international journal reasearch paper

IJARMSS International Journal of Advanced Research in Management and Social Sciences

Volume 2, Issue 2, February 2013

ISSN: 2278-6236

2013

Greenfield Advanced Research Publishing House www.garph.co.uk

Email: [email protected], [email protected]

ii

Editor in Chief: Ezendu Ariwa

Visiting Professor, Gulf University, Bahrain Visiting Professor, University of Lagos, Nigeria Visiting Professor, Kano State Polytechnic, Nigeria Chair, IEEE Consumer Electronics Chapter, UK&RI Chair, IEEE Broadcast Technology Chapter, UK&RI London Metropolitan Business School London Metropolitan University United Kingdom

Disclaimer

It is our editorial policy to accommodate broad diversity of viewpoints on various issues of the scope of journal. Nevertheless, any views expressed in this publication are the views of the authors and not of GreenField Advanced Research Publishing House.

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INDEX

1. DEPOSIT- MONEY- BANKS: UNETHICAL DIVERGENCE IN CAPITAL ADEQUACY RATIOS – NIGERIA PERSPECTIVE

Yunisa, Simon A., Omah, I. (PhD)

1-19

2. FARMERS’ AWARENESS AND APPLICATION OF IMPROVED WATER MANAGEMENT PRACTICES

Ijaz Ashraf, Bilal Muneer, Sher Muhammad, Fariha Rehman

20-27

3. APPLICATION OF NONWOVENS FOR WATER FILTRATION

Sakpal P.P., Landage S.M., Prof. (Dr.) Wasif A.I.

28-47

4. EXPLORING FACTORS AFFECTING THE ADOPTION OF IPTV: A LITERATURE REVIEW

Samiran Sur, Dr. (Mrs.) Mrinalini Pandey

48-66

5. PARENTS’ CHILD PREFERENCE FOR EDUCATION IN IMENTI NORTH COUNTY, KENYA

Catherine Gakii Murungi

67-73

6. INFLUENCE OF EMPOWERMENT ON POLITICAL PARTICIPATION OF DALIT WOMEN

Dr. Kaushiki Singh

74-95

7. SALES PROMOTION SCHEMES: CONSUMER’S PICK

Swati Chopra

96-106

8. THEORETICAL PERSPECTIVE FOR IMPLEMENTING OF INTERNATIONAL FINANCIAL REPORTING SYSTEM (IFRS)

Dr. Ali Kheradmand, Mahdi Naqdi Bahar

107-120

9. ROLE OF FINANCIAL INCLUSION THROUGH SELF HELP GROUP: A STUDY OF SELECTED SHGS IN YAMUNA NAGAR (DISTRICT HARYANA) INDIA

Rekha Rathore, Manika Garg

121-135

10. MANAGING BRANDS THROUGH CULTURE A CUSTOMER ORIENTED APPROACH

Aarti Sharma

136-143

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11. INFORMATION TECHNOLOGY AND ITS ROLE TO MANAGE SUSTAINABLE FINANCE

Himanshu Sekhar Acharya, S.R. Dutta, R.K. Bhoi

144-149

12. SPARE PARTS MANAGEMENT (SPM): AN INVENTORY CONTROL THROUGH JIT PHILOSOPHY

Omah I. PhD, Okolie J.U PhD

150-163

13. RURAL ENTREPRENEURSHIP AND ECONOMIC UPLIFTMENT: A CASE STUDY OF MS. MANSUKHBHAI RAGHAVJIBHAI PRAJAPATI

Dr. Priyanka Sharma

164-171

14. BUZZ MARKETING: ITS ROLE IN GLOBAL ARENA

Chanjyot Kaur

172-180

15. ROLE OF HUMAN RESOURCE DEPARTMENT AND RECRUITMENT POLICIES IN RECRUITMENT: “A CASE STUDY OF BHEL”

Nahid

181-196

16. GROWTH AND DEVELOPMENT IN INDIAN BANKING SECTOR

Dr. Nafees A. Khan, Ms. Fozia

197-211

17. A STUDY OF ORGANIZATIONAL CLIMATE AND STRESS OF POLICE PERSONNEL

Dr. Priyanka Sharma

212-230

International Journal of Advanced Research in

Management and Social Sciences ISSN: 2278-6236

Vol. 2 | No. 2 | February 2013 www.garph.co.uk IJARMSS | 1

DEPOSIT- MONEY- BANKS: UNETHICAL DIVERGENCE IN CAPITAL ADEQUACY

RATIOS – NIGERIA PERSPECTIVE

Yunisa, Simon A.*

Omah, I. (PhD)*

Abstract

Objectives: This study examines the role of capital adequacy ratios in deposit money banks

in Nigeria. The conventional / traditional role of capital is to ensure the survival of business

enterprises when losses are envisaged. Therefore, the primary objective for setting an

international standard to regulate minimum capital requirement ratios for deposit money

banks is to ensure that the tenacity and stability of financial institutions/banks are

strengthened globally. Banks hold capital in excess of the minimum requirement to ensure

that unexpected losses do not lead to non-compliance with the minimum requirement.

Similarly, capital adequacy ratio (CAR) is the ratio of bank’s capital to risk adjusted factors

which provide a platform for the regulatory authority to measure the amount of a bank’s

real assets expressed as a percentage of its risk-weighted asset and keep track, to ensure

that financial institutions can absorb a reasonable amount of loss and still complies with

statutory capital requirement structures.

Methodology/Approach: Data procurement was based on “parliolithic” track of

transactions of specific financial institutions under consideration (Nigeria). The analysis was

tailored to harness the meritorious advantages of capital adequacy ratio in banks and other

financial institutions.

Findings: The study reveals that the higher the capital adequacy ratio, the greater the level

of unexpected losses it can absorb.

Validity: The study therefore, recommends that regulatory authorities should ensure that

financial institutions (banks) strictly comply with the minimum capital adequacy ratios

stipulated to ensure stability and efficiency in performance.

Keywords: Capital Adequacy Ratios (CAR), Market Generated Capital, Regulatory

Authorities, Optimum Capital Structure, Minimum Requirement, Risk-adjusted Factors, “Too-

big- to- fail”, Weighted- Assets- Ratios (WAR).

*Department of Accounting and Finance, Faculty of Management Sciences, Lagos State

University, Nigeria.




INTRODUCTION

The special role of capital in banks is explained in its significance to the bank’s role as credit

providers. That is why capital requirements for deposit money banks are necessary moreso,

that they play an important role in global economy. Capital requirements according to

Kristian (2010) relate to the size and composition of liable capital. He stated further that the

capital requirements for banks are based on international standards laid down by the Basel

Committee. In 2004 the Committee (Basel II) on Banking Supervision proposed the

Economic capital and Regulatory capital for the analysis of a new framework for bank capital

regulation. The committee whose secretariat is at the Bank of International Settlement (BIS)

was set up in 1974 with the purpose of strengthening the stability of the international

financial system (Abel and Rafael, 2007).

The primary objective of the new regulation as stated by Caruana (2005), is to set “… more

risk-sensitive minimum capital requirements so that regulatory capital is both adequate and

closer to economic capital”. Economic capital (Abel and Rafael, 2007) is the capital level that

is required to cover the bank’s losses with a certain probability or confidence level, which is

related to a desired rating. Such desired solvency standard is derived from an underlying

objective function such as the maximization of the value of the bank. Economic capital

therefore, may be seen as the capital level that bank shareholders would choose in absence

of capital regulation.

Regulatory capital on the other hand is the minimum capital required by the regulator.

Regulatory capital therefore, in principle, is derived from the maximization of a social

welfare function that takes into account the cost and benefit of capital regulation (Abel and

Rafael, 2007). The costs of capital regulation include an increase in the cost of credit while

the benefits include a reduction in the probability of bank failure.

The capital structure of a business enterprise reflects the proportions of the enterprise’s

assets financed by own funds and external financing (Kristian, 2010). It is the composition of

the financial structure of the business. The capital structure of a business measures the

extent to which an organization is geared, i.e. the extent to which it makes use of debt and

equity in financing its operations (Kehinde and Abiola, 2006). Banks have a considerably

lower equity ratio than non-financial corporation. The reason as suggested by Kristian

(2010) is because the principal function of banks is to receive deposit and relend, whereby




the profit and the volume of business are related to the size and the relative distribution of

the balance sheet items.

The proposition by Modigliani and Miller (M & M, 1958) that in a financial world of full

information and complete markets, a firm’s capital structure cannot affect its value;

contrast with the intuitive notion that a firm with risk-free debt can borrow at an interest

rate below the required return on equity. This reduces its weighted average cost of

financing and increases its value by substituting debt for equity (Berger, Herring and Szego,

1995).

Okwoli and Kpelai (2008) posit that the value of a firm refers to the net price of its ordinary

shares which results directly from the firm’s investment, financing and dividend decisions.

Some of the factors affecting the choice of capital structure of a firm includes sales stability,

asset structure, profitability, control (ownership diffusion/dillution), taxes, growth rate,

operating structure, management attitude, firm’s internal control, financial flexibility,

market condition and prices of substitute product (Akinsulire, 2008).

An optimal capital structure exists according to Mortgliani and Miller (1958) when the risk of

going bankrupt is offset by the tax savings of debt. Once this optimal capital structure is

established, a firm would be able to maximize returns to its stakeholders and these returns

would be higher than returns obtained from a firm whose capital is made up of equity only.

In the simplest formulation, a bank's capital is the "cushion" for potential losses, and

protects the bank's depositors and other lenders. That is why banking regulators in most

countries define and monitor capital adequacy ratios (CAR) to protect depositors, so as to

maintain confidence in the banking system. CAR is the ratio which determines the bank's

capacity to meet the time liabilities and other risks such as credit and operational risk, to

mention but a few. CAR is similar to leverage; in the most basic formulation, it is comparable

to the inverse of debt-to-equity leverage formulations (although CAR uses equity over assets

instead of debt-to-equity; since assets are by definition equal to debt plus equity, a

transformation is required). Unlike traditional leverage, however, CAR recognizes that assets

can have different levels of risk (Akerlof, 1990).

The paper examines the role of capital in deposit money banks in Nigeria. It evaluates the

importance of capital, how market-generated capital “requirements” differ from regulatory




requirements. The paper also examined capital adequacy ratios, the history of capital

adequacy ratios and discusses the computation of capital adequacy ratios and its usefulness.

This study is of significant importance for regulatory authorities and managers of financial

institutions because these institutions lack any plausible rationale in the frictionless world of

M & M. Several works on financial institutions has begun with a set of assumed

imperfections, such as taxes, cost of financial distress, transactions costs, asymmetric

information and regulation. Though, Miller (1995) argued that these imperfections may not

be important enough to overturn the M&M proposition, (Berger et al, 1995), it is important

to look away from M&M frictionless world, so that financial institutions may be able to

enhance their market values by taking on an “optimal” amount of leverage.

The rest of the paper is structured into four parts. Part II dwells on review of relevant

literatures followed by capital adequacy ratios and its significance in Part III. Part IV dwells

on ranking of deposit money banks on the basis of tier 1 capital. The paper ends in Part V

with conclusion and recommendations.

NEOLITHIC REVIEW

Market Capital Requirements

We may want to ask why markets may encourage institutions to hold certain capital ratios

in the absence of the regulatory capital requirements (capital ratio, i.e. the ratio of equity to

assets). Berger et al (1995) defined a bank’s market capital ‘requirement’ as the capital ratio

that maximizes the value of deposit money bank in the absence of regulatory capital

requirements and all the regulatory mechanism that are used to enforce them but in the

presence of the rest of the regulatory structures that protects the safety and soundness of

banks. They further explained that this market ‘requirement’ which may differ for each

deposit money bank, is the ratio toward which each bank would tend to move in the long

run in the absence of regulatory capital requirements. Berge et al (1995) further posits that

sanctions for a bank’s departure from market capital ‘requirements’ are two sided, the value

of the bank will decline if it has either too little or too much capital.

The basis for determining the optimum capital structure according to Kristian (2010) is the

Modgliani-Miller theory, which posits that the value of a company in a perfect world

without taxes is independent of financing. He explained further, that the underlying

assumption in M&M theory is that in a perfect world the investors can compose their own




personal gearing which we may choose to call “home leverage”. It is therefore, not possible

for companies to add value via the capital structure. This result however, changes

significantly when corporate taxes are introduced, as the value of the company increases

with growing indebtedness owing to the tax deductibility of interest payments but not of

the remuneration on the equity capital.

Berger et al (1995) observed that taxes and the cost of financial distress were the first major

frictions considered in determining optimal capital ratios. They argued that since interest

payments are tax deductible, but dividends are not, substituting debt for equity enables

firms to pass greater returns to investors by reducing payments to the government.

Therefore, all things being equal, owners prefer to fund the firm almost entirely with debt.

However, increasing leverage also increase the risk of incurring the costs of financial

distress. The expected costs of financial distress increases as the capital ratio declines and

the probability of insolvency rises.

In determining the capital structure Berger et al (1995) posits that the capital ratio at the

point at which the tax advantage of additional debt are offset by the increase in the

expected cost of financial distress determines the optimal capital structure or market capital

‘requirement’ in the presence of these two frictions. Financial distress occurs when the bank

has difficulty honoring its commitments. The cost of financial distress includes the cost of

bankruptcy. That is the cost of transferring ownership of the firm from shareholders to

creditors. It also includes the loss in value that may occur as a result of the perception that

bankruptcy may be imminent, even if bankruptcy may ultimately be avoided. Moreover, the

company may in addition to the above costs loose her skilled/talented employees and

suppliers may decide to ask for shorter and timelier payments for supplies. The cost of

financial distress may also include decline in revenues from credit-risk sensitive products

(e.g. guarantees), and conflicts of interest between shareholders and creditors which may

lead to sub optimal operating, investment and financing decisions.

THE SIGNIFICANCE OF EXCESS CAPITAL RESERVES IN DEPOSIT MONEY BANKS

Kristian (2010) posits that the conventional role of capital is to ensure the survival of

business enterprises when they encounter losses. For instance, deposit money banks in

Nigeria are subjected to a minimum capital requirement of 8 % by the Central Bank of

Nigeria (CBN) of the risk-weighted assets. If the banks’ liable capital falls below the




minimum capital requirements, the CBN may decide to either close the bank down or

encourage another bank to acquire it, where all effort to restore the capital fails.

In Nigeria, between 2000 and 2012, there were several cases of banks which had been taken

over by other banks due to inability of their shareholders to increase their liable capital

which fell below the minimum capital requirement. Within the period stated above, Access

bank acquired Intercontinental bank, Ecobank acquired Oceanic bank, First City Monument

Bank acquired FinBank and Sterling bank also acquired Equatorial Trust bank. Three other

deposit money banks which were salvaged by the CBN within the above stated period were

nationalized. They include Springbank now called Enterprise bank Limited, Bank PHB now

called Keystone Bank and Afribank now renamed Mainstreet Bank. Therefore, the banks

capital reserves in excess of the minimum capital requirements and their current earnings

ensure their independence and survival in case of unexpected losses; as provisions

corresponding to the expected value of the losses are made (Okey, 2012).

Furthermore, banks hold capital in excess of the minimum capital requirement to ensure

that unexpected losses do not lead to non-compliance with the minimum capital

requirements, in which case the shareholders would have to transfer control of the bank to

the authorities as seen in the case of Afribank, Bank PHB and SpringBank which became

nationalized in 2011.

Another purpose of the excess capital reserves is to avoid excessive financing costs for other

financing options than deposits. Where a bank desperately wants to correct insufficiency in

excess capital reserves, it may have to pay a high rate of interest on loans from other banks

or on bonds she had issued (Kristian, 2010).

Furthermore, large banks decides to have considerable market-determined excess capital

reserves in order to keep their good ratings (Jackson et al, 2002), as rating agencies make

demands regarding the banks’ excess capital reserves as a condition for high rating.

Moreover, sufficient excess capital reserves enable banks to enter into large exposures

without having to raise new capital. The bank faces the risk of loosing her reputation if she

finds it difficult to meet the CBN’s (i.e. regulatory) capital requirements where she suffers

large losses from loan exposures.




REASONS FOR IMPOSITION OF CAPITAL REQUIREMENTS BY THE CBN

Capital requirement is determined with a view to ensuring confidence in the banks without

jeopardizing the bank’s role as provider of capital. One of the reasons why CBN imposes

minimum capital requirements is to prevent a bank’s financial problems from spreading and

threatening the financial stability of the economy. This could happen if an event in a bank

leads to considerable financial losses and/or loss of confidence in other parts of the financial

system. The ultimate consequence would be that the banks no longer function as efficient

providers of credit to business enterprises and households (Akerlof, 1990).

Moreover, loss of confidence in the banking sector would have grave consequences on the

banks as they would be unable to attract sufficient deposit as a source of financing, and also

may not be able to attract capital from investors, including inter-bank loans. Furthermore,

minimum capital requirements are to prevent the value of assets in a failing bank from

dropping below the value of the depositors’ claims. The aim is to ensure that the bank can

be reconstructed or wound up in a relatively orderly fashion, whereby exposures can be

settled without the counter parties suffering losses. Generally, the capital requirement is

determined with a view to ensuring confidence in the banks without jeopardizing the banks’

role as providers of capital. Therefore, the minimum capital requirement of 8% of the risk

weighted assets is an international compromise between these two considerations (Jackson

et al., 2002).

Assessing the significance of capital requirements is a difficult task. However, a theoretical

argument is that capital requirements increases the banks’ risk-taking (Genotte and Pyle,

1991). This is because the financing costs on deposits do not rise when risk-taking increases.

In practice however, the value of the license to operate as a bank is often so great that the

shareholders do not wish to assume excess risk.

Business enterprises hold certain equity capital due to financial distress costs. For banks, a

major cost of financial distress is that the value of loans, which constitute the most

important part of a bank’s assets, is typically lower in a default situation than in a situation

where the bank is a “going concern”. This is because the bank’s private information on the

borrowers cannot be immediately transferred to other banks, as it is built up over the

period during which the bank has had those borrowers as customers. A risk premium would




be required for another bank to takeover the loan since this bank would not know the

borrowers (Kristian, 2010). Akerlof (1970) calls it the “lemon effect”.

The size of the bank usually influences the capital structure. In a related work by Kristian

(2010), it was found that large banks usually have smaller excess capital reserves than small

banks. One explanation for this is the “too-big-to-fail” argument. That a government

guarantee is implied, since regulatory authorities believes the failure of large banks would

have incalculable consequences for the society.

Another argument in literature is that excess capital reserves are an alternative to advanced

risk management. It is cheaper for small banks to hold relatively large excess capital

reserves than to invest in and maintain advanced risk-management models. Moreover,

other argument holds that small banks’ loan and deposit portfolios are less diversified than

those of large banks since small banks are typically exposed to the local community in which

they operate. Moreover, the pressure from the shareholders is often more limited in small

banks due to a high degree of local ownership of the shares (Berger et al., 1995).

One of the factors determining excess capital reserves in banks is the policy of the

regulatory authority. If the authorities raise the capital requirement, the banks will augment

their capital, though not by quite as much as the increase in the capital requirement.

Therefore, the excess capital reserves tend to decrease when authorities impose higher

capital requirements (Alfon et al., 2004).

CAPITAL ADEQUACY RATIO AND ITS SIGNIFICANCE

Deposit Money Banks licensed by the CBN are required to submit to her quarterly disclosure

statements which include a range of financial and prudential information. A key part of

these statements is the disclosure of the banks' "capital adequacy ratios" (CAR). CAR also

called Capital to Risk (Weighted) Assets Ratio (CRAR), is a ratio of a bank's capital to its risk.

It is a measure of the amount of a bank's core capital expressed as a percentage of its risk-

weighted asset (Berger et al., 1995).

The CBN keep track of a bank's CAR to ensure that it can absorb a reasonable amount of

loss and complies with statutory Capital requirements as these ratios are a measure of the

amount of a bank's capital in relation to the amount of its credit exposures. They are usually

expressed as a percentage. For instance, a capital adequacy ratio of eight (8) percent means

that a bank's capital is eight percent of the size of its credit exposures (Alfon et al., 2004).




An international standard has been developed which recommends minimum capital

adequacy ratios for international banks. The purpose of having minimum capital adequacy

ratios is to ensure that banks can absorb a reasonable level of losses before becoming

insolvent, and before depositors funds are lost (Harley, 2011). Applying minimum capital

adequacy ratios serves to promote the stability and efficiency of the financial system by

reducing the likelihood of banks becoming insolvent. A bank becoming insolvent may lead to

loss of confidence in the financial system, causing financial problems for other banks and

perhaps threatening the smooth functioning of financial markets (Soludo, 2009). Therefore,

the application of minimum capital adequacy ratios by the CBN assists in maintaining a

sound and efficient financial system. It also gives some protection to depositors. In the

event of a winding-up, depositors' funds rank in priority before capital, so depositors would

only lose money if the bank makes a loss which exceeds the amount of capital it has. Hence,

Alashi (2002) observed that the higher the capital adequacy ratio, the higher the level of

protection available to depositors.

DEVELOPMENT OF MINIMUM CAPITAL ADEQUACY RATIOS

The "Basel Committee" established in 1974, is a committee that represents central banks

and financial supervisory authorities of the major industrialized countries (the G10

countries). The committee concerns itself with ensuring the effective supervision of banks

on a global basis by setting and promoting international standards. Its principal interest has

been in the area of capital adequacy ratios. In 1988 the committee issued a statement of

principles (Basel Capital Accord) dealing with capital adequacy ratios. The statement

contains a recommended approach for calculating capital adequacy ratios and

recommended minimum capital adequacy ratios for international banks. The Accord was

developed in order to improve capital adequacy ratios (which were considered to be too

low in some banks) and to help standardize international regulatory practice. This Accord

has been adopted by the OECD countries and many developing countries (Basel Committee

on Banking Supervision, 2003).

MINIMUM CAPITAL ADEQUACY RATIOS AND ITS LIMITATIONS

The minimum CAR that supervisory authorities are encouraged to apply according to the

Basel Capital Accord are: one, that tier 1 capital to total risk weighted credit exposures

should not be less than 4 percent; and: two, that total capital (i.e. tier 1 plus tier 2 less




certain deductions) to total risk weighted credit exposures should not be less than 8

percent. Akerlof (1990) observed that having a CAR above the minimum recommended level

is not a guarantee that the bank is "safe" as CAR are concerned primarily with credit risks.

There are also other types of risks which are not recognized by CAR, for instance inadequate

internal control systems could lead to large losses by fraud, or losses could be made on the

trading of foreign exchange and other types of financial instruments. Furthermore, CARs are

only as good as the information on which they are based. For instance, if inadequate

provisions have been made against problem loans, then the CAR will overstate the amount

of losses that the bank is able to absorb. Therefore, CAR should not be interpreted as the

only indicators necessary to judge a bank's financial soundness.

CREDIT EXPOSURES OF DEPOSIT MONEY BANKS

A credit risk is a risk that the bank will not be able to recover the money it is owed. Credit

exposures arise when a bank lends money to a customer, or buys a financial asset (e.g. a

commercial bill issued by a company or another bank), or has any other arrangement with

another party that requires that party to pay money to the bank (e.g. under a foreign

exchange contract). Some of the factors that affect risks inherent in a credit exposure

include the financial strength of the party owing the bank and the market factors that

impact on the value or cash flow of assets that are used as security for loans. The greater

the financial strength of the party owing the bank, the greater the probability of repayment

(Alashi, 2002).

COMPUTATION OF CAPITAL ADEQUACY RATIOS

The process of calculating capital for use in capital adequacy ratios, require adjustments to

be made to the amount of capital shown on the balance sheet. The formula below may be

used:

CAR = Tier 1 Capital + Tier 2 Capital

Risk Weighted Assets

Tier 1 capital is calculated as (paid up capital + statutory reserves + disclosed free reserves) -

(equity investments in subsidiary + intangible assets + current and brought forward losses).

Tier 1 capital is capital permanently and freely available to absorb losses without the bank

being obliged to cease trading. This capital is important because it safeguards both the

survival of the bank and the stability of the financial system (Kristian, 2010).




Tier 2 capital consists of undisclosed reserves, general loss reserves, hybrid debt capital

instruments and subordinated debts. This capital generally absorbs losses only in the event

of a winding-up of a bank, and so provides a lower level of protection for depositors and

other creditors. It comes into play in absorbing losses after tier 1 capital has been lost by the

bank. Tier 2 capital is sub-divided into upper and lower tier 2 capital. Upper tier 2 capital has

no fixed maturity, while lower tier 2 capital has a limited life span, which makes it less

effective in providing a buffer against losses by the bank. While Risk can either be weighted

assets (α) or the minimum total capital requirement stipulated by the regulatory authorities

(Akerlof, 1990).

If using risk weighted assets, CAR = T1 + T2 ≥ 10%

α

A third type of capital, tier 3 capital, as defined by Basel Capital Accord consists of short

term subordinated debt. It can be used to provide a buffer against losses caused by market

risks if tier 1 and tier 2 capital are insufficient for this. Market risks are risks of losses on

foreign exchange and interest rate contracts caused by changes in foreign exchange rates

and interest rates. However, Regulatory authorities do not require capital to be held against

market risk, so does not have any requirements for the holding of tier 3 capital (Akerlof,

1990).

FIRST STEP IN COMPUTATION OF CAPITAL

Tier 1 capital comprises of:

the ordinary share capital of the bank; and

audited revenue reserves (e.g. retained earnings); less current year's losses; future

tax benefits; and intangible assets (e.g. goodwill).

Upper Tier 2 capital comprises of:

unaudited retained earnings;

revaluation reserves;

general provisions for bad debts;

perpetual cumulative preference shares (i.e. preference shares with no maturity

date whose dividends accrue for future payment even if the bank's financial

condition does not support immediate payment);




perpetual subordinated debt (i.e. debt with no maturity date which ranks in priority

behind all creditors except shareholders).

Lower Tier 2 capital comprises of:

subordinated debt with a term of at least 5 years;

redeemable preference shares which may not be redeemed for at least 5 years.

The total capital is the sum of tier 1 and tier 2 capital less equity investments in subsidiaries;

shareholdings in other banks that exceed 10 percent of that bank's capital and unrealized

revaluation losses on securities holdings.

Table 1: Computation of Capital for XYZ Bank Plc (Hypothetical)

Computation of Tier 1 Capital

Ordinary Capital 7

Retained earnings 8

Less Goodwill -3

Total tier 1 capital 12

Calculation of Tier 2 capital (Upper)

General bad debt provision 2

Revaluation reserve 4

Calculation of tier 2 capital (Lower)

Subordinated debt 2

Redeemable preference shares 3

Total tier 2 capital 11

Less shareholding in other bank -3

Total capital 20

Source: Publication of Reserve Bank of New Zealand

http:www.rbnz.govt.nz/finstab/banking/regulation/0091769.html

Computation of Risk Weighted Exposures for (Hypothetical) XYZ Bank Plc

The credit equivalent amounts of all off-balance sheet exposures are multiplied by the same

risk weightings that apply to on-balance sheet exposures (i.e. the weighting used depends

on the type of counterparty), except that market related contracts that would otherwise be

weighted at 100 percent are weighted at 50 percent




Table 2: Calculation of Risk Weighted Exposures

On-balance sheet

Exposure type Amount

X Risk Weighting = Risk weighted exposures

Cash 11 0% 0

5 Year Govt. Stock 20 10% 2

Lending to banks 30 20% 6

Home loans 52 50% 26

Commercial loans 64 100% 64

Fixed assets 25 200% 25

Total 123

Off-balance sheet

Exposure type Amount X

Credit conversion factor X

Risk weighting = Risk weighted exposures

Guarantee 10 100% 100% 10 Asset sale with recourse 18 100% 100% 18

Forward purchase 23 100% 100% 23

Performance bond 8 50% 100% 4

Underwriting facility 28 50% 100% 14

Trade contingency 30 20% 100% 6

Exposure type (Replacement Cost) +

Potential exposure X

Risk weighting =

Risk weighted exposure

Forward FX contract 4 1 20% 1

Interest rate swap 4 1 20% 1

Total 77 Total risk weighted exposures 200

Capital adequacy ratios are calculated by dividing tier 1 capital and total capital by risk

weighted credit exposures.

Tier 1 capital to total weighted exposures = 12 / 200 = 6%

Total capital to total risk weighted exposures = 20 / 200 = 10%

The CAR for our (hypothetical) XYZ Bank Plc. equals 10%

RANKING DEPOSIT MONEY BANKS ON THE BASIS OF TIER 1 CAPITAL

Most ranking agencies uses the tier 1 capital as a basis for ranking banks all-over the world

as it is considered a core measure of the banks’ financial strength. The recent ranking of

deposit money banks in Nigeria by The Banker Magazine, a subsidiary of the Financial Times

is a case in time. The ranking indicates that Zenith Bank Plc is the largest bank in Nigeria, 7th

in Africa and 322nd in the world. Zenith bank has a total tier 1 capital of $2.398 billion in

2011 as against $2.405 billion in 2010. Financial Institutions all over the world often dread

formal or informal rankings because of its capacity to classify them. This is due to the highly




competitive environment of banking. Hence no bank would be happy to be ranked below its

peers (Business Hallmark, 2012).

Financial experts observed that Tier 1 capital is the core measure of a bank’s financial

strength, as it can absorb losses without a bank being forced to cease trading. They

however, added that African banks suffered in this year’s top 1000 ranking from the

weakness of their currencies, many of which fell sharply against the US dollar in the second

half of 2011. The performance Indices used in ranking the banks include: Tier 1 capital,

assets, capital adequacy ratio, pre-tax profit, returns on capital employed, returns on assets,

BIS total capital ratio, non-performing loan ratio, loans/assets ratio and cost/income ratio

(Business Hallmark, 2012).

The table below shows a comprehensive picture of the ranking done by The Banker

Magazine.

TIER 1 CAPITAL FOR NIGERIAN’S TOP 8 BANKS FEATURED IN THE GLOBAL 1000 BANKS IN

2012

DepositMoneyBanks

Tier 1 Capital 2010

(Billion)

Tier 1 Capital 2011

(Billion)

2011 PAT

(Billion)

Ranking by Banker Magazine

Zenith Bank Plc

$2.405 $2.398 N44.189 Nig Africa World

1st 7th 32nd

FBN Plc $2.221 $2.262 N44.785 2nd 8th 338th GT. Bank

Plc $1.362 $1.478 N52.654 3rd 11th 455th

Access Bank Plc

$1.054 $1.149 N13.660 4th 15th 541st

UBA Plc $1.003 $1.037 (N9.647) 5th 16th 563rd Fidelity Bank Plc

$0.867 $0.904 N5.361 6th 17th 618th

FCMB Plc $0.683 $0.854 (N9.915) 7th 22nd 710th Skye

Bank Plc $0.665 $0.683 N5.250 8th 24th 721st

Source: Business Hallmark, July 23, 2012.

CONCLUSION AND RECOMMENDATIONS

This study examines the role of capital and capital adequacy ratios in deposit money banks

in Nigeria. The conventional role of capital is to ensure the survival of business enterprises

when they encounter losses. Hence the primary objective for setting an international




standard to regulate minimum capital requirements for deposit money banks is to ensure

confidence in the banks and strengthen the stability of the international financial system.

The capital structure of a business enterprise reflects the proportions of the enterprise’s

assets financed by own funds and external financing. It measures the extent to which an

organization is geared, (i.e. the extent to which it makes use of debt and equity in financing

its operations). The study reveals that banks have a considerably lower equity ratio than

non-financial corporation. The reason as suggested by Kristian (2010) is because the

principal function of banks is to receive deposit and relend, whereby the profit and the

volume of business are related to the size and the relative distribution of the balance sheet

items.

The study also reveals that capital adequacy ratios measure the amount of a bank's capital

in relation to the amount of its risk weighted credit exposures. The risk weighting process

takes into account the relative riskiness of various types of credit exposures that banks

have, and incorporates the effect of off-balance sheet contracts on credit risk. The higher

the capital adequacy ratios a bank has, the greater the level of unexpected losses it can

absorb before becoming insolvent.

Finally, the study reveals that the Basel Capital Accord is an international standard for the

calculation of capital adequacy ratios. The Accord recommends minimum capital adequacy

ratios that banks should meet. The CBN applies the minimum standards specified in the

Accord to licensed banks. This helps to promote stability and efficiency in the financial

system, and ensures that deposit money banks comply with generally accepted

international standards.

The study therefore, recommends that regulatory authorities, all-over the world should as a

matter of policy ensure strict implementation of this Accord. Their efficient and effective

supervision will no doubt enhance stability and efficiency of the financial system which is

the catalyst and hence bedrock of every economy.

REFERENCES

1. Abel, C. and Rafael R. (2007), Economic and regulatory capital in banking: What is the

difference? International Journal of Central banking, Vol. 3 No. 3.

2. Adegbite, E. O. (2010), “The Nigerian Financial System; Emerging issues and global

relevance”.




3. Akerlof, G. A. (1990), The market for “lemons”: Quality uncertainty and the market

mechanism, Quarterly Journal of Economies 84(3).

4. Akinsulire, O. (2008), Financial Management: 5th Edition El-Toda ventures Ltd.

Mushin, Lagos, 540pp.

5. Alashi S. O, (2002), “Banking Crisis: Causes, Early Warning Signals and Resolutions” in

CBN; Enhancing Financial Sector Soundness in Nigeria (Abuja).

6. Alfon I., Isabel A. and Bascunana, P. (2004), “What determine how much capital is

held by UK banks and building societies?” Occasional Paper series 22, Financial

Service Authority.

7. “Anon” (2008), “SECs Code of Corporate Governances in Nigeria” Zenith Bank

Quarterly April 2008.

8. Basel Committee on Banking Supervision (1988), International Convergence of

Capital Measurement and Capital Standards; Bank for International Settlements.

9. Basel Committee on Banking Supervision (2003), Overview of the New Capital

Accord.

10. Berger, A. N., Herring R. J. and Szego, G. P. (1995), The role of capital in financial

institutions, Journal of Banking and Finance, Vol. 19, Nos 3-4.

11. Caruana, J. (2005), “Basel II: Back to the Future” 7th Hong Kong Monetary Authority

Distinguished lecture available at:

12. www.bde.es/prensa/intervenpub/gobernador/040205e.pdf.

13. Harley, T. W. (2011), “Determinants of Capital Adequacy in the Banking Sub-sector of

the Nigerian economy Efficacy of Camels”. (A model specification with co-intefration

Analysts), International Journal of Academic Research in Business and Social Sciences

Vol. 1 No. 3 ISSN: 2222 – 6990.

14. Jackson, P., William, P. and Saporta, V. (2002), Regulatory and economic solvency

standards for internationally active banks, Journal of banking and finance, 26

15. Kehinde, J. S. and Abiola S. J. (2006), Financial Management and Strategy, Rackson

Nigerian Limited, first edition, Educational publishers Mushin, Lagos, Nigeria.

16. Kristian K. (2010), “The role of Capital in Banks” Journal of Banking and finance

17. Miller, Merton H. (1995), Do the M&M proposition apply to banks? Journal of

Banking and Finance, Vol. 19, Nos. 3-4




18. Modgliani, F., and Miller, M. (1958), “The cost of capital, corporation finance and the

theory of investment,” American Economic Review, 48, 261-97.

19. Ojo J. A (2010), The Nigeria Maladapted Financial System: Reforming Tasks and

Development Dilemma, first edition, the CIBN Press limited, Yaba, Lagos.

20. Okey Onyenweaku (2012), New ranking raise doubts over Nigerian banks, Business

Hallmark July 23.

21. Okwoli, A. A. and Kpelai S. T. (2008), Introduction to Managerial Finance, 2nd Edition,

Go-Go International Limited, Jos, Plateau State, Nigeria.

22. Sanusi, L. S. (2010), “Evolving Financial Landscape: Strategies for Economic

Resilience”: Keynote Address presented at the 4th Annual Banking and Finance

Conference of the Chartered Institute of Bankers of Nigeria, Abuja September 23-

24”.

23. Soludo, C. C. (2009), “Banking in Nigeria at a Time of Global Crisis” Paper Presented

at a Special Interactive Section on the Banking Sector at the Eko Hotels & Suites, V.I.

Lagos, March 30th.

24. "Capital Adequacy Ratio-CAR" (2007),

http://www.investopedia.com/terms/c/capitaladequacyratio.asp). Investopedia.

Retrieved 07th October.




APPENDIX 1

Hypothetical Balance sheet of XYZ Bank Plc

Assets Liabilities & Equity

Cash 11 Deposits 182

5 Year Govt. Stock 20 Subordinated term debt 2

Lending to Banks 30 Shareholders’ funds

Housing loans with mortgages 52 Ordinary capital 7

Commercial loans 64 Redeemable preference shares 3

Goodwill 3 Retained earnings 8

Shareholding in other banks 3 Revaluation reserve 4

Fixed assets 25

General provision for bad debts -2

Total/Assets 206 Total Liabilities 206

Hypothetical Off-Balance Sheet Exposures of XYZ Bank Plc

Nominal Principal Amount

Direct credit substitute (guarantee of financial obligations) 10

Asset with recourse 18

Commitment with certain drawdown (forward purchase of assets) 23

Transaction related contingent item (performance bond) 8

Underwriting facility 28

Short term self liquidating trade related contingency 30

6 month forward foreign exchange contract (replacement cost = 4) 100

4 year interest rate swap (replacement cost = 4) 200

Total 417

Note: The foreign exchange contract and interest rate swap are with banks. All other transactions

are with non-banks customers.

Source: Publication of Reserve Bank of New Zealand

http:www.rbnz.govt.nz/finstab/banking/regulation/0091769.html

Appendix 2

Calculation of Credit Exposures (On-Balance Sheet Exposures)

The categories into which all credit exposures are assigned for capital adequacy ratio purposes, and

the percentages the balance sheet numbers are weighted by, are as follows:

Credit Exposure Type Percentage Risk Weighing

Cash 0

Short term claims of governments 0

Long term claims on governments (> 1 year) 10

Claims on banks 20

Claims on public sector entities 20

Residential mortgages 50

All other credit exposures 100




Calculation of Credit Equivalents: Off-Balance Sheet Credit Exposures

The nominal principal amounts in each category are multiplied by the credit conversion factor to get

a "credit equivalent amount":

Credit Exposure Type Credit Conversion Factor (%)

Direct credit substitutes e.g. guarantees, bills of exchange, letters of credit, risk participations

100

Asset sales with recourse 100

Commitments with certain drawdown e.g. forward purchase, partly paid shares

100

Transaction related contracts e.g. performance bonds, bid bonds 50

Underwriting and sub-underwriting facilities 50

Other commitments with an original maturity more than 1 year 50

Short term trade related contingencies e.g. letters of credit 20

Other commitments with an original maturity of less than 1 year or which can be unconditionally cancelled at any time

0

Interest rate contracts < 1 year 0%

Interest rate contracts > 1 year 0.5%

Exchange rate contracts < 1 year 1%

Exchange rate contracts > 1 year 5%




FARMERS’ AWARENESS AND APPLICATION OF IMPROVED WATER

MANAGEMENT PRACTICES

Ijaz Ashraf*

Bilal Muneer*

Sher Muhammad*

Fariha Rehman**

Abstract: Water scarcity is becoming an issue of immense importance for many developed as

well as developing countries. The limited fresh water resources present the world with a

major challenge to feed everybody and sustain the economy and the environment. Pakistan

is not an exception in this regard especially in agriculture context. In such conditions, we

need to conserve the available water for irrigation purposes and also to minimize the losses

in this regard. The present study was designed to investigate into the awareness of improved

water management practices among farmers and their application by them. A sample of 125

respondents was selected at random from five union councils of tehsil Burewala selected at

random. The data were collected with the help of a pre-tested and validated interview

schedule and were analyzed using computer software Statistical Package for Social Sciences

(SPSS). Descriptive statistics were used for data analysis. The result showed that majority of

the respondents was aware of most of the improved water management practices. However,

there was a large proportion of the respondents who did not apply the water management

practices like cleaning and maintenance of improved watercourses, laser land leveling, and

cleaning and maintenance of farm ditches for the efficient use of irrigation water. The major

factors that had impeded the application of improved water management practices were

lack of technical knowledge, costly technology and non-cooperation of extension staff.

Keywords: Water management practices, Factor hindering application of water

management practices, Awareness and application of water management practices

*Institute of Agri. Extension and Rural Development, University of Agriculture, Faisalabad –

Pakistan

**Univ. College of Agri. and Environmental Sci., Islamia Univ. of Bahawalpur, Bahawalpur–

Pakistan




INTRODUCTION

Water shortage is becoming an issue of immense importance allover the world. The

fundamental fear of food shortages encourages ever great use of water resources for

agriculture. The finite nature of irrigation water resources is one of the great challenge

faced by the world to feed the population and to achieve sustainability in economy &

environment. The International Water Management Institute (IWMI) has estimated that by

2025 1.8 billion people will live in countries, which will face irrigation water scarcity for their

agriculture sector (Seckler et al., 1999; IWMI, 2000). As a result, such countries will lack

sufficient water resources to produce and sustain their per capita food production from

irrigated agriculture, unless they would have highest irrigation efficiency to reasonably meet

water requirements for their agriculture. Pakistan is also not an exception, as far as shortage

f irrigation water is concerned.

Pakistan is blessed with various natural resources required for agriculture including

favorable climatic conditions, fertile land and irrigation water. Among these water, which is

the life blood of agriculture has become scarce resource mainly due to mismanagement

especially at farm level. In Pakistan, out of estimated water resources up to 142 MAF, only

42 MAF is available for agricultural purposes. Therefore, a huge amount of irrigation water

goes to waste in our deteriorated irrigation system causing water logging salinity problems

in our agricultural land (Ahmad et al., 2011).

Irrigation network of Pakistan comprises of barrages, headworks, main canals, distributaries,

minors and watercourses. The irrigation in Pakistan is generally done by flood method as a

common practice. This practice not only affects adversely crops but also cause water logging

and salinity besides making a huge loss to water resources especially when the fields are

not properly leveled. Land leveling, therefore, is extremely important practice which should

be adopted for uniform application of water at farm level. There is a great need in Pakistan

for precision land leveling to save water. The traditional method of land leveling practiced

by common farmers in the country lacks precision. Similarly considerable quantity of

precious water goes into waste during the transference of irrigation water in the irrigation

network including the watercourses. Twenty five to thirty percent of water is wasted only in

the watercourses due to poor management and maintenance by farmers. According t an

estimate, in the Punjab this loss is 10 MAF (Govt. of Punjab, 2010).




Considering the huge water loses, the government of Punjab-Pakistan launched an On-Farm

Water Management Project in 1976-77 to minimize the water losses beyond outlet

(Mogha). It was ever first project designed in Pakistan where the beneficiaries (farmers)

were fully involved and contributed almost 50% cost of the project. Through this

programme, use of precision land leveling technology was introduced in the Punjab during

1985. This technology has a great potential for becoming proved highly beneficial because it

minimizes the cost of operation, insures high degree of precision, helps in uniform

application of irrigation water, improves seed germination, enhanced fertilizer use

efficiency, and consequently increases crop yield (Hammad, 2000).

In 2004, the Government of Pakistan launched nationwide project captioned as “National

Program for Improvement of Watercourses (NPIW)” in Pakistan. It envisages the

improvement of 28,000 watercourses and 2000 irrigation schemes in the Punjab province

involving a total cost of Rs. 550.70 million. In the Punjab, so far 19,944 watercourses have

been improved under this program against the assigned target of 19,350. Over all

achievement comes to 103%, which is indicative of excellent efforts made by the (Govt. of

Punjab, 2010).

The National Rural Support Program (NRSP) and Punjab Rural Support Program (PRSP) are

also performing their role for the improvement of watercourses. The NRSP and PRSP are

basically focusing on poverty alleviation through micro financing. Under NPIW, 2,000

watercourses are to be improved through Community Organizations (COs) formed by the

NRSP and PRSP while 5,000 watercourses will be improved under district government

system (NRSP, 2012). How far the above mentioned programmes have been sucessesful, seems to be an

important area to be looked into. That is why the present study was designed to investigate

into the farmers’ awareness of improved water management practices and their application

by them besides looking into the hurdles that impede the application of improved water

management practices.

MATERIALS AND METHODS

The study was conducted in tehsil Burewala, district Vehari, which consists of thirty two

union councils. Five union councils were selected randomly and one village was selected at

random from each selected union council. From each selected village, 25 farmers were




taken randomly, thus the total sample size comprised 125 respondents. The data were

collected with the help of a pre-tested and validated interview schedule and were analyzed

using computer software Statistical Package for Social Sciences (SPSS). Descriptive statistics

such as simple frequency and percentage were used.

RESULTS AND DISCUSSION

Awareness of respondents about water management practices

The respondents were asked whether they were aware of improved water management

practices or not. The information obtained is given in Table I.

Table I: Distribution of the respondents according to their awareness about

improved water management practices

Water management practices Frequency %

Land leveling with tractor and dozer blade 103 82.4

Laser land leveling 35 28.0

Re-shaping of traditional fields into level furrow

111 88.8

Cleaning and maintenance of improved main water courses

63 50.4

Cleaning and maintenance of farm ditches 59 47.2

Use of siphon tubes in leveled furrows for irrigation

45 36.0

Hoeing and intercultural practices for increasing moisture holding capacity

81 64.8

Maintenance of optimum plant population for the maximum use of irrigation water

79 63.2

Irrigating the fields according to soil moisture contents

93 74.4

Scheduling the irrigation turn according to crop needs

113 90.4

Source: Field data

Table I revealed that a vast majority (90.4%) of the respondents was aware of scheduling the

irrigation turn according to crop needs. Wahaj and Asghar (2002) in their study also

emphasized about the value of irrigation scheduling for different crops, the awareness

about which was already very high among the respondents. Similarly 88.8% respondents

were also aware of re-shaping of traditional fields into level furrow, 82.4% of the

respondents were aware of land leveling with tractor and dozer blade and about three-

fourths (74.4%) of the respondents were aware of irrigating the fields according to soil




moisture contents. These findings are quite encouraging with respect to water

management. While about 47% respondents were aware of cleaning and maintenance of

farm ditches, about 41% respondents were aware of laser land leveling and only about 26%

respondents were aware of use of siphon tubes in leveled furrows. It clearly indicates that

with regard to these practices majority of the respondents was quite unaware.

Extent of application of water management practices

The respondents were asked about the extent of application of water management

practices. The information in this regard are presented in Table II.

Table II: Distribution of the respondents according to extent of application of different

water management practices

Water management practices

Extent of application

Use regularly Use occasionally

No. % No. %

Land leveling with tractor and dozer blade

4 3.2 91 72.8

Laser land leveling 16 12.8 39 31.2

Re-shaping of traditional fields into level furrow

6 4.8 67 53.6

Cleaning and maintenance of improved watercourses

18 14.4 36 28.8

Cleaning and maintenance of farm ditches

10 8.0 46 36.8

Use of siphon tubes in leveled furrows for irrigation

6 4.8 39 31.2

Hoeing and intercultural practices for increasing moisture holding capacity

14 11.2 60 48.0

Maintenance of optimum plant population for the maximum use of irrigation water

44 35.2 30 24.0

Irrigation of fields according to soil moisture contents

34 27.2 59 47.2

Scheduling the irrigation turn according to crop needs

18 14.4 58 46.4

Source: Field data

Table II shows that a large proportion of the respondents used occasionally the water

management practices like land leveling with tractor and dozer blade (72.8%), followed by

re-shaping of traditional fields into level furrow (53.6%), and hoeing and intercultural




practices for increasing moisture holding capacity (48.0%). While only 35.2% of the

respondents used regularly the maintenance of optimum plant population for the maximum

use of irrigation water, 27.2% used irrigation of fields according to soil moisture contents,

and equal percentage (14.4%) used cleaning and maintenance of improved watercourses

and scheduling the irrigation turn according to crop needs. Analysis of the data clearly

indicates that large proportion of the respondents did not use the water management

practices like laser land leveling (56%), and cleaning and maintenance of farm ditches

(55.2%).

FACTORS IMPEDING THE APPLICATION OF WATER MANAGEMENT PRACTICES

The respondents were asked about the factors that impede in the application of improved

water management practices. The data in this regard are presented in Table III.

Table III: Distribution of the respondents according to the factors that impede the impede of improved water management practices

Factor Frequency %

Lack of awareness 69 52.2

Lack of interest 52 41.6

Lack of time 80 64.0

Lack of credit facilities 52 41.6

Lack of subsidy facility 49 39.2

Lack of technical knowledge 97 77.6

Small land holding 74 59.2

Tenancy status 38 30.4

Non-availability of implement 56 44.8

Lack of technical labour 39 31.2

Poor financial position 52 41.6

Costly technology 95 76.0

Non-cooperation of extension field staff 85 68.0

Source: Field data

Table III shows that major factors which had impeded the application of improved water

management practices were lack of technical knowledge, costly technology, non-

cooperation of extension field staff, lack of time, lack of interest, and small land holding.

Non-availability of implements, poor financial condition and lack of technical labour were

the other factors which had impede the adoption of water management practices.

CONCLUSIONS

The results showed that a large proportion of the respondents had used occasionally the

water management practices like land leveling with tractor and dozer blade, re-shaping of




traditional fields into level furrow, and hoeing and intercultural practices for increasing

moisture holding capacity. While the practices which were used regularly included

maintenance of optimum plant population for the maximum use of irrigation water,

irrigation of fields according to soil moisture contents, cleaning and maintenance of

improved watercourses, and scheduling the irrigation turn according to crop needs.

However the practices which were not at all applied by a large proportion of the

respondents included cleaning and maintenance of improved watercourses, laser land

leveling, and cleaning and maintenance of farm ditches for the maximum use of irrigation

water. The major factors that had impeded the adoption of recommended water

management practices were lack of technical knowledge, costly technology and non-

cooperation of extension staff.

RECOMMENDATONS

In the light of the discussion and the conclusions drawn, following recommendations are

made to improve the adoption behavior of the farmers:

Awareness among farmers should be created using all possible means such as mass

media regarding water management practices like laser land leveling, use of siphon

tubes, cleaning and maintenance of main water courses as well as from diches.

Farmers should be motivated and encouraged for applictin of imprved water

management practices through demonstrations or arranging field visits to those

farmers where such practices are already in use.

Extension staff should focus on water management practices which are either not

used by the respondents or they used occasionally.

The agencies dealing with farm machinery/implements should facilitate farmers

through provision of required machinery/implements on subsidized rates.

REFERENCES

1. Ahmad, H., J.I. Bokhari, and Siddiqui Q.T.M. (2011); Flashflood risk assessment in

Pakistan. Pakistan Engineering Congress, 71st Annual Session Proceedings, paper No.

707. pp: 696-708.

2. Hammad, R. (2000); The impact of watercourse improvement on farm production in

tehsil Chak Jumra. M.Sc. Thesis, Dept. of Rural Sociology, Univ. of Agri., Faisalabad,

Pakistan.




3. IWMI. (2000); Projected Water Scarcity in 2025. Available at:

http://www.waternunc.com/gb/pws2025.htm

4. NRSP. 2012. Monthly Programme Update. Available at:

http://nrsp.org.pk/Documents

/Programme%20Update%20as%20of%20August%202012.pdf

5. Seckler, D., D. Molden, and R. Barker. (1999); Water scarcity in the twenty-first

century. International Water Management Institute (IWMI), Colombo, Sri Lanka.

Available at: http://pdf.usaid.gov/pdf_docs/PNACH595.pdf

6. Wahaj, R. and M.N. Asghar. (2002); Farmers’ management responses to the gap

between supply and demand of canal water in large scale irrigation system. Irrigation

Advisory Services and Participatory Extension in Irrigation Management, Workshop

organized by FAO-ICID 24th July, 2002, Montreal.

7. Daily Dawn. (2012); Ensuring better crop per water drop. 3 September, 2012.

Available at: http://dawn.com/2012/09/03/ensuring-better-crop-per-water-drop/

http://nrsp.org.pk/Documents




APPLICATION OF NONWOVENS FOR WATER FILTRATION

Sakpal P.P.*

Landage S.M.*

Prof. (Dr.) Wasif A.I.*

Abstract: Filter fabric during the present has seen a substancial demand across the world

due to increase in water pollution and technical awareness continual research activity

enables manufacturer for more and more innovative solutions, to create cloths with special

weave, to manufacture customized products, in order to satisfy complete demand of

outsourcing market wide range of filter fabrics – available in different fibers satisfy the

requirements of different industries. According to the sources the demand is going to break

the records in coming years. Focusing on filter fabric as a main; its fabric manufacturing

technique, selection criteria, filtration efficiency, filter performance and its various

applications in brief.

Keywords: Effluent, Non-woven, water filter.

*D. K. T. E. Society’s, Textile & Engineering Institute, Ichalkaranji, Maharashtra, India




1. INTRODUCTION:

Water filtration is the process of removing undesirable chemicals, biological contaminants,

suspended solids and gases from contaminated water. The goal is to produce safe and clean

water for a specific purpose. Most of the water is filtered for human drinking purpose, but

water filtration may also be carried out a variety of other purposes, including meeting the

requirements of medical, pharmacological, chemical and industrial applications. In general,

the methods used include physical processes such as filtration, sedimentation, and

distillation, biological processes such as slow sand filters or biologically active carbon,

chemical processes such as flocculation, chlorination and the use of electromagnetic

radiations such as ultraviolet light. The filtration process of water may reduce the

concentration of particulate matter including suspendedparticles, parasites, bacteria, algae,

viruses, fungi and a range of dissolved and particulate material derived from the surfaces

that water may have made contact with after falling as rain [1].

Nonwoven fabrics described as a random fibrous web formed by either mechanical, wet or

air laid means and having interconnecting open area throughout the cross-section are able

to remove a percentage of particulate from liquid or gaseous fluids streams flowing through

it. Hence they find applications in filtration. Generally manufacturers’ of non woven fabrics

supply filtration media having mean flow ratings ranging from from 1 to 500 micron. Micron

ratings depend significantly on the test procedure by which the manufacturer rates the

media. Fabrics having micron ratings below 10-15 micron must be calendared, in order to

achieve the finer micron ratings. But certain wet laid glass fabrics are exception for this.

With the micron pore rating, dirt holding capacity, flow rates and differential pressure data

are also considered.

2. WHAT IS FILTRATION?

Filtration is defined as the mechanical or physical operation used for the separation of solids

from fluids (liquids or gases) by interposing a medium through which only the fluid can

pass.”

Oversize solids in the fluid are retained, but the separation is not complete as solids are

contaminated with some fluid and filtrate contains fine particles (depending on the pore

size and filter thickness). Filtration is also used for some biological processes, especially in

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

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

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

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

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

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

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

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

http://en.wikipedia.org/wiki/Suspension_(chemistry)



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

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

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

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

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

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

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




water treatment and sewage treatments wherein undesirable constituents are removed by

absorption into a biological film grown on or in the filter medium [1].

Filtration differs from sieving, where separation occurs at a single perforated layer. In

sieving, particles that are too big to pass through the holes of the sieve are retained. In

filtration, a multilayer lattice retains those particles that are unable to follow the tortuous

channels of the filter. Oversize particles may form a cake layer on top of the filter and may

also block the filter lattice, preventing the fluid phase from crossing the filter. Commercially,

the term filter is applied to membraneswhere the separation lattice is so thin that the

surface becomes the main zone of particle separation, even though these products might be

described as sieves.

3.CLASSIFICATION OF FILTRATION

a. Dry filtration

i. Gas filtration

ii. Air filtration

b. Wet filtration

The three main types of wet filtration:

i. Surface Filtration

ii. Depth Filtration

iii. Cake Formation

i. Surface filtration

All particles which are bigger than pores are captured on the flat filter surface. The typical

example are spunbond filters. Thus, for these filters, the pores distribution and permeability

are important properties. Surface filtration is common for liquid filtration. Surface filters are

described in subject “High funcional textiles“.

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

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

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




Direction of flow

Captured Particles Textilefilter expressed as a set of cylinders

placed in parallel

Figure 1: Surface filtration

ii. Depth Filtration:

Depth filters are able to capture particles that are too small to be sieved out as in flat

filtration. Particles, that are smaller than the distances between fibers, penetrate into the

fiber structure. Filtered particles are captured in terms of the filtration mechanisms. This

type of filtration process is important for the most of filter applications.

Direction of flow

Captured Particles Textile filter expressed as a set of

cylinders placed in parallel

Figure 2: Depth filtration

iii. Cake Filtration

A filtercake is formed by the substances that are retained on a filter. The filter cake grows in

the course of filtration, becomes "thicker" as particulate matter is being retained. With

increasing layer thickness, the flow resistance of the filter cake increases. After a certain

time of use, the filter cake has to be removed from the filter by back flushing. If this is not

http://en.wikipedia.org/wiki/Filter_(chemistry)

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




accomplished, the filtration is disrupted because of increase the flow resistance due to the

filter cake.

Figure 3: Cake filtration

With the increase in time the thickness of the cake increases, as more solids are filtered.

This results in a corresponding increase of the pressure resistance across the cake.

If the cake is incompressible the pressure resistance increases proportionally to the cake

thickness.However, since most of the cakes are compressible the pressure across the cake

typically increases, even faster than the cake build-up [2].

Depending on the process of separation, filtration is classified as:

1. Particle filtration

Particle filtration is the separation of particles having size above 10 microns. These can be

filtered out easily without any usage of micro porous membrane.

2. Microfiltration

Contaminants from a fluid (liquid & gas) can be removed by using microfiltration by passing

liquid through a micro porous membrane. In a typical microfiltration membrane, pore size

ranges from 0.1 to 10 microns (µm). There is no need to apply pressure in microfiltration

process.

3. Ultra-filtration

An ultra-filtration filter has a pore size around 0.01 micron. A microfiltration filter has a pore

size around 0.1 micron, so when water undergoes microfiltration, many microorganisms are

removed, but viruses can pass through. Ultra-filtration would remove these larger particles,

and may remove some viruses as well. Neither microfiltration nor ultra-filtration can remove




dissolved substances unless they are first adsorbed (with activated carbon) or coagulated

(with alum or iron salt).

4. Nano filtration

A nano filtration filter has a pore size around 0.001 micron. Nano filtration removes most of

the organic molecules, nearly all viruses, most of the natural organic matter and a range of

salts. Nano filtration removes divalent ions, which make water hard. Hence, nano filtration

is often used to soften hard water.

5. Reverse Osmosis

Reverse osmosis filters have a pore size around 0.0001 micron. After water passes through a

reverse osmosis filter, it is essentially a pure water. In addition to removing all organic

molecules and viruses, reverse osmosis also removes most of the minerals that are present

in the water. Reverse osmosis removes monovalent ions, which means that it desalinates

the water.

Osmosis occurs when a semi-permeable membrane separates two salt solutions of different

concentrations. The water will migrate from the weaker solution to the stronger solution,

until the two solutions are of the same concentration, because the semi-permeable

membrane allows the water to pass through, but not the salt.

In reverse osmosis, the two solutions are still separated by a semi-permeable membrane,

but pressure is applied to reverse the natural flow of the water. This forces the water to

move from the more concentrated solution to the weaker. Thus, the contaminants end up

on one side of the semi-permeable membrane and the pure water is on the other side [3].

4. Mechanisms of filtration:

Filtration is carried out by following mechanisms




Figure 4: Filtration Mechanisms

i. Inertial Impaction

Inertia works on large, heavy particles suspended in the flow stream. These particles are

heavier than the fluid surrounding them. As the fluid changes direction to enter the fiber

space, the particle continues in a straight line and collides with the media fibers where it is

trapped and held.

ii. Interception

Direct interception works on particles in the midrange size that are not quite large enough

to have inertia and not small enough to diffuse within the flow stream. These mid-sized

particles follow the flow stream as it bends through the fiber spaces. Interception occurs

when particles small enough to follow the airstream around the fiber but are intercepted by

the fiber due to the dimension of the particle radii being larger than the distance between

the fiber and airstream path the particle is following. The particle is held to the fiber by a

molecular surface attraction known as Van der Waals' Forces.

iii. Diffusion

Diffusion, also referred to as Super Interception, occurs on sub-micron particles which have

sufficiently low mass so that air molecules, which are continually in motion and bombarding

the particles, cause the particle to travel in an erratic path. This motion increases the chance

of the particle coming in contact with the fiber. The smaller the particle, the stronger the

effect. Small particles are not held in place by the viscous fluid and diffuse within the flow




stream. As the particles traverse the flow stream, they collide with the fiber and are

collected.

iv. Electrostatic attraction

Electrostatic filtration is an extremely effective method for removing dust, smoke, and other

small particles from air over a particle size range from about 10 to 0.01 microns. The

principle involved is that of passing the air through an ionizer screen where electrons

colliding with air molecules generate positive ions which adhere to dust and other small

particles present, giving them a positive charge. The charged dust particles then enter a

region filled with closely spaced parallel metal plates alternatively charged with positive and

negative voltages of the order of 6000 volts DC. Positive plates repel the charged particles

which are attracted by and retained on the negative plates by electrostatic forces, further

supplemented by intermolecular forces, causing the dust to agglomerate [4, 5].

5. Liquid Filtration

Liquid filtration is the separation of solid matter and fluids.

Factors influencing filtration process are:

5.1. Turbidity of fluid dispersion

particle concentration

particle size, surface characteristics, degree of dispersion of the solid matter

temperature

viscosity and density of fluid and solid matter

5.2. Pressure difference on the two sides of the filter lamina

dependent on the flow velocity and the permeability of the filter or the filter cake

influence the structure up to the filter cake[7].

Water FiltrationSystems

The general treatment of drinking water takes place in several steps to remove dissolved

and suspended solids. The treatment processes may include processes such as flocculation,

sedimentation, and media filtration to remove colloidal and suspended solids; ion exchange,

carbon adsorption, and membrane processes to remove dissolved solids; and a disinfection

step often achieved by chlorination, ozonation, and ultraviolet radiation.

Filtration systems can be divided into several categories depending on the type of the media

used for filtration and the size of the contaminants to be removed from water. Following are




recent advancements that relate to different types of filtration systems used for drinking

water treatment.

i. Media Filtration

Media Filtration is the most effective method for removal of suspended organic and

inorganic solids from water.Media filters remove suspended solids from water. Media filters

are often constructed using one or more layers of sand, gravel, anthracite, and other inert

media. As the water moves through filter media, suspended particles are trapped within the

filter. The top layer removes organic compounds, which contribute to taste and odor. Most

particles pass through surface layers but are trapped in the pore spaces and/or adhere to

particle surfaces within the media.

ii. Membrane Filtration

Membrane filters or “membranes” are microporous plastic films with specific pore size

ratings. Also known as screen, sieve or microporous filters, membranes retain particles or

microorganisms larger than their pore size, primarily by surface capture.

Membrane filtration is a general term used for a number of different separation processes.

The membrane acts as a filter that allows water to flow through it, removing suspended

solids and other substances. Membrane process can be pressure driven or dependent on

electrical potential gradients, concentration gradients, or other driving forces.

Pressure-driven membrane processes include microfiltration (MF) and ultra-filtration (UF),

nano-filtration (NF) and reverse osmosis (RO). These all are membrane filtration techniques.

In all cases, the size of the pores has to be carefully calculated to exclude undesirable

particles, and the size of the membrane has to be designed for optimal operating efficiency.

Membranes are also prone to clogging as the pores slowly fill with trapped particles, which

means that the system must provide accommodations for easy cleaning and maintenance so

that it can be kept in good working order.

iii. Filtration Cartridges

Filter cartridges are also used in medical devices such as dialysis systems. Dialysis is a

systems used for patients requiring hemodialysis or peritoneal dialysis which involves

pumping a large volume of dialysate through a dialyzing device. In these filters, the used

dialysate is generally discarded after a single pass through the filter.Cartridge filters have

pore sizes are larger than 1.0 mm.




iv. Hybrid Filtration Systems

Technologies which combine coarse filtration with membrane filtration processes offer ease

of operation and optimize the benefits of both types of filtration systems. The main

characteristic of this system is that underneath the primary space there is an accessory

space that has an essentially smaller cross-section to keep the filter surrounded by unclean

water [8].

6. FIBERS USED FOR FILTER FABRIC CONSTRUCTION

i. Polypropylene:

Polypropylene is mostly used for wet filtration. However, it is sensitive to oxidising agents

such as chlorine, nitric acid etc. This fiber is widely used in woven and nonwoven structure

in wet filtration due to its resistance to chemical degradation. This fiber is creep prone due

to low glass transition temperature. The production is ecological and waste-free. It is

resistance to insects, mildews and rot and having good washability and quick drying

properties [9].

The polypropylene non woven filter cloth has the lowest temperature resistance up to 80oC,

With its reasonable price and excellent hydrolysis resistant, anti-acid, anti-alkali, anti-

abrasion, etc.It's mainly applied to the low temperature and high humid conditions.

ii. Polytetrafluoroethylene:

It is virtually resistant to all chemicals having a maximum service temperature of 280°C.

PTFE membranes are an important building block for designing safe and effective solutions

to challenging medical filtration and separation problems. It is biocompatible, biostable, and

hydrophobic used for manufacturing of filter bags. The fabrics made of this fiber are hard

and expensive to produce. There could also be problems with stretching and/or shrinking

during filtration operation [10].

The main disadvantages of PTFE are

low melting point

low thermal conductivity

relatively low load carrying capacity

Because of the disadvantages polytetrafluoroethylene is used in light low speed

applications.




iii. Polyester:

Polyester is widely used fiber in filtration because of its strength, relatively high

temperature resistance. The disadvantages of polyester for filter application are low

resistance to alkalis, acids and steam. Polyester is mainly used for manufacturing filter bags of

fine quality.

These filter bags are used in various industries to trap the dust particles. PET is strong,

abrasion resistant, can work up to 150°C and has good resistance to common acids, solvents

and oxidizing agents.

However, polyester's only real weakness is a tendency to get hydrolyzed at elevated

temperatures.

iv. Acrylic

Acrylic non woven filter cloth can withstand temperatures up to 130oC. Having anti-acid,

anti-alkali properties.

v. PPS (Ryton)

PPS (Ryton) non woven Filter clothcan work upto temperature range of 190oC-210oC having

anti-acid, anti-alkali, hydrolysis resistant properties. It finds application in waste incinerator,

electric station boiler, industry boiler and so on.

vi. Glass Fiber

Glass fiber non woven needle felt have high temperature resistance upto 240oC- 260oC. It

has low price compared to other fibers that can withstand high tempertaures. It has low

shrinkage rate, high intensity, but it is crisp, which is applied in chemistry.

vii. Polyamide

Polyamide non woven needle felt with following characteristics:

High temperature resistance 260- 300oC. Good chemistry resistance, good air permeability,

high filtration efficiency, but the price is high. It is mostly applied in cement kiln.

viii. PTFE

PTFE coated non woven needle felt adopt PTFE fiber, formed by three- dimensional needled.

PTFE fiber is a linear macromolecular structure, which has strong stability. Wear résistance,

chemical stability, temperature resistance is particularly prominent, and it is widely used in

steel, power, waste incineration flue gas filtration and other harsh environment.




7. FABRIC CONSTRUCTION

Three basic types of construction are found in filter fabric i.e. woven fabrics, nonwoven and

knitted structures.

i. Woven Fabrics

By virtue of its greater number of pores, it permits higher filtration velocities, greater

laminar flow and therefore a lower pressure drop across the fabric. By using a combination

of continuous filament warp and staple-fiber weft yarns, preferably in a satin weave for a

smoother surface and greater flexibility, an ideal compromise is possible. In this case, the

filtration efficiency can be further enhanced by subjecting the weft side to a mechanical

raising treatment [11].

ii. Knitted Fabrics

Filter fabrics are used in the chemical industry such as petrol, oil and air filters in motor

vehicles, or as fluff-filters in washing machines that are produced on various Tricot and

Raschel machines. The type of machine, gauge, and yarns used depend on the density of the

fabric and the resistance required against filtering liquids. The advantages of warp knitted

filter fabrics is an optimal porosity of the artery walls and minimize bleeding their water

permeability ranging from 400-650 cm3 / cm2 min-1 [12].

iii. Nonwoven Fabrics

There is wide-spread application of nonwovens’ in various filtration applications including

geoengineering. The critical pore size corresponds to the diameter of nominally spherical

solid particle that will pass through this pore. This minimum pore is not identical throughout

the nonwoven. Hence, pore size variation is also considered. Higher the number of fiber

strata and consequently the greater the thickness of nonwoven, higher the probability of

encountering the pores of minimum size at least once throughout the on woven. The

homogeneity of the nonwoven is all the lower the variation between lowest and highest

pore diameters. Needled / felted nonwoven filters are generally thick and the spun bonded

fabrics are quite thin but provide better filtration.

There are five different types of nonwoven processes that are used to make filtration media.

The most widely used is Needlepunch followed by Wetlaid, Meltblown, Spunbond and

Carded/Other [2].




Needlepunch:

Needlepunch media is 3D (it has length, width & depth), it is very good for trapping

contaminants on both the surface and the interior. In liquid filtration, needlepunched

medias are used for filtering paints, cleaning intake water, sewage effluent, etc. Worldwide,

the needle punching industry enjoys one of greatest successes of any textile related process.

The needle punching industry around the world is a very exciting and diverse trade involving

either natural or synthetic fibers. Needlepunched nonwoven is manufactured by

mechanically orienting and interlocking the fibers of a spunbonded or carded web. This

mechanical interlocking is achieved with thousands of barbed felting needles repeatedly

passing into and out of web [13].

Wetlaid:

In some respect, wetlaid nonwovens are similar to paper. Swimming pool filters, coolant oil

filters, HEPA (High Efficiency Particulate Air) filters and coffee filters are examples of wetlaid

media uses.

Meltblown:

Meltblown technology allows uniform, micro porous webs to be formed from very fine

filaments. It is most often found in end uses that require the filtering of very fine particles.

Particulates such as smoke, asbestos, lead dust and other airborne contaminants can be

filtered through meltblown. It is used extensively in respirators; for face masks; automotive

cabin filters as well as a filter to catch the fine dust particles.

Spunbonded:

Spunbonded filter media made of polyester, polypropylene or nylon are used as both air

&liquid media to produce a filter fabric.

Carded & Other:

Use of resin bonded or thermal bonded carded media, airlaid pulp and a small sector of

spunlaced media which was used in filtering milk, cooking oils, coolant oil filters and in face

masks has largely been replaced by the newer, more cost effective nonwoven processes

above.

Special Characteristics:

Depending upon the form and construction of the nonwoven filter media, nonwoven fabrics

filtration characteristics and capabilities vary widely. Wide pore size distribution of




nonwoven fabrics can be both an asset and limit use to prefiltration or non-precision

filtration. However, special manufacturing or post-processing such as calendering can

sometimes overcome this. One interesting fact, that few in the filtration industry realize, is

that these specialty processed nonwovens do not have a much wider pore size distribution

than microporous membranes which are rated above 1 micron. In the 1 to 20 micron mean

flow pore range, the costs of nonwovens are much less than membranes and the dirt

holding capacity is generally far superior. However, their flow rate suffers due to lower void

volume than membranes. All of which reinforces the fact that filter design engineers make

their media selections based on performance trade-offs. Nonwoven fabrics have thicker

cross-sections and bulk compared to membranes, wire cloth and monofilament fabrics.

Thus, nonwovens fabrics are the material of choice when large quantities of particulate

loading, long-life or where general clarification of a liquid or gas stream is required.

Nonwoven fabrics are relatively inexpensive compared to most other media. Only filter aids

have lower cost per pound, but generally do not compete in the same applications as

nonwoven fabrics [2, 14].

8. REQUIRED PARAMETERS FOR WATER FILTER FABRIC:

i. Fabric Parameters

Filtration is the process of separation of one kind of substance from another kind. Thus

filtration can be defined as the separation of suspended solid particles from gas, liquid or

even solid. The medium used to distinguish between these two types of material is called

the filter and the separated material can be designated as filtrate. In general, filtration can

have two possible objectives:

i. To eliminate the contaminant particles so as to recover dispersing fluid.

ii. To recover solid particles eliminating the dispersing fluid.

From the phenomena point of view, the filtration process can be characterized by various

parameters.

Drop in Pressure ∆p: Drop in pressure through a filter is defined by the following

expression:

∆p = P1 – P2

Where P1 is the pressure before the filtration and P2 is the pressure after the filtration.




Filter Efficiency E: The filter efficiency is defined as a ratio between the quantity of particles

retained in the filter and the number of dispersed particles found in the suspension.

Filter Penetration P: This parameter related to the previous one through the following

expression:E + P = 1

And represents the number of particles that manage to pass through the filter, in the

relation to those existing in the suspension before getting through the filter.

Filter Capacity Q: Filter capacity is defined by the amount of particles deposited in it

[expressed in g or kg] and that accumulated before a drop in pressure begins. The capacity

of a filter must be specified for each particles size.

Cleaning Efficiency: It is the ratio of dust retained by fabric after cleaning to total dust

deposited expressed in percentage.

Degree of Filtration: This parameter defines the ratio between a certain size particles that

enters the filter and the particles of the same size that leave the filter. It is evident that a

textile fabric or a non woven fabric construction is a porous medium. Whatever may be the

nature of the textile construction, the solid matrix that almost totally encloses the pore size

is the textile fiber. The agglomeration of the fibers of different length and fineness, more or

less oriented to form the said solid matrix.

ii. Pore size distribution

Pore size and its distribution play an important role in water permeability characteristics.

When the depth of needle penetration is varied in the needle punching process, keeping the

fabric weight constant, it may result in different structural arrangement of fibers in

nonwoven fabrics, subsequently affecting the pore size and their distribution. During the

process of needle punching some the medium pores are converted into smaller pores and

larger pores converted into medium pores due to the entanglement action of the needle.

These types of pores mainly help in retaining the impurities in the fluid flowing, apart from

allowing the fluid to pass through fabric [15-17].

iii. Water permeability

The water permeabilitydecreases as the depth of penetration of needles increases during

the needle punching process. This may be due to variation in the pore characteristics of

nonwoven fabric. The water permeability decreased as the feed rate of fibers increases

during the needle punching process [17-19].




iv. Air permeability

Air permeability is defined as “the rate of flow through a material under a different

pressure.”

Porosity is defined as “the total volume of void space contained within the boundaries of a

material.”

Filter fabric density has significant influence on air permeability than either thickness or

fiber size. Fabric weight and thickness were both inversely proportional to air permeability

[15, 18,19].

v. Water -to-cloth ratio

The term filtration velocity water to cloth ratio can be used interchangeably. The formula

used for the filtration velocity is

A V= --- AC Where,

V= Filtration velocity

Q= Volumetric water flow rate

AC= Area of cloth filter

The water to cloth ratio is the ratio of water filtered in cubic feet per minute to the area of

filtering media in sq. feet. Filter fabric have lowest water to cloth ratio for getting the

maximum filtration efficiency. The ratio of filtering time to cleaning time is the measure of

percent of time the filter are performing [20].

9. COMPARISON OF WOVEN AND NONWOVEN FILTER FABRIC

Woven filter fabric Nonwoven filter Fabric

Expensive in manufacturing Low-cost in manufacturing

High strength fabric Low strength fabric

Two dimensional structure Three dimensional structure

Low permeability High permeability

Chance of yarn slippage No chance of yarn slippage

Only surface filtration occurs In-depth and surface filtration occurs due to its construction and thickness

Separation predominantly by sieve mechanism

Separation by impact, interception, diffusion, electrostatic charge mechanism




Only those particles are retained which are large than the interstices between threads

Pores may be greater than the particles to be retained and yet produce very high efficiency of separation

10. ADVANTAGES:

There are many advantages of nonwoven fabrics, including their versatility, low cost and

diverse functionality. The price-performance ratio is outstanding. Nonwoven fabrics are

made from standard and many specialty inorganic and organic fibers including common

wood pulp, cotton or rayon. Surprisingly, the growing use of soft, highly flexible, fine

diameter and non-kinking stainless steel, nickel and titanium metal fibers now permits the

use of needlefelted, air and wet-laid nonwoven fabrics which have extraordinary

temperature, chemical and wide pH properties. The choices are almost endless. Resin

bonded glass fiber liquid filter cartridges alsoprovide many excellent properties. Another

advantage of nonwovens is the wide number of diverse processes fibers can be

incorporated including needlefelt, air and wet laid, resin bonded et.al. In addition to media

from discrete fibers, it is possible to simultaneously melt-spin a polymer fiber while forming

a web construction without an intermediate fiber-forming step. Onestep processes typically

include melt blown, spunbond and certain high-loft webs as discussed earlier. The direct

web manufacturing method offers a cost advantage and very popular. These direct web

processes produce fine and sometimes continuous filaments and in case of spun bond, a

strong and non-shedding web which cannot be achieved by any other means for a

comparable cost.

11. DISADVANTAGES:

Nonwoven fabrics like most filtration media, have disadvantages compared to other media

choices, such as polymeric membranes, woven fabrics, metal media etc. No single media can

or will ever satisfy every filtration requirement. In the case of nonwoven fabrics, the

disadvantages are not so much the shortcomings of nonwovens, but the advantages other

media. For example, membranes provide narrow pore size distribution, particularly below 1

micron mean flow pore. Monofilament fabrics and wire cloth offer strength and straight

through holes for use in sifting and excellent sieving capabilities. All three of these are

surface filters, a feature not easily achieved for nonwoven fabrics, because of the nature of




the manufacturing processes and resultant constructions; at least, not yet. Many filtration

and separation applications require stiffness, minimal flex, and rigidity or even low stretch

as is the case of dewatering belts, which by their nature are less favorable to the use of

nonwovens. All, which proves, that even with the tremendous growth of nonwoven fabrics

in filtration, there are many unmet market opportunities for nonwoven fabric

manufacturers to further expand their business.

12. MARKET:

Filtration market for nonwoven fabrics is broad. The largest single market for nonwovens, in

both pounds and dollars, is baghouse filtration with needlefelted fabrics being the media of

choice. Needlefelted fabrics also serve as a base substrate for a microporous membrane or

porous coating in this application. Similar needlefelted fabric constructions are found in

liquid filter bags in paint, chemical and general industrial applications. Meltblowns are

widely used in liquid cartridges as prefilters or as final filters in many high-performance

applications from pharmaceutical to the semiconductor industries. Membrane cartridge

suppliers were the first to exploit the use of melt blown fabrics in the 1970.s and early

1980.s and the market continues to expand. Spunbonded fabrics are perhaps the most

versatile, with filtration applications includingcoolant, cartridge pleat and membrane

support. These fabrics supply strength, reasonable dirt holding capacity and in certain cases

stiffness and lateral flux. Overall bonded fabrics consist of two or more dissimilar or

contracting fibers which bond forming a bicomponent fabric and an especially stable web

and minimal downstream fiber release; an important benefit when foreign contaminate in

the filtrate is unacceptable. Many forms of nonwoven of both glass fabric and batting are

used in air and liquid filtration including cartridges. Binder materials are often used to

maintain fabric structure integrity and prevent fibers release downstream [21].

Filter clothes are used in almost all sectors of industry such as,

agricultural area

Chemical, dyestuff, textile, power fertilizer industry

Pharmaceutical and cosmetic industry

Mineral oil refineries

Sewage disposal and effluent treatment plants

Automotive industry




Sugar, wine industry

Dairy, starch, paper, cellulose industry

Coating and paint industry

Soap concentrating industry

CONCLUSION:

Seeing the polluted world and adulterations practices more and more in the coming days,

demand for more or filter fabrics would generate and thus more technological advancement

will happen in this field and thus will lead to higher filtration efficiency.For coming decades,

filter fabric filtration will play a very important role in our day-to-day life; there is not a

single type of fabric used in all the applications. The usage of the filter fabrics varies

according to their end use.

REFERENCES:

1. Aadekunie A. A., Adejuyigbe S. B., Fabrication of Plastic Water and Testing with

Slow Sand Filtration Method, The Pacific Journal of Science and Technology, Vol.

13, No. 5, 2012, P121-132.

2. Anon, Submicron Filtration Media, International Nonwoven Journal, 2005, P 29-39.

3. Ultrafiltration, Nanofiltration And Reverse Osmosis,www.safewater.org.com

4. Horrocks A. R., Anand S. C., Hand Book of Technical Textiles, Woodhead Publishing

Limited, Cambridge, England, Chapter 13, P 316-357.

5. Adanur S., Wellington Sears Handbook of Industrial Textiles, Techomic Publishing

Company, Chapter 8, 1845, P 275-294.

6. Houghton J., Anand S. C., Purd A. T., Characterisation of Fabrics Used for Wet

Filtration, Textile Asia,Vol. 28, No. 7, 1997, P 59-66.

7. Chaudhari S., Sankhe M., Filter Fabrics: An Overview, SYNTHETIC FIBRES, July/Sept.,

2003, P 9-13.

8. Tansel B., New Technology for water and Wastewater Treatment: A Survey of

Recent Patent, Recent Patents on Chemical Engineering, Vol.1, No.1, 2008, P 17-26.

9. Agrawal B. J., Geotextiles: It’s Application to Civil Engineering- Overview, National

Conference on Recent Trends in Engineering and Technology, 13-14 May, 2011, P

1-5.

http://www.safewater.org.com/




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STATIONS, June 2006.

11. Ogulata R. T., The Air Permeability of Woven Fabric, Journal of Textile and Apparel,

Technology and Management, Vol. 5, Issue 2, Summer 2006, P 1-10.

12. Paul P., Gon D., Warp Knitted Structures for Technical Use, Journal of The Textile

Association, Vol. 72, No.1, 2011, P 9-22.

13. Debnath S., Madhusoothanan M., Thermal Resistance and Air permeability of Jute-

polypropylene Blended Needle Punched Nonwoven, IJFTR, Vol. 36,June 2011, P 122-

131.

14. Sharma I. C., Tyagi G. K., Study of Physical, Mechanical and Filtration Characteristics

of Polypropylene Filter Fabrics, Textile Trends, Vol. XXVIII, No. 10, Jan. 1986, P 53-

61.

15. Chaudhary A. K., Kumar N., Ranjan R., Charactrisation of Pore Size and Air

Permeability of Nonwoven Filter Media, Journal of Textile Association, May-June

2009, P 19-26.

16. Rawal A., Structural Analysis of Pore Size Distribution of Nonwovens, The Journal of

The Textile Institute, Vol. 101, April 2010, P 350-359.

17. Patanaik A., Anandjiwala R., Some Studies on Water Permeability of Nonwoven

Fabrics, Textile Research Journal, Vol. 79, No. 2, 2009, P 147-152.

18. Patanaik A., Rajesh D., Andjiwala N., Water Permeability in Needle Punched

Nonwoven using Finite elements Analysis, South African Conference on

Computational and Applied Mechanics, March, 2008, P 1-8.

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of Nonwoven Fabrics, Indian Journal of Fiber and Textile Research, Vol. 2, June

2004, P 122-128.

20. Patil U. J., Jawale S. N., Kolte P. P., Fabrics For Drain Filtration – A Review, Textile

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Indian Journal of Fibre and Textile Research, Vol. 32,June 2007, P 214-220.




EXPLORING FACTORS AFFECTING THE ADOPTION OF IPTV: A LITERATURE

REVIEW

Samiran Sur*

Dr. (Mrs.) Mrinalini Pandey**

Abstract: The evolution of Internet Protocol Television (IPTV) is quickening worldwide and

provides substantial revenue opportunities depending upon user acceptance. Therefore, user

acceptance of IPTV becomes an area of interest for IPTV service providers. This study

reviewed different prior studies to investigate the driving forces of users’ adoption of IPTV.

Analyzing IPTV as a hedonic IT system, this paper emphasizes the importance of users'

perception of IPTV-specific factors through technology acceptance model (TAM).Technology

Acceptance Model is widely used to access users’ usage in various information system fields.

Learning the vital role of TAM can guide research workers to design different users’ interface

for different online consumers and accordingly achieve high user use in various application

areas. The application areas of TAM are elaborated including individual and organization

adoption, electronic service, mobile data service, self-service technology, electronic learning,

World Wide Web, intranet, electronic commerce, online shopping and so on, but limited

number of research was done to explain the acceptance factors of IPTV through TAM. We

discussed the related studies to understand important factors for using and accepting IPTV

indifferent corner of world. Further this study will help to implement IPTV successfully in

India.

Keywords: Internet Protocol Television (IPTV), Interactivity, Technology Acceptance Model,

Addressable advertising, Interactivity.

*Assistant Professor and Research scholar, Haldia Institute of Technology, West Bengal,

India.

**Assistant Professor, Indian School of Mines (ISM), Dhanbad, Jharkhand, India.




INTRODUCTION:

IP (Internet Protocol) and TV (Television) both are the two elements of Internet Protocol

Television (IPTV).IP allows transferring information (data) to a point which is addressed

earlier. Except the addressed point, no one can get this information. On the other hand, TV

is a system where images, videos and sounds are transmitted via terrestrial, cable or

satellite. IPTV is the addition of these two elements and the system is able to deliver video

and sounds together through Internet. So, IPTV system having features of both, Internet and

TV. IPTV is a real time distribution service for multimedia contents (either broadcast or on-

demand) over an IP network. IP infrastructure is based on personal choices, depending on

people’s needs and interests (Jain, 2005). Therefore, IPTV has two-way interactive

communications between operators and users, for example, streaming control functions

such as pause, forward, rewind, and so on, which traditional cable television services lack.

Triple play is a service operator’s package including voice, video, and data.

As Technology Acceptance Model (TAM) has introduced for Information system, we can

apply TAM (Davis, 1989) theory for IPTV also. TAM is a leading theory of technology

acceptance in IS research. Lots of empirical study has indicated that TAM is a parsimonious

and highly fitted model of technology acceptance behaviors in a large variety of

IS(Information System).The original TAM model proposed by (Davis, 1989) don’t adapt fully

to the area of IPTV, because TV broadcast provide fun and usefulness at the same time.

Subscribers of IPTV will expect to get information, amusement, and enjoyment at anywhere,

anytime and in any devices. These intentions are different from Information system ones

that is increasing performance (Shin, 2008).

RESEARCH METHODOLOGY:

For this research, academic and professional literature of leading telecom publications and

organizations were studies to identify issues of importance relating to the subject. The

research media will mainly come through Internet-based resources and IT Trade periodicals.

As IPTV is relatively new concept, there is limited availability of IPTV literature in libraries

outside of periodicals. Systemic and relative analysis and generalization of scientific

literature were applied while theoretical studies of IPTV, TAM and interactive marketing

were carried out.




IPTV:

Now a day’s two main models of deployment of television are available: 1) The traditional

broadcast model like cable TV and satellite TV, and 2) A new model, where the TV program

distribution developed to a mixture of “linear” and “nonlinear” / “on demand” system in the

IP networks with crucial element of interactivity and with new business models, where the

television service provider have direct access to the end users (Tadayoni, 2006).

There are several IPTV service definitions exists. Some of these are given below.

1. “IPTV can be tentatively defined as a service that delivers media such as video via a

network in real-time, or is used to retransmit stored media.”(Lee, 2009).

2. “Digital video content, including television, which is delivered via the Internet Protocol

(IP).” (Held, 2007).

3. “Delivery of digital television and other audio and video service over broadband data

networks using the same basic protocols that support the internet.” (Cooper et al.

,2006)

IPTV HISTORY:

Video distribution for PCs using the internet, started approximately in 1998. The name of

this service was internet streaming. Internet streaming was an advanced service as it

allowed for real-time video frames (Yamamoto, 2009).

The IPTV concept came-out in 1995 for the first time. In 1998, the AudioNet company

initiated the first live webcasts with TV programs. In 2001, Kingston Communications was

one of the first companies to introduce IPTV over ADSL and in 2003 Total Access Networks

Inc. releases its IPTV service consisting 100 free access channels. In 2006, AT&T launched in

US an IPTV service, named U-Verse, with more than 300 channels in 11 different cities. In

2009, AT&T announced the introduction of more than 100 HD TV channels(Rodrigues,

2010). Later it was introduced in Japan, Korea, China, India and in many more countries.

A recent study (Whitney, 2006) shows that there is a relationship between Television

programming with a large number of household product positioning and the desire to

remodel one’s house. Mobile TV has the potential to modify the recent market for cellular

services. Two future paths and scenarios are suggested; one where mobile TV is transmitted

primarily over a dedicated broadcast network similar to conventional TV today. The other is

a solution that uses the existing cellular networks that with some upgrades could support a




“broadcast-like” service where broadcasters and carriers can collaborate on technical hybrid

solutions with broadcast streams being synchronized with mobile Internet usage (Bria,

2007).

Moote(2006) addressed that, basic difference between Internet TV and IPTV is that Internet

TV allows access to content everywhere. Whereas IPTV is distributed within a closed

environment, such as a city or regional area like a sub-division, basically a private network,

which allow for restricted access of content in a close network. IPTV systems are changing

the style television is broadcasted and used, offering large advantages to TV broadcasters

and users. It is not only the little distribution and transportation costs, but also the

possibility to offer distinguished interactive services (Rodrigues, 2010). Karantanis (2009)

considered six domains for IPTV value chain, namely, Consumer Domain, Network Provider

Domain, Platform Provider Domain, IPTV service Provider Domain, Content Provider

Domain. Four different business models also proposed, namely, Triple play offerings

(Traditional Triple Play, Hybrid Triple Play); IPTV bundled with VOD, VOD-only business

model, Combination of IPTV-Internet TV business model.

Bouwman (2008) described two types of drivers, Technological drivers (an increase in

effective distribution capacity, an increase in the ability to process user feedback, an

increase in the storage and processing power controlled by viewers, and the separation of

applications from transport) and Market drivers / Commercial drivers. Market drivers may

be type of market demand, Convergence of Information and Telecommunication and TV

industries, and competition. Different types of domain are incorporated within the IPTV

business model such as service Domain, technical domain, organizational domain and

financial domain etc.

Future effect of IPTV on the industry can be categorized into three areas:

Content - Availability of more content with easier access will be the main objective,

Convergence - IP network will permit one application programs to be run over multiple

end‐user devices, in a single service network. Interactivity– The both‐way type of the IP

network will enable interaction among users, content providers, broadcasters and

advertisers (BSF Broadband, 2006).

IPTV service providers need to have access to pleasing content to compete with cable and

satellite pay TV providers (Thomson, 2006). By the advent of IPTV, users who used to be




‘passive viewer’ of the program of traditional television now became ‘active selectors and

users’ of varied contents of IPTV (Kim and Kim, 2009).

IPTV ADVERTISING RELATED RESEARCH:

IPTV advertising has some inherent features like addressability, interactivity and

measurability. TV advertising can be energized by IPTV, by using those features.

Addressability: Every internet subscriber has unique IP address. Using this notable attributes

targetable advertisement is possible. Set-top-box is that equipment which allows reaching

of specific content TV. A TV (generally known as smart TV) itself also can be an IP end-point.

Due to its inbuilt addressability feature many hundreds or even thousands of IPTV

advertisements can be broadcasted simultaneously during a single timeslot and can be

targeted to large peoples, small groups or even individuals, and for viewers’ responses to be

collated (Hart, 2008). Advertiser need to decide whether the advertising content is

appropriate for the recipient or not. It allows telecom operators to control where the ads go

to, aim the major or minor groups, or even sets within a family. The ads can be calibrated to

the people within a family who are most likely to be viewing at a certain time (Sur and

Pandey, 2011).

Interactivity: One of the distinguished features of IPTV is its interactivity. Interactive TV will

add services not yet delivered such as time shifting , Video-on-demand, network-based

Digital Video Recorder (DVRs) , where the content is potentially stocked on the network and

streamed to the device wherever it might be (Akerkar, 2010). Recently, a series of studies

into interactivity were conducted (Rafaeli, 1988; Steuer, 1992; Zack, 1993; Ha and James,

1998; Liu and Shrum, 2002; Stromer-Galley, 2004; Johnson, 2006). Previous research into

interactivity has focused only on cognitive area, and individual features such as trust and

emotion were not studied prominently (Shin, 2011), and the reason was predominant TAM

approach (Davis et al. 1989).

Measurability: Since IPTV technology permit feedback data to be received from a television

household, real-time viewer measurement is possible. The study on return response can

prove return on investment (ROI). IPTV advertising provides a new channel for user

knowledge opportunities.




TECHNOLOGY ACCEPTANCE MODEL (TAM):

IPTV has characteristics of both information and media technology, for this reason we can

say it’s a convergent of those two technologies. It broadcasts different contents to

subscribers via IP network. Moreover, users can use telecom services with same terminal. As

such, IPTV using intent should be described in part by the technology acceptance model,

TAM(Davis, 1989). TAM is a leading theory of technology acceptance in IS study. Large

numbers of empirical research have established that TAM is a robust model of technology

acceptance behaviors in a broad variety of IT. TAM hypothesizes the effects of external

factors on intention to use by perceived usefulness (Gefen, 2003; Talyor and Todd, 1995b;

Shin, 2008) and perceived ease of use (Venkatesh and Davis, 2000). TAM has been

demonstrated its robustness through a range of empirical research in IS study (Davis et al.

1989; Legris, 2003) and applied across a variety of IT areas.

Original TAM model proposed by Davis (Davis, 1989) don’t adapt the field of IPTV in full,

reason is that TV broadcasts provide playfulness and usefulness at the same time. That

means, subscribers of IPTV will expect to get entertainment information at anywhere,

anytime, and any devices. These purposes are dissimilar from increasing performance. To

suggest extended TAM model for Mobile IPTV, Shin (2008) added extra factors as flow

experience, perceived enjoyment, perceived loss, and social norm.

Figure 1. The Technology Acceptance Model (TAM) (Davis, 1989)

The original factor Perceived ease of use (PEU) was defined as “the degree to which a person

believes that using a particular system would be free of effort”. Perceived usefulness (PU) was

defined as “the degree to which a person believes that using a particular technology would

enhance his or her performance” based on the definition of TAM study (Davis, 1989). As per

previous studies, PEU and PU were directly or indirectly associated to Behavioral Intention (BI)




(Davis, 1989; Karahanna, 1999; Venkatesh and Morris, 2000; Moon and Kim, 2001). In the case

of mobile IPTV, efforts saved because of improved ease of use will enable an individual to use a

newly service conveniently and frequently and user’s sense of efficacy and personal control is

proportional to use of easier technology (Shin,2008).

Perceived enjoyment can be defined as the degree to which a user perceives a system to be

enjoyable in its own right after using it (Davis, 1989; Karahanna, 1999; Morris& Dillon, 1997;

Segars& Grover, 1993; Yi & Hwang, 2003). Previous TAM research exposed that enjoyment is

one of the most important factor of intention (Sun & Zhang, 2006a, 2006b; Yi & Hwang, 2003).

Moreover, key purpose of TV is pleasure and enjoyment. Many research demonstrated that

perceived enjoyment positively affected a user’s attitude (Shin, 2008).Particularly, in case of

interactive TV, TV features are enjoyment of using and ease of inducing interest (Kim& Moon

2001).They also proposed the `playfulness' concept as a person's intrinsic salient belief to

describe the individual's intrinsically motivated behaviors. Perceived enjoyment is one of the

salient factors of an IP TV service (Choi, 2010).

Some researchers have shown a negative relationship between price and perceived quality

(Dodds, 1991).Online customers were price sensitive. Generally, customers measure the quality

of aproduct or its value by monetary and nonmonetary paid. In the study Theory of Reasoned

Action (Fishbein and Ajzen,1975) introduced an important factor subjective norm, which was

defined as “person’s perception that most people who are important to him think he should or

should not perform the behavior in question”. Many studies after the TRA (Fishbein and Ajzen,

1975) have demonstrated that subjective norm had a straight relation with Behavioral

Intention. Since consumers have never experienced IPTV, this social influence also will affect

behavioral intention (Karahanna, 1999).Another study (Shin,2008)showed that prior

experiences of service, affect on service adoption procedure and prior services’ similarity of

new service also affect on service adoption.

TAM II was introduced in 2000 (Venkatesh and Davis, 2000; and Venkatesh, 2000), a new

edition of original TAM. Social influence (subjective norms) and Cognitive Instruments (job

relevance, image, quality, and result demonstrability)was introduced (Venkatesh and

Davis,2000) as external variables of PU, whereas anchor (computer self-efficacy,

perceptions of external control, computer anxiety, and computer playfulness) and




adjustments (perceived enjoyment and objective usability) was introduced as external

variables of Perceived ease of use(PEOU)(Venkatesh ,2000).

Figure 2. The Extended Technology Acceptance Model (TAM2) (Venkatesh and Davis, 2000)

Playfulness and personal innovativeness have important effects on cognitive absorption

(Agarwal and Karahanna ,2000). Study of Gardner (2004) analyses the individual acceptance

and usage of a website through extension of the TAM and they added two new constructs:

perceived entertainment value and perceived presentation attractiveness. Where perceived

usefulness, perceived entertainment value and website revisit has significant relation. This

study showed that in case of website usage perceived usefulness and perceived

entertainment value both are important factors.

Men’s decisions were strongly determined by their perceptions of usefulness; whereas, ease

of use and subjective norm were more important for women ( Venkatesh and Morris, 2000).

Usage of certain technology is mandatory for their employees in certain companies.

However, some individuals will not agree to adopt such rules. Venkatesh & Davis, (2000)

observed that voluntariness has an effect on the subjective norm on intention to use.

Hence, behavioral intentions vary within mandatory and voluntary usage(Gardner, 2004).

TAM RESEARCH ON IPTV ADOPTION:

Ha (2009) pointed out that attitude, subjective norm and perceived behavior control that

three factors influencing behavior intention. They also elaborated the TAM to the

interactive TV based shopping, T-commerce. The results demonstrated that perceived

enjoyment is the most influencing factor affecting attitude and behavioral intention towards

T-commerce. Hence, the TAM is suitable for examining acceptance of IPTV. It is assumed




that Perceived price level and perceived enjoyment is will to play the most significant role in

TAM acceptance (Weniger, 2010).

Davis (1989) defined Perceived ease of use as "the degree to which a person believes that

using a particular system would be free of effort" and Perceived usefulness as "the degree

to which a person believes that using a particular system would enhance his or her job

performance" in original TAM study. Whereas Ha (2009) defined, PU is as “the degree to

which a person believes that using IPTV would enhance a person’s performance without

regard to time and space”, and PEU as “degree to which a person believes that using IPTV

would be free of effort”. Similar to the original TAM, they also demonstrate a positive

relationship from PEOU and PU to attitude toward IPTV.

Another study (Shin, 2009) incorporates perceived enjoyment to the TAM model. In addition

to perceived usefulness and ease of use, perceived playfulness, content quality, system

quality, internet experience and perceived price level are also employed (Cheong and Park,

2005).

‘TV viewing habit’ factors and 'Internet use habit' factors has been generally used to

describe current media usage instead of new media adoption (HA, 2009). He also added

since IPTV is convergence of TV and the Internet, they assumed that IPTV acceptance

intentions would be also associated to habitual uses of TV and/or Internet. Thus, both ‘TV

viewing habit’ factors and ‘Internet use habit’ factors, considered as critical aspects as to

viewing IPTV or not. Their result showed that entertainment is stronger indicator than

information motivation is in perceived usefulness of IPTV. The results of another study

(Shin, 2011) evidently demonstrate that the trust and emotion of consumers should be

considered from the MIS perspective in order to build user intentions to use the product.

Similarly, other research ( Fogelgren-Pedersen, 2005) has shown that stability of connection

and geographical coverage are important factors of perceived relative advantage in wireless

broadband. The perceived enhanced utility of mobile services is a powerful variable

motivating use of t-commerce. Though these researches demonstrated important perceived

variables, they still did not find factors particular to convergence technologies (Shin,

2009).He also added IPTV is a simpler system to use, and it is guessed that IPTV, as a

variation of the Internet, presents little difficulty to consumers. In addition, because IPTV is

a variety of television that provides enjoyment, interest, and pleasure.




Perceived usefulness is defined as a type of extrinsic motivation and enjoyment asa type of

intrinsic motivation (Davis, 1992). Recently Heijden (2003) found that perceived enjoyment

as a hedonic purpose powerfully influenced Web usage for entertainment purposes.

Extrinsic motivational factors on the behavioral intention have more influence for the

experienced people than the inexperienced people and the influence of intrinsic

motivational factors on the behavioral intention are more powerful for the inexperienced

people than the experienced people (Choi, 2010). This study also identified four significant

intrinsic motivational factors – ease of use, enjoyment, usefulness, and trialability – in the IP

TV adoption behavior.

Some researchers advocated on Perceived content quality also (DeLone and McLean

,1992).The information quality is an important factor for building successful IS.

Perceived content quality along with other constructs was examined in evaluating Web-

based reference systems (Shin, 2009).They found perceived content quality to be one of the

important factors in the use of the reference systems. Recently, another study (Cheong and

Park, 2005) employed perceived content quality to the acceptance model of mobile

Internet. They showed content quality is a significant factor in the adoption of that

technology.

Again some researchers said on Perceived system quality. Many individuals become

reluctant to use IS when they experience delays in reply, frequent disconnection, limited

access, and poor security and this is why it is an important construct. Also information

quality, response time, and system accessibility as IS qualities and they said that these

variables are useful predictors of perceived ease of use and perceived usefulness (Aladwani

and Palvia,2002). Perceived system quality has positive causal relationships perceived

usefulness (Cheong and Park, 2005).

Normative pressure is another important predictor which was revealed in studies based on

the IS perspective (Hung, 2003). People often use technology in a social context in which

they notice others’ interaction and in which they must adapt to others’ activities (Shin,

2009). Farther headed perceived cost variable as a significant predictor in developing the

intention to use IPTV. In the construction of behavioral intention, subscribers compare the

benefit from the service to the cost of utilizing the service. If the price exceeds the gain, they

do not use the service. Though IP TV service has potential to become a crucial IT in the




future, only a few studies have been conducted related to adoption behavior for an IP TV

service. IP TV services can easily go wrong if its service providers do not realize what users

want from it (Choi, 2010). IP TV service has unique features of public utility and interactivity.

Unlike conventional information systems (IS) used in organizational environments, television

media do not target a particular group but tend to be shared by users in family

environments. Because of this feature, IP TV service is dissimilar from conventional IT, in

that its intention is not productivity.

MAJOR LIMITATIONS OF TAM STUDIES:

Self-reported usage is the most commonly reported limitation, most analysis trusted mainly

on self-reported use accepting that self-reported usage successfully reflects real usage (Lee,

2003). Though, self-reported usage is known to be subject to the usual method bias

(Agarwal and Karahanna, 2000), which distorts and magnify the causal relationship among

independent and dependent variables ( Podsakoff and Organ, 1986). The use of student

subjects is another limitation and can affect on generalizability of the findings. The major

problems of TAM studies are low explanations of variance (Lee, 2003).

IPTV service using a traditional TAM has some limitations in explaining IPTV subscribers’

behavior, because an IP TV service is used in a different context and for a different intention

than new technologies in a work environment (Choi,2010). Though there are various

moderating factors, users’ prior experience has been detected as an important factor in

their behavior (Gefen, karahanna & Straub, 2003a; Taylor & Todd, 1995; Thompson, Higgins

& Howell, 1994),the reason is experience has a strong consequence on determining attitude

(Venkatesh, 2000).When experience increased, users have more familiarity with and

knowledge about technology( Fishbein & Ajzen, 1975; Sun &Zhang, 2006b) and which can be

change to different adoption behaviors.

LIMITATIONS:

As IPTV is still in nascent stage, various region has different infrastructure so getting the

generalize behavior may not be possible. For this study, IPTV related data were gathered

from different websites. As this study constructed on secondary data so there is the obvious

chance that industry has undergone certain changes in the form of up gradation new

research. Certain features of IPTV related data might not have been included in this study

because all research data might not be available in web.




CONCLUSIONS:

Generally, IS system use in the work may become more routinized as experience grows, in

the event of an IP TV service, growing experience increases the function of perceived

enjoyment, because the service is primarily used to enjoy time instead of perform tasks

(Choi, 2010). Enjoyment creates a less cognitive load because the users are feeling pleasure

from the action and is willing to spend more effort on it(Sun & Zhang, 2006a, 2006b). TAM

has tested to be an important theoretical model in helping to interpret and explain usage

behavior in the IS implementation. In this article, we discussed the related research with

Technology Acceptance Model and IPTV. Learning the vital use of Technology Acceptance

Model can lead to research design on various users’ interface for different online consumers

and in different application areas. This study reviewed a number of studies (from 1975 to

2011) to understand the relation between IPTV adoption behavior and Technology

Acceptance Model. We discussed the related research to clarify the extension of Technology

Acceptance Model.

The future research may be extended using technology acceptance model to assess the IPTV

technology contexts including 4G mobile data service, e-learning applications and hotel and

hospital applications and so on.

IMPLICATIONS FOR BUSINESS MARKETING PRACTICE:

As IPTV is still in nascent stage, various region has different infrastructure so getting the

generalize behavior may not be possible. The future research may be extended using

technology acceptance model to assess the IPTV technology contexts including 4G mobile

data service, e-learning applications, hotel and hospital applications and so on. Depending

on targeted advertising, further the concept of behavioral targeting can be constructed,

based on customers’ behavioral attributes like interests, customers’ preferences, lifestyle,

etc.

Managerial implications on the topic can include the matching criteria of demographics’

choice and advertisement’s content. If the system can provide individualized ads to each

participant, the ad-consuming rate may increase. Therefore, an interactive advertising

platform that comprises this function can be counted a future work. Additionally when too

many players will present in the market what will be the sustainable growth factor or what

will be important customer retention factors.




The managerial implications of this research to the developing IPTV industry are several, as

follows:

1. Identification of advantageous combinations of services, pricing options which

improve the customer experience, and promote the customer’s tendency to buy

additive services and stay with the provider longer.

2. Assistance in developing effective marketing strategies which are more consumer-

centric and therefore increase consumer satisfaction.

3. Assisting providers in developing innovative, value-laden, consumer-centric business

models which maximize consumer satisfaction and ultimately, company financial

performance.

4. It will provide a brief idea to Indian IPTV service providers, about recent IPTV market

status and challenges of it.

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PARENTS’ CHILD PREFERENCE FOR EDUCATION IN IMENTI NORTH COUNTY,

KENYA

Catherine Gakii Murungi*

Abstract: This paper explores the parents’ child preference for education of pre-school age

going children in Miriga Mieru West Division of Imenti North County, Kenya. To establish this

parent’s demographic information on marital status, religion, age, education level and child

preference was collected. The findings are discussed in this paper.

*School of Education, Department of Early Childhood Studies, Kenyatta University, Nairobi -

Kenya.




BACK GROUND

Contemporary household is characterized by each parent’s utility function, which is shaped

by their own preferences (Vermeulan 2002). This means in this paper that, when finances

are constrained or are not enough the decision on whether the little available is spent on

educating children or not depends on a parents preference also whether to use the

resources in educating a male or a female child. Consequently, preferences have a large

impact on the well-being of children. Resources invested in a child are determined not only

by the level of resources available, but also by a parent’s preferences (Vermeulan 2002).

Preferences between parents need not be the same; therefore outcomes of mothers’ and

fathers’ actions can differ (Brown & Park 2002). While this can benefit the children, Children

from the Meru community may not have this benefit, gender of the parents was not

considered since almost exclusively young children especially in the pre-school years are

associated with mothers, fathers associate themselves with children when they are all

grown up, even though this is the case there were men parents who participated in this

study.

To exercise preferences, a parent must have the ability to do so (Rubalcava, Teruel &

Thomas 2004). The work by Haddad & Hoddinott in 1994, suggests that bargaining power

over household economic decisions, especially when held by women, is associated with

improved well-being for herself and her children than when the same resources are in the

hands of men (Haddad & Hoddinott 1994; Rubalcava, Teruel & Thomas 2004). This

necessitates the current study and more so since majority of the sample comprises women.

To further understand parental preferences in Imenti North County, an examination of

parents demographic data was necessary to understand their types of power structures, and

their believe system in relation to particularly educating children at pre-school level and in

consequently in the other levels of education . To figure this out there was need to for this

paper to find out and establish these parents marital status, religion, age, education level

and child preference

Recent research provides an important insight that while the existing research has focused

on understanding the role of parental background on skills and preferences that facilitate

individual success ( Flavio Cunha and Heckman 2007; Cunha et al.2006; Heckman 2006).

Also a study by Michal, Julie & Barbara (2011), noted that while the existing research has




focused on understanding the role of parental background and on skills and preferences

that facilitate individual success no work has focused on parental preferences and in

particular in education for children in relation to school enrolments. This paper focuses on

parental child’s preference for education.

METHODS

This study was a descriptive study employing a survey method. The study was conducted in

Imenti North County which was formerly called Meru central District. The District is

approximately 1,141 square kilometres in size with 54,777 households with pre-school age

children of 4-5 years. Imenti North District has a population of 243,220 pre-school age

children of 4-5 years. The study targeted parents of pre-school age going children. According

to the census report by Central Bureau of Statistics (CBS) of 1999, Miriga Mieru West

Division of Imenti North County has got five locations identified and documented. These are

Ntima with a population of 10,431 children of 4-5 years, Municipality with 27,349 children

of 4-5 years, Igoki with 8,555 children, Ntankira with 19,554 and Nthimbiri with 12,312. The

five locations of Miriga Mieru West Division of Imenti North District have a total population

of 78,201 pre-school children aged 4-5 years. From the target population of parents with

children of pre-school age a probability sample size of 390 parents was selected.The study

utilized the questionnaire for parents in data collection.

RESULTS AND DISCUSSIONS

Parents’ Marital Status

To establish the marital status of parents, they were asked to state whether they are single,

married, divorced, separated or widowed. Out of the 390 parents who participated in the

study in the five locations 288, (74%) of them were married, 44 (11%) were single, 32 (8%)

of them were separated, 20 of them were widowed and less than one percent of these

parents were divorced.

Parents’ Religion

To establish the religion of parents, they were asked to tick their religion. Whether Catholic,

Protestant, Muslim or specify any other religion. After this, it was evident that parents who

participated in the study belonged to a certain religion of which majority 282 (72%) were

Protestants, 85 parents (22%) were Catholics, Muslims and other religions accounted for

4%. Among these 15 parents were Muslims and 8 parents belonged to other religions.




Religion is important not only to parents but also to young children since it inculcates in

them moral values such as right and wrong, it also develops a firm foundation of faith to be

built upon as they get older. Religious practices can also determine child rearing practices.

Parents’ Age

To establish the age of parents, they were asked to indicate the category that best explained

their age. A large number of parents in the study 203 (52%) were between 25 – 34 years of

age while only 13parents (3%) were above the age of 55 years. Parents between the age

brackets 35 – 44 years were 94 (24%), those between ages 18-24 years were 58 (15%) and

ages 45 - 54 years were 22 (6%).

Parents’ Education Level

To establish parents’ levels of education, they were asked to state their highest level of

education completed and their responses are indicated in table 1

Table 1: Parent’s Level of Education by Location

Location

Parents Education Level Igoki Municipal

Ntankira Nthimbiri

Ntima Total

Primary Frequency Percentages (%)

15 (19.2)

12 (15.4)

24 (30.8)

25 (32.1)

26 (33.3)

102 (26.1)

Secondary Frequency Percentages (%)

22 (28.2)

17 (21.8)

13 (16.7)

19 (24.4)

18 (23.1)

89 (22.8)

Post sec/ College/ Professional training Frequency Percentages (%)

16 (20.5)

10 (12.8)

4 (5.1)

11 (14.1)

4 (5.1)

45 (11.5)

University Frequency Percentages (%)

3 (3.8)

1 (1.3)

1 (1.3)

1 (1.3)

0 (0.00)

6 (1.5)

No schooling Frequency Percentages (%)

22 (28.2)

38 (48.7)

36 (46.1)

22 (28.2)

30 (38.4)

148 (37.9)

Total Frequency Percentages (%)

78 (100)

78 (100)

78 (100)

78 (100)

78 (100)

390 (100)




Table 1 shows that 102 parents (26%) had a primary school education while only 6 parents

(2%) had a university education. The study also found that 148 parents (38%) did not have

an education at all. Among the 390 parents, 89 (23%) of them had a secondary education

and only 45 parents (12%) had gone to colleges and other professional training institutions.

Interestingly, Ntima and Ntankira locations had the least number of parents with post

secondary education. In the five divisions the number of parents with post-secondary

education decreased as indicated in table 1. It was necessary to establish the education

level of parents since it has been strongly associated with health of children and also the

importance attached to education. Research indicates that highly educated parents seek

medical advice (Gering et al., 2006).

PARENTS’ CHILD PREFERENCE FOR EDUCATION

Parents were asked if they did not have enough money, which of the children they would

prefer to educate between boys or girls. It came out that parents in Imenti North County,

Kenya prefer to educate both boys and girls. Some parents 186 (48%) preferred to educate

girls and 204 parents (52%) preferred to educate the boys. Some of the reasons given by

parents for making their choice to educate the girls and not boys were that girls have more

needs than boys, and are able to help themselves as well as others when educated. Parents

also reported that girls are more merciful to them than boys, that girls are more

development conscious and more responsible, they are less problematic and more

vulnerable, these parents argued that boys get inheritance from parents or grandparents

but girls can get married to a family with nothing and suffer more raising children and taking

care of the family, but if she gets a good education, she can be a pillar to support her family

comfortably. These parents also argued that boys can get many casual jobs to do than girls.

Parents who supported girl education gave examples of what girls have done in their villages

like constructing permanent houses for their parents, helping the needy children in the

community and cited the fact that girls can now become national leaders and take powerful

positions in government.

Parents who preferred educating boys than girls said that it is better to educate a boy

because a girl can become pregnant and drop out of school hence the enormous resources

put to her education ends up being wasted. The same parents argued that a boy needs

education to be responsible since they are expected to marry and take good care of their




families. The opinions of parents who preferred educating girls and those who preferred

educating boys strongly bring out the idea that both the boy-child and the girl-child need

education to have a better future, get employed or start a business to help themselves and

their families.

The views of these parents on child preference are consistent with those of participants in a

study by Ncabira (2005) who found that parents in Meru Central County viewed educating

boys to be more crucial given the ultimate roles as family heads and bread winners. They

also believed that boys are more intelligent than the girls and that girls are less success-

oriented than boys. Given the perceptions of parents in the two studies, it is not surprising

to find girls who have dropped out of school due to family inability to meet their financial

demands of schooling, or being used as a source of income for the household.

A study by David & Amy, (1974) on individual sessions with 150 preschool children aged two

through four: they were asked to choose which parent (in the next room) they wanted to

participate with them in each of seven play activities. The purpose was to investigate

hypotheses about parent preference in a theory of sex-role and parental identification. Boys

showed a strong father preference (p <.01). Girls showed no parent preference when age

groups were combined whereas a father preference was significant (p =.049) in two-year-

old girls, and a mother preference was significant (p =.024) in four-year-old girls, with three-

year-old girls showing no significant preference. Just like this finding where by children view

their fathers significantly, this paper recommends that fathers in Meru need to be more

significantly involved in their young children’s education and more importantly on making

positive decisions to send both male and female children for education at pre-school level

and also in other levels of education.

REFERENCES

1. Brown, P.H., & Park, A. (2002). Education and poverty in rural China. Economics of

EducationReview, 21, 523-41.

2. David B. Lynn and Amy De Palma Cross Journal of Marriage and Family Vol. 36, No. 3

(Aug., 1974), pp. 555-559: National Council on Family Relations Retrieved on 5th May

2012 from http://www.jstor.org/stable/350726

3. Vermeulan, F. (2002). Collective Household Models: Principles and Main Results.

Journal of Economic Surveys, 16(4), 533 – 564.

http://www.jstor.org/action/showPublisher?publisherCode=ncfr

http://www.jstor.org/stable/350726




4. Haddad, L., & Hoddinott, J. (1994). Women's income and boy-girl anthropometric

status in the Cote d'Ivoire. World Development, 22(4), 543-53.

5. Rubalcava, L., Teruel, G., & Thomas, D. (2004). Spending, Saving and Public Transfers

Paid to Women. California Center for Population Research. On-Line Working Paper

Series. Retrieved on May 5, 2012 from http://repositories.cdlib.org/.

6. Michal, B., Julie, C., Barbara, P., (2011), Effects of Parental Background on Other-

Regarding Preferences in Children, IZA DP No. 6026 retrieved on May 5th 2012 from

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http://repositories.cdlib.org/




INFLUENCE OF EMPOWERMENT ON POLITICAL PARTICIPATION OF DALIT

WOMEN

Dr. Kaushiki Singh*

Abstract: Empowerment of women means enabling or arming them to function

independently or authorization that is enduring to equip women with all attributes

Empowering women exclusively attempt for the removal of gender biases, cultural

restriction, provision of adequate facilities. The study deals with Empowerment of Dalit

women who are being included in the minority sections. The concept of empowerment is

based on setting of standards and trying to achieve the standards The constitution of India

recognizes equality right of women and allows special measure for women and children to

realize the guarantee of equality Despite different gender specific law women’s status in

society continues to be devalved hence the focus should be on women awareness so that

they can participate in political and legal framework of society .This paper deals with the

dalit womens and their political participation There is a need for change in society building

in dealing with women. The objective of this paper is to support and encourage in political

and legal framework. It is a small exploratory study designed to analyze and interpret the

Dalit women in Ambedkar & non-Ambedkar gram of Lucknow district. The sample size will be

500 dalit women from which 250 dalit women from Ambedkar gram are being selected. The

result is being discussed in the full length paper.

Keywords: Performance, ability, drastic change, exploratory, de centralization

*Assistant Professor, Department of Commerce, National P G College, Lucknow




INTRODUCTION

Empowerment of women means enabling or arming them to function independently or

authorization that is enduring to equip women with all attributes Empowering women

exclusively attempt for the removal of gender biases, cultural restriction, provision of

adequate facilities. The study deals with Empowerment of Dalit women who are being

included in the minority sections. The concept of empowerment is based on setting of

standards and trying to achieve the standards. It deals with the totality of having decision-

making power of our own. In the present scenario, the influence of Empowerment is very

important for the growth and development of Dalit women. It gives them a chance for

deciding and controlling things by themselves. The study reveals the BKT Block of Lucknow

district which includes 5 Block selected randomly.

There are important critical factor like Education, Health, Income generation and Political

Participation of Dalit women they were taken as a parameter and the impact of these

parameter where studied.

The impact of the patriarchal structure can be seen in rural and urban India, although

women’s empowerment in rural India is much less visible than in urban areas. This is of

particular concern, since much of India is rural despite the high rate of urbanization and

expansion of cities. Rural women, as opposed to women in urban settings, face inequality at

much higher rates, and in all spheres of life. Urban women and, in particular, urban

educated women enjoy relatively higher access to economic opportunities, health and

education, and experience less domestic violence. Women (both urban and rural) who have

some level of education have higher decisionmaking power in the household and the

community. Furthermore, the level of women’s education also has a direct implication on

maternal mortality rates, and nutrition and health indicators among children.

POLITICAL PARTICIPATION

The constitution of India recognizes equality right of women and allows special measure for

women and children to realize the guarantee of equality Despite different gender specific

law women’s status in society continues to be devalved hence the focus should be on

women awareness so that they can participate in political and legal framework of society.

There are different number of Law enforced society like Equal Remuneration Act 1976,

women’s compensation Act 1923, minimum wages Act 1948, factories Act 1948. These law




if enforced then women will be getting an equal chance of participation and obviously their

growth and development will happen.

Women are facing a crisis of health need from the moment of conception to the and of life

because they name a limited a uses to health care. Despite the health crisis of women, India

is consistently investing in National Health Policy. There should be a holistic perspective on

women’s health and it need to be main streamed from the primary education system.

Policies relating to women's rights have had a positive trajectory in the past few decades

with the central government articulating many progressive measures to advance gender

equality in social, economic, and political arenas. The Government of India (GoI) has two

main bodies to advance gender equality: the Ministry of Women and Child Development

and the National Commission for Women, which is an autonomous organization under the

Ministry of Women and Child Development.

Both bodies work on national- and state-level legal and social policies to advance

gender equality. The Ministry has widely implemented local-level micro-finance schemes to

advance economic opportunities for rural women. The National Commission for Women

has been instrumental in creating legislative changes, and has set up Complaint and

Investigate Cells at the state level. The Grievance Cells receive complaints of gender-based

violence and are mandated to investigate, provide referrals and counselling, and ultimately

report on such cases.

With a vibrant women’s rights movement in India, there are continuous demands for better

laws, provisions, and accountability for implementation. Most recent examples include the

change in India’s rape laws, where in 2006 marital rape was recognized. Currently, women’s

rights activists are demanding better provisions in Sections 375 and 376 of the Indian Penal

Code. Since then, there have been multiple challenges by the women’s movement leading

to small but significant amendments.

The 2005 Domestic Violence Act provides protection from violence in the household from

not only male perpetrators, but also female perpetrators like mothers-in-law and other

female members in extended families. There also have been gains in women's inheritance

rights, yet challenges remain in implementation. Social biases and lack of enforcement

continue to hinder the full realization of Indian inheritance laws. Inheritance laws and

property distribution fall under the Hindu and Muslim personal laws, both of which exempt




agricultural land. For a country with a predominantly agro-based economy, women’s

inability to inherit agricultural land exacerbates feminization of poverty and neglects

women’s welfare. Like all other spheres of social change in India, there is an undeniable gap

between policy and practice. More notably, the deeply entrenched social hierarchies based

on class, caste, ethnic, and communal divisions leave many communities on the margins

with little knowledge of their rights and even less protection from local, state, and national

governmental policies. Inequality between men and women runs across the board, including

in education, economic opportunities, representation in governance, and other state and

private institutions. Additionally, women in India face high rates of violence. Some recent

statistics on women include: among the highest maternal mortality rates in the world with

540 deaths for every 100,000 births.

India is one of the world’s fastest growing economies, with women mainly from the middle

class increasingly entering the workforce. Urban centres like Delhi and Bangalore have seen

an influxof young women from semi-urban and rural parts of the country, living alone and

redefining themselves. However, the story of economic empowerment for women is not a

singular narrative; rather it is located in a complex set of caste, class, religious, and ethnic

identities. The Global Gender Gap Report by the World Economic Forum in 2009 ranked

India 114Th out of 134 countries for inequality between men and women in the economy,

politics, health, and education.

During the independence movement, women were visible and active as nationalists, and as

symbols of “Mother India”. Gandhi, in particular, was instrumental in creating space for

women through his non-violence (and some would argue feminized) mode of protest.

Initially excluded women, but due to demands from women nationalists he later realized the

power of women organizers at the local level. His inclusion of women, however, was not

located within a gender equality framework, but was a means to achieving a stronger and

unified Indian state. The inclusion of women in the nationalist movement was also to

debunk the British colonial assertion of “needing to save the poor, vulnerable women” of

preindependence India.

As in many nationalist movements, women in India took part in the struggle, in turn

propelling a women’s rights movement. And, as seen historically in many post-colonial

countries, the nationalist women’s movement in India was confronted by the rebuilding of a




patriarchal nationalist state. Women revolutionaries gave way to their male counterparts

who (as a result of Partition politics) created a strong, male, and Hindu "New India".The first

post-independence Lok Sabha (the People’s Council or the Parliament) had 4.4% women.

The period between the early 1940’s and late 1970’s saw an emergence of the Indian

women’s movement, but it was not until the 1980s that the women’s movement gained real

momentum.

In the last two decades since the reservation for women in elected Panchayats was passed,

many studies have been conducted to look at the impact of this policy. A survey conducted

in 2008 yielded that women made up close to 50% of all the village councils across the India.

The number of women representatives has certainly increased at the grassroots level;

however, questions still remain regarding their decision-making power within the councils.

A study in West Bengal and Rajasthan by the Institute of Management Studies (Calcutta) and

the Massachusetts Institute of Technology (MIT) found that where women Panchayat

members were active, there were more robust programs on water, irrigation, and

infrastructure. The study conclusively states that in Panchayats where women were present

policies were more beneficial to the community than in Panchayats where women were

absent. A study by The Accountability Initiative also states that in Panchayats with female

presidents, the participation of women in the larger council rose close to 3% in one year.

The reason for the increase in women’s participation is correlated to two possible factors:

first, women representatives exemplified new possibilities for change; and second, women

leaders took up issues that would have a positive impact on the community as a whole.

The Women’s Bill in April 2010, which gives 33.3% reservation for women in all levels of

Indian politics, took 14 years after its introduction to finally pass by the Rajya Sabha (the

upper house of parliament). It is yet to be passed by the Lok Sabha (the lower house of

parliament). The reservation bill will ensure 181 out of the 543 seats at the Parliament level,

and 1,370 seats out of the 4,109 seats at the State Assembly level.44 This is a historic move

in the Indian political landscape, as currently women occupy less than 10% of seats in the

national Parliament. The Women’s Bill will also significantly change the demographics of

class and caste among women politicians in leadership positions in the Indian political

structure. It will create a path for women from lower classes and castes (who are currently

confined to local-level governance) to enter state and national level governments. In




addition to the existing reservations for scheduled castes and scheduled tribes, one third of

the SC and ST candidates must be women. Other Backward Class (OBC) members are not

included in the reservation due to the wide disagreement about who constitutes OBC and a

lack of existing data on the OBC population. The two main arguments against the bill are

that it will only benefit elite women (particularly in national level politics) and that there

should be reservations for Dalit, minorities (particularly Muslim women), and OBCs.

However, supporters of the bill do not agree with creating quotas within the existing 33%

women quota in parliament, as SC and ST quotas already exist. The bill mandates that all

political parties reserve one third of their electoral ticket for women, including in the

already mandated reservations for SC and STs. This will inadvertently create spaces for

lower caste and class women to enter state and national level politics. The passage and

implementation of the Women’s Bill, and its impact on the existing gender, class, and caste

barriers, is yet to be realized, but one thing is clear: India’s politics is moving closer to

equitable inclusion than ever before.

Empowerment is now increasingly seen as a process by which the one's without power gain

greater control over their lives. This means control over material assets, intellectual

resources and ideology. It involves power to, power with and power within. Some define

empowerment as a process of awareness and conscientization, of capacity building leading

to greater participation, effective decision-making power and control leading to

transformative action. This involves ability to get what one wants and to influence others on

our concerns. With reference to women the power relation that has to be involved includes

their lives at multiple levels, family, community, market and the state. Importantly it

involves at the psychological level women's ability to assert themselves and this is

constructed by the 'gender roles' assigned to her specially in a cultural which resists change

like India.

Empowerment of women is a commitment for PACS and some others strategic programmes,

while developing strategies for empowering women some programmes are sensitive to

recognizing women's contribution and their knowledge as the first step. The appreciate that

women require principally social support to fight their sense of inadequacy and fears to

enhance their self-respect and dignity. Empowering women means control over their bodies

and becoming economically independent, controlling resources like land and property and




reduction of burden of work. A society or programme which aims at women's

empowerment needs to create and strengthen sisterhood and to promote overall nurturing,

caring and gentleness. PACS emphasis on emphasis on women SHG's as a collective is one

such efforts. Being conference 1995 had identified certain quantitative and qualitative

indicators of women empowerment.

OBJECTIVES

The aim of present research is to investigate the current short coming in the present

scenario and try to develop the concept of empowerment by the following objectives:

1. To analyse equal access in decision making and to participate in social, political and

economic empowerment.

2. To achieve equal opportunity to women in health care, quality education at all

levels, career and equal remuneration.

3. To strengthen legal system aimed for elimination of all forms of discrimination

against women.

4. Women should be provided leadership and communication training.

5. To empower women by improving capabilities and providing opportunities to share

information and experience.

6. To establish to support platform for women by building alliances so that they

achieve higher level of energy and commitment.

REVIEW OF LITERATURE

Review of literature is a vital part of any research. It helps the researcher to know the areas

where earlier studies had focused on and certain aspects untouched by them. There have

been numerous thought-provoking studies on human rights violation against women and

dalits. A look at the studies shows that violations against women and dalits are increasing

day by day in the local and global context.

The conceptualization of political participation has been undergoing drastic changes. Such

changes will have ;direct impact upon different modes of political participation. Citizens can

participate in different and alternative ways to influence the government and the: political

system. Until recently most survey studies of political participation confined their enquiry to

a relatively limited set of political acts. Most of them asked whether a person had voted or

not and some went on to ask about such behaviour as attendance at political meetings or




rallies, working for a party, making a moretary contribution or seeking a public office.

However, these alternative ways of political participation depend on the types of citizens

who participate, tile way in which they act, the amount of pressure they can to exert and

the system's response towards their activities. Thus political participation is more than the

vote and more than an activity in the electoral system. Verba and Nie grouped into four

broad modes of participation the alternative activities by which citizens can participate in

politics, i.e., voting, campaign activity, co-operative activity and citizen-initiated contactand

Goel add protest and communication to these modes mentioned by Verba and Nie, which

relate individuals lo thc: polity. They are also of the view that political acts could be

hierarchically organised rroni the least difficult to the most difficult, if a person performed a

more diff cult act, he was likely to perform those that are less difficult as well.*'

It is useful to' consider poltical participation in a hierarchical sense, but it should also be

born in mind thal some levels of participation may be absent in some political systems.**

Not all political system have elections or a form of voting, some systems severely restrict or

ban public meetings and demonstrations, while others forbid the formation of political

parties and other types of political or quasi-political orgnisation, and so on.*' Explaining the

extent of political participation Michael Rush and Pliilip Althoff added that apathy,

alienation and the use of violence vary clearly and considerably from system to system, but

remain quite important factors in any examination of political participation.24 Examining

the modes of political participation Schonfeld has mentioned ten types of activities which

include [I) running for or holding public or party offices, (2) belonging to a party or other

,Political Organization, (3) working in an election, (4) attending political meetings or rallies,

(5) making financial contribution to a party or a candidate, (6) contacting a public official, (7)

publicly expressing a political opinion to convince others, (8) partaking in political discussion,

(9) voting, and (10) exposing oneself political stimuli.25 Political participation is the mother

and politics is the child. The former creates and determines politics and hence is of utmost

importance both for the nation and the individual. The politics of the nation is determined

therefore, by political participation in all its processes. Political participation appears to be a

complex phenomenon, a dependent variable that hinges upon many Sac.ors such as the

psychological, socio-economic and political, which provide orientation to individuals either

positively or negatively Political participation tends to meet one's psychological needs of




overcoming loneliness. It refers to the degree to which citizens are interested in and

concerned about politics and public affairs. Psychological attachment of a person towards

political objects certainly determines the extent and gravity of political participation. In

every society there are persons who are very much concerned and interested in political

affairs and a. the same time there are persons who have no such concern and interest in

political affairs. This difference may be due to the differences in their psychological

attitudes. In this situation it becomes clear that the former are more likely to be active in

politics than the latter. Again it is generally believed that men are psychologically more

involved than women in politics as in their respective field of activity.

The political party is the most potent instrument in facilitating political participation. The

party resembles the nation both in its symbolic force and in its capacity for arousing

affection, devotion and sacrifice on the part of its members and syliipathizers. The party also

inspires its members to develop a feeling of belongingness. It has been observed that

people, who affiliated to a party vote more frequently than those who are not. The

propaganda and election campaign refer to the efforts made by political parties to involve

the voters in the process of political participation. The campaign has its effect on polarising

party attachments, reinforcing candidate preferences and gaining votes. It is, in fact, process

of political education. A significant aspect of the relation of the individual to his political

environment is his exposure to the influence of propaganda.

Political participation is the hallmark of democracy and modernisation. In the traditional

society government and politics are concerns of a narrow elite." There is positive

relationship between urban residence and higher levels of political participation. It has been

argued that urbanisation, combined with other component process of social modernization,

would bind the citizens with new ties to the nation state and increase th: extent of political

communication that leads to greater political awareness." Ideology can affect political

participation, positively or negatively. Normally, those who have firm faith in democratic

ideology positively respond to political participation. On the other hand, persons having

contempt for democratic ideology show little inclination for political participation.

Political participation is associated with political awareness i.e., actual knowledge of political

affairs. awareness is highly connected with interest. In every society the number of citizens

who can be described as 'aware' is extremely small. Awareness affects both the quality and




amount of participation. It is to be noted that the three sets of variables are closely linked

and intermingled. A change in any sne of them, can, therefore, increase or decrease the

level of political participation. The present study is concerned not with political participation

in general, but it 1s only a micro-level study concerned with political participation of women

that too at the grassroots levels of political functioning. Participation of women in

Panchayati Raj institutions has been an area of much interest in India. Participation in the

local government institutions has been viewed as essential in promoting women's

consciousness and development at the local level as well as in training them for

participation in the wider politics. Democratic thinkers have n general linked liberty to the

people by the process of political participation. Participation is maximized in local

government because, "local institutions are to liberty what primary schools are to science;

they put it within people's reach; they teach people to appreciate its peaceful enjoyment

and accustom them to make use of i t 4 ' Karl Mam stood in favor of mass involvement in

the process. To him political participation by the masses is at once a process of education

and of building up of a capacity for governing the new society.44 It is a fact that woman

herself is an important variable capable of determining the nature and scope of political

participation and as a result the whole political system in turn.

The attempt to assess and evaluate the level and extent of political participation of women

become. very much relevant as to the nature and functioning of the political system a

whole. It is particularly more beneficial to political parties and political leaders to the natural

qualities of women such as honesty, affection and sense of duty. The mobilization of women

in large numbers weakened the bondage of tradition and encouraged them to develop a

perspective on the wider socio-political problems. When the Universal Declaration of

Human Rights was adopted on December, 1948, its Article 1 , proclaimed that, "all human

beings are born free and equal in dignity and rights". Article to provided for equality of

sexes. It states that, "every one is entitled to all the rights and freedoms without distinction

of sex." It is considered as a clarion call for the cause of women empowerment. It is not an

argument for feminism. "Feminism is the political theory and practice that struggles to free

all women: women of color, working class women."4h Milbrath and Goel observed that it is

a tradition in almost all societies that politics is mainly an affair of men and that women

should fall in line with them politically.




The political participation the political behavior of human beings just like any other aspects

of human behavior take place in a given socio-cultural setting. It implies that the political

participation is affected by social structure, economic development and historical factors

joining together. The political behavior of Muslim women should be understood in the

Islamic perspective. It is observed that Islamic has given equal status in matters of religion

and religious observations to men and women but politically they are unequal oness2

Marcia Lee believes that, lack of female participation in politics stems from three factors,

namely, children at home, fear o ' sex discrimination and perceptions of women that certain

things are not proper to do." The generally accepted sex - role socialization process is

considered to be advantageous to males in the field of political participation although

women may be interested in politics. The Indian society is full ocparadoxes. On the one

hand, foreigners come in hordes to our country in search of spiritual solace but on the other

hand, Indians rank among the most competent in the world. Again, on the one hand, India is

spending millions, nay, billions to send satellites to space to prove its scientific prowess but

on the other the state can not provide almost half the population with the basic necessities

of food, education, health and shelter. The same paradox exists in the case of women too.

On the one hand, the scriptures put them on a high pedestal. An old Sanskrit proverb is that,

where the women are held in reverence there do the gods reside.

METHODOLOGY

The Methodology adopted for this research study is discussed in this chapter

Section A – Sample, Method & procedure Sample –

The final study will be conducted on 500 dalit womens residing in BKT Block of

Lucknow District. The selection of the sample as purposive. They were matched on factors -

Health, Political, Economic and Education.

The total methodology in the following step

1. Step 1. Selection of five Nayay Panchayat by random sampling

2. Step 2. Selection of the village is a two tier system

I. Ambedkar Grams of five Naya Panchayat by random among the Ambedkar

villages.

II. Five non-Ambedkar grams of the same Nayay Panchayat by random methods.

3. Step 3. Selection of target group.




4. Step 4. Preparation of questionnaires separately the following

i. Target group

5. Step 5. Preparation of Interview schedule for the following:

I. Govt. officials

II. Magistrate

III. Block development officer

IV. Panchayat secretary

Peoples Man/Men from society

i. Members of parliament/assembly

ii. Block Pramukh

iii. Gram Pradhan

Objective 1) To analyse equal access on political basis

This objective is analyzed by considering the following points:

a) Voting criteria( means do you vote or not)

b) Presence of Voter ID

c) Reason for Voting

d) Enrollment of women’s in political parties

e) Knowledge about past political leader’s

A) On the basis of Voting criteria( means do you vote or not)

Chart 8: Distribution of women’s vote in Ambedkar & Non-Ambedkar Grams




Above chart represents that women of Ambedkar gram do more vote (99.6%), as compare

to NonAmbedkar gram( 62.8%).

Table 1: Comparison of proportion of women’s vote in Ambedkar & Non-Ambedkar Grams

Voting Significance Result

Yes No

Ambedkar Grams 249 (.996)

1

<.0001 Significant Non-Ambedkar Grams

157 (.628)

93

This table shows that there is a significant difference in proportion of women’s vote in

Ambedkar & Non Ambedkar gram. And women of Ambedkar Gram are voted more.

B) On the basis of Presence of Voter ID

Chart 1: Number of women’s have voter ID in Ambedkar & Non-Ambedkar Grams




Above chart represents that approximately all of the women’s of Ambedkar &

NonAmbedkar have voter ID.

Table 2: Comparison of proportion of women’s having voter ID in Ambedkar & Non-

Ambedkar Grams

Voter ID Significance Result

Yes No


1

0.1527 Non-

Significant Non-Ambedkar Grams

250 (1.00)

0

This table shows that there is no significant difference in proportion of women’s having

voter ID of Ambedkar & Non Ambedkar gram.

C) On the basis of Reason for Voting

Chart 2: Reason for voting of dalit women’s of Ambedkar & Non-Ambedkar Grams

Above chart shows the figures that represents reason to vote in both the grams. From above

chart it is clear that most of the women’s of Non-Ambedkar gram either vote for caste or

govt, while of Ambedkar gram are vote for govt.

Table 3: Comparison of proportion of women’s vote for govt. in Ambedkar & Non-

Ambedkar Grams

Reason for voting Significance Result

Govt. Others


3


132 (.532)

116




This table shows that there is a significant difference in proportion of women’s vote for

govt. in Ambedkar gram as compare to Non Ambedkar gram. And women of Ambedkar

Gram are voting more for govt(98.8%) as compare to Non Ambedkar gram (53.2%).

D) On the basis of Enrollment of women’s in political parties

Chart3: Distribution of Enrollment of women in politicial parties in Ambedkar & Non-

Ambedkar Grams

Above chart represents that out of total women’s who thinks that women should be

enrolled in political parties 56% women’s are of of Ambedkar gram & 44% 0f women’s are of

Non-Ambedkar gram.

Table 4: Comparison of proportion of women’s think that women’s should be enrolled in

political parities

Enrollment of women in political parties Significance Result Yes No


14


185 (.74)

65




This table shows that there is a significant difference in proportion of women’s think that

women’s should be enrolled in political parties of Ambedkar & Non Ambedkargram. And

women of Ambedkar Gram thinks more about this.

E) On the basis of knowledge of past political leaders

Chart 4: Distribution of awareness about past political leaders in Ambedkar & Non-

Ambedkar Grams

Above chart represents that out of total women’s who have knowledge of past political

leaders 64% women’s are of of Ambedkar gram & 36% 0f women’s are of Non-Ambedkar

gram.

Table 5: Comparison of proportion of women’s having knowledge about past political

leaders in Ambedkar & Non-Ambedkar Grams

Knowledge about past political leaders Significance Result Yes No


8


138 (.552)

112




This table shows that there is a significant difference in proportion of women’s having

knowledge about past political leaders in Ambedkar & Non-Ambedkar Grams & is more in

women’s of Ambedkar grams.

RESULT & DISCUSSION

The result of the study have been presented in the previous chapter In this chapter an

attempt will be made to discuss an interpret the findings of the present investigation. The

research plan was to study the Capacity Building of dalit women in Lucknow district: A case

study in BKT block. Data was subjected to suitable statistical analysis and the findings are

discussed on the basis of hypothesis formulated for the research study. The result

supported the henotheist relationship the study was based on comparative analysis

between Ambedkar gram and non Ambedkar gram. Firstly the analysis was done on the

basis of basic characteristics of dalit women and it was found

On the basis of collected data an analysis had performed. At 5 % level of significance the

following conclusions are drawn:

There is a significant difference in voting independence of Ambedkar & Non

Ambedkar grams. And women of Ambedkar Gram are more free to cash their votes

according to their willingness.

There is no significant difference in Independency related to make decision about

Children treatment’s of Ambedkar & Non Ambedkar gram.

There is no significant difference regarding awareness about benefits of BPL families

in Ambedkar & Non Ambedkargram.

There is a significant difference in awareness level for schemes framed to socially

disadvantageous families in Ambedkar & Non Ambedkargram. And women of

Ambedkar Gram are more aware.

There is a significant difference related to healthcare awareness of Ambedkar & Non

Ambedkargram. And women of Ambedkar Gram are more aware about healthcare

as compare to women of Non-Ambedkar Gram

There is a significant difference in proportion of women believed that women

education is more important in Ambedkar & Non Ambedkargram. And women of

Ambedkar Gram are more aware about women’s education.




There is a significant difference in awareness about laws of Ambedkar & Non

Ambedkargram. And women of Ambedkar Gram more knowledge of laws as

compare to Non- Ambedkar.

There is a significant difference in proportion of women’s vote in Ambedkar & Non

Ambedkar gram. And women of Ambedkar Gram are voted more.

There is no significant difference in proportion of women’s having voter ID of

Ambedkar & Non Ambedkar gram.

There is a significant difference in proportion of women’s vote for govt. in Ambedkar

gram as compare to Non Ambedkar gram. And women of Ambedkar Gram are voting

more for govt. (98.8%) as compare to Non Ambedkar gram (53.2%).

There is a significant difference in proportion of women’s think that women’s should

be enrolled in political parties of Ambedkar & Non Ambedkargram. And women of

Ambedkar Gram think more about this.

There is a significant difference in proportion of women’s having knowledge about

past political leaders in Ambedkar & Non-Ambedkar Grams & is more in women’s of

Ambedkar grams.

There is a significant difference in Average number of earning members of women’s

in Ambedkar gram & Non-Ambedkar Grams & is more in women’s of Ambedkar

grams.

There is a significant difference in Average number of days women’s employed in

Ambedkar gram & Non-Ambedkar Grams & it’s found that women’s of Ambedkar

grams are employed for more days

On the basis of above results we can clearly see that either Dalit women’s of Ambedkar &

Non-Ambedkar grams have equal rights, facilities & awareness level related to healthcare,

children’s future, education, income etc. or Dalit Women’s of Ambedkar gram have more

facilities & awareness. Thus Condition of Ambedkar grams are said to be more improved as

compare to Non-Ambedkar grams on the basis of health, income, education, decision

making & political rights.

Apart from the sign of rise in living conditions of Ambedkar grams, there is still a need to pay

more attention on several issues like:

Voting Independence is still low in Non-Ambedkar grams




Awareness related to benefits for Below Poverty Line Families

To aware women’s related to importance of women’s education

Awareness level about laws is very low in Non-Ambedkar gram

LIMITATION AND SUGGESTION

Like several other studies in other sciences the present study has also certain constraints the

data is restricted BKT block of Lucknow region. The study could have being done on different

levels of dalits women in Ambedkar and Non Ambedkar gram. The Psychographic variable

where not study which may have affected the result. It is believed that lake of attention to

moderate variable constitute a major limitation of earlier research in this area.

In a move that will lead to empowerment of Dalit women in Uttar Pradesh, the Mulayam

Singh government has decided to enroll Dalit women in the Prantia Rakshak Dal. The

Prantiya Rakshak Dal (PRD) is a statelevel protection force that is usually deployed to

maintain law and other in villages, in large congregations like the Kumbh Mela and during

elections.

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SALES PROMOTION SCHEMES: CONSUMER’S PICK

Swati Chopra*

Abstract: A sales promotion or “sale” works as a branding tool. It is an effective way to

stimulate demand. But to perform better and stay ahead in the competition, retailers need

to understand the cause and effect relationship of sales promotion.

In this paper we present the Hypothesis Testing to distinguish the mind-set of customers

towards cash discount with respect to Demographic variables such as gender, family

income, educational qualification.

*Asst. Prof., MBA Dept., Ambalika institute of management and Technology




1. INTRODUCTION

Given the growing importance of sales promotion, there has been considerable interest in

its effect on different dimensions, such as the consumers’ price perceptions, brand choice,

brand switching behaviour, evaluation of brand equity, effect on brand perception and so

on. The concept of sales promotion in India is as popular as in any other Western country.

But unlike the West, the number of retailers factoring the expenses of sales promotion is

negligible.

In a country like India, sales promotion takes place at least four times a year. The

approach and the strategies of an Indian retailer are different compared to the West. An

average Indian retailer is only interested in the sales figures. Few look at the footfalls,

conversion, average bill size, etc. during promotions. And even fewer measure profits by

relating revenues to costs of promotions. Isolating the effect of different promotions in a

situation of promotion overlap is not even considered.

The primary objective of a sales promotion is to bolster sales by predicting and modifying

the purchasing behaviour and pattern of target customers. Not only that, it also attracts

new customers while retaining the existing ones. With so much cut-throat competition, no

retailer wants to lag behind in capitalising every emotion and sentiment of the consumer.

Once one big retailer starts, it becomes a trend.

Today, the Indian consumer has more disposable income and is more inclined towards the

higher-end brands. They wait for the time when brands offer the best discounts. Last year,

retailers preponed festival sales or ran them for extended periods to be able to clear the

inventory. Many brands went on sale before the usual last week of July. Moreover, stores

are still stocking more discounted items than fresh merchandise.

1.1 Sales Promotion: Advantages & Disadvantages:

Sales promotions draw attention to a particular product or service being offered. They distinguish

a business from competitors through pricing. Dryden Sales, explains that when sales promotions

are offered for a limited time, it creates urgency among the customers because they have to act

before the promotion expires. As a result, the limited offer reduces the time customers have to

think about the product. In most cases, they will stop comparing the alternatives and buy the

featured item or service.




Promotions in sales are a disadvantage when they are offered too regularly. The key to making

them successful is offering them irregularly, catching the customer off guard and unprepared. If

they are provided too regularly then they create price sensitivity among customers. Dryden

outlines price sensitivity as intentional waiting by customers to purchase items only when they

are promoted in a sale, rather than buying them at the regular retail price. Profits decrease.

1.2 Intention of sales promotion:

Before designing a promotional campaign, you must identify the target groups. This is done

by breaking up of your product markets and identification of small groups of consumers

whose wants and needs are not the same as the mass market as a whole- this is one of

the key to success in sales promotion. For finding the target group you need to take a

qualitative research on the market to determine your groups of customers, if the target

group exists then find out their needs & wants, and what drives them to buy your

product. After learning about the target groups, you must set the objectives of sales

promotion which is all about why you want to achieve in sales promotion campaign and

how your customers will be benefits. Other aspects of sales objectives are: budget of the

promotion and duration of the promotional offer[2].

1.3 Paradigm of Sales objectives

Sales Growth

The most basic of sales force objectives is to raise the total sales numbers in each period,

generally each week, month or quarter. Sales forces record the number of customers

served daily, and sales managers view detailed reports displaying trends in daily sales

volume. An example of a strategy used to achieve a revenue growth objective is to

institute a commission compensation program for salespeople in addition to base salaries.

This can motivate salespeople to push themselves harder to beat their personal sales

records.

Sales Force Turnover

The sales component of marketing can experience one of the highest employee turnover

rates of any area of business, as new salespeople are often ill equipped for the stresses

and demands of the job. One possible objective of sales forces is to continually reduce

their level of employee turnover, which can increase sales productivity and reduce training

costs. Two possible strategies to achieve this objective include rewriting job postings to




make sure job applicants fully understand the nature of the work, and adding stress and

conflict management role-playing scenarios to new-hire training programs.

Repeat Customers

Repeat customers can be a company's most profitable customers. One possible objective

of a sales team is to increase the number of sales made to existing customers compared to

first-time buyers. Customer-relationship management or CRM strategies can help to

achieve this objective, strengthening relationships with customers and turning repeat

customers into champions for the brand.

Up-Sell Strategies

In settings where customers come to salespeople, such as retail outlets and inbound call

centers, sales forces commonly have an objective of increasing the average total amount

of each transaction through a technique called up-selling. Up-selling is the art of

strategically suggesting one more item to compliment what a customer has already

ordered. While up-selling can contribute to the sales growth objective mentioned above, it

can also reduce inventory holding costs, reduce inventory cycle time and boost

profitability. Sales team competitions with rewards that employees actually want can

motivate team members to try up-selling with each customer and to be more strategic in

their up-selling pitches. [3].

2. STIMULUS FOR THE STUDY

With the growth of population and spending power of the consumer has created the

opportunities and challenges for the FMCG companies in the world market[1]. Simultaneously,

competition to win consumers has been increased drastically. World is becoming the small village

and Many MNC‘s have entered in India and other countries. Marketing paradigm is shifting from

consumer satisfaction to consumer delight. Enticing consumers with the various sales promotion

schemes is the order of the day. If this tool is not used strategically, company has to follow the

trend of promotions to maintain the market share[5]. Considering almost universal applications

of designing the sales promotion schemes and understanding its impact on business has

motivated to take the steps in the direction to study this crucial aspect of promotion

management[4].

3. RESEARCH DESIGN:

3. 1 Sampling Element:




Each and every individual who purchases the FMCG products in the state of Uttar Pradesh

and neighboring states has been identified as a sampling element.

3.2 Sampling Design & Data gathering:

The universe of the study consists of all FMCG consumers in the state of Uttar Pradesh and

neighboring states.

Sample Size: 500

Sampling Method: Convenient Sampling Method

Data Type: Primary Data & Secondary Data

Data Collection Tool: Structured Questionnaire

Scope of Research : Uttar Pradesh and neighboring states.

The buyer may belong to any age group and any sex of metropolitan cities.

4. ANALYSIS AND INTERPRETATION OF DATA

Testing Hypothesis:

Testing hypothesis provides the scientific base for the interpretation. Herewith, stated

hypothesis are tested with the help of various parametric and non paramet ric tests as

mentioned below.

H1: There is no momentous divergence between Consumer mind-set towards the cash

discount as a sales promotion scheme and demographic variables.

H11: There is no noteworthy divergence between Consumer mind-set towards the cash

concession as a sales promotion scheme and Gender.

Group Statistics

Attitude towards Cash discount According to Gender

Gender

No.

Mean

Std. Deviation

Std. Error Mean

Attitude towards Cash Discount

Male 280 3.0859 .98838 .05896

Female 180 3.1014 .98889 .07391




If we perform One-Sample Kolmogorov-Smirnov Test (Test of Normality) it is found that the

sample distribution is not the normal (0.001 < 0.005) distribution. Hence Normality of the

sample does not validate the Z test for testing the hypothesis.

Here, it is to test whether two samples are coming from the same population. More clearly,

there is any significance difference between the mean of two samples. It is a comparing of

two means with large sample size. If the distribution of the attitude towards the cash

discount is normal probability distribution, Z test as a test of comparing two means should

be used. But the interested variable is not normally distributed.

In this context, it is advisable and required to apply non parametric test to test the

significance difference between two samples.

So, Non parametric tests have been used to test the hypothesis as mentioned below.

Mann-Whitney Test:

Ranks

Gender N Mean Rank Sum of Ranks

Attitude towards Male Cash Discount

Female

Total

281 229.78 64568.50

179 231.63 41461.50

460

Test Statisticsa


Mann-Whitney U 24947.500

Wilcoxon W 64568.500

Z -.145

Asymp. Sig. (2-tailed) .884




Two-Sample Kolmogorov-Smirnov Test:

Test Statisticsa


Most Extreme Differences

Absolute Positive Negative

.048

.048

-.041

Kolmogorov-Smirnov Z

.502

Asymp. Sig. (2-tailed) .963

a. Grouping Variable: Gender

Here, at 5 % level of significance the value of the Mann Whitney and Kolmogorov- Smirnov

tests are greater than 0.05 ( 0.884 > 0.05 & 0.963>0.005, respectively) it is concluded that

there is no significant difference between Consumer attitude towards the cash discount as

a sales promotion scheme and gender as one of the demographic variables.

Ho12: There is no significant difference between Consumer attitude towards the cash

discount as a sales promotion scheme and Family Income

To check the assumption that all the Educational Qualification categories have equal

variance Levene test is performed.

Test of Homogeneity of Variances


Levene Statistic df1 df2 Sig.

.496 5 454 .779

Significance value is 0.779 > 0.10, So Levene test accept the assumption of equal variance

among the various Family Income Group. So it provides the evidence to run ANOVA as a

parametric test.




Descriptive

5.5.2 Descriptives


N

Mean

Std. Deviation

Std. Error

95% Confidence Interval for

Mean

Minimum

Maximum

Lower Bound

Upper Bound

Below 1 lakh

82

3.2805

.95461

.10542

3.0707

3.4902

1.57

6.29

l to 2 lakhs 148 3.0463 .94485 .07767 2.8928 3.1998 1.29 5.86

2 to 3 lakhs 102 3.1232 1.01495 .10049 2.9239 3.3226 1.43 6.57

3 to 4 lakhs 58 3.3695 1.03537 .13595 3.0972 3.6417 1.86 6.00

4 to 5 lakhs 32 2.5536 .76265 .13482 2.2786 2.8285 1.29 4.00

Above 5 lakhs

38

2.8083

1.03031

.16714

2.4696

3.1469

1.29

5.43

Total 460 3.0919 .98753 .04604 3.0014 3.1824 1.29 6.57

ANOVA


Sum of Squares Df Mean Square F Sig.

Between Groups 20.123 5 4.025 4.274 .001

Within Groups 427.500 454 .942

Total 447.623 459

It is interpreted that the significance value is 0.01 < 0.05, Null Hypotheses is rejected

and concluded that there is significant difference between Consumer attitude

towards the cash discount as a sales promotion scheme and Family Income.

Ho13: There is no momentous divergence between Consumer mind-set towards the cash

concession as a sales promotion scheme and Education Qualification

To check the assumption that all the Educational Qualification categories have equal

variance Levene test is performed.




Test of Homogeneity of Variances

Mind-set towards Cash concession

Levene Statistic

df1

df2

Sig.

.421 5 454 .834

Significance value is 0.834 > 0.10, So Levene test accept the assumption of equal variance

among the various employment status.

Descriptive


N

Mean

Std. Deviation

Std. Error

95% Confidence Interval for Mean

Minimum

Maximum

Lower Bound

Upper Bound

Below primary

15

3.0762

1.02855

.26557

2.5066

3.6458

1.57

5.57 Primary

42 2.9150

1.08937

.16809

2.5755

3.2544

1.57

6.29 Higher

secondary 76

3.1165

.91747

.10524

2.9069

3.3262

1.57

5.43

Graduate 199 3.1558

.96765

.06859

3.0205 3.2910

1.29 6.29

Post graduate

122

3.0703

1.02954

.09321

2.8857

3.2548

1.29

6.57

Above postgraduate

6 2.3810 .64944 .26513 1.6994 3.0625 1.57 3.14

Total 460

3.0919

.98753

.04604

3.0014

3.1824

1.29

6.57




ANOVA


Sum of Squares

Df

Mean Square

F

Sig. Between Groups

5.267

5

1.053

1.081

.370

Within Groups

442.357

454

.974

Total 447.623 459

It is interpreted that the significance value is 0.370 > 0.05, Null Hypotheses is not rejected and

concluded that there is no significant difference between Consumer attitude towards the cash

discount as a sales promotion scheme and Educational Qualification.

5. CONCLUSION

Cash concession is one of the extensively used Sales promotions Scheme. Testing the

hypothesis, it is found that male and female attitude towards the cash discount as one of the

sales promotion schemes do not differ significantly. In other words, both gender categories

have same attitude towards cash discount. Also, it does not differ according to various

Employment statuses, family size, (Number of family members), family type (joint or individual

family) and marital status (Married or Unmarried) of the respondents.

Educational Qualifications as one of the Categorical Independent variable does not have any

significant difference in terms of attitude towards the cash discount. While, it is found that

there is a significant difference among various family income categories towards cash

discount offered on various products. So, Family income is one of the variables which should be

considered while designing sales promotion schemes more specifically cash discount.

6. REFERENCES

[1]. Abhisek Malhotra (2010), ―The future of FMCG, Strategist Team / November 29, 2010,

0:03 IST.

[2]. Acquisti, Alessandro and Hal R. Varian (2005), ―Conditioning Prices on Purchase

History, Marketing Science, 24 (3), 367–81.

[3]. Agrawal, Nidhi and Durairaj Maheswaran (2005), ―The Effects of Self-Construal and

Commitment on Persuasion, Journal of Consumer Research, 31 (March), 841–49.




[4]. Barwise, P. and Farley, J.U. 2004. ‗Marketing Metrics: Status of Six Metrics in Five

Countries‘, European Management Journal, 22 (3): 257-262

[5]. Begona Alvarez Alvarez and Rodolfo Vazquez Casielles (2008), ―Effects of price

decisions on product categories and brands, Asia Pacific Journal of Marketing and Logistics,

20(1) p.p. 23-43

[6]. Darke, P.R. and Chung, C.M.Y. (2005), ―Effects of pricing and promotion on consumer

perceptions: it depends on how you frame it, Journal of Retailing, Vol. 81 No. 1, pp. 35- 7.

[7]. DelVecchio, D., Henard, D.H. and Freling, T.H. (2006), ―The effects of sales promotion

on post-promotion brand preference: a meta-analysis, Journal of Retailing, Vol. 82 No. 3, pp.

203-13.

[8]. Henkel, S., Tomczak, T, Heitmann, M. & Herrmann, A. (2007), Managing brand

consistent employee behaviors: relevance and managerial control of behavioral branding.

Journal of Product & Brand management, 16 (5): 310-320




THEORETICAL PERSPECTIVE FOR IMPLEMENTING OF INTERNATIONAL

FINANCIAL REPORTING SYSTEM (IFRS)

Dr. Ali Kheradmand*

Mahdi Naqdi Bahar**

INTRODUCTION:

Accounting is the lingua franca of the business .Accounting has been integral function of

micro and macro institutions. As an efficient tool of financial assessment, accounting is used

in both households and corporate business units. It serves as a mode of communication to

those who are interested in it. Financial statement are prepared, and guided by the

accounting thought, regulations and standards issued and prescribed and written by

experts, documents issued by expert accounting body or by the government or other

regulatory body. Propelled by the internationalization and globalization at an economic and

organization level, the body of knowledge of accounting has expanded widely. Financial

reporting is changing, accounting has always been a reactive service, changing and

developing to meet the practical needs created by the environment in which it operates.

These days when most business operation are largely organized across the national

boundaries ,therefore accounting thoughts , practices and regulation are required to be

harmonized . As business is international and its process are changing very fast. From slow

beginning International Financial Reporting System (IFRS) has become now generally

accepted regulator at this international level. This paper reflects a theoretical framework for

implication of IFRS. In this paper an attempt is made to find out the extent of applicability of

IFRS and the level of complexity faced by various professional and firms regarding its

implementation.

*Department of Accounting, Zahedshahr Branch, Islamic Azad University, Zahedshahr, Iran

**Research Scholar




BACK GROUND OF IFRS:

The International Accounting Standards Board (IASB) founded on July 1, 2000 is the

successor of the International Accounting Standards Committee (IASC) founded in June

1973 in London. On April 1, 2001, the IASB took over from the IASC the responsibility for

setting International Accounting Standards. It is responsible for developing the International

Financial Reporting Standards (IFRS), (new name for the International Accounting Standards

issued after 2001) and promoting the use and application of these standards. The IASB

(International Accounting Standards Board) is an independent standard setting board,

appointed and overseen by a geographically and professionally diverse group of Trustees of

the IASC Foundation who are accountable to the public interest. It is supported by an

external Standards Advisory Council (SAC) which advises the IASB on various technical and

strategic issues, for example; selection of topics for future development into standards. In

addition the IASB is also supported by the International Financial Reporting Interpretations

Committee (IFRIC) which is mandated to interpret the standards and produce binding

guidance when divergences occur in the application of the standards. In the public interest,

the IASB is developing a single set of high quality, understandable and enforceable

International Financial Reporting Standards (IFRS) for general purpose financial statements.

The standards developed by the IASB follow an accurate due process involving various

stakeholders that include accountants, users of financial statements and regulators to

mention but a few. The due process ensures through public debate and exposure that the

views of the various stakeholders are incorporated in the requirements mandated by the

IASB in the form of the final standards. Many countries committed to the objective of global

“harmonization”. The aim of the IASB is to issue principles based standards that can be

applied across the globe. Convergence with International Accounting Standards (IASs) /

International Financial Reporting Standards (collectively referred to as IFRSs), issued by the

IASB has gained momentum in recent years all over the world. The reason for this is obvious

as the capital markets become increasingly global in nature; more and more investors see

the need for a common set of International Accounting Standards (IAS).

OBJECTIVE OF IFRS:

The main objectives of IFRS are:




1) To develop, in the public interest, a single set of high quality, understandable and

enforceable global accounting standards that require high quality, transparent and

comparable information in financial statements to help capital markets and other

users make economic decisions.

2) To promote the use and accurate application of those standards; in fulfilling the

objectives associated with the standards.

3) To take account of, the special needs of small and medium-sized entities and

emerging economies.

4) To bring convergence of national accounting standards and International Accounting

standards and International Financial Reporting Standards (IFRS) to high quality

solutions.

IMPORTANT REASONS FOR IMPLEMENTING THE IFRS:

1) It offers a superior form of economic information on business performance and now

could be the basis for internal as well as external accounting information systems.

2) It represents a switch from for tax and statute orientation to a shareholder

orientation and it should be of greater relevance and importance to controllers and

to managers more generally.

3) It enables integrated financial and management accounting systems that should be

preferred on grounds of efficiency in data collection and processing.

4) It could be connected to the integrative potential of modern business computing

systems in operating the new accounting system.

QUESTIONS WHICH YOU SHOULD BE ABLE TO ANSWER BEFORE

IMPLEMENTATION OF IFRS:

What is the strategy for changeover to IFRS? (e.g., embed IFRS throughout the

accounting process vs. use IFRS only at a consolidated level; use the changeover as

catalyst for other change, such as streamlining processes or enhancing controls.)

Have the leaders of business units, treasury, HR, IT, tax, and investor relations been

engaged and educated on the possible implications for them of the IFRS

changeover?

What is management’s rationale (pros and cons) in selecting specific accounting

policies?




QUESTIONS YOU SHOULD BE PREPARED TO ANSWER:

Are the major risks and opportunities associated with the IFRS changeover being

identified, evaluated, and documented?

How is management learning about and assessing what other companies in our

industry and our competitors are doing in their move to IFRS? Would industry

consultation and/or consensus be desirable in any areas?

WHAT DOES THE IMPLEMENTATION OF IFRS PROCESS REQUIRE?

The most important message for IFRS implementation is that, it is never too early to start

the transition process, especially because, when the firms present their first IFRS financial

statements, they will need to present comparative IFRS information for the prior years. The

process therefore should begin no later than the start of the year before IFRS adoption is

mandated, and preferably earlier, to ensure that all data required are captured. The IFRS

implementation process should be treated like any other major business project, and not as

a technical accounting issue. A forceful project plan from the outset was thus a prerequisite

for a smooth transition to IFRS. It is very important that, all staff involved in the accounting

process need to be made aware of how the change to IFRS will impact their work. The

choice is between recruiting experienced, IFRS knowledgeable employees or relying on

external advisors i.e. auditors, subject to independence constraints, and other professional

and training firms. As IFRS knowledge is needed on an ongoing basis after implementation,

recruitment or the systematic training and retention of existing employees may be regarded

as the most desirable option. Using in house expertise also means that the ability to take

quick corrective action as delays and problems identified would be enhanced. The firms

should also take a call to limit double reporting and take a view on no (or minimal) change

to IFRS.

I. Systems:

Systems will need to be upgraded sometimes, for example to deal with the extensive fair

value data required under IFRS, particularly regarding to financial instruments. If system’s

changes are to be made, these, need to be specified early on in the project, in order to allow

time for development, testing and corrective action, and also to ensure that the system is

ready for operation when required. The time taken to achieve this should not be

underestimated. Many firms met project deadlines by “workarounds” the use of




spreadsheets to produce certain figures and disclosures which were not embedded in the

accounting systems. At the same time as this may have been necessary in the first instance,

it is generally not desirable because firms had to do more work the following year to bring

information within their normal accounting systems. There is also an increased risk of error.

II. Training:

It is very important to train all staff involved in adoption of IFRS. This is not only limited to

finance teams , but extends to budget holders and any other internal or external

stakeholder who needs to understand and interpret IFRS accounting information, or who is

rewarded based on such information.

III. Governance:

The board of directors / officers should be involved from the start of the process. IFRS

adoption has the potential to significantly affect earnings and net assets, and senior

management needs to be aware of this fact early on inviting the regulatory intervention.

The firm’s auditors should also be consulted early on in the process, where key judgments

and estimations would be required; to avoid last-minute revisions of the financial

statements will be necessary.

IV. Disclosures:

Once faced with producing the first annual report and accounts under IFRS, it became

evident that the disclosure requirements of IFRS are far more extensive than those of GAAP

and, many firms did not fully comply with IFRS requirements. It is generally recognized that

the quality of disclosures improved in the second year of IFRS implementation.

V. Business issues:

The firm must consider the effect that IFRS adoption will have on, among other things:

Management compensation structures (profits may become more unstable under

IFRS adoption, especially if the firm is exposed to the extensive use of fair values for

financial instruments).

Taxation implications.

Key performance indicators, which may need to be amended as a result of the switch

to IFRS.




INVOLVED PARTIES DURING CONVERGENCE TO IFRS:

In implementing of IFRS, several segments are involved as follow:

I. Standard setting bodies: standard setting bodies have an important political, social,

moral, and economic responsibility. These regulatory bodies have to consider the

possible impact on all of these aspects by introducing a change new accounting

standard.

II. Users of financial reports: users of financial report will lobby with standard setting

bodies to influence the outcome of the standard setting process in favor of the

organization in terms of comparability and transparency.

III. Management of the companies: the preparers will lobby as well with standard

setting bodies to influence the outcome in favor for individual firms.

IV. Public Auditors: public auditors will provide possible solutions to standard setting

bodies to resolve and clarify accounting issues, in order to improve clarity of the

applicable standards. In addition, this segment will lobby with standard setting

bodies to realize the best possible outcome for the capital market and the

profession for maximum transparency and comparability of firms. Public auditors

lobby with standard setters in order to reduce the complexity of the standards in

advantage to current clients and themselves.

V. Academics: academics perform consequently empirical research on the impact of

change in accounting standards and will consequently have constructive input for

standard setting bodies, with possible economic consequences resulting from

certain changes implemented in the past.

STEPS TO IMPLEMENTATION OF IFRS:

There are 7 steps to implementing of IFRS that should be considered:

1) Strategy, 2) Leadership, 3) Communication, 4) Resources, 5) Knowledge, 6) Project

management, 7) Time.

1) Strategy:

The firm can approach this in two different ways:

Prepare financial statements of subsidiaries under national standards and convert to

IFRS at consolidation.

Implement IFRS as an accounting process across the whole firm.




2) Leadership:

Leadership in IFRS transition must come from the top of the organization. Depending on

strategy; it’s likely that IFRS will change behavior. Therefore, senior management must show

leadership and sponsorship of the project. The implementation of IFRS is invariably a

compulsion from the regulators. This means that there is a need to prioritize the work, and

that requires leadership from the top of the organization. Clearly, the relationship with

external stakeholders needs to be managed. In the private sector, these amounts to analysts

at stockbrokers, bondholders, shareholders and other providers of finance, in the public

sector, whilst these stakeholders don’t exist, there remains a dialogue with the higher

echelons of the public sector structure.

3) Communication:

As all projects, communication with interested stakeholders is necessary for both the

internal and external stakeholder groups and how IFRS will impact on business decisions.

4) Resources:

The team needs to be a formally constituted project team that meets with the requirements

of the firm, Clearly, technical accountants that are well versed in IFRS are required, but also

a project sponsor (probably the CFO, and non-finance representatives of the business who

know how it works, If the project is large enough, permanent staff may be seconded to the

implementation project or outside resource brought to bear.

5) Knowledge:

The following knowledge reserves in the firm are required:

I. A good overview of the firm’s operations and business issues, together with events

and transactions that typify the firm’s activities

II. Familiarity with the reporting processes currently in place and the technology that’s

used to support them

III. An understanding of the methodologies and tools that will be used to implement

IFRS within the firm’s reporting processes

The project team will bring together the people who are the reserves of this knowledge that

must work together as an effective team that achieves the goal of IFRS implementation.

Typically, the skills required would include technical accounting, treasury, tax, legal,




actuarial and systems specialists, and human resource and project management specialists

to run the project.

6) Project management:

There are a number of key phases into which the project can be divided to ensure that it can

be managed properly to achieve a successful conclusion:

A. Raise Awareness.

All those that are affected by IFRS implementation need to be aware of its existence, with

the whole firm mobilized behind it. The key areas are as follow:

I. The effect on current accounting and reporting and the current state.

II. Complexity of impact upon systems and processes and their current state.

III. The complexity of impact upon people.

Fragmented or conglomerate firm may have different degrees of state and impact.

Examples include firms with international structures and public bodies with disparate

activities and finance structures.

B. Assess:

The firm needs to assess the impact areas and how to get it right first time, based on the

differences between local GAAP and IFRS. This assessment needs to be made on the systems

for management as well as statutory reporting and budgeting as well as reporting. Once the

assessment is made, management is able to determine a cost-effective path that has

minimum disruption to the firm. The team making this assessment is multi disciplinary. The

method to employ in making this assessment is a gap analysis between local GAAP and IFRS

in terms of accounting and disclosures, systems and processes and on the training needs for

individuals. This produces an implementing plan and budget and the formulation of

additional benefits that a revision of systems and process can give in.

C. Design:

This is the process for closing the gaps to harmonize local GAAP with IFRS, but may also

include the redevelopment of the reporting pack, enhancing or speeding up the reporting

process, planning and implementing the necessary systems changes and developing the

necessary training programs for technical and operational staff. The plan needs to build in a

dry-run, data collection and testing and analysis. All of these points need to be built into a




project management plan with established milestones over the implementation time

period..

7) Time:

Time is as much of a critical success factor as the other points above since invariably there is

a stipulation that IFRS is to be implemented by a certain date. The more time that is

allowed, the more opportunity there is to iron out any problems arising.

IMPLEMENTATION OF IFRS AND ITS ADVANTAGES:

1) It would benefit the economy by increasing growth of international business.

2) It would encourage international investing and thereby lead to more foreign capital

inflows into the country.

3) Investors want the information that is more relevant, reliable, timely and comparable

across the jurisdictions. IFRS would enhance the comparability between financial

statements of various firms across the globe.

4) Better understanding of financial statements would benefit investors who wish to

invest outside their own country.

5) The industry would be able to raise capital from foreign markets at lower cost if it can

create confidence in the minds of foreign investors that their financial statements

comply with globally accepted accounting standards.

6) It would reduce different accounting requirements prevailing in various countries

there by enabling enterprises to reduce cost of compliances.

7) It would provide professional opportunities to serve international clients.

8) It would increase their mobility to work in different parts of the world either in

industry or practice

IMPLEMENTATION OF IFRS AND ITS CHALLENGES:

1) Increase in cost initially due to dual reporting requirement which entity might have to

meet till full convergence is achieved.

2) In many countries, the accounting framework is deeply affected by laws and

regulations. Changes may be required to various regulatory requirements under The

Companies Act, Income Tax Act, etc. so that IFRS financial statements are accepted

generally.




3) If IFRS has to be uniformly understood and consistently applied, all stakeholders,

employees, auditors, regulators, tax authorities, etc would need to be trained.

4) Entity would need to incur additional cost for modifying their IT systems and

procedures to enable it to collate data necessary for meeting the new disclosures

and reporting requirements.

5) Differences between country’s GAAP and IFRS may impact business decision /

financial performance of an entity.

6) Limited pool of trained resource and persons having expert knowledge on IFRSs.

SIGNIFICANT OBSTACLES TO ACHIEVING CONVERGENCE ARE FOLLOWING:

Disagreements with the requirements of certain significant IFRS, for example,

financial instruments and other standard based on fair value accounting.

Tax driven nature of the national accounting system and the tension wield on the

capital markets and firms which desire to adopt IFRS.

Complicated nature of particular standards may have as a result the limited

implementation of IFRS to listed firms, widening the gap between IFRS and the

national accounting standards used by small and medium-sized entities (SME) s.

Insufficient guidance on first time implementation of IFRS.

Limited capital markets.

Satisfaction with national accounting standards among investors/users.

Translation difficulties.

DETERMINE WHEN TO QUANTIFY THE IMPACT OF IFRS:

To understand the impact of IFRS on financial results, most people know that being able to

work through the numbers is generally more effective than having to rely on words alone.

When should a firm provide quantified information about the impact that IFRS is likely to

have, both on transition and ongoing? This question triggers considerable discussion, but

the answers appear to fall into two clusters.

Some financial executives take a conservative stance. They strongly believe that fims

should disclose quantitative information only when management is absolutely

confident that the information it can provide is complete and accurate.

In contrast, other financial executives are willing to provide quantitative insights at

an earlier point. They are prepared to provide information, when they have it, on the




potential quantitative impact of specific accounting policies being considered. They

will, however, require that their disclosures be subject to certain conditions. For

example, they may indicate that management has confidence in the process used to

reach these decisions and reasonable confidence in the numbers being provided,

and also include in the disclosure appropriate cautionary language about key

assumptions and that amounts are unaudited.

For each firm, determining the right time to provide quantitative disclosure will require a

fine balance management’s comfort with the level of accuracy and completeness of the

information versus stakeholders’ need for information to understand the likely impact of

IFRS. As noted earlier management’s initial plans about when to provide quantitative

information may be further complicated by peer firms or competitors making information

available earlier than anticipated. Also, regulators clearly expect this information to be

provided as soon as possible. Effective disclosure controls and procedures as well as the

firm’s disclosure committee should certainly demonstrate their value this year. For example,

any messages being delivered by investor relations to the market definitely need to be

aligned with any quantitative IFRS related disclosures provided. Audit committees should be

prepared for interesting and challenging discussions. Directors should be able for

considering how effectively their firm is communicating with stakeholders about its move to

IFRS.

ECONOMIC CONSEQUENCES OF IMPLEMENTATION OF IFRS:

IFRS was invented to set a formalized method for recording and reporting the economic

activities of businesses. If the capital market become more assure that the financial

statements of a firm represent a true and fair view of their financial performances, there

will be a liquid market to trade securities on. In addition, due to increasing transparency the

cost of capital can be reduced. Market liquidity is affected by lower transaction costs and a

narrower bid ask spread. The introduction of IFRS was focused on improving transparency

and comparability of firms, and consequently the economic benefits are possible results to

firms for adopting these reporting standards. The direct measurements of economic

consequences of IFRS are not simple matters. IFRS adoption will have a favorable impact on

economic benefits in many instances as follows:




It has impact on economic, social, or political scale. In public policy considerations,

such as domestic economic growth and stability or promoting the competitiveness of

an economy in the globe, should be included in standard setting decisions.

It will have impact on judgment and economic decisions and capital market.

It is important for decision making activities for a management team as adopter in

the firm.

It impacts on accounting reports on the decision making behavior of business,

government, unions, investors, and creditors.

It would affect the wealth distribution.

It would improve general public confidence in financial markets, due to more

transparency resulting in a more efficient allocation of capital resources.

The increased credibility of the financial statements of a single entity, resulting in an

improved accessibility to capital markets and possible lower costs of capital.

It can increase utilities.

It will increase management efficiency as a result of accountability to shareholders,

investors and others who could make better informed evaluations and comparisons.

Prepares of financial statements can take actions directly in response to changed

accounting standards in only own interest situations.

In reality there are much more users of financial statements than just investors and

creditors who give more feedback to adopters.

It causes change in the competiveness of one country to another, or between

continents. This is due to a change in accounting standards for that specific region.

CONCLUSION:

The implementation of International Financial Reporting System (IFRS) needs to take into

account all of the forces affecting corporate behavior and all of the layers of the corporate

reporting process. The process as a whole needs to contribute to wealth creation. The

arguments in favor of IFRS implementation (i.e. the benefits to firms and investors of

lowering the costs of cross border transactions) apply equally to monitoring and

enforcement activities. Indeed, it could be argued that much of the effort devoted to IFRS

implementation will be wasteful if there are inconsistent or duplicative national approaches

to monitoring and enforcement. Inconsistency will constrain the improvements in investor




confidence; duplication will increase costs for both firms and investors. The benefits from

cooperation amongst national regulators are already well understood in the banking,

securities and insurance markets. There are well established international organizations at

the global and European levels which make it easier for the national authorities to

cooperate and to adopt common approaches. It is reasonable for them to request a

consistent regulatory framework in which to operate. A single worldwide regulatory

approach or regulatory organization is neither feasible nor desirable because the national

differences in the factors affecting the design and intensity of monitoring and enforcement

activities (e.g. firms and securities law, the strength of the accounting profession, the extent

to which investors are able to exert influence over firms, etc.) are likely to persist for a long

time. However, it is more realistic to hope that, over time, there could be agreement on

common principles and on cooperation arrangements. International agreement on IFRS

would make cross border regulatory cooperation easier and more effective. As yet,

however, there are no equivalent organizations for the national audit regulators. Given the

recent creation of independent audit regulators in a number of countries, and the likelihood

of this number increasing in future, it is believed that there would be merit in the

establishment of an international mechanism to facilitate exchange of information and the

development of IFRS which would help to reduce the risk of inconsistency or duplication .

REFERENCES:

1. Practical Implementation, Guide and Workbook for IFRS,Wiley,by Abbas Ali

Mirza,Graham J.Holt

2. IAS/ IFRS: The Economic Consequences of Increased Disclosure: the Effects of the

IAC/IFRS in the European Union on the Bank’s Cost of Equity, By Vera Palea

3. XBRL International. (n.d.). Frequently Asked Questions. , from Extensible Business

Reporting Language: http://www.xbrl.org/faq.aspx#15

4. A survey of National Efforts to Promote and Achieve Convergence with IFRS; GAAP

Convergence 2002.

5. UNCTAD Secretariat (2005). Review of Practical Implementation Issues of

International Financial Reporting Standards, Country Case Studies. UNCTAD

Secretariat. 2005. Intergovernmental Working Group of Experts on International

Standards of Accounting and Reporting (ISAR), 21st session

http://www.xbrl.org/faq.aspx#15




6. Guest Column: Potential Advantages and Disadvantages of Harmonization of IFRS by

Ms. Namita Vyas

http://www.forum4finance.com/2009/10/11/guest-column-potential-advantages-and-

disadvantages-of-harmonization-of-ifrs/

7. Report on the committee on the IFRS compliance in Indian Insurance Industry,

Insurance Regulatory and Development Authority, June 22 2009, Chairman

Dr.R.Kannan http://www.irdaindia.org/press_release/ifrs_report.pdf

8. Brown, W. C. (2011, May 16). Are You Ready for an IFRS Conversion? ISACA Journal:

http://www.isaca.org/Journal/Blog/Lists/Posts/Post.aspx?ID=63

9. GAAP IFRS: Which Standard to Choose? January 27 2010, Deloitte,

Http://www.fmi.ca/uploads/1/Deloitte_David_GAAP_IFRS.PDF

10. Review of Practical Implementation Issues Relating to International Financial

Reporting Standards, Case Study of the United Kingdom of Great Britain and

Northern Ireland, Note by the UNCTAD Secretariat,

http://unctad.org/en/Docs/c2isard48_en.pdf

11. Brown, V. H. (1990). Accounting Standards: Their Economic and Social

Consequences. Accounting Horizons.

12. Daske, H., L. Hail, C. Leuz and R.S. Verdi (2009). Heterogeneity in the Economic

Consequences of IFRS Adoptions. University of Mannheim.

13.Deloitte & Touche (2003). “International Financial Reporting Standards: Of Growing

Importance for U.S. Companies.” Deloitte & Touche LLP.

14.SGV & Co., & Ernst & Young. (2008). Conversion to International Financial Reporting

Standards. Issues & Perspective.

http://www.ey.com/global/content.nsf/Philippines/Issues_&_Perspectives

15.Kieso, E. D., Weygandt, J. J. & Warfield, T. D. (2007). Intermediate accounting, 12th Ed.

Wiley, John Wiley & Sons Inc.

16. http://www.iasplus.com/dttpubs/usifrs.pdf

17. http://www.ifrs.org/Pages/default.aspx

18. http://en.wikipedia.org

19. www.iasb.org

20. http://www.financialexpress.com

21. http://www.kpmg.com

http://www.irdaindia.org/press_release/ifrs_report.pdf

http://www.isaca.org/Journal/Blog/Lists/Posts/Post.aspx?ID=63

http://www.fmi.ca/uploads/1/Deloitte_David_GAAP_IFRS.PDF

http://unctad.org/en/Docs/c2isard48_en.pdf

http://www.ey.com/global/content.nsf/Philippines/Issues_&_Perspectives

http://www.iasplus.com/dttpubs/usifrs.pdf




ROLE OF FINANCIAL INCLUSION THROUGH SELF HELP GROUP: A STUDY OF

SELECTED SHGS IN YAMUNA NAGAR (DISTRICT HARYANA) INDIA

Rekha Rathore*

Manika Garg**

Abstract: The financial inclusion emphasizes on conversion of unbanked area into banked

ones. Having a bank account does not mean financial Inclusion. The significant steps have

been taken by Reserve Bank of India to penetrate unbanked areas. The future lies with those

companies who see Bottom of pyramid as their customer. We need to have comprehensive

methods to measure the reach of financial system to foster the financial inclusion across the

country. In financial inclusion index rank, India occupies 50th place above Russia (83 rd

position) but below china. Microfinance through Self Help Groups (SHGs) has become an

important vehicle to meet the savings and credit needs of the poor, especially women in

rural areas. The purpose of study is to know the role of financial inclusion through self help

group and for this the data will be collected from NGOs, SHG, NABARD, Gramin Banks by

using interview method. Study is limited to Yamuna Nagar district only. This study help to

give an outlook about the current status of SHGs in Financial inclusion , by conducting this

study we are able to find out the problems faced by NGOs, SHG, NABARD, Gramin Banks and

able to improve the success rate of SHG for the development of economy and make it as a

powerful tool in financial inclusion.

*Asst. Professor & Research Scholar, S.D. Institute of Mgt. and tech., Jagadhri.

***Student MBA, S.D. Institute of Mgt. and tech., Jagadhri.




INTRODUCTION

Financial Inclusion is a very important initiative for the sustainable growth of a country. With

a huge rural population, that is economically challenged, Government in India has rolled out

many initiatives like Rural Employment Guarantee Scheme, Sarva Shiksha Abhiyan

(Education for All), Bharat Nirman Programme. But to support the growth, a committee on

Financial Inclusion (FI) was also formed in June 2006, with Dr. C Rangarajan as Chairman to

recommend a strategy to achieve a higher Financial Inclusion in the country. India in last 15

years has witnessed unprecedented growth in financial services, unfolded by liberalization

and globalization of financial services due to adoption of Information Technology and

unlocking of the regulatory framework. But alongside this positive development there are

evidences that the formal financial sector still excludes a large section of population. As on

March 2006, the saving accounts per 100 adult populations were 63 and credit accounts

were only 16 in all India (RBI, BSR 2006). In 1992, India’s National Bank for Agricultural and

Rural Development (NABARD) piloted the concept with 500 groups. Since then, the SHG

movement has witnessed tremendous growth that brought about one of the world’s largest

and fastest-growing networks for micro-finance. In 2007, some 40 million households were

organized in more than 2.8 million SHGs that borrowed more than US$ 1 billion of credit

from banks in 2006/7 alone (Reserve Bank of India 2008). Cumulative credit disbursed to

SHGs amounted to some US$ 4.5 billion (or about 10% of total rural credit) in India

(Garikipati 2008).

1According to IISS (Invest India Incomes and Savings Survey, 2007), 55 percent of all the

households do not have bank accounts, 97 percent do not have any health insurance and 61

percent do not have life insurance

FINANCIAL INCLUSION

Financial Inclusion is delivery of basic banking services at an affordable cost to the vast

sections of disadvantaged and low income groups. It includes access to formal financial

system such as financial institutions, markets and instruments, like savings, loans,

remittances and insurance services, at affordable prices.

Financial Inclusion can be thought of in two ways: One is exclusion from the payments

system –i.e. not having access to a bank account. The second type of exclusion is from

1 http://www.idfresearch.org/Financial-Inclusion-0901.pdf, accessed on dated 02-04-2010.

http://www.idfresearch.org/Financial-Inclusion-0901.pdf




formal credit markets, requiring the excluded to approach informal and exploitative

markets. Access to formal banking services has been available through the use of

intermediaries such as Self Help Groups (SHGs) and Microfinance Institutions (MFIs). SHGs

are usually groups of women who get together and pool their savings and give loans to

members. Usually NGOs and National Bank for Agriculture and Rural Development

(NABARD) promote and nurture these groups. The recovery experience has been very good

from SHGs and there are currently 2.6 million SHGs linked to public sector banks reaching

almost 40 million households through its members.

GROWTH

India in last 15 years has witnessed unprecedented growth in financial services, unfolded by

liberalization and globalization of financial services due to adoption of Information

Technology and unlocking of the regulatory framework. The banking sector responded

quickly to the new technology; diversified in multiple services and thus the share of finance

& related services in the gross domestic product increased to about 14 per cent in 2006-07

from 11 per cent in 1991-92 (RBI, Annual Report 2006-07). But alongside this positive

development there are evidences that the formal financial sector is still excludes a large

section of population. As on March 2006, the saving accounts per 100 adult populations

were 63 and credit accounts were only 16 in all India (RBI, BSR 2006). Reserve Bank of India

(RBI) and Government of India (GOI) are very much concerned about the financial exclusion

as expressed in various issues of Monthly Bulletins of RBI during 2006 & 2007 and Central

Budget of 2007-08(5,1). One aspect of inclusive growth is financial inclusion. The process of

financial inclusion is an attempt to bring within the ambit of the organised financial system

the weaker and vulnerable sections of society.

Financial inclusion can be defined as the delivery of credit and other financial services at an

affordable cost to the vast sections of the disadvantaged and low income groups. The Indian

state put stress on providing financial services to the poor and underprivileged since

independence. The commercial banks were nationalized in 1969 and were directed to lend

40% of their loan able funds, at a concessional rate, to the priority sector. The priority sector

included agriculture and other rural activities and the weaker strata of society in general.

The aim was to provide resources to help the poor to attain self sufficiency. They had

neither resources nor employment opportunities to be financially independent, let alone




meet the minimal consumption needs. To supplement these efforts, the credit scheme

Integrated Rural Development Programme (IRDP) was launched in 1980. But these supply

side programs (ignoring the demand side of the economy) aided by corruption and leakages,

achieved little. Further, ‘The share of the formal financial sector in total rural credit was

56.6%, compared to informal finance at 39.6% and unspecified sources at 3.8%. [RBI 1992].

Not only had formal credit flow been less but also uneven. The collateral and paperwork

based system shied away from the poor. The vacuum continued to be filled by the village

moneylender who charged interest rates of 2 to 30% per month (Rural Credit and Self Help

Groups- Microfinance needs and Concepts in India- K.G.Karmakar 1999). 70% of

landless/marginal farmers did not have a bank account and 87% had no access to credit

from a formal source.( World Bank NCAER, Rural Financial Access Survey 2003)

OBJECTIVES OF THE STUDY:

1. To know the problems being faced by NABARD, NGO, bank & SHG.

2. To develop a framework for improvement in financial inclusion.

3. Suggestions for Role of financial inclusion through Self help group

REVIEW OF LITERATURE:

Khawari (2004) revealed that the establishment of microfinance institutions (MFIs) world-

wide for the provision of collateral free loans to the poor through mechanisms and

instruments not known to normal commercial banks has set new milestones in the field of

financial services. With 900 million households in the less developed countries left without

any access to formal financial services. Firpo (2005) suggested that the Micro development

Finance Team (MFT) carried out pilot projects in Uganda to determine the role technology

could play in increasing the reach of microfinance. The conclusions drawn from the study

that business process change and the implementation of new technology should proceed in

tandem; creative technology solutions are required to be tailored to the unique and often

challenging needs in emerging markets and local contexts; and partnerships between MFIs

and local companies assist in reducing infrastructure costs. Technologies such as the RTS can

evolve and provide functionality that serves to build bridges between MFIs and the formal

financial sector.Ghosh (2005) traced the evolution of the Microfinance revolution in India as

a powerful tool for poverty alleviation and women empowerment. Where institutional

finance failed Microfinance delivered, but the outreach is too small. Pahuja (2007)




concluded that at analyzing the historical and the present state of the rural financial

system in India .The paper is divided into three major segments where Segment (I) presents

the background of the rural financial system and also studies the problem of Financial

exclusion, (II) segment deals with the institutions working for the rural financial system,

segment (III) focuses on Micro Finance Institutions and deals with the analysis of the overall

paradigm as it holds for the Micro Finance Institutions in India Yang, whitefeild & Boehme

(2007) described that an empirical study of investigating recent trend and development of

the application of e-banking in rural areas and its economic impact on local financial

institutions. The data used in this research are collected through a web-based questionnaire

survey. The research objective is to investigate how those smaller and community banks

located in rural areas have attempted to catch up with their counterparts in larger cities in

terms of the application of e-banking, focusing on emerging issues and challenges. The

results are discussed with managerial implications along with suggestions for future

research. Rangarajan (2008) accessed that to finance by the poor and vulnerable groups is

a prerequisite for poverty reduction and social cohesion . The objective of financial inclusion

is to extend the scope of activities of the organized financial system to include within its

ambit people with low incomes. Through graduated credit, the attempt must be to lift the

poor from one level to another so that they come out of poverty. Sharma (2009) studied the

financial inclusion by channelizing existing recourses. His conclusions are that (i) use of

technology in the banking system is the most feasible solution for achieving financial

inclusion, and (ii) the implementation of technology should follow a top down approach.

Anamika (2009) analyzed the efforts made by the government of India in the

implementation of financial inclusion, identifies the barriers in the process and suggests

strategies to ensure maximum financial inclusion for the underprivileged and unbanked

areas. Prasher (2009) suggested that the root cause for advancement in banking sector in

rural areas is the cost factor. Technology can help in cutting down the cost factor. Use of IT

reduces the costs of financial transactions, improves allocation of resources, and increases

competitiveness and efficiency. Most importantly, it enables to take any product or service

to the general masses. IT has also enabled efficient, accurate and timely management of the

increased transaction volume that comes with a larger customer base.




WORKING

In the pursuit of economic development NABARD (National Bank for Agriculture and Rural

Development) who takes the initiative to develop SHG’s (Self Help Group) with the help of

an NGOs(Non Government Organization) and banks to empower the rural people to get self

employed and generate some income. SHG is group of people from a homogeneous social

or economic class, all of who come together for addressing their common problems. After

the six month of commencement of SHG, they people approach to bank for the loan. After

analysing the working and documentation of last six months bank approve the loan to the

SHG and this loan will be used by the group for the working of SHG. Interest rate on the

loan is nominal and the NABARD also provide subsidies to SHG. As the NABARD leading the

Indian economy towards i.e higher GDP and national income. NGO’S earning profits in form

of incentive from NABARD. SHGs are earning income by utilising the loans for productive

purposes. Interest paid by the NGO’s on loans are the income for the Banks.

RESEARCH METHODOLOGY:

Sample:

50 SHGs, and 3 banks will be randomly selected with in Yamuna Nagar & Jagadhri.

Sampling: Random sampling Sampling Design: Descriptive Research

Tools: For this few public and private banks will be selected to know that how these banks

provide financial education to underprivileged persons and debt counselling to individuals

who are indebted to formal and/or informal financial sectors. Different SHGs will be

selected and data will be collected through interviews. To know the role of financial literacy

and credit counselling centre Punjab National Bank, State Bank of India, ICICI Bank and HDFC

Bank will be selected. To study the third objective and its sub objective, a primary study will

Nabard

& Other

Agencie

sssss

NGO’s

S

H

G

Banks

PROFITS

Incentives Guidance Approval of loan

Interest for loan

Economy

growth

incentives

Income Interest

Approach for loan




be made through interview of bank managers, using unstructured interview and

questionnaires filled by vulnerable group.

Analysis: Data collected for first and second objective will be through primary method i.e.

interview and for third objective data will be through secondary data i.e. journals, literature

review.

DATA ANALYSIS & INTERPRETATION:

Mainly, members of the SHGs are women. Consequently, participation of women in the

country’s economic development is increasing. They also play an important role in elevating

the economic status of their families. This has led boost to the process of women’s

empowerment.

The SHG is the dominant microfinance methodology in India. The operations of 15-25

member SHGs are based on the principle of revolving the members’ own savings. External

financial assistance –by MFIs or banks – augments the resources available to the group-

operated revolving fund. Savings thus precede borrowing by the members. In many SHG

programmes, the volume of individual borrowing is determined either by the volume of

member savings or the savings of the group as a whole. Some NGOs operate microfinance

programmes by organising federations of SHGs to act as the MFI which obtains external loan

funds in bulk to be channelled to the members via the SHGs. NABARD has facilitated and

extensively supported a programme which entails commercial banks lending directly to

SHGs rather than via bulk loans to MFIs. NABARD re-finances the loans of the commercial

banks to SHGs. Self-help group is a method of organising the poor people and the

marginalized to come together to solve their individual problem. The SHG method is used by

the government, NGOs and others worldwide. In 1991-92 NABARD started promoting self-

help groups on a large scale. And it was the real take-off point for the ‘SHG movement’. In

1993, the Reserve Bank of India also allowed SHGs to open saving accounts in banks. Facility

of availing bank services was a major boost to the movement.

In Figure 1, a graphic illustration is shown of a SHG Federation. Typically, about 15 to 50

SHGs make up a Cluster / VO with either one or two representatives from each SHG.

Depending on geography, several clusters or VOs come together to form an apex body or an

SHG Federation.




Figure 1 Illustrative SHG Federation

SHG model in India

In India three different models of linkage of SHGs to the financial institutions have emerged.

They are:

Banks, themselves, form and finance the SHGs.

SHGs are formed by NGOs and other agencies but financed By banks.

Banks finance SHGs with NGOs and other agencies as financial intermediaries.

Problems

Banks NGO

SHGs

•Problem in guidance

•Legal provisions

•Non payment of interest

•Delay in interest payments

•Illiteracy

•Problem of providing financial literacy

•Non utilization of funds

•lack of awareness,

•lack of trust

•improper accounting system

• conflict among the members

SHG Federation /

Apex /

Mandal Samakhya

Cluster/Village

Organization Cluster/ Village

Organization Cluster/ Village

Organization

SHG SHG SHG SHG SHG




CHALLENGES FACED BY SELF HELP GROUPS:

1. Security risk

Pooled savings are often guarded by a designated sub-group or individual, and while these

individuals may be trust worthy, the money could still be easily misplaced, if not stolen

altogether.

2. Risk of fraud

Well established self-help groups may not face the perils of fraud because their longevity

relies on the adoption of good governance principles; however, recently-formed self-help

groups are susceptible to fraudulent activity by the designated accountants or even by

group member.

3. Lack of capital

The loan requirement of the self-help group may easily exceed the pool of funds generated

through savings from group members, especially considering money lost through bad debts.

4. Lack of management skills

Self-help groups are often initiated by a small cluster of individuals from low-income groups.

Even though the members have little formal education or exposure to running thriving

businesses, they may manage the group efficiency when the group size is small.

5) Limited financial strength hence limited borrowing capacity

The another problem faced by the self help groups are limited financial strength which

creates the problem to borrow the fund from outside,even if their paper work already get

completed.

6) Lack professionalism

Members of the self help groups are illitrate and less qualified,due to which they are not

having the perfect knowledge of starting the business and proceed it further.this shows that

members of self help groups do not have the professional knowledge.

7) Marketing of production poses a major challenge for the SHG

In today’s modern era, marketing of the product play a very important role to launch and

proper enhancing the sale in cut throat competition. So, this is very difficult for financially

weak self help groups to spend money marketing.




HOW SELF-HELP GROUPS PROMOTE WELLNESS

Large Variety of Wellness-Focused Groups: There exists a large variety of groups focused on

specific areas of wellness. These include weight loss, smoking cessation, alcohol or drug

abuse, diabetes education, stress reduction, and all types of illnesses and disorders.

Wellness Activities: Groups for arthritis, weight loss, stroke, diabetes and others have many

activities to help patients feel better, gain strength or mobility, or to live better with the

ailment.

Prevention Activities: Many groups include a prevention component for both their

members as well as for persons unaffected by the condition.

Peer Support is Stronger than Willpower. Sharing stories, offering suggestions and tools,

and mentoring have been found to promote healthy behaviors.

Education Helps People Gain Greater Control: With the wealth of knowledge on the

internet, people are beginning to educate themselves more about their health issues.

Having Meaningful Rituals – Many groups have rituals or “check outs” during their meetings

which solicit positive responses. Some questions that members may respond to before the

end of the meeting might be: “This one thing I’ll do for myself this week is...” “The main

lesson I learned today is...,” “This week I will look for strengths in this part of my life...,” etc

Framework of Financial Inclusion

In the pursuit of economic development NABARD(national bank for agriculture and rural

development) who takes the initiative to develop SHG’s (self help group) with the help of an

NGOs(non government organization) and banks to empower the rural people to get self

employed and generate some income. SHG is group of people from a homogeneous social

or economic class, all of who come together for addressing their common problems. After

NABARD

& Other

Agencies NGO’s

S

H

G

Banks

PROFITS

Incentives Guidance Approval of loan

Interest for loan

Economy

growth

Incentives

Income Interest

Approach for loan




the six month of commencement of SHG, they people approach to bank for the loan. After

analysing the working and documentation of last six months bank approve the loan to the

SHG and this loan will be used by the group for the working of SHG. Interest rate on the

loan is nominal and the NABARD also provide subsidies to SHG. As we talk about the profits,

it is clearly defined from the figure that not only the SHG but all the other organisations also

achieving their objectives. As the NABARD leading the Indian economy towards i.e higher

GDP and national income. NGO’S earning profits in form of incentive from NABARD. SHGs

are earning income by utilising the loans for productive purposes. Interest paid by the

NGO’s on loans are the income for the Banks. We have conducted interview with different

banks in order to find out the problems faced by the banks from SHGs. Conversations with

the banks conclude some basic problems as follows:

Punjab National Bank Jagadhri:

As per the conversation with Mr. M. Goel (Commercial Tax Officer) of Punjab National Bank,

Jagadhri, we came to know that Punjab National Bank is providing loan for self employment

to a group of women which is known as SHG which are established by NGO or by other

agencies. They generate income by cooperative way. The main problem faced by banks from

SHGs is lack of knowledge, lack of mutual understanding within group and improper

utilization of funds.

The suggestions are given by him to improve the efficiency of banking system is inclusion of

bank representative in village committee. They also have special cell for SHGs on the state

level but not on Branch banking level.

Bank of Baroda Jagadhri:

As per the conversation with Mr. S.R. Thakur CTO, Jagadhri, we came to know that Bank of

Baroda, Jagadhri is currently associated with two SHGs i.e. Luxmi SHG and Bala Sundri SHG.

They are providing loan to SHGs according the rules and regulation. At this time, Bank is

providing the subsidy of Rs. 125000. They do not have special cell for facilitating to SHG.

Problem is that these banks are working only because of target basis. Not going in meeting.

Default in payment. The main problem faced by them from SHGs are lack of knowledge,

Illiterate members , take the loan for the investment purpose but use the same for

consumption purpose not for income generation and the non utilization of funds. NGOs in

Yamuna Nagar are not so active as they are working in Gujrat. The suggestions are given by




him that proper training programme should be conducted for illiterate persons and tell

them how they can properly and effectively use the new techniques in SHGs. Proper

awareness programme should be conducted for the Business. NGOs should support them in

best and effective way. Financial Discipline should be in SHGs i.e. Rule regulation and code

of conduct of the business. As per interview taken by Bank of Baroda and Punjab National

Bank CTO in Jagadhri region, we are able to find the problems which banks are facing and it

leads to default in payment by SHGs.

BENEFITS

Financing through SHG’s effects quite a few benefits viz; (i)savings mobilized by the poor; (ii)

access to the required amount of appropriate credit by the poor; (iii) meeting the demand

and supply of credit structure and opening of new market for financing institutions; (iv)

reduction in transaction cost for both lenders and borrowers; (v) tremendous improvement

in recovery; (vi) heralding a new realization of subsidy-less and corruption-less credit; and

(vii) remarkable empowerment of poor women.

RECOMMENDATIONS:

1. Proper Regulation: The regulation was not a major concern when the microfinance was in

its nascent stage and individual institutions were free to bring in innovative operational

models. However, as the sector completes almost two decades of age with a high growth

trajectory, an enabling regulatory environment that protects interest of stakeholders as well

as promotes growth, is needed.

2. Field Supervision: In addition to proper regulation of the microfinance sector, field visits

can be adopted as a medium for monitoring the conditions on ground and initiating

corrective action if needed.

3. Encourage rural penetration: It has been seen that in lieu of reducing the initial cost,

MFIs are opening their branches in places which already have a few MFIs operating.

Encouraging MFIs for opening new branches in areas of low microfinance penetration by

providing financial assistance will increase the outreach of the microfinance in the state and

check multiple lending. This will also increase rural penetration of microfinance in the state.

4. Complete range of Products: MFIs should provide complete range of products including

credit, savings, remittance, financial advice and also non-financial services like training and




support. As MFIs are acting as a substitute to banks in areas where people don’t have access

to banks, providing a complete range of products will enable the poor to avail all services.

5. Transparency of Interest rates: As it has been observed that, MFIs are employing

different patterns of charging interest rates and a few are also charging additional charges

and interest free deposits (a part of the loan amount is kept as deposit on which no interest

is paid).

6. Technology to reduce Operating Cost: MFIs should use new technologies and IT tools &

applications to reduce their operating costs. Though most NBFCs are adopting such cost

cutting measures, which is clearly evident from the low cost per unit money lent (9%-10%)

of such institutions.

7. Alternative sources of Fund: In absence of adequate funds the growth and the reach of

MFIs become restricted and to overcome this problem MFIs should look for other sources

for funding their loan portfolio.

CONCLUSION:

SHGs contribute to solving the problems of inadequate housing and urban services as an

integral part of poverty alleviation programmes. The challenge lies in finding the level of

flexibility in the credit instrument that could make it match the multiple credit requirements

of the low income borrower without imposing unbearably high cost of monitoring its end

use upon the lenders. A promising solution is to provide multipurpose loan or composite

credit for income generation, housing improvement and consumption support.

Consumption loan is found to be especially important during the gestation period between

commencing a new economic activity and deriving positive income. “fortune at the bottom

of the pyramid.”

REFERENCES:

1. Basu, P., Shrivastava, P. (2005), “Scaling-up microfinance for India's rural poor”.

Available at URL: http://ideas.repec.org/p/wbk/wbrwps/3646.html, accessed on

dated 23-04-2012.

2. Chavan, A., Arora, S., Kumar A., Koppula, P (2009), “How Mobile Money Can Drive

Financial Inclusion for Women at the Bottom of the Pyramid (BOP) in Indian Urban

Centers”. Available at URL: http://portal.acm.org/citation.cfm?id=1610926.1610984,

accessed on dated 06-03-2012.

http://ideas.repec.org/p/wbk/wbrwps/3646.html

http://portal.acm.org/citation.cfm?id=1610926.1610984




3. Chethan Vanitha, Krishnamurthy B 2004. Swarnajayanthi Grama Swarozgar Yojana

for empowerment of rural women in Karnataka. In: Kiran Prasad (Ed.):

Communication and Empowerment of Women. Vol. 2. New Delhi: The Women Press,

pp. 558-591.

4. Firpo, J. (2005), “Banking the Unbanked: Technology’s Role in Delivering Accessible

Financial Services to the Poor”. Available at URL:

http://www.gdrc.org/icm/govern/banking-unbanked.pdf, accessed on dated 25-03-

2012.

5. Ghosh, R. (2005), “Microfinance in India- A Critique”. Available at URL:

http://unpan1.un.org/intradoc/groups/public/documents/APCITY/UNPAN024232.pd

f, accessed on dated 25-04-2012.

6. Khawari, A. (2004), “Microfinance: Does it Hold its Promises?”. Available at SSRN:

http://ssrn.com/abstract=556213, accessed on dated 22-02-2012.

7. Kumari A, Malathi N 2009. Micro credit and rural development. In: Anil Kumar

Thakur, Praveen Sharma (Eds.): Micro-credit and Rural Development. New Delhi:

Deep & Deep Publications, pp. 1-10.

8. Luzzi Ferro, G., Weber, S. (2006), “Measuring the performance of Microfinance

Institutions”. Available at SSRN: http://ssrn.com/abstract=918750, accessed on

dated 25-04-2012.

9. Murali, D. (2008), “Financial Inclusion from an Opportunist Perspective”. Available at

URL: http://www.cab.org.in/ICTPortal/Lists/News%20Room/DispForm.aspx?ID=8,

accessed on dated 03-04-2012.

10. Nair, A. (2005), “Sustainability of microfinance self help groups in India: would

federating help?” Available at URL:

http://ideas.repec.org/p/wbk/wbrwps/3516.html, accessed on dated 26-04-2012.

11. Pahuja, N. (2007), “Financial Inclusion and Micro Finance in India”. Available at URL:

http://www.shvoong.com/social-sciences/economics/1617280-financial-inclusion-

micro-finance-india/, Accessed on dated 23-03-2012.

12. Ramanunny, M. (2005), “ Poverty Reduction through Micro Enterprise development

in Kerala”, India. In: Vineetha Menon, PR Gopinathan Nair, KN Nair (Eds.): Alleviating

Poverty. NOIDA: Rainbow Publishers, pp. 252-263.

http://www.gdrc.org/icm/govern/banking-unbanked.pdf

http://ssrn.com/abstract=556213


http://www.cab.org.in/ICTPortal/Lists/News%20Room/DispForm.aspx?ID=8

http://ideas.repec.org/p/wbk/wbrwps/3516.html

http://www.shvoong.com/social-sciences/economics/1617280-financial-inclusion-micro-finance-india/

http://www.shvoong.com/social-sciences/economics/1617280-financial-inclusion-micro-finance-india/




13. Rangarajan, C. (2008), “Reports on the Financial Inclusion”. Available at URL:

http://www.microfinancefocus.com/resources/2009/08/29/reports-on-the-financial-

inclusion/, accessed on dated 06-04-2012.

14. Sharma, A. (2009), “Challenges: For Building Financial Inclusive India”. ICFAI Reader,

pp.14-20, May 2009. Available at SSRN: http://ssrn.com/abstract=1445306, accessed

on dated 11-04-2012.

15. Sharma, P. (2009), “Financial Inclusion by Channelizing Existing Resources in India”.

The India Economy Review, pp. 76-82, 2009. Available at SSRN:

http://ssrn.com/abstract=1477765, accessed on dated 10-04-2012.

16. Yang, J., White Field, M. and Boehme, K. (2007), “New issues and challenges facing e-

banking in rural areas: an empirical study”. International Journal of Electronic

Finance, Vol. (1), Issue 3, PP. 336-354.

http://www.microfinancefocus.com/resources/2009/08/29/reports-on-the-financial-inclusion/

http://www.microfinancefocus.com/resources/2009/08/29/reports-on-the-financial-inclusion/






MANAGING BRANDS THROUGH CULTURE A CUSTOMER ORIENTED

APPROACH

Aarti Sharma*

Abstract: In consumer marketing, brands often provide the primary points of differentiation

between competitive offerings, and as such they can be critical to the success of companies.

Hence, it is important that the management of brands is approached strategically. However,

the lack of an effective dialogue between functions that are disparate in philosophy and do

not have a common and compatible use of terminology may be a barrier to strategic

management within organizations. No more is this evident than between the functions of

marketing and accounting. This article presents the relationships between the culture and

concepts of branding, and to provide a framework and vocabulary that aids effective

communication between the socio cultural marketing of the brands. A model for the

management of brand cultural approach is also offered. The following discussion focuses on

the concepts of cultural brand management and added value as they relate to the brand

construct itself.

Keywords: Brand Management , Culture, Brand Icons.

*Assistant Professor, LR DAV College, Jagraon




LITERATURE REVIEW

Cultural approach is based on analysis of brands and branding in the light of cultural

influences. The approach emphasizes the cultural forces in society and how these can be

used to build iconic brands as well as the impact of branding practices on the globalized

culture and market place. Starbucks is often referred to as a cultural icon or a brand icon. In

1971, Starbucks was founded as one single coffee shop in Seattle; by the end of 2006 the

American corporation owned around 12,440 coffee shops and stores around the world.

Starbucks initiated what subsequently has been referred to as the ‘Starbucks Revolution’ as

an expression of how much Starbucks has changed the way coffee is consumed all around

the world. The financial success is substantial and Starbucks is one of the global ‘brand

icons’ serving as a common frame of reference. All in all, Starbucks is a tremendous

marketing success. Starbucks is, however, also subjected to criticism for acting as a cultural

imperialist and for not taking interest and paying enough attention to fair trade, etc. Its

success hence goes hand in hand with being one of the brands that is most fiercely criticized

by the anti-brand movement: ‘Starbucks has become a cultural icon for all the rapacious

excesses, predatory intentions, and cultural homogenizations that social critics attribute to

globalizing corporate capitalism’ (Thompson and Arsel 2004, p. 631). Seemingly

contradictory, the common ground in the approach is the cultural brand perspective, in

which the brand is regarded as an important part of and contributor to mainstream culture.

Both parties (the literature concerned with the building of iconic brands and the anti-

branding movement) are mostly concerned with the brands representing corporate

America. These hugely successful brands are the ones that are pointed out as examples of

best practice; meanwhile these brands are also the ones that attract the majority of critical

voices from socially and culturally concerned citizen movements.

ASSUMPTIONS OF THE CULTURAL APPROACH

The individual brand perspectives introduced in the 1990s (the consumer-based approach,

the personality approach and the relational approach) had different takes on understanding

the exchange between a marketer and a consumer. The consumer-based approach turned

the spotlight on the consumer, while the personality approach and the relational approach

further constituted brand value as something co-created in a dialogue between marketer

and consumer (the ‘dyadic’ brand relationship). The community approach added meaning




found in the social interaction among dedicated brand consumers (the ‘triadic’ brand

relationship)to the main theories of brand value creation. Inspired by cultural studies, the

cultural brand perspective adds the exchange between macro-level culture and brands to

the picture. The literature deals with the way marketers can use cultural forces to build

strong brands (ultimately brand icons) and what brands and branding do to culture. It is

consumer culture rather than the individual consumer that is researched in the cultural

approach. One could argue that the pivotal point is still the brand meaning found in groups

of consumers just as in the community approach, but the focus of analysis is completely

different: In contrast [to research in communities], this article focuses on brand co creation

in a context where brands are not the central focus; thus, it is necessary to unpack the

meanings and socio cultural processes that continually problematize and ensure a brand’s

legitimacy to its various consumer groupings.

THEORETICAL BUILDING BLOCKS OF THE CULTURAL APPROACH

The cultural approach is very different from the other approaches, which implies a different

structure of the theoretical building blocks section. In the other approaches, a core theme is

presented alongside its supporting themes. The core theme is the main theory behind the

approach and the supporting themes are notions facilitating the deeper understanding of

the core theory. The dualism and the tensions of the cultural approach are, however,

reflected in the way this section is constructed. The theoretical building blocks hence consist

of one supporting theme – cultural consumption – and one core theme, namely brand icons.

The societal reaction to the core theme, the No Logo movement, is then reviewed followed

by a viable theory (the citizen-artist brand) of how brand management can deal with the

counter-reaction. The theory on cultural branding by Douglas B. Holt (How Brands Become

Icons) is a cornerstone in the cultural approach and serves as the core theme. Different from

the majority of the publications with a cultural perspective, this theory is focused on the

management of brands. The cultural branding model is closely related to the theory on

cultural consumption formulated by Grant McCracken. Understanding the basic way of

thinking about consumption in a cultural context facilitates the further reading of the theory

on how brands become icons, which is why it serves as the supporting theme. The review of

these two elements could immediately seem like sufficient material to gain an

understanding of brand management in cultural approach.




Figure:1 Model of the cultural approach

THE SOCIETAL RESPONSE TO BRAND ICONS: THE NO LOGO MOVEMENT

In the No Logo movement branding efforts are critically analyzed and linked with environmental

issues, human rights and cultural degradation.

Table :1.

A comparison between the mindshare branding model and the cultural branding model.

The mindshare branding model The cultural branding model Brand communication Persuasion The purpose of Myth making Communication advertising is to influence is the centre of consumer consumer perception of the value. The brand is a ‘storied’ brand through rhetoric product and the product is merely a means to embracing the story Brand components Abstract associations Cultural expressions The The brand consists of a set of brand’s value is found in the associations that is the brand’s cultural contents of the purified essence (brand DNA) brand’s myth. The brand has a reputation for performing

Supporting theme:

Cultural consumption

Core theme: Cultural branding: “How brands become icons

A societal comment: The No Logo movement

A future brand scenario: The citizen-artist brand




certain myths Brand management Consistency Brand Historical fit – brand management is about to management is about to upholding consistency in adapting the brand’s myth communications over time cultural changes in order to remain relevant

Source: Adapted from Holt (2004)

Moving through time and cultural changes and still staying relevant is one of the great

challenges of the iconic brands. The powerful myth has to be reinvented over and over

again in congruence with the socio-political-economic-cultural changes: ‘Iconic brands

remain relevant when they adapt their myths to address the shifting contradictions that

their constituents face’ . The cultural branding model is essentially very different from the

mindshare branding model (Holt’s term; in this book the consumer-based approach) as the

mindshare model establishes that consistency in brand communication is what builds a

strong brand. The aim of this book is the side-by-side presentation of the seven ‘ideal types’,

not to discuss if one approach is superior to another. Emphasizing the differences between

the mindshare model (the consumer-based approach) and the cultural model.After having

established the nature of consumption in a cultural perspective and how cultural meaning

can be activated in such a powerful way that brands become icons, we will now turn to the

societal, critical comment on the cultural impact of the global iconic brands. focusing on the

production of images. In that sense, No Logo is a serious attack on the idea of branding in

itself and seriously questions whether the iconic brands are selling something of real value

or only empty images and promises. Kalle Lasn is another significant voice in the anti-brand

movement. Founder of Adjusters and advocating the ‘uncooling’, ‘unswooshing’ and

‘demarketing’ of America, Lasn’s overall concern (1999) is that culture is not ‘bottom-up’

any more (significant cultural issues stemming from the people), but rather ‘top down’,

reversed by big companies and global brand corporations. Thereby, culture is no longer

created by the people, but by corporate America. Brands, products, fashions, celebrities,

entertainments have moved from being spectacles surrounding culture to become the main

constituents of culture. Human desires are manipulated through advertising; thereby an

authentic life is no longer possible. The activist agenda of Adbusters encourages ‘the people’




to fight ‘the cool machine’. This can be done through ‘culture jamming’ (the distortion of

commercial signs and mediums), by joining ‘buy nothing days’ and sticking to ‘TV turnoff

weeks’. Through these actions people can change the way cultural meaning is created in

society. Activist anti-brand movements also monitor corporations closely and thereby

pressure for corporate social responsibility (so-called corporate watch). This pressure for

more corporate social responsibility has created increasing attention in management circles

for the display of corporate social responsibility.

A FUTURE BRAND SCENARIO: THE CITIZEN-ARTIST BRAND

None of the other brand approaches holds opposing views in the same manner as the

cultural. The fact that the absolute champions of the branding process (the brand icons) are

also subjects to a ‘revolutionary’ agenda aiming at their downfall is, however, important to

understand. But maybe the two views are not so opposite as they first appear. Just like

critical voices can comment on the impact of the iconic brands, management can benefit

from an analysis of the tension between the two sides of the spectrum in the cultural

branding literature. One research article delivers an interesting take on the tensions

between brand icons and the anti-brand ‘No Logo’ movement . It is the article that is

mentioned as a key reading in the introduction to this approach. Holt’s analysis provides a

new logic to the opposites as he analyzes ‘the emerging anti branding movement to

understand tensions between the current branding paradigm and consumer culture to

speculate on their future directions’ . The brand icons are the champions of the postmodern

branding paradigm (the branding techniques that have proven efficient since the 1960s).

The pressure and criticism they are exposed to by the anti-brand movement should,

according to Holt’s analysis, be seen as the beginning of a paradigm shift. The same thing

happened in the 1960s, when cultural changes implied a new marketing/branding paradigm

to emerge. The pressure on the champions of the postmodern branding paradigms is hence

nothing more than an indication that things are about to change. Below is an illustration

with a short description of the postmodern branding paradigm and the post-postmodern

paradigm of Holt’s (2002) analysis. Changes in consumer culture have led to changes in the

marketing function, and branding techniques have changed accordingly. The move from one

dominant paradigm would another has been instigated by rebellion against the dominant

marketing techniques. In that sense ‘Consumers are revolutionary only insofar as they assist




entrepreneurial firms to tear down the old branding paradigm and create opportunities for

companies that understand emerging new principles’ . If a new branding agenda is about to

emerge, it is relevant to look at the major differences between the existing and the new.

‘Authenticity’ is central to understanding the proposed shift from the postmodern to the

post-postmodern branding paradigm. In the postmodern branding paradigm postmodern,

‘stealth’ branding (where the profit motive is disguised behind disinterested, ironic brand

communication) is perceived as being authentic. In the post-postmodern paradigm,

openness about profit motives should be accompanied by an engaged citizenship. The

authenticity problem of disguising profit motives behind a laid-back, ironic brand attitude is

what is being revealed by the anti-brand movement. In the post-postmodern branding

paradigm the citizen-artist brands should be frank about profit motives, act as responsible

citizens and be able to deliver original and relevant cultural material, consumers peel away

the brand veneer, they are looking for companies that act like a local merchant, as a

stalwart citizen of the community. What consumers will want to touch, soon enough, is the

way in which companies treat people when they are not customers. Brands will be trusted

to serve as cultural source materials when their sponsors have demonstrated that they

shoulder civic responsibilities as would a community pillar. To reflect one final time on this

somewhat different review of the theoretical building blocks of the approach: brand icons

are brands capable of telling powerful myths commenting on the central cultural

contradictions of the time. The basic understanding of consumption of goods as the

consumption of cultural meaning facilitates the understanding of the cultural brand

perspective and thereby serves as a supporting theme. How the culturally savvy brands

influence mainstream culture is fiercely resisted by the anti-branding agenda. Even though it

is not a supporting theme, but rather a societal comment, it is important to understand

some of the challenges facing the branding champions. Evoking thoughts about the future of

brand management, the future scenario of the citizen-artist brand is a central and

managerially relevant comment on the societal resistance by the No Logo movement. Even

though it seems contradictory at a first glance, the core elements of the cultural approach fit

nicely together.




SUMMARY

Core to the cultural approach is the theory on how brands become icons. So-called identity

brands (strong on self-expressive benefits) have the potential for becoming brand icons by

adapting to the cultural branding model. The cultural branding model is closely related to

McCracken’s classic theory about cultural consumption In this view of consumption, the

consumption objects are seen as cultural art effects carrying meaning from the culturally

constituted world to the consumers. Brands are regarded as cultural resources just like

movies, social movements, books, magazines, etc. In this brand perspective, the tools for

building iconic brands are found. Through addressing the pressing cultural contradictions as

a viable cultural ‘text’, and being able to reinvent as changes in societal contradictions

occur, the brand can approach the identity value of a cultural icon. The anti-brand

movement is concerned with what branding and globalization do to culture. The

encouragers of civil activism, they also raise important political questions and push for

corporate social responsibility. The tensions between brand icons and the anti-brand

movement can be understood as a phenomenon indicating the beginning of a new branding

paradigm. In this prospect of a post-postmodern branding paradigm the brand should act as

a citizen-artist, meaning being able to deliver relevant cultural material while shouldering its

social and civic responsibilities.

REFERENCES:

1. Aaker, D. A. and Joachimsthaler, E. (2002), Brand Leadership, Sydney: Free Press

Business

2. Berthon P., Nairn A. and Money A. (2003), ‘Through the paradigm funnel: conceptual

tool for literature analysis’, Marketing Education Review, Vol. 13, No. 2: 55–66

3. Bjerre, M., Heding, T. and Knudtzen, C. F. (2008), ‘Using the dynamic paradigm

funnel to analyze brand management’, in K. Tollin and A. Caru (eds) Strategic Market

Creation: A New Perspective on Marketing and Innovation Management, Chichester:

Wiley

4. Kapferer, J-N. (1997), Strategic Brand Management: Creating and Sustaining Brand

Equity Long Term, London: Kogan Page

5. Keller, K. L. (2003), Strategic Brand Management: Building, Measuring, and

Managing Brand Equity, Upper Saddle River NJ: Prentice Hall

6. Kuhn, T. S. (1996), The Structure of Scientific Revolutions, Chicago: University of

Chicago Press




INFORMATION TECHNOLOGY AND ITS ROLE TO MANAGE SUSTAINABLE

FINANCE

Himanshu Sekhar Acharya*

S.R. Dutta*

R.K. Bhoi*

Abstract: Today’s information society is being built on technology, knowledge and

intelligence. Information technology (IT) empowers both people and systems with

information, which is transformed into knowledge and intelligence. IT with communications

technologies facilitate fast, cheap, equitable, and resource efficient access to information,

accumulated knowledge, learning opportunities, and co-operation support tools for its

citizens. The investment in human recourses and IT are probably the important two factors in

building nation’s sustainable financial development. ITs investment can be more effective in

growth if accompanied by better organization and management in government sector and

private sector. The dramatic growth of the past half-century has led to higher living

standards in much of the world, but has also resulted in urban sprawl, choking pollution and

global warming. Information Technology offers tremendous opportunities for the developing

countries to fully share in the benefits of the global information economy and contribute in

sustainable financial development. Nations need to issue a national IT strategies and

initiatives framework to enable the governmental organizations to be proactive and to guide

the enterprise in its efforts to contribute in sustainable development. With about one billion

computers currently in use, information technology rightfully owns some of the blame for

the world's sustainability ills. The lifetime toll for a computer includes substantial resources

for manufacture and delivery, then more energy consumed in home offices and companies.

Yet for all this, IT will also take a starring role in sustainability solutions that meet the needs

of the present without depriving future generations.

This paper extends the existing evidence of important role of IT on nation’s sustainable

financial development with sustainable strategies using IT and related communication

gadgets.

Keywords: IT, sustainable finance, communication technology

*Asst. Prof., Comp. Sc, KIIMS,Cuttack




1.0 INTRODUCTION

Information Technology (IT) defined as “the application of computer systems - both

hardware and software, and often including networking and telecommunications”. Also it

defined as “the technology required for information processing”. Danziger and Andersen [9],

define Information Technology (IT) as those mechanical, conceptual, human and

organizational components whose function is to transmit or store data and information

using digital devices. Information and communication Technologies (ICTs) encompass all

those technologies that enable the handling of information and facilitate different forms of

communication among human actors, between human beings and electronic systems, and

among electronic systems. Although there no general agreement regarding to the precise

definition of sustainable development. The United Nation defines sustainable development

as “development that meets the needs of the person without compromising the ability of

future generations to meet their own needs”. Also, sustainable development can be

understood as a continuous process of balancing the need for environmental capabilities to

fulfill social needs and the availability in an ecosystem characterized by a stable dynamic

equilibrium. Therefore, current technology development should be reoriented and future

development directed with respect to sustainability. Information and communication

technologies (ICTs) offer a high potential for making a positive contribution towards

sustainability by reducing the impacts arising from manufacturing and transportation

activities.

This paper highlights the state of art of IT and its role in sustainable growth [2]-[16] of

developing countries. Also the paper extends some important strategies for sustainable

growth.

2.0 EFFECTIVE NATIONAL SUSTAINABLE DEVELOPMENT STRATEGIES

The experiences of both developed and developing countries suggest that sound and

effective national sustainable development strategies would have certain fundamental

elements; these elements are as follows:

- Country ownership and commitment

Country-driven, multi-stakeholder ‘ownership’ and strong political commitment are crucial

to the development and implementation of effective and continuous national sustainable

development strategies.




- Integrated economic, social and environmental objectives across sectors, territories

and generations

A national strategy for sustainable development should be comprehensive, balanced and

integrated vertically as well as horizontally. Vertical integration refers to incorporating

community (local) level concerns and actions into national decision making processes.

Horizontal integration on the other hand refers to the coordinated involvement of various

sectors in strategy development.

3.0 IMPACT OF INFORMATION AND COMMUNICATION TECHNOLOGIES ON

NATIONAL DEVELOPMENT

Today’s information society is being built on technology, knowledge and intelligence.

Information and communication technologies (ICTs) empower both people and systems

with information, which is transformed into knowledge and intelligence. It facilitates fast,

cheap, equitable, and resource efficient access to information, accumulated knowledge,

learning opportunities, and co-operation support tools for its citizens. Information and

communication technology has been used in both developed and developing countries to

support social and economic development. Many researches had delineated the

relationships between information and communication technologies and sustainable

development. Hanna et al [4], view information and communication sectors as providing the

infrastructure for the whole information economy, facilitating market entry, reducing costs,

improving customer services, and increasing productivity [4].

4.0 FACTORS AFFECTING IT DEPLOYMENT AND DEVELOPMENT

The crucial role of information and communication technologies in stimulating development

is a two-edged sword. On one hand, it allows countries to leapfrog stages of economic

growth by being able to modernize their production systems and increase their

competitiveness faster than in the past. On the other hand, for those economies that are

unable to adapt to the new technological system, their retardation becomes cumulative.

The deployment of information technology is a complex process; it incorporates with a

number of interrelated issues. Chieochan et al, list some factors affecting IT deployment and

development as follows [4]:

- Individual factors (leadership, attitude & IT knowledge),

- Organizational factors (business size, structure & culture), and




- Environmental factors (political, social, economical & technological factors).

Some of the internal and external factors are as follows:

- Internal Factors: Organizational structure and the corporate culture, Management and

business process, the organization’s strategy, and Individuals and roles.

- External Factors: Social, economical and political issues

5.0 BARRIERS

Barriers and problems that have been experienced in a number of ICT-based projects and

initiatives in some developing countries can be summarized in the following items:

• High telecommunication costs in some developing countries - The cost of basic

Internet remains a strong deterrent in many developing countries,

• Infrastructure - The telecommunication and electricity infrastructure in developing

countries is often inadequate,

• High rate of illiteracy in rural areas – “Illiteracy is a fundamental barrier to

participation in knowledge societies”. This means that these individuals are

disadvantaged and lack the basic skills required to harness the benefits of ICTs,

• Inadequate human resources - To ensure more meaningful participation in rural

development and to pave way for the creation of a critical mass of people that

effectively harness ICTs in developing countries, training and capacity building must

be an integral part of all ICT projects,

6.0 PROPOSED GUIDELINES

By reviewing literature in combination with observed practical situations few guidelines are

proposed for successful

These guidelines include three main steps as follows:

A. Clarifying national ICT strategies

Strengthen of customer service through IT,

Strengthen of national enterprise’s IT approach,

Strengthen of and validate national enterprise’s IT security and privacy,

Identify and assess national enterprise’s IT infrastructure readiness,

Identify and assess national enterprise’s IT needs and funding, and

B. Clarifying national ICT goals

Use IT to improve community’s processes,




Simplify and standardize the community’s IT environment, and

Modernize the community’s computer network.

C. Liberalized, pro-competitive telecommunications policy

6.0 CONCLUSION

This paper extends the existing evidence of important role of ICTs on nation’s sustainable

development. The investment in human recourses and ICTs are probably the important two

factors in building nation’s sustainable development. ICTs investment can be more effective

ion growth if accompanied by better organization and management in government sector

and private sector. ICTs offer tremendous opportunities for the developing countries to fully

share in the benefits of the global information economy and contribute in sustainable

development. The deployment of ICTs will improve services to citizens and empower

citizens to access information and knowledge. The proposed guidelines are a step-by-step

methodology that can help the developing countries to establish their own ITCs strategies.

These guidelines need further studies to set the criteria and process for applications

according to country’s situations.

ACKNOWLEDGEMENT

We extend our heartily thanks to the organizing committee of the Conference for selection

and publication of the article.

REFERENCES

1. Benjamin, P. (2001), “Does ‘Telecentre’ mean the centre is far away? Telecentre

development in South Africa”, The Southern African Journal of Information and

Communication – Vol. 1, No 1.

2. Bhatnagar, S. (2000), “Social Implications of Information and communication

Technology in Developing Countries: Lessons from Asian Success Stories”, Electronic

Journal on Information Systems in Developing Countries, 1, 4, 1-9. Available

(http://www.ejisdc.org).

3. Cees, J. (1997), “New Information and Communication Technologies, Social

Development and Culture Change”, United Nations Research Institute for Social

Development (UNRISD).




4. Chen, Y. (2003), “eGovernment Network: The Role of Information Technology in

Managing Networks”, The National Public Management Research Conference,

Washington D.C.

5. Chieochan, O., Lindley, D. & Dunn, T. (2000), “Factors Affecting the Use of

Information Technology in Thai Agricultural Cooperatives: A Work in Progress”,

Electronic Journal on Information Systems in Developing Countries, 2, 1, 1-15.

Available (http://www.ejisdc.org).

6. Coulibaly, A. (2002), “New Information and Communication Technologies and

Professionals in the Media, Information and Communications Technologies and

Social Development in Senegal”, United Nations Research Institute for Social

Development (UNRISD).

7. Dabla, A. (2004), “The Role of Information Technology Policies in Promoting Social

and Economic Development: The Case of The State of Andhra Pradesh, India”,

Electronic Journal on Information Systems in Developing Countries, 19, 5, 1-21.

Available (http://www.ejisdc.org).

8. Daffé, G. & Dansokho, M. (2002), “New Information and Communications

Technologies: Challenges and Opportunities for the Senegalese Economy - Final

Report”, United Nations Research Institute for Social Development (UNRISD).

9. Danziger, J. & Andersen, K. (2002), “The impacts of information technology on public

administration: an analysis of empirical research from the “golden age” of

transformation”, International Journal of Public Administration. Vol. 25. Issue 5.




SPARE PARTS MANAGEMENT (SPM):

AN INVENTORY CONTROL THROUGH JIT PHILOSOPHY

Omah I. PhD*

Okolie J.U PhD*

Abstract

Objective: The objective of this article is to effectively determine the adaptability of Just-In-

Time (JIT) philosophy in spare parts management and control in ALABA INTERNATIONAL

MARKET Lagos State metropolis. To determine how JIT can be meaningfully applied in order

to avail the advantage of economy of large-scale stocking of spare parts. To ensure that

obsolescence due to time preference and fashion are taking into consideration for effective

implementation of JIT.

Methodology/Approach: A theoretical concept and framework of JIT was empirically

reviewed in related literature books in order to comprehend its philosophical advantage.

Questionnaires were prepared based on this knowledge to allow the respondents develop

insight to its conceptual utility. On-line questionnaires, as well as personal interviews were

also adopted. Data collection was done on time schedule determined between the

respondent and researcher based on agreement. Both primary and secondary data were

used in the work presentation.

Findings: JIT is a “Supra” system that encompass the conventional techniques of inventory

management and control philosophy. It has greater scope, which includes the historical

method in addition to it conceptual frame work. Its utility is more advantageous when

absolutely applied systematically. Adjustment is required in its adaptability based on the

nature of individual organizational and its business environment. Under practical wisdom,

its meritorious advantage outweighs its limitations, hence the researcher advices the

business organizations to embrace the philosophy of JIT as absolute means and remedy to

spare parts management and control.

Implications: JIT philosophy is a cost effectiveness when adopted. It has no time barred in

application. It can be adopted by any size of business organization (small, medium and

large). Financial implication and its advantages are never of par. Its utility is overwhelmingly

at confidence limit always.




Original/Value: This work highlights the use of JIT philosophy in spare parts management

and control, an advert of neo-scientific methodology in inventory management. It is a

computer integrated system (CIS), harnessing its cost effectiveness to the advantage of the

users. Advantages, notwithstanding, has come to stay perpetually.

Keywords:

JIT – (Just-In-Time).

Throughput Time.

AMT – (Advanced Manufacturing Technology)

JIT Production.

JIT Purchasing.

Non – Value-Added-Time.

JIT Philosophy.

JIT Vs EOQ guided Decision models.

Internal-Lead-Time.

External-Lead-Time.

CIS-Computer Integrated System.

*Department of Accounting and Finance, Faculty of Management Sciences, Lagos State

University, Nigeria




INTRODUCTION:

When JIT philosophy is implemented throughput-time is minimized, inventory holding costs

are almost eliminated and large gains are realized by improvement of quality and

productivity. The non-value added –time represents the time in waiting, being moved or

being inspected. The JAPANESE manufacturers refer to non-value added-time as waste time

to highlight that no-value is being created for the customer, when the product is not being

processed. JIT purchasing is implemented by developing closer relationship with suppliers,

so that the company and the suppliers can work together co-operatively. JIT production

leads to a total supplication of production process, so that only essential activities are

conducted.

HISTORICAL BACKGROUND:

JIT (Just-In-Time) philosophy is dedicated to eliminate of waste (Sexena & Vashist 1996). In

the context of JIT, waste is anything that does not add value. In an ideal JIT system,

throughput time exactly equals its processing time. Throughput time is the interval between

the first stage of production and the point of which the finished product comes out of

production line. This goal just like zero defects may be unattainable, but it sets target, by

which progress can be measured.

The throughput time is the aggregate of processing time, inspecting time, conveyance time

and waiting time (Khan & Jain 2007). In many factories, processing time is less than 10% of

throughput time. The JAPANESE manufacturers, who led the course in devising and

implementation of JIT system emphasis the importance of reducing throughput times by

rewriting the throughput equation as:

TPT = Added-Value-Time (+) non-Added-Value-Time.

Value added time is the time during which work is actually performed on the product

(Ronald Hilton & Michael Matherg, Selto 1998). The non-value-added-time represents the

time in waiting, being moved or being inspected. The time has been wasted by inefficiencies

in manufacturing process. In JIT, inventory is viewed as a form of waste, cause of delays and

a form of production inefficiencies. In JIT system, main emphasis is on quality factor, set-up-

times, factory layout, uncertainty in suppliers delivery and quality etc (Ronald W. Hilton

2001). JIT philosophy is used in purchasing and production respectively.




ADAPTABILITY:

JIT Purchasing: JIP purchasing is the purchasing of materials and supplies in such a manner

that delivery immediately precedes the demand of use. This will ensure that stocks are as

low as possible. JIT purchasing is implemented by developing closer relationship with

supplier so that the organization and the supplier can work together co-operatively. In JIT

purchasing, arrangement is made with supplier for more frequent deliveries of smaller

quantities of materials so that each delivery is just sufficient to meet immediate production

requirements. Stocks are cut to a minimum. Considerable savings in material handling

expenses is made by requiring the suppliers to inspect materials and guarantee their quality.

This improved service is obtained by giving more business to fewer suppliers, who can

provide high quality and reliable delivery.

Encouragement is given to employers to render good service by placing with them long-

term purchasing orders. When a supplier has assurance of long-time sales, he is able to plan

and meet the requirements with reference to more frequent deliveries of smaller quantities

for buyer. Organizations which has implemented JIT purchasing has subsequently reduced

their investment in raw materials and WIP stocks. Other advantages from JIT purchasing

include saving in factory space, large quantity discount and reduced paper work arising from

issuing blanket long-term orders to fewer suppliers instead of purchase orders. As blanket

order is placed, ordering cost are reduced. Traditionally, EOQ formula guides the ordering

level and quantities. In JIT purchasing, policy is not always guided by EOQ decision models.

At minimum, the EOQ model assumes a constant order quantity. JIT purchasing policy may

require different quantities for each order if demand fluctuates.

JIT Production: JIT is a system in which each component on a production line is produced

immediately as needed by the next step in the production line. It has the following features.

Production line is run on a demand pull bases.

Emphasis is placed on minimizing the throughput time of each unit.

The production line is stopped if parts are absent or defective work is discovered.

JIT production leads to a total supplication of production process so that only

essential activities are conducted.

The JIT manufacturing has been successfully applied to reduce optimal number of units,

which should have been scheduled for each production run (ie the batch size). The




production of large batch size results in large stocks of WIP and finished goods being hold.

By introducing Advanced Manufacturing Technologies (AMT), set up times and cost is

dramatically reduced.

Reducing set-up costs causes the economic batch size to fall until eventually it is

unnecessary to produce more than the quantity needed for current consumption. The effect

of setting up time to a limit of zero is to produce an economic batch size of one unit. In this

situation, the need to maintain stocks would be eliminated.

Ideally, JIT philosophy operates with zero inventory. Many related terms describes the JIP

approach such as MAN (material as needed), MIPS (minimum inventory production system)

and ZIPS (zero inventory production system).

VALUE ADDED/NON-VALUE ADDED COST ANALYSIS:

Most of the organizations use cost as a competitive weapon and in this context, value

added/non-value added analysis gains special importance. Value added/non-value added

classification of cost is used by several organizations who aggressively seek out ways to

become cost competitive. The cost classification focuses whether a cost can be eliminated

without functional loss to the customer or quality or product or deterioration of

performance. This stress is on cutting non-value added costs. Often this analysis involves

following steps which are the hybrid of JIT:

Identification of attributes of products that customers perceive to be valuable.

These attributes are quality, reliability and price.

Identification of those activities that cause work in the production line. An attempt is

made to asses whether each activity add value or not. At the time of selection,

activities are divided into three categories as:

Category Example

Value added. Non-value added. Grey area.

Machining time. Rework time. Work assignment.

Identification and elimination of non-value added activities eg., change in layout

may result in reduced material movement.

BACK FLUSH ACCOUNTING VERSUS JIT:

This term was introduced in CIMA terminology published in February 1991. CIMA defines

“back flush accounting as accounting system”, which focuses on the output of an




organization and then works back to attribute costs to stock and cost of sales”.

Traditional/conventional accounting system use sequential tracking ie, accounting methods

are synchronized with physical sequences of purchases and production. Back flush

accounting, which is also referred to as delayed accounting or post-deduct accounting,

focuses on output and then works back to apply manufacturing costs to units sold and to

inventories. The term back flush came into existence because in “back flush accounting”,

costing of inventories is delayed as late as the time of sale. Costs are then finally flushed

back through the accounting system. It is especially attractive in organizations having low

inventories resulting from JIT. Back flush accounting eliminates need for a separate WIP

account. There are two basic justifications for this purpose:

To remove the incentive for managers to produce for inventory. In conventional

system managers try to add to operating income by producing units not sold. In

absorption costing, fixed overhead costs, which would otherwise be expenses for

the period get inventoried.

To increase the focus of the managers on plant-wide goal rather than on individual

subunit goals. For example, a production manager may be interested in increasing

machine utilization at an individual work centre and this step may not be compatible

to overall organizational objective.

The organization adopting back flush accounting often meet the following three conditions.

Management wants a simple accounting system and no detailed tracking of direct

material and direct labor through a series of operations is required.

Each product has a set of standard cost.

Material inventory levels are either low or constant.

If inventories are low, the bulk of manufacturing costs will flow into costs of goods sold and

it is not deferred as inventory cost. Back flush accounting is specially attractive in

organizations, that have low inventories resulting from JIT.

LIMITATIONS OF BACKFLUSH ACCOUNTING VICE VERSA JIT:

Back flush accounting does not strictly adhere to generally accepted accounting

principles of external reporting.

The critics of back flush accounting primarily emphasize on the absence of audit

trails.




It does not pinpoint the use of resources at each step of the production process.

Back flush accounting is suitable for JIT production system with virtually no direct

material inventory and minimum WIP inventories. It is less feasible otherwise.

OVERVIEW:

Inventory control and management in one of the functions of material management, which

deals with the process of deciding what and how much of various items are to be kept in

stock. It also determines the time and quantity of various items to be procured. The basic

objective of inventory control is to reduce investments in inventories and ensure that

production process does not suffer at the same time. The objectives are:

To reduce financial investment in inventories.

To facilitate production operation.

To avoid losses from inventories obsolescence.

To improve customer services.

Besides cost of items kept as inventory, following recurring expenses are involved:

Bank interest on capital = XX%

employed X% compounded

quarterly or X% flat

Handling, losses, damages etc = XX%

Total carrying cost XX%

The inflation rate may be around 10% which maybe 1/3 of inventory carrying cost. Carrying

inventory on inflationary ground cannot be justified. In this case, we have to ignore

considering the traditional method of determining the inventory carrying cost, by not adding

the manpower cost and paper work cost. In an ideal condition inventory should not be

maintained. This would have been possible, if items required can be made available exactly

when needed, at an economic cost. We can think of developing an inventory system which

can be delivered exactly when the maintenance department wants it, exactly what the

maintenance wants, and in the exact quantity wanted to avoid waste. Under practical

condition it seems difficult to design such a mistake proof system for the continuous process

plant, where the down time cost is very high and one cannot afford the down time cost due

to want of spares.




JIT Philosophy: JIT philosophy has been introduced and successfully implemented in many

manufacturing organizations to eliminate waste. The concept of JIT in relation to inventory

control is to avail the necessary spare as and when maintenance department wants and at

exact quantity. That means there may not be need to keep the inventories. All the same,

there can be possibility of substantial saving by adopting JIT concept in spare parts

management.

Limitation of JIT: JIT seems to be difficult to adopt due to following draw backs: Internal and

external lead time. Internal lead time is the time taken for the processing of documents,

against which item is to be secured. This time can be eliminated/reduced by the

organization by improving the productivity of office work. Organization and methods (OQM)

also help to enhance the office productivity and reduce the delay. External lead time is the

time taken by the spares/items to reach to the right place after placing the orders. This time

vary from item to item.

The items/spares which are easily available and items are off the shelf in nature, can be

arranged within a few hours. The items which cannot be available easily and the nature is

fabrication or tailor made, the external lead time is always very high. The external lead time

is the only bottleneck to apply JIT concept and to reduce waste. If our inventory system is

designed in such a manner so that external lead time for every spares/items is zero, only

then one can think of implementing JIT concept successfully.

Steps to Adopt JIT Concept: On the basis of availability of spares/items, the inventory has

been segmentised into three, termed S, D and E items.

S – Scarce Items: These are items/spares which cannot be made available within the country

and required importation. This category should contain only those items which are

imported.

D – Difficult Available Items: These are items which can be procured within the country, but

which their availability is very rare and the external lead time is very high, for example fuel

supply.

E – Easily Available: These are items which can be procured as and when needed, items

which can be procured from the local suppliers/vendors, can be classified under E-type. The

items which can be procured from regional states and can be made available within 24

hours of requisition.




Similarly, on the basis of nature of spares/items, inventory is can be classification as ‘O’ and

‘T’.

O – Off The Shelf Items: These are items/spares which are readily available in the market

like general purpose bearings – welding electrodes, belt conveyor, standard tyres, V – belt

etc. For these items, external lead time is always less and depends upon the place of

procurement.

T – Tailor made Items: These are items which are to be prepared by the other industries on

the basis of requirement like casting, refractory bricks, special purpose motors, shafts etc.

For these items, external lead time is very high.

The items/spares which are easily available and off the shelf in nature, JIT concept can be

applied. Many organizations have developed vendors/suppliers for scarce items. For scarce

items and difficult available items/spares, local suppliers/vendors can be developed, which

can adopt JIT concept easily, to control inventories and items/spares which cannot be made

available to maintenance department in a right time and at a right quantity, to ensure

production and reduced losses, lead time should be determined on organizational basis.

CONCEPTUAL OPINIONS, INTERVIEW QUESTIONNAIRE AND JIT PHILOSOPHY:

Research question 1: JIT is a concept based on elimination of waste, do you adopt it your

organization successfully?

Respondent 1: Any measure which can reduce waste is a welcome idea in any sizeable

organization. The objective of every enterprise is to minimize loss and maximize profit. The

concept JIT philosophy is quite advantageous to business environment in the era of cut-

throat competition. Waste is adverse to organizational prosperity and progress. JIT is a

welcome philosophical concept.

Respondent II: An organization is not compatible in the business environment with trend of

loss which is the By-product of mismanagement due to inefficiency. JIT can be a “test”

match on management of the organization whereby a manager is put to action and the

organization stands to benefit, which will result in bonus to employees and the public as a

whole.

Research Question II: How effective is JIT applied in your organization in terms of inventory

management and control?




Respondent I: JIT philosophy is the hybrid of business success, if it is well implemented

systemically. This is because waste and business successes are always in opposite direction.

They never meet and will never meet. It is a secret of any successful business organization

and its mangers. It is a surd of two edge at par. Inventory is the bulk of Current Asset tied

up, which may result in lack of working capital. Inventory management and control should

be studied in order to avail the stabilized liquidity position of the business enterprise

otherwise.

Respondent II: Success is a spring, flexible or elastic in content. It can be static when

management is faulty. Implementation of JIT is the management responsibility which may

result in either favourable or adverse trend of the organization. JIT is cost effectiveness and

cost reduction. Any effort by the management tailored to this direction will invariably

reduce waste and enhance profitability.

DEPICTING THE ACCEPTABILITY CONFIDENCE LEVEL OF JIT PHILOSOPHY

Data Presentation and Analysis

Testing the validity of the hypothesis held: In order to test the validity of the alternative

hypothesis, the question asked was:

Is JIT philosophy has a positive impact on inventory management and control?

OBSERVED FREQUENCY TABLE

SEX SA A SD D TOTAL

Male 13 32 1 1 47

Female 14 9 2 1 26

Total 27 41 3 2 73

Expected Frequency (EF) = CT x RT

CT

Male: Female:

SA = 27 x 47 SA = 27 x 26

73 = 17.4 73 = 9.6

A = 41 x 47 A = 41 x 26

73 = 26.4 73 = 14.6




SD = 3 x 47 SD = 3 x 26

73 = 1.9 73 = 1.1

D = 2 x 47 SA = 2 x 26

73 = 1.3 73 = 0.7

Calculation of Chi-Square (X2)

Observed Expected (O-E) (O-E)2 (O-E)2 E

Male

SA 13 17.4 -4.4 19.36 1.113

A 32 26.4 5.6 31.35 1.188

SD 1 1.9 -0.9 0.81 0.426

D 1 1.3 -0.3 0.09 0.069

Female

SA 14 9.6 4.4 19.36 2.017

A 9 14.6 -5.6 31.35 2.148

SD 2 1.1 0.9 0.81 0.736

D 1 0.7 0.3 0.09 0.129

0 7.826

With two (2) rows and four (4) columns, the degree of freedom will be (R-1) (C-1) = (2-1) (4-

1) = 3. The X2 value at 5% level of significant and 3 degree of freedom is 7.81. Based on this

determination, the alternative hypothesis is accepted which states that JIT has a positive

impact on inventory management and control, which validates the initial assumption. But

then, the figure from the X2 determined and the X2 table value are closely related as to

arrive at conclusion that JIT has impact on inventory control.

The above issue, however raises a fundamental investigation. That is, how to determine the

level and depth of influence that JIT has on inventory control and management. Therefore,

considering the very deep influence the JIT has made and expected additional merits, one is

compelled to assert that such an influence could not have been achieved without the

establishment of JIT. 37 or 46.25% agreed on the one hand that JIT has influenced the

inventory management. 2 or 2.5% strongly disagreed, while 5 or 6.35% disagreed with the

above hypothesis. The result is that a total of 66 or 82.5% believe that JIT philosophy has

influenced the inventory control and management favorably, while total of 7 or 8.75%

claimed that JIT philosophy has no such impact. This shows that majority of the respondents

believe that JIT philosophy has viably influenced inventory control system positively and

advantageously.




The next step is to determine the area in which JIT affect the inventory system.

Is JIT Philosophy a Positive Impact on Inventory Management and Control?

Respondent No %

SA 27 33.75

A 41 51.25

SD 3 3.75

D 2 2.50

No response 7 8.75

Total 80 100.00

The above table depicts that 27 or 33.75% out of 80 respondents (SA) believe that JIT

system is a positive impact on inventory control and management. On the other hand 41 or

51.25% (A) that JIT is a viable application. 3 or 3.75% (SD), while 2 or 2.5% (D). The entire

result shows that a total of 68 or 85% out of 80 respondents believe that JIT philosophy is a

positive impact on inventory control.

Has JIT Philosophy Revolutionized the Inventory Control and Management?

Respondent No %

SA 28 35.00

A 42 52.50

SD 3 3.75

D 2 2.50

No response 5 6.25

Total 80 100.00

The table shows that of the 80 questionnaires 70 or 87.5% of respondents rightly agreed

that JIT philosophy has revolutionalised the operation of inventory management. 5 or 6.25%

were of the opinion that JIT has not revolutionalised the inventory control system.

In order to understand the extent to which JIT has infused changes and better

management, this question was asked:

Has JIT attracted attention of business environment

Respondent No %

SA 23 28.75

A 43 53.75

SD 3 3.75

D 3 3.75

No response 8 10.00

Total 80 100.00




The table shows that of the 80 questionnaires, 23 or 28.75% (SA) that JIT has attracted the

attention of business environment in its adaptability, 43 or 53.75% agreed that JIT

philosophy has attracted business environment, 3 or 3.75% (SD) on JIT attention in industry.

Based on the total response, 82.5% believed that JIT has yielded a tangible result in

application. This is not to say that JIT does not have its own challenges and problems.

To investigate the challenges in the implementation of JIT philosophy, the following

question was asked.

Is JIT a Debacle in Inventory Management?

Respondent No %

SA 8 10.00

A 11 13.75

SD 22 27.50

D 34 42.50

No response 5 6.25

Total 80 100.00

The table shows that of the 80 questionnaires 75 were returned with valid response. 8 or

10% (SA) that JIT is debacle in inventory management, 11 or 13.75 agreed that JIT is a failure

in inventory control system. Whereas 22 or 27.50% (SD) that JIT is a debacle as far as

inventory management is concerned. 34 or 42.50% believed that the implementation of JIT

has many outstanding merits if its concept is well administered. 5 or 6.25% provided no

answer to the question probably due to lack of the knowledge of the concept and its

methodology. Generally, 56 or 70% of the respondents agreed that JIT is a useful concept,

not a failure in implementation of inventory control and management.

Comments: The business environment should endeavour to imbibe the philosophy which

has enormous merits in inventory control and management. Unlike conventional inventory

management systems, JIT is a tool dedicated to the elimination of waste. In this context,

waste is anything that does not add value. It is a supra-system.

SELECTED REFERENCES:

1. Chakraborty (1988): Advanced Accountancy 6th Edition, Oxford University Press,

Walton Street, Oxford OX2.

2. Khan M.Y & Jain, P.K. (2007): Management Accounting 4th Edition, McGraw Hill

Publishing Company Ltd. New Delhi.




3. Ronald W Hilton, Micheal W. Mather and Frank H. Selto (1998), Cost and

Management Accounting McGraw-Hill Irwin USA.

4. Ronald W. Hilton (2001): Management Accounting 5th Edition, McGraw-Hill Irvin

USA.

5. Sexena V.K and Vashist C.D (1996): Advanced Cost and Management Accounting

3rd Edition, Revised Edition, Sultan Chaud & Sons, New Delhi-India.

6. Edward J. Blocher, Kung H. Chen and Thomas W. Lin. (2002) Cost Management -

A Strategic Emphasis McGraw – Hill.




RURAL ENTREPRENEURSHIP AND ECONOMIC UPLIFTMENT: A CASE STUDY OF

MS. MANSUKHBHAI RAGHAVJIBHAI PRAJAPATI

Dr. Priyanka Sharma*

INTRODUCTION

Rural development is more than ever before linked to entrepreneurship. Institutions and

individuals promoting rural development now see entrepreneurship as a strategic

development intervention that could accelerate the rural development process.

Entrepreneurship stands as a vehicle to improve the quality of life for individuals, families

and communities and to sustain a healthy economy and environment. The entrepreneurial

orientation to rural development accepts entrepreneurship as the central force of economic

growth and development, without it other factors of development will be wasted or

frittered away. However, the acceptance of entrepreneurship as a central development

force by itself will not lead to rural development and the advancement of rural enterprises.

What is needed in addition is an environment enabling entrepreneurship in rural areas.

*Sr. Assistant Professor, Department of Lifelong Learning, University of Jammu.




ENTREPRENEURSHIP DEFINED

Defining entrepreneurship is not an easy task. There are almost as many definitions of

entrepreneurship as there are scholar books on the subjects. To choose the definition of

entrepreneurship most appropriate for the rural area context, it is important to bear in

mind the entrepreneurial skills that will be needed to improve the quality of life for

individuals, families and communities and to sustain a healthy economy and environment.

Taking this into consideration, we will find that each of the traditional definitions has its

own weakness (Tyson, Petrin, Rogers, 1994, p. 4). Defining entrepreneurship as risk-taking

neglects other major elements of what we usually think of as entrepreneurship, such as a

well-developed ability to recognise unexploited market opportunities. Entrepreneurship as a

stabilising force limits entrepreneurship to reading markets disequilibria, while

entrepreneurship defined as owning and operating a business, denies the possibility of

entrepreneurial behaviour by non-owners, employees and managers who have no equity

stake in the business. Therefore, the most appropriate definition of entrepreneurship that

would fit into the rural development context, argued here, is the broader one, the one

which defines entrepreneurship as: "a force that mobilises other resources to meet unmet

market demand", "the ability to create and build something from practically nothing", "the

process of creating value by pulling together a unique package of resources to exploit an

opportunity".

Entrepreneurship so defined, pertains to any new organization of productive factors and not

exclusively to innovations that are on the technological or organizational cutting edge, it

pertains to entrepreneurial activities both within and outside the organization.

Entrepreneurship need not involve anything new from a global or even national perspective,

but rather the adoption of new forms of business organizations, new technologies and new

enterprises producing goods not previously available at a location (Petrin, 1991).

ENTREPRENEURIAL VS NON ENTREPRENEURIAL ECONOMY

An entrepreneurial economy, whether on the national, regional or community level, differs

significantly from a non-entrepreneurial economy in many respects, not only by its

economic structure and its economic vigorousness, but also by the social vitality and quality

of life which it offers with a consequent attractiveness to people. Economic structure is very




dynamic and extremely competitive due to the rapid creation of new firms and the exit of

'old' stagnant and declining firms.

RURAL ENTREPRENEURSHIP AND URBAN ENTREPRENEURSHIP

It is important to stress that rural entrepreneurship in its substance does not differ from

entrepreneurship in urban areas. Entrepreneurship in rural areas is finding a unique blend of

resources, either inside or outside of agriculture. This can be achieved by widening the base

of a farm business to include all the non-agricultural uses that available resources can be put

to or through any major changes in land use or level of production other than those related

solely to agriculture. Thus, a rural entrepreneur is someone who is prepared to stay in the

rural area and contribute to the creation of local wealth for the upliftment of rural economic

and social structure. To some degree, however, the economic goals of an entrepreneur and

the social goals of rural development are more strongly interlinked than in urban areas. For

this reason entrepreneurship in rural areas is usually community based, has strong extended

family linkages and a relatively large impact on a rural community.

The promotion of entrepreneurship, the understanding where entrepreneurship comes

from is as equally important as understanding the concept of entrepreneurship. It indicates

where the governments, national, regional or local, should target their promotional efforts.

If entrepreneurial skills, for example, are innate, active promotion policies have a small role

to play. If instead, only certain entrepreneurial characteristics are innate, then active

promotion policies can contribute to entrepreneurship development in the community in

the region and in the nation, since entrepreneurial skills can be acquired through training.

PERSONALITY, CULTURE AND OTHER PREDISPOSITIONS TO

ENTREPRENEURIAL VENTURE

The standard perception is that entrepreneurship is a special personal feature (personality

profile), either a person is, or is not an entrepreneur. According to this perception

entrepreneurial traits, such as the need to achieve, risk taking propensity, self-esteem and

internal locus of control, creativity and innovative behaviour, the need for independence,

occupational primacy, fixation upon goals and dominance, are all inborn. Therefore, policies

directed specifically towards promoting the development of entrepreneurship would not

help much since chose characteristics cannot be acquired by training.




Another perception is that some cultures or some social groups are more conducive to

entrepreneurial behaviour than others. According to this view, the factors that contribute to

the supply of entrepreneurs are an inheritance of entrepreneurial tradition, family position,

social status, educational background and the level of education. Based on research into the

origins of business owners, it is believed that persons, who come from small business owner

families, are more likely to become entrepreneurs than others.

The research which tries to explain, by personal traits and/or other social aspects, why

certain individuals become entrepreneurs, has not yet produced convincing results.

Consequently, a widely accepted view is the following: while personal characteristics as well

as social aspects clearly play some role, entrepreneurship and entrepreneurs can also be

developed through conscious action. Development of entrepreneurs and of

entrepreneurship can be stimulated through a set of supporting institutions and through

deliberate innovative action which stimulates changes and fully supports capable individuals

or groups. It is argued, that controllable variables such as a stable system of property rights

and freedom of action in the economic sphere, availability of other inputs in the economy

(besides entrepreneurship) as well as education and training, contribute significantly to the

development of entrepreneurship.

Many examples of successful rural entrepreneurship can be found in literature.

Diversification into non-agricultural uses of available resources such as catering for tourists,

blacksmithing, carpentry, spinning, etc. as well as diversification into activities other than

those solely related to agricultural usage, for example, the use of resources other than land

such as water, woodlands, buildings, available skills and local features, all fit into rural

entrepreneurship. The entrepreneurial combinations of these resources are, for example:

tourism, sport and recreation facilities, professional and technical training, retailing and

wholesaling, industrial applications (engineering, crafts), servicing (consultancy), value

added (products from meat, milk, wood, etc.) and the possibility of off-farm work. Equally

entrepreneurial, are new uses of land that enable a reduction in the intensity of agricultural

production, for example, organic production. Dynamic rural entrepreneurs can also be

found. They are expanding their activities and markets and they find new markets for their

products and services beyond the local boundaries.




METHODOLOGY

The present paper is a case study of a Mr. Mansukhbhai Raghavjibhai prajapati whose

entrepreneurial ventures were diversified from the traditional farm sector entrepreneurial

initiatives. He was an entrepreneur who was engaged in the diverse entrepreneurial

activities for the upliftment of local communities. The paper analysis his personality profile

and his environment forcing him to undertake entrepreneurial ventures. The paper also

shows how the small entrepreneurial ventures like his could be translated into bigger

entrepreneurial activity.

Mansukhbhai’s journey in the Entrepreneurial world.

Mansukhbhai Raghavjibhai prajapati was born on19th october1965 in village Nichimandal in

Morbi Gujrat, where he started his journey as a supervisor in roof tiles manufacturer

company of Gujarat.

In the year of 1989 he started making Tawa from the Taraquta mud in which he got

unbelievable response from market thereafter in 1997 he launched mitti cool water filter

successfully then in 2002 he launched mitticool refrigerator.

In 2004 for mitticool (non stick tawa) he got award from national and state rural

development departments. At present Mansukhbhai is roaming all over India with his

different artistic products for marketing aboard and in India as well. The indigenous

products like natural refrigerator/ filter created by him are liked by peoples because of its

use and cost effectiveness.

Learning for sure entrepreneurial success: need based, user friendly, cost effective

products sell fast in market.

Vision and aim of the rural entrepreneur: To provide all luxurious things to country wide

peoples who can’t imagine affording such goods at competitive rates.

Manusukhbhai’s life experiences and landing into entrepreneurial ventures.

After the breakdown of Machhu dam of Morbi in 1979, his family lost everything and they

had to migrate to wankaner where his father took the job of mason to support his family. It

was here his journey as a worker in a small rooftop tile manufacturing unit started, which

today has reached at a point as a successful entrepreneur.

Through his family was struggling with finances, his parents motivated him to study up to

class ten later he left his studies to provide a helping hand in augmenting family's




resources.

To begin with he started to working in a small factory. Learning: (Catch every little

opportunity which will enrich experience).

Unfortunate enough in the very first month, while working inside a chimney his left eye got

injured because of which he had to quit work for ever eight months.

Ones his sight improved, in 1984 he started tea lorry near the highway but somehow due

to the persistent comments of his acquaintance he closed it down within six months, one of

his uncles visiting at his tea lorry inquired about a person who would be interested to work

in a roof tile manufacturing unit. He immediately closed tea lorry and joined the unit,

Jagdamba potteries, as a trainee at Rs.300 per month in 1985. He worked hard for three

years and learned all the related works of the unit during this time, he also helped to my

parents marry off his younger sisters.

Learning: Overcoming losses and ill fates at an earliest and not allowing them to be

converted into one’s miseries.

Witnessing how technology can increase quantitity as well as quality of products

manufactured.

During his childhood he saw earthen pans/ hot plates (locally termed askaladi/tavdi) being

manufactured manually on the potter’s wheel (locally termed as chhakdo). Using this one

person could only make about 100 units per day. Then he saw roof tiles being manufactured

in large quantity on hand press, which made him think why earthen pans cannot be made

the same why.

Mansukhs first small entrepreneurial initiative.

In 1988 Mansukh left his Job and took a loan of Rs 30,000 from a money lender to start his

own earthen plate manufacturing factory. Then he purchased a small piece of land for the

factory, dyes and presses, soil mixing machine, electric potter’s wheel and other scrap

objects. Later he modified the roof tile making hand press and developed a hand press

machine having capacity to produce 700 earthen pans per day.

First marketing strategy of a small entrepreneur and taste of success experienced by

budding entrepreneur encouraging him for undertaking larger entrepreneurial ventures.

It took him eight days to put everything together and on the ninth day because of the first

day of his work he made 50 pieces of the earthen plate. Then he kept all of these in a




container tying to the carrier of the cycle and went to the nearby villages to sell the same.

He sold one piece for 0.65 paise and within two days he could sell the entire first batch. This

was the first Income of the budding entrepreneur.

Utilising the fruits of technology in further strengthening his entrepreneurial venture.

This continued for the sometime. Then he realized that there was a difference in making

earthen objects on manual potter’s wheel and making them on electric potter’s wheels and

using presses. He also visualised the problem with the twas they would break because of

overheating.

Importance of feedback and product improvisation for product to cater to consumers

need.

He got negative feedback from many of his customers. He even tried reducing the price of

his tavas but still people could not find it as a good value for money. Then experimentally

varying the proportions of different types of clay to obtain the preferred mix.

Gradually he increased the production and in six months time started hiring chakda to go

around nearby villages to sell his products.

CONCLUSION

Entrepreneurship especially rural entrepreneurship stands as a vehicle to improve the

quality of life for individuals, families and communities and to sustain a healthy economy

and environment. The entrepreneurial orientation to rural development accepts

entrepreneurship as the central force of economic growth and development. Mansukh

Bhai’s entrepreneurial initiatives appropriately contribute in the said direction i.e in socio

economic upliftment of rural people. His case studies his worth emulating for budding

entrepreneurs. Being an uneducated man he realised and applied the importance of

technology and customer feedback and suitably used both in improvising his business

ventures. His dominant personality traits demonstrating strong learning acumen,

perseverance and coming out of the adversities immediately contributed to his

entrepreneurial success.

REFERENCES

1. Petrin, T. (1991). 'Is Entrepreneurship Possible in Public Enterprises'?' in J.

Prokopenko and I. Pavlin (eds.), Entrepreneurship Development in Public Enterprises,




ILO, Geneva and International Center for Public Enterprises in Developing Countries,

Ljubljana, pp. 7-33.

2. Petrin, T. (1992). 'Partnership and Institution Building as Factors in Rural

Development', paper presented at the Sixth Session of the FAO/ECA Working Party

on Women and the Agricultural Family in Rural Development, Innsbruck, Austria, 13-

16 October.

3. Tyson, L., T. Petrin and H. Rogers (1994). 'Promoting Entrepreneurship in Central

and Eastern Europe', Small Business Economics 6, pp. 1-20.




BUZZ MARKETING: ITS ROLE IN GLOBAL ARENA

Chanjyot Kaur*

Abstract: Strangely enough in this world of sophisticated communication technologies we

still realize greatly upon the views heard from others rather than going by what is being

promoted popularly. The demographic paradigm has witnessed a sea of change in terms of

education and thereby has resulted in higher levels of awareness and value expectations.

In products like movies, organized retailing the above mentioned phenomenon is very

evident wherein consumers rely greatly upon the feedback they receive from authentic

sources for even testing the value delivery proposition. Therefore it has become imperative

for a marketer to initiate value convincing promotions amongst the opinion creators.

Key Words: communication technologies, demographic paradigm, value expectations,

authentic sources, value delivery proposition.

*Assistant Professor, Department of Business Management, Govt. Mohindra College,

Patiala.




INTRODUCTION

Strangely enough in this world of sophisticated communication technologies, we still realize

greatly upon the views heard from others rather than going by what is being promoted

popularly. The invention of cell phones greatly enhanced the talking capacity of the people.

A lot of people talk and share information peer to peer and this phenomenon made a clear

path for BUZZ marketing to flourish and like a virus mutates according to its environment,

the buzz created by buzz marketing also change itself in order to meet challenges imposed

by new environment . BUZZ marketing is a very effective technique of conveying a message

which needs no money but only word of mouth communication. The volunteers are first

gathered to try a new product then they send to the world to talk about what they have

experienced with the people they come across in their daily routine. More the people see

that product being used in the public or more they hear about that product from others

whom they know very well and trust, the greater is the possibility of buying that product by

them.

Due to globalization, the competition is on hike in each and every field and when it comes to

marketing, it’s even more difficult. Traditional marketing techniques like radio and television

advertising are grown older as they are facing ignorance of the viewers. Thus a huge amount

of money spent on such advertisements is being wasted where as creating a BUZZ around

your product is far easier, cost effective and less time consuming. In such kind of marketing

campaign, money doesn’t play a prominent role rather it encourages a curiosity amongst

people who then start talking about and finally spread it to others, all it needs is innovation

and creativity.

In this hi-tech 21st century, along with the advancement of technologies, people also

became advanced and smarter than before education played an important role in increasing

the awareness and knowledge of people .today people are expecting a lot from what they

buy. The soul of buzz marketing is the quality of the product. if it is not good then the

company may not be able to create a positive buzz around it rather a negative buzz will be

created, that will destroy the overall image of the product and people will reject it

altogether. Lets take an example of a new product, let it be a flavored juice, that is going to

be launched by a company after few months but before that they want to create a buzz

around their product for which they started giving their juice for free to people, they go to




school and colleges and ask the students to try their product, they go to restaurants and

motels and ask them to serve their flavored juice to their customers for free . Now two

things can happen, people can either like it and a sense of curiosity will be generated among

them for that juice. They will start passing the information about that extremely new drink

that they have tasted just before any of their friends and will feel proud to be the first one

who has the knowledge about a new thing which according to them is really very good.

Though they are talking about that product but it happened just because of the taste and

quality of that juice that makes them to spread positive information among others .the

other possibility can be, they don’t like it and started creating negative buzz that hampers

the curiosity of the people and as the virus kills the host cells in the body it starts killing the

prospective customers. So we can say that buzz marketing strongly depends upon the

quality of the product.

We are talking about buzz marketing here, so it is necessary to talk about its major forms

and these forms namely stealth marketing and viral marketing have played a major role in

creating buzz around so many products all over the world. In 2002 Sony Ericsson used the

technique of stealth marketing in which the marketing of a product is done in such a way

that the customers don’t even realize that a product is marketed to them .it makes them

believe that the company is not marketing its product to them rather they came across it,

discussed with their peer and made their choice. The company hired almost sixty actors in

ten different cities of US in order to market their new camera phone among the people.

they started approaching people walking on the streets ,asking them to take their pictures

.the motive behind this was to make people engage in the benefits of their “new Sony

Ericsson phone” and they succeeded to make people interact with their product by

touching, feeling and using it in the natural environment . This “fake tourist“idea of Sony

Ericsson was a huge success and stealth marketing gained an effective position in the

marketing strategies of the company.

Other form of buzz marketing that is viral marketing is also very popular globally .it was

successfully used by the burger king for promoting their tender crisp chicken sandwich .as

this marketing is conducted through digital format or information and communication

technologies such as e-mails ,mobile communication , web blogs etc so it is also known as

word of mouse communication .the company started spreading the virus of their products




through internet, television and print campaigns .though all other forms enjoyed a huge

success but the ‘subservient chicken’ website created an astonishing buzz for their product

that gained a huge popularity in a very short span of time .the website contained a man,

who dressed up as a chicken . Under this chicken was an input box where users can put a

wide range of actions that they want by the chicken to perform. It was actually an awesome

burger king mantra – “get chicken as you like it” that generated curiosity among the people

for their tender crisp chicken sandwich. the people under the age group of 18 to 32 were

actually got stuck by this website and started word of mouth communication with their peer

and finally this campaign came out as one of the biggest buzz marketing campaigns.

There are certain basic elements which are required to include in making a strategy for buzz

marketing:

1. Product value ability – people are easily attracted towards the word 'free' and this

is the word that holds a great importance in the vocabulary of a marketing person.

There is no need to do anything else when the word ‘free’ comes along with your

product. The people cannot resist themselves from its attractiveness .no doubt

certain cheap and inexpensive things also draws attention of the consumer but the

effect that the word ‘free’ generate cannot be done by any other thing .it will not

profit in the starting but once it generates interest among the people then it will

generate profits for the rest of the lives.

2. Effortless transferability - the medium plays a major role in spreading a particular

message it should be such that no effort will required to transfer it and it will

replicate smoothly among the people. E-mails, graphics website etc they can serve

as a major tool because through this the instant communication occurs much easier

and faster. Secondly if the medium is not very smooth then people do not show

interest in passing the information to others thirdly the message that has to be

transferred should be clear and simple so that people will not find any difficulty in

passing it to others.

3. Spread like a fire – the method of transmission should be rapidly scalable from small

to very large .it should spread the message like fire from very few people to world at

large It should not die before spreading to large scale thus it should be that much




effective that people will love to spread it to others and from the very small scale to

large scale.

4. Striking the common human motives and behaviors - Cleverness is required on the

marketer side who will exploit the common motivations of the human. The hunger

of being popular and greed and lust for something always drives people this makes

them to communicate messages to others that would make them happy and proud

in the heart of hearts.

5. Existing communication networks should be utilized – if we listen to the social

scientists then according to them every person in the world loves to talk and has a

network of near about 8 to 12 people either in the friends family or other social

groups where as it can be as broad as to hundred or thousand depending upon the

position he or she has in the society for example a shopkeeper may talk to so many

people in a given weak. And these human networks are strong enough to create a

buzz around a particular product.

6. The advantage of other sources should also be taken – this is very creative idea to

use other sources such as placing text or graphic links on the others website to get

the word out the most common example is of those authors who give away their

articles for free and seek to position their articles on other's webpage.

As it is a very effective technique, it has certain advantages over conventional marketing

techniques:

1. The best part of buzz marketing is that it is trustworthy as people come to know

about some product or service through those people whom they really trust and can

follow their recommendations without any hesitations.

2. It is quite entertaining, people like to know the new exciting things and pass it to

their peers this makes the core message a stronger one as the actual motive of the

company is fulfilled by the creation of buzz around their product and making people

curious about it.

3. It is very cost effective; in the times where the companies spend lots of money on

their marketing campaigns. Buzz marketing provides a simple way of inexpensive

marketing of the product with huge success.




4. It markets the product globally with great impressions that will insist the consumers

to go and buy the product. The product becomes famous in very short span of time

all around the world.

5. It is the easiest way of spreading the information about the product and services

that will spread like a virus in fraction of seconds.

Buzz marketing had shown a great impact on the sales and promotion of various products in

the past. In 1987 a new drink called red bull was formulated in the Australian market by

Dietrich masteschitz but no bar was willing to stock it initially as they found it more a

medical drink rather than a mixture however it was soon recognized by clubbers and snow

boarders. Because the drink was giving them boost they started bringing it in the non

alcoholic bars and pubs after that red bull adopted the technique of buzz marketing. They

started distributing some goodies and their branded refrigerator to the clubs and bars so

that they can start a word of mouth communication they refuse all other conventional

establishments if they ask for red bull in order to retain the uniqueness and credibility of

their community and clubbers and the only way to connect to this community was to attend

a 2 week annual music festival which was organized by red bull. After that they started

distributing it for free to all the people who need energy especially teenagers, college going

guys’ construction workers and athletes and finally a huge word of mouth spread through

out the people and they started buying it. Coke and Pepsi created lots of energy drink and

tried to capture the energy drink market with big marketing budget but still they are lagging

behind to red bull which is king of the energy drink market with 65% of market share with

the fraction of marketing budget spending.

This is the impact of buzz marketing that markets a product without spending huge amount

of money. As Philip Kotler said the laziest way of marketing your product is advertising. But

it is something to move your butts and come in to real action. However the buzz marketing

is purely an engaging art of marketing. Basically, it’s economical, unconventional and

powerful method that captures the attention of media and consumers and makes them to

talk and write about your brand who finds it entertaining, fascinating and newsworthy.

A buzz was also created by a car making company lotus around their new vehicle evora

when they sent two masked faceless people in to a number of high profile events in London

such as Wimbledon during summer months .all the top news channels and radio stations




discussed them and this became the most interesting story to discuss, people started

making guesses, whether they were celebrities who were trying to avoid paparazzi? Or was

it an anonymous protest group, who are known for its attacks on scientology? This story set

the whole world at fire in few minutes and finally after creating a huge buzz all around the

world, the company unveiled their new car evora at British motor show .they succeeded in

creating a mystery about the launch of their product and generating the curiosity around

their marketing campaign without falling foul of the new marketing regulations. Lotus

wanted to emphasize on the fact that their new car was more mainstream than others from

the brand as they had been making cars that were targeted towards petro heads. For this

they used a different kind of marketing campaign that was more clever and innovative and

not high budgeted .They gave certain clues about their brand on certain blog sites which led

the internet users to a website faceless people .com that featured a countdown clock and a

lotus logo.

All this generates an interest among the people who then try to find something out of it.

They feel clever when they get to know that they have decoded something and become

more curious as the countdown suggests there is something more to come.

Even now the companies like coca-cola and Kellogg who have the strong history of

traditional media use are to experiment with buzz marketing .the Kellogg brand is making its

first foray in to buzz marketing by introducing UK consumers to fruitabu, a bagged fruit

snacks. Consumers can sign up to be sent samples and product information, with the

intention that they will pass the information and recommend this product to their friends. If

we analyze the global environment then we will find that the main force that would drive

the impact of buzz marketing are teen agers and this force is more prominent in Asian

countries as compared to US because in the coming years Asian countries would be having

50 to 60 % population of young people as compared to US where the percentage might

resist to 30 to 40%. even though it is a high tech era , traditional phone calls the social lives

of teens are still indulged in face to face interactions and traditional phone calls so we can

say that they are the main drivers of buzz marketing .thus it is very important for a brand to

get a space in the brain of a teen but tapping their social network is not very easy but still

some companies like apple, coca-cola and Disney are trying to reach them through online

social networks to create a virtual word of mouth communication.




The other important things about teens are they love to be initiators and volunteers and it is

estimated that about $175 billion are spend by them every year on product and services

.they love to live ahead of friends on the latest trends and other newest ideas and

information about the products which means a lot to a teenager like food, fashion

entertainment and gaming. that is why most of the buzzing agencies prefer to recruit a teen

as buzz agents because they are influential among their peers and do not afraid of doing

something new and different they have a large social network of friends who believe in

what they say and do .the success of using teens as buzz agents has already seen in case of

various products right from the cars [Toyota matrix], cosmetics [cover girl], movies [my big

fat Greek wedding] to motor oil [valvoline]

CONCLUSION

Marketing the product by creating the buzz around it is not only cost effective but also has a

great impact all over the world. As compared to conventional marketing techniques the

products that are marketed according to this method gains more popularity that finally

affects the sales of that particular product in a positive manner. Creative ideas, innovative

thinking and quality of the product plays a major role in generating a buzz and due to the

burden of budgets of huge marketing campaigns , the organizations are now opting this

technique for marketing of their products. The fire of curiosity that is generated by this

marketing method amongst the customers cannot be generated by any other marketing

technique. Many big companies used this technique and gained the success globally so it

cannot be ignored.

REFERENCES

Dr. Ralph F.Wilson, E-Commerce Consultant, 2005 (BUZZ marketing is a marketing that

acts like a virus to spread a particular message in a short span of time and infects the world

at large). Kaikati and Kaikati, 2004(stealth marketing is that in which the company is not

marketing its product to customers rather they came across it, discuss with their peer and

made their choice). Roshan D. Ahuja, Tara Anne Michels, Mary Mazzei Walker, Mike

Weissbuch. 2007. (Most of the companies prefer to recruit teens as their buzz agents),

Gemma Charles, 2008 (Kevin Brennan, marketing director of Kellogg, said it was something

Very different' for the company, which has a strong history of traditional media use), Jim

http://proquest.umi.com/pqdweb?RQT=572&VType=PQD&VName=PQD&VInst=PROD&pmid=14863&pcid=37043501&SrchMode=3




Matorin, 2007(true buzz is like a virus that changes to meet the challenge of a new

environment)

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&RQT=309&VName=PQD


&RQT=309&VName=PQD


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http://knowledge.wharton.upenn.edu/article.cfm?articleid=1105






ROLE OF HUMAN RESOURCE DEPARTMENT AND RECRUITMENT POLICIES IN

RECRUITMENT: “A CASE STUDY OF BHEL”

Nahid*

Abstract: Recruitment is the process of searching the candidates for employment and

stimulating them to apply for jobs in the organization. This paper aims to study the role of

human resource department and recruitment policies in recruitment in public sector

undertakings with reference to BHEL. The paper aims to give conceptual frame work about

the recruitment and its role on human resource department and recruitment policies and

procedure for making performances in PSUs with special reference to BHEL in is the main

focus of the study. Further it examines the nature of recruitment adopted by BHEL.

Recruitment, as a human resource management function, is one of the activities that impact

most critically on the performance of an organization. Poor recruitment decisions continue to

affect organizational performance and also discuss some of the strategies that organizations

can and employ to ensure the existence of the best possible pool of qualified applicants from

which they can fill vacancies as and when required.

Keywords: BHEL, Human Resource Department, Public Sector undertakings and Recruitment

Policies

*Department of Commerce, Aligarh Muslim University, Aligarh




INTRODUCTION

In investigating the impacts of “innovative human resource practices” on manufacturing

performance, McDuffie (1995) uses four measures including hiring, compensation, status

barriers, and training to represent innovative human resource practices. He indicates that

integration of bundles of HR practices is positively associated with the improvements in

productivity. Similarly, Ichniowski et al. (1997) examine the productivity effects of

“innovative work practices”. They use different measures of the innovative work practices,

which include incentive pays, recruitment and selection, teamwork, flexible job

assignments, employment security, communication, and training, and suggest that these

innovative work practices achieve higher levels of productivity than traditional approach

such as narrow job definitions, strict work rules, and hourly pay with close supervision.

In addition, by using four dimensions of human resource practices, including staffing,

training, performance appraisal, and compensation, Youndt et al. (1996) indicate that an HR

practices system is directly related to multiple dimensions of operational performance. Also,

subsequent analysis reveals that manufacturing strategies moderate this main effect. In

terms of financial performance, Delery and Doty (1996), drawing on three dominant modes

of theorizing, identify seven key “strategic human resource practices”, including career

ladders, training, results-oriented appraisal, compensation, employment security, employee

voice, and broadly defined jobs, and use them to develop theoretical arguments consistent

with each of the three perspectives.

The results demonstrate that each perspective can be used to structure theoretical

arguments that explain significant levels of variation in financial performance. Mendelson

and Pillai (1999) examine the impacts of the characteristics of “information age

organization” and indicate that the relationship between these characteristics, including

decentralization and incentives, information practices, and internal focus and inter-

organizational networks, and business performance is stronger in industry segments that

are more dynamic.

In addition, Collins and Clark (2003) explore the black box between “strategic human

resource practices”, which include training, performance assessment, rewards, and firm

performance from a field study with 73 high-tech firms. The results show those top

managers' social networks mediate the relationship. Though prior research has paid




attentions to the impacts of HR practices on organizational outcomes, few studies explore

the impact of HR practices on knowledge management and on innovation performance. By

taking an organizational learning perspective, Currie and Kerrin (2003) use case study

approach to explore the influence of “strategic human resource practices”, including

performance management, recruitment and selection, employee interaction, and career

development, on enhancing knowledge sharing within a company.

They suggest that HR practices can improve knowledge sharing in the firm with a

functionally based organizational structure and culture. In investigating the effects of “new

human resource management practices” on innovation performance of firms in different

sectors, Laursen and Foss (2003) categorize nine HRM variables, including interdisciplinary

workgroups, quality circles, collection systems of employee proposals, planned job rotation,

delegation of responsibility, integration of functions, performance-related pay, firm internal

training, and firm external training, into two HRM systems.

Their findings indicate that the innovation performance of four manufacturing sectors

correlates with the first system while that of wholesale and ICT sectors is associated with

the second system. This prior research term HR practices differently, such as strategic

human resource practices, innovative work or human resource practices, new human

resource practices, and characteristics of information age organizations. In addition, the

measurement of HR practices is in different ways in these prior studies for coping with their

research purposes. This study purposely focuses on examining the strategic impacts of HR

practices on the innovation performance through the mediating effect of knowledge

management capacity. This study considers those measures in the prior studies using the

concepts of strategic and innovative HR practices as they are more germane to the

arguments of the relationships involving HR practices, knowledge management, and

innovation. Accordingly, this study adopts five dimensions, including staffing, training,

participation, performance appraisal, and compensation, in the construct of strategic human

resource practices.

Human Resource Management refers to the management of human resource in the work

organizations. It is an organization concerned with the procurement, motivation and

development of human resources and maintaining harmonious relationship between the

employer and the employees. It ensures a dynamic and controlled workforce for the




successful achievement of missions and objectives in today’s competitive business

environment.

The Human Resources Management function includes a variety of activities, and key among

them is deciding what staffing needs you have and whether to use independent contractors

or hire employees to fill these needs, recruiting and training the best employees, ensuring

they are high performers, dealing with performance issues, and ensuring your personnel

and management practices conform to various regulations. Activities also include managing

your approach to employee benefits and compensation, employee records and personnel

policies (http://www.training8m.com).

REVIEW OF LITERATURE:

Reddy, S. (2004) studied training and development of employees through CD- ROMs.

Most learners find their learning experience incomplete unless the course content is made

available to them through multiple media. CD-ROMs offer a rich medium, complete with

text, graphics, motions, and audio, which the learners can experience in privacy at their

place and comfort.

Aswathappa, K. (2010) in his book entitled “Human Resource Management” tried to reflect

the focus on HR professional to play the role of a strategic .According to KA, Swathappa

Recruitment is understood as the process of searching for and obtaining applicants for jobs

from whom the right people can be selected.

Pattanayak, Biswajeet (2005) in his book entitled “Human Resource Management” (2005)

tried to place the proper emphasis on problems in the organization are human related,

related as a human beings are dynamic and complex and also tried to manage the human

resource in any sector is a challenging job. According to the Patnayak Biswajeet recruitment

is the process of searching for prospective employees and them to apply for the job in the

organization.

Gupta, K. Shashi (2004) in their book entitled “Human Resource Management” tried to

develop proper emphasis on human resource management with human being in the

organization and also tried to emphasis on ,no business in the organization can exist or

grow without effective management of human resource and also taking up different aspects

of the subject such as Nature, scope of human resource management ,personnel

management, human resource planning, job design ,job analysis, recruitment ,selection

http://www.training8m.com/




,placement and induction, promotion, transfers, training, Executive development ,career,

planning and development.

Khanka, S. S. (2009) in his book entitled “Human Resource Management” focused on the

LPG process (liberalization, privatization and globalization) has made business environment

highly competitive and complex. These changes have led to change in human resource

environment which in turn change human behavior in organization. The book makes a

presumption to know all aspect of HRM logically dividing them into seven sections to enable

the redress comprehend the key and vital issues of HRM in a dynamic environment

Prasad, Lallan and Banerjee, A. M. (2003) in their book entitled, “Management of Human

Resources” have stressed that manpower is a primary resource without which other

resources like money, material etc. cannot be put to use. Even a fully automatic unit

such as unmanned satellite requires manpower to execute it and plan further

improvements/activities.

Narain L. (2010) discusses in his study entitled “Public Enterprises Management and

Privatization” revealed about public sector enterprises and tried to focus on the PEs have

been a serious challenges in the context of liberalization .The reform to improve PE

performance have been recognized, appreciated and identified.

Rayudu, C. S. (2001) in their paper entitled ”Public Sector In India” tried to focused on the

feature of Indian industry to have public enterprises to participate agro based industry

which has occupied an important place. Sickness is more evident in public sector. Sickness is

defined by different experts differently.

Sinha, Chandan (2007) in their work entitled “Public Sector Reforms in India” tried to

focuses on the, term ‘public Sector ‘denotes the realm in which the state operates in

conjunction with other agencies to provide public goods and services.

RESEARCH METHODOLOGY

It has been the endeavor of the authors to make an empirical study, by analyzing and

critically examining the relevant statistics, collected from primary as well as secondary

sources. Primary data have been collected by using structured questionnaire, personal

interviews, discussions and observations.

Secondary sources include published and unpublished sources. Published sources are

newspapers, reports etc. Unpublished sources viz., the records maintained by the




Government, studies undertaken by research institutions, scholars, executives and

economists have served the purpose. The BHEL has been selected as an operational area of

the present study because it is one of the biggest organizations among corporate entities in

India .Secondly; it is a major source of fulfilling to the needs of India’s growing population

for employment, besides fetching reasonably good rate of return. Moreover, it is also

expected that the impact of economic reforms of 1991 would be more informative in the

case of BHEL than that of any other PSUs because of its greater transparency in its policy

programmed implementation and achievements as far as the recruitment practices are

concerned. Since the BHEL gives a global outlook, there appears to be much greater scope

for successful implementation of both employment opportunities and structural

adjustments.

The analysis carried out in the present work is absolutely based on the data/information

compiled primary as well as secondary source only. The importance among these sources

consists of mainly Annual Reports of BHEL. Memorandum and articles of association of BHEL

Personnel Handbook and Delegated Powers, Public Enterprises Survey, Journals and

Periodicals, References Books, News papers and other published literature available on the

subjects. The methods used commonly for processing of data in the present case are both

simple as well as sophisticated.

Further, a case study of BHEL has been made on the basis of the information provided by

these organizations in order to make the study more concrete and valuable.

ANALYSIS & INTERPRETATION OF DATA

The information collected by means of the questionnaire from the respondents has been

processed and analyzed for testing the hypothesis .The collected data is analyzed and

presented below. The analysis of data can be divided into two parts. Part one present the

analysis of demographic profile of the respondents and the part two makes the analysis of

variables factors.

DEMOGRAPHIC PROFILE:

It is very essential to reveal the demographic profile of the customers. The profile of the

customers include, age, gender, designation, educational qualification, experience.




1. Designation of Respondent’s

The designation of the employees reveals the nature of work done by the employees. It

includes as one of the profile variables .The designation of the employees is confined to

skilled, un-skilled, officers and supervisors. The results are shown in table2.1.

Table (2.1): Respondent’s Designation

Respondent’s Designation Frequency Percent

Skilled 248 82.7

Unskilled 27 9.0

Officers 19 6.3

Supervisors 6 2.0

Total 300 100.0

The pie chart shows the percentage of each occupation category of

Respondent’s in BHEL

83%

9%

6%

2%

Respondent's Designation

Skilled

Unskilled

Officers

Supervisors




2. Gender of the Respondent’s

Gender of the employees plays an important role in their level of satisfaction. It is included

as one of the important variables.

In BHEL there are 198 male and 102 female yielding a percentage of 66 and 34 percent. The

present study analyses the gender among the employers in BHEL. The results are shown in

table2.2.

Table (2.2): Respondent’s Gender

Respondent’s Gender Frequency Percent

Male 198 66.0

Female 102 34.0

Total 300 100.0

The pie chart shows the percentage of each gender category of

Respondent in BHEL.

0

50

100

150

200

250

300

Skilled Unskilled Officers Supervisors

Frequency

Percent




3. Age of Respondents:

Age of the employers is one of the important profile variables of the employers. It shows

their level of experience and maturity. In BHEL, age plays a predominant role in their levels

of satisfaction. In general the youngsters expect more than the elders who are highly

experienced and emotional. The age of the customers in the present study is confined to

below 20 years, 31-40 years, and 41-50 years above 51. The distribution of the employees

on the basis of the age is given below in table 2.3

Table (2.3): Respondent’s Age

66%

34%

Respondent's Gender

Male

Female

0

50

100

150

200

250

Frequency Percent

Respondent’s

Gender Male

Respondent’s

Gender Female

Respondent’s Age Frequency Percentage

20-30 Years 241 80.3

31-40 Years 54 18.0

41-50Years 2 .7

51 Years and above 3 1.0

Total 300 100.0




From the above table it is clear that the important age group among the employers is 20

to30 years which constitute 80.3 percent. The age group of 20to30yers constitutes the

highest number of 241 or 80.3 percent. The age group of 31-40 years constitutes 54

respondents yielding a percentage of 18.0 respectively. The age group of 51 years which

reveals the senior citizens employers of the BHEL constitutes 3 with a percentage of 1.0 in

BHEL. The analysis of data reveals that the important age groups among the employees in

the present study are 20 to30 and 40 years.

The pie chart shows the percentage of each age category of

Respondent’s in BHEL.

80%

18%

1%1%

Respondent's Age

20-30

31-40

41-50

51- above

0

50

100

150

200

250

300

20-30 Years 31-40 Years 41-50Years 51 Years

and above

Frequency

Percent




4. Experience of Respondents

Experience of the employees is one of the important profiles of the employees .It shows the

level of experience and maturity. In public Sector experience plays a predominant role. table

2.4

Table (2.4): Respondent’s Experience

From the above table it is clear that important experience groups among the employees is 5

years which constitutes 78.7 percent in BHEL The Experience groups of below 5 years

constitutes the highest number of 236 employees or 78.7 percent in BHEL. The experience

groups of 6- 10 years constitutes 49 respondents in BHEL. The experience groups of 21 to 25

years constitute 1 respondent in BHEL yielding a percentage of .3 respectively.

The pie chart shows the percentage of experience of respondents in BHEL.

79%

16%

2% 3% 0%

Respondent's Experience

0-5 Years

6-10 Year

11-15 Years

16-20 years

21-25 Year

Respondent’s Experience Frequency Percent

0-5 Years 236 78.7

6-10 Year 49 16.3

11-15 Years 6 2.0

16-20 years 8 2.7

21-25 Year 1 .3

Total 300 100.0




5. Level of Qualification of the Respondent’s

The level of Education provides more knowledge and exposure on the recruitment practices

Hence the level of Education of the Employees is included as one of the profile variables

.The highly educated employees may be more aware of the Recruitment Practices and

expect more from the BHEL as compared to uneducated employees. The education level of

the employees is confined to graduate, Post Graduate and others (including less than

undergraduates).The data is computed in table 2.5

Table (2.4): Respondent’s Qualification

Respondent’s Qualification Frequency Percent

Graduate 166 55.3

Post Graduate 103 34.3

Others 31 10.3

Total 300 100.0

0

50

100

150

200

250

0-5 Years 6-10

Year

11-15

Years

16-20

years

21-25

Year

Frequency

Percent




The pie charts shows the percentages of each qualification category of respondent’s in

BHEL.

TESTING OF HYPOTHESIS

HYPOTHESIS (1)

H0: Role of human resource department in Recruitment Practices of BHEL is not significant

in Public Sector Undertaking.

H01: Role of human resource department in Recruitment Practices of BHEL is significant in

Public Sector Undertaking.

56%34%

10%

Respondent Qualification

graduate

Post Graduate

Others

0

20

40

60

80

100

120

140

160

180

Graduate Post Graduate Others

Series1

Series2




In order to test the hypothesis, one Sample Test t- test is applied because it shows the

Recruitment Practices of dimension “Role of human resource department” in BHEL.

Group Statistics

Particulars

N Mean Std. Deviation

Std .Error Mean

Role of human Resource department

300 1.5100 .60370 .03485

From the above table descriptive statistics is shown. This table indicates the mean value and

standard deviation obtained by BHEL on the dimension of “Role of human resource

department” of Recruitment Practices in Public sector undertakings.

It is found from the above table that the Role of human resource department have the

highest mean value of 1.5100 and std. deviation of .60370. This is clear indication that the

employees of BHEL have a positive perception on the dimension of Role of human resource

department.

One-Sample Test

Test Value = 0

T df Sig.(2- tailed)

Mean Difference

95% Confidence Interval of the

Difference

Lower Upper

Role of the human resource

department 43.323 299 .000 1.51000 1.4414 1.5786

The above table shows the results of One- sample test used to access the perception of

employees towards the dimension of “Role of human resource department” of Recruitment

Practices in BHEL.

The t- value is 43.323 and sig. value is 0.000 which is less than 0.05 (95 Percent Confidence

Internal), which indicates that the perception of employees in the Recruitment Practices of

dimension “Role of the human resource department” in BHEL is significant.

Hence, the hypothesis that there is no significant difference in the perception of employees

on the Recruitment Practices dimension of “Role of the human resource department” in

BHEL stands rejected and alternative hypothesis is accepted.




HYPOTHESIS (2)

H0: Recruitment Policies in Recruitment Practices of BHEL is not significant in Public Sector

Undertaking.

H01: Recruitment Policies in Recruitment Practices of BHEL is significant in Public Sector

Undertaking.

In order to test the hypothesis, one Sample Test t- test is applied because it shows the

Recruitment Practices of dimension “Recruitment Policies” in BHEL.

Group Statistics

Particulars

N Mean Std. Deviation

Std .Error Mean

Recruitment Policies 300 1.8467 .70104 .04047

From the above table descriptive statistics is shown .This table indicates the mean value and

standard deviation obtained by BHEL on the dimension of “Recruitment Policies” of

Recruitment Practices in Public sector undertakings.

It is found from the above table that the Recruitment Policies have the highest mean value

of 1.8467 and std. deviation of .70104. This is clear indication that the employees of BHEL

have a positive perception on the dimension of Recruitment policies.

One-Sample Test

Test Value = 0

T df Sig.(2- tailed)

Mean Difference

95% Confidence Interval of the

Difference

Lower Upper

Recruitment Policies

45.625 299 0.000 1.84667 1.7670 1.9263

The above table shows the results of One- sample test used to access the perception of

employees towards the dimension of “Recruitment Policies” of Recruitment Practices in

BHEL.

The t- value is 45.625 and sig. value is 0.000 which is less than 0.05 (95 Percent Confidence

Internal), which indicates that the perception of employees in the Recruitment Practices of

dimension “Recruitment Policies” in BHEL is significant.




Hence, the hypothesis that there is no significant difference in the perception of employees

on the Recruitment Practices dimension of “Recruitment Policies” in BHEL stands rejected

and alternative hypothesis is accepted.

CONCLUSION

This paper has tried to find out the perception of employees regarding the various

dimensions (Role of human resource department, Recruitment Policies) in BHEL. For this

purpose primary data was collected from Hardwar cities of U.P. From the analysis it has

been found that there exists a gap in the perception of employees the dimensions in BHEL.

This is clear indication that the employees of BHEL have a positive perception on the

dimension of Recruitment policies and Role of Human Resource Department. The two

hypotheses that there is no significant difference in the perception of employees on the

Recruitment Practices dimension of “Role of the human resource department& Recruitment

Policies” in BHEL stands rejected and alternative hypothesis is accepted.

REFERENCES

1. Training8m, “Management Training- Resource Management” Retrieved From:

http://www.training8m.com/Training%20-%20Resource%20Mgt.html

2. Reddy, S. (March, 2005). Team at Work- Power Of Team Over Individuals. HRM

Review, 23, 3, 45-51.

3. Aswathappa, K. (2010). Human Resource Management. Tata McGraw-Hill Education.

New Delhi.

4. Pattanayak, B. (2005). Human Resource Management. PHI Learning Pvt. Ltd.,

2005.New Delhi

5. Gupta, K. S. (2004). Human Resource Management. Kalyani Publishers.2003.New

Delhi

6. Khanka, S. S. (2009). Human Resource Management. S. Chand & Company Ltd. New

Delhi.

7. Prasad, L. & Banerjee, A. M. (2003). Management of Human Resources. Sterling

Publishers Pvt Limited, New Delhi

8. Narain, L. (2010). Public Enterprises Management and privatisation.pp112

9. Rayudu, C. S. (2007). Public Sector in India. Gyan book Publication India Pvt. Ltd New

Delhi

10. Sinha, C. (2007). Public Sector Reforms in India. Sage Publications India Pvt Ltd, New

Delhi.

http://www.training8m.com/Training%20-%20Resource%20Mgt.html

International Journal of Advanced Research in Management and Social Sciences ISSN: 2278-6236


GROWTH AND DEVELOPMENT IN INDIAN BANKING SECTOR

Dr. Nafees A. Khan*

Ms. Fozia**

Abstract: The purpose of the research article is to show the growth and technological

development in Indian banking sector. The objectives of this research article are to show the

growth in Indian banking sector; the technological development in Indian banking sector and

computerisation in the banking sector. Technology enables increased access of the banking

system, increases cost effectiveness and makes small value transactions possible.

Technology allows transactions to take place faster and offers unparallel convenience

through various delivery channels. Technology enhances choices, creates new markets, and

improves productivity and efficiency. Effective use of technology has a multiplier effect on

growth and development.

Keywords: Growth, Development, Computerisation and Indian banking

*Associate Professor, Department of Commerce, Aligarh Muslim University, Aligarh

**Research Scholar, Department of Commerce, Aligarh Muslim University, Aligarh



INTRODUCTION

In recent years, the banking industry around the world has been undergoing a quick

transformation. The deepening of information technology has facilitated better tracking and

fulfilment of commitments, multiple delivery channels for online customers. The Indian

banking has welcomed this change. As an increasing number of Indian banks seem at the

modern ways, such as Online banking, to make a customer's banking experience more

convenient, efficient, and effective. The use of internet in banking has vastly reduced the

physical transfer of paper money and currency from one place to another or even from one

person to another which reduces costs for banks. It is also called electronic banking. It may

include wire transfers, electronic funds transfers, and credit card, debit card.

Internet banking is allow to using automatic teller machine and telephone transaction and

also websites for performing simple and advanced transaction without physical presence of

customers in bank, allowing customer to submit their applications for different services,

make queries on their account balance and submit instruction to the bank and also

electronically transfer fund to their account, pay bill and other banking transaction online. It

also allows banks to expand their markets for traditional deposit taking and credit expansion

activities, and to offer new products and services.

GROWTH IN BANKING SECTOR

The banking sector comprises of 28 public sector banks with majority government

ownership, 23 private banks and 27 foreign banks. Private sector banks were barred from

involvement in the banking market after the nationalization of banks in 1969. Most

important changes were implemented after 1990. First, the market was opened up to

private sector banks and foreign banks. Second, regulations governing the establishment of

branches were amended. Third, regulations relating to lending were eased. Fourth, public

sector banks were allowed to procure financial resources from the stock market up to 49%

of their paid-up capital.

The state of affairs began to change after 2000.The government adopted a policy of

converting development financial institutions into banks, and ICICI became a bank in 2001,

followed by IDBI in 2004. During this period, one public sector bank and four private sector

banks were established, and 16 foreign banks entered the market. In March 1991, foreign

http://www.britannica.com/EBchecked/topic/51953/bank-note�



banks had 151 branches. This had increased to 205 by March 2001, and to 295 by March

2009

Table 1-showing Number of banks

2006 2007 2008 2009 2010 2011 SBI Group 8 8 8 7 7 6 State-owned banks 20 20 20 20 20 20 Private sector banks 28 25 23 22 22 21 Foreign banks 29 29 28 31 32 34 Regional rural banks 133 96 91 86 82 82 Non-scheduled commercial banks

4 4 4 4 4 4

Scheduled commercial banks

218 178 170 166 163 163

Notes: As of March 31 in each year.

Source: STATISTICAL TABLES RELATING TO BANKS IN INDIA, RBI

Branch Expansion:

The country witnessed branch expansion in public sector banks, private sector banks and

foreign banks in absolute term during period 2010-2011.The table showed that the

percentage share of SBI group registered a growth of 3.5 during 2010-2011. The state-

owned banks of India registered an increase of 5.4 per cent during 2010-11. During 2010-11

India’s private sector banks, foreign banks and regional rural banks registered a growth 3.6,

2.9 and 1.9. The non scheduled commercial banks registered a growth 10.4 per cent during

2010-2011.all scheduled commercial banks registered a growth 5.5 per cent during 2010-

2011.

Table-2 showing Number of branches

2006 2007 2008 2009 2010 2011 Scheduled commercial banks

72,069 74,696 78,740 82,850 88,155 93,027

SBI Group 14310 14673 15848 16894 18186 18823 State-owned banks 35858 37415 39235 40937 43467 45850 Private sector banks 6835 7424 8324 9240 10452 12001 Foreign banks 259 272 279 295 310 319 Regional rural banks 14807 14822 15054 15484 15740 16034 Non-scheduled commercial banks

41 47 47 47 48 53

Notes : 1. Data is as per information reported by banks.

2. $ Includees IDBI Bank Ltd.



3. Data on number of offices include administrative offices.

Source : Master Office File (latest updated version) on commercial banks, Department of

Statistics and Information Management, RBI.

Growth of Bank Deposits:

The resource mobilisation is an integral part of banking activity. The basic principle of

branch expansion is to tap deposit and culminate saving habit among the community

.tapping of potential savings and uses them for a productive purpose in particular is the

main objective.

Table-3-showing DEPOSITS OF SCHEDULED COMMERCIAL BANKS IN INDIA - 2010 AND 2011

(Amount in ` crore) (As on March 31)

2010 2011 Increase % State banks of India & its associate

1108086 1245862 12.4

Nationalised 2583934 3127122 21.0 Public sector 3692019 4372985 18.4 Old private 229897 264157 15.0 New private sector banks 592904 738602 24.5 Private sector banks 822801 1002759 22 Foreign banks 232099 240689 3.7 All scheduled commercial banks

4746920 5616432 18.3

There has been a substantial rise of bank deposits since nationalisation. The table showed

that the percentage share of state bank of India and its associate banks registered a growth

of 12.4 during 2010-2011. The nationalised banks of India registered an increase of 21.0 per

010,00020,00030,00040,00050,00060,00070,00080,00090,000

100,000

Number of Branches

2006

2007

2008

2009

2010

2011



cent during 2010-11. During 2010-11 India’s public sector banks, old private sector banks,

new private sector banks, private sector banks and foreign banks registered a growth 18.4,

15.0, 24.5, 22 and 3.7 per cent during 2010-2011. The all scheduled commercial banks

registered a growth 18.3 per cent during 2010-2011.

Growth of Advances:

The credit from the bank is an important input in the production function of the agriculture,

industry, commerce and allied productive activities for socio economic development of the

country. The bank credits, its development, composition and direction are equally important

in realising the country’s various macroeconomic goals. The channelization of bank credit in

proper direction, otherwise, there will be the adverse effect on the economy of the country.

Table-4 showing ADVANCES OF SCHEDULED COMMERCIAL BANKS IN INDIA - 2010 AND 2011


2010 2011 Increase % State banks of India & its associate banks

857937 994157 15.9

Nationalised banks 1843082 2311478 25.4 Public sector banks 2701019 3305632 22.3 Old private banks 154085 184647 19.9 New private sector banks 478356 612886 28.1 Private sector banks 632441 797539 26.1 Foreign banks 163260 195539 19.8 All scheduled commercial banks

3496720 4298704 23.0

0100000020000003000000400000050000006000000

Deposits of Scheduled Commercial Banks

2010

2011



The table showed that the percentage share of state bank of India and its associate banks

registered a growth of 15.9 during 2010-2011. The nationalised banks of India registered an

increase of 25.4 per cent during 2010-11. During 2010-11 India’s public sector banks, old

private sector banks, new private sector banks, private sector banks and foreign banks

registered a growth 22.3, 19.9, 28.1, 26.1 and 19.8 per cent during 2010-2011. The all

scheduled commercial banks registered a growth 23.0 per cent during 2010-2011.

Growth of Bank Investment:






scheduled commercial banks registered a growth 18.6 per cent during 2010-2011

Table-5 showing INVESTMENTS OF SCHEDULED COMMERCIAL BANKS IN INDIA - 2010 AND 2011


2010 2011 Increase % State banks of India & its associate

357627 377658 5.6

Nationalised 655042 828125 26.4 Public sector 1012666 1205783 19.0 Old private 72393 83499 15.3 New private sector banks 234139 270618 15.6 Private sector banks 306531 354117 15.5 Foreign banks 130354 159286 22.1 All scheduled commercial banks

1449551 1719185 18.6

Growth of Bank Assets:








scheduled commercial banks registered a growth 19.2 per cent during 2010-2011.

Table-6 showing TOTAL ASSETS OF SCHEDULED COMMERCIAL BANKS IN INDIA - 2010 AND 2011


2010 2011 INCREASE % State banks of India & its associate

1412253 1597684 13.1

Nationalised 3028574 3696133 22.0 Public sector 4440827 5293817 19.2 Old private 268905 309011 15.0 New private sector banks 881831 1089165 23.5 Private sector banks 1150736 1398176 21.5 Foreign banks 435362 491528 12.9 All scheduled commercial banks

6026925 7183522 19.2

TECHNOLOGICAL DEVELOPMENT IN BANKING:-

Indian banking has changed terrifically in the past few years. The changes are multiple and

at a fast pace in the term of transformation of technology advancement. It has become

completely dependent on technology as the service/ product channel. Up gradation of

technology, innovation and modernization are the key factors of having excellence in

banking sector. It becomes necessary for a bank to differentiate its products from others.

The differentiation can be in terms of specialisation, new products, increasing added value

by technology convergence.

Technology in banking sector is one of the focus areas of banks. The banks in India are using

Information Technology (IT) not only to improve their own internal processes but also to

increase facilities and services to their customers.

Technological innovation not only enables a broader reach for consumer banking and

financial services, but also enhances its capacity for continued and inclusive growth. IT

improves the front end operations with back end and helps in bringing down the transaction

costs for the customers.

Table 7-showing: Computerization in Public Sector banks

Category 2007 2008 2009 2010 Fully computerized Branches (%) 85.6 93.7 95.0 97.8 Source: RBI, Annual Report 2009-10



Automated clearing House (ACH): Automated clearing house (ACH) is an electronic network

for financial transaction. In clearing house, computers are employed to handle cheques. The

nature of work involved in clearing operations in voluminous, repetitive, routine in nature.

ACH processes large number of debit and credit transaction in batches.

National Automated clearing house Association (NACHA): ACH is used to collect payment

online customer in business, rather than accepting credit or debit. Both government and the

commercial sectors use ACH payment. Rules and regulations governing the ACH network are

established by NACHA and Federal Reserve. The Federal Reserve banks are collectively the

nation's largest automated clearing house operator. FEDACH is the Federal Reserve's

centralized application software used to process ACH transactions.

Electronic Clearing Services (ECS): ECS is an electronic mode of payment which is used for

bulk transfer from one bank account to another bank account .the service is for companies

and government department to make or receive large volume of payments, rather than for

funds transfer by individual. There are two type of ECS service.

Table 8 showing ECS transaction in Rs. Crores

Item 2005-06 2006-07 2007-08 2008-09 2009-10 2010-2011

ECS Credit 32,324 83,277 7,82,222 97,487 1,17,833 1,81,686 ECS Debit 12,986 25,441 48,937 66,976 69,819 73,646 Source: RBI, Annual Report 2010-11

85.6

93.795

97.8

2007 2008 2009 2010

Fully computerized Branches %Fully computerized Branches %



National Electronic fund Transfer (NEFT): NEFT facilitates online transfer of funds from one

bank account to another bank account. The limit of transferring fund is 200000/-. In India,

NEFT system lives with effect from 21 November 2005. NEFT was sent to cover all banks

which were participating in the special electronic funds transfer (NEFT) clearing. NEFT was

made on the structured financial messaging solution (SFMS) platform. In NEFT public key

infrastructure (PKI) technique used for maintaining security.

Electronic Funds Transfer (EFT): Electronic Fund Transfer (EFT) is a function of electronic

banking that facilitates to customer transfer of funds from any branch of a bank to any other

branch of any bank in the shortest time period. The EFT system presently covers all the

branches of the 27 public sector banks and 55 scheduled commercial banks at the 15

centers viz:- Ahmadabad, Bangalore, Bhubaneswar, Kolkata, Chandigarh, Chennai,

Guwahati, Hyderabad, Japura, Kanpur, Mumbai, Nagpur, new Delhi, Patna, and

Thriuvananthpuram.

Table 9 showing: EFT/NEFT Transactions in Rs. Crores

Category 2005-06 2006-07 2007-08 2008-09 2009-10 2010-2011 EFT / NEFT 61,288 77,446 1,40,326 2,51,956 4,11,088 9,39,149 Source: RBI, Annual Report 2010-11

EDI: EDI was born in the early 1970s.it is the first widely known application of business to

business electronic commerce. It was first adopted by in the US to streamline their internal

operations

Electronic data interchange is the inter-organisational exchange of business documentation

in structured form such as order and invoice via computer to computer. It is the application

to application transmission of business information and document in standard formats.

CARDS TRANSACTION:

1-Debit card: debit card is a card which designate to customer to withdraw own money

from the bank in any time. It is also called a plastic card. Debit card is used for cash

withdraw from ATM, funds transfer, paying bills, accessing detail account information,

charging PIN etc. Bank gives debit card free of cost at the time of opening account. From 1st

Jan 2011, RBI declared that for every transaction with debit card on ATM user has to enter

password for every transaction. This is done for security purpose.



2-Credit card: Credit Card is a post paid card. The Credit Card holder is empowered to

spend money wherever and whenever he wants with his Credit Card within the limits fixed

by his bank.

Table 10 showing Card based payment Transaction Value (Rupees Crores)

Category 2005-06 2006-07 2007-08 2008-09 2009-10 Credit Cards 33,886 41,361 57,985 65,356 62,950 Debit Cards 5,897 8,172 12,521 18,547 26,566 Source: RBI, Annual Report 2009-10

Smart card: smart card was first introduced in Europe 1990s for low value payment system

it is also called as stored value card or electronic purse system. The smart card technology is

used for purchase through the internet, purchase product and services from market

,withdraw and deposits cash money .it is widely used in countries such as France, Germany,

Japan and Singapore to pay for public phone calls, transportation and shopper loyalty

programmes.

Core Banking: core banking solution is a networking which creates a environment where the

entire bank’s operations can be controlled and run from a centralized hub. This creates a

centralized customer data base which makes anytime, anywhere, anyway banking possible.

It provides faster and efficient service to the customers. An important development in the

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2005-06 2006-07 2007-08 2008-09 2009-10

Card Based Payment Transaction

Credit Cards

Debit Cards



percentage of branches of public sector banks implementing CBS. The percentages of such

branches increased by 79.4 % at end March 2009 to 90% at the end of March-2010.

Table 11 showing: Branches under Core Banking (in %)

Name of the Bank Branches under core banking solutions Public Sector Banks 90% Nationalised Banks 85.9% State Bank Group 100 Source: Report on Trend and Progress of Banking in India 2009-10, PP-55

Automated Teller Machine (ATM): ATM is an electronic machine which allows to customer

to withdraw or deposit funds, check account balances, transfer fund, and check statement

information, Purchasing online products, Train tickets reservations, Products from shopping

mall, Donating to charities, Claque processing module, Adding pre-paid cell phone/mobile

phone credit, Advertising channels for own or third party products and services, Pay

premium..

Table 12 showing: Growth in ATM Installation (2005 To 2009)

Year Number of ATMs 2005 -06 21110 2006-07 25247 2007-08 34547 2008-09 43651 Source: Cyber Media DQ Estimates Research

In 2010-11 the number of ATMs increases of 24 per cent over the earlier year. However, the

percentage of off-site ATMs to total ATMs show decline to 45.3 per cent in 2010-11 from

45.7 per cent in 2009-10. More than 65 per cent of the total ATMs belonged to the public

sector banks as at end March 2011.



Table-13 showing: ATMs of Scheduled Commercial Banks (As at end-March 2011)

SR NO Bank group On-site No. ATMs

Off-site No. ATMs

Total number ATMs as of ATMs

Off-site ATMs as per cent of total ATMs

I Public sector banks 29,795 19,692 49,487 39.8 1.1 Nationalised banks 15,691 9,145 24,836 36.8 1.2 SBI group 14,104 10,547 24,651 42.8 II Private sector banks 10,648 13,003 23,651 55.0 2.1 Old private sector banks 2,641 1,485 4,126 36.0 2.2 New private sector banks 8,007 11,518 19,525 59.0 III Foreign banks 286 1,081 1,367 79.1 All SCBs (I+II+III) 40,729 33,776 74,505 45.3

Source: RBI

The use of electronic payment has witnessed manifold increase, partly reflecting increased

adoption of technology. The growth of volume of ATMs indicates that customer most prefer

ATMs for transactions because they do not want to go branches for their day to day banking

transaction.

Mobile Banking: Mobile banking is used for performing balance inquiry, account

transactions, payments etc. via a mobile phone. Mobile banking is performed via SMS or the

Mobile Internet, but can also use special programmes downloaded to the mobile device

Magnetic Ink Character Recognition (MICR): MICR introduced in 1987 in India. In this

system data are printed at the bottom of cheque in magnetic ink, for an electronic read is a

typical use of electronics for cheque processing. In 14 centers the MICR clearing is operation

viz- Hyderabad, Bangalore, Ahmadabad, Kanpur, Japura, Nagpur, Baroda, Pune, Gauhati,

Trivandrum. Speed clearing, introduced in 2008, operating on the core banking

infrastructure of banks has now been mode available as a part of MICR. Dearing at all the 66

MICR cheque processing centers (CPCS).

Table 14 showing: Payment system indicators-annual turnover

Volume (000’s) Value (Rupees in Crore) Item 2007-2008 2008-2009 2009-2010 2007-2008 2008-2009 2009-2010 MICR Clearing

1201045 1140492 1143164 6028672 5849642 6664003

MICR clearing

237600 233566 230567 1867376 2060893 1878425

Source: RBI, annual report 2009-10



Real Time Gross Settlement (RTGS): RTGS means funds are transfer on a real time from one

bank to another .Real time refers to there is no waiting period. The transactions are settled

as soon as they are processed or one to one basis without bunching with any other

transaction.

Table 15 showing: Growth of RTGS in India

Item Volume (000’s) Value (Rupees in Crore) 2007-

08 2008-09

2009-2010

2010-2011

2007-08 2008-09 2009-10 2010-2011

RTGS 5840 13,366 33,241

49,3 2,73,18,330

3,22,79,881

3,94,53,359

4,84,87,234

Annual RBI report 2010-11

INFINET: The 'INFINET' - Indian Financial Network is a satellite based wide area network

using VSAT (Very Small Aperture Terminal) technology set up by the RBI in June 1999. The

hub and the Network Management System of the INFINET are located in the Institute for

Development and Research in Banking Technology, (IDRBT) Hyderabad. A Closed User Group

of the member banks of the network called the "INFINET User Group" has been formed to

resolve issues of common interest on a continuing basis. Among the major applications

identified for porting on the INFINET in the initial phase are e-mail, Electronic Clearing

Service - Credit and Debit, Electronic Funds Transfer and transmission of Inter-city Cheque

Realisation advices. Later, other payment system related applications as well as

Management Information System (MIS) applications are proposed to be operationalised.

(banknetindia.com)

S.W.I.F.T: SWIFT stand for the Society for Worldwide Inter-bank Financial

Telecommunication. It was set up in 1973 and is based in Brussels. It facilitates reliable and

expeditious telecommunication facilities for exchange of financial message all over the

world. In SWIFT, financial world conducts its business operations with speed, certainty and

confidence. SWIFT linked more than 9000 financial institutions in 209 countries, who were

exchanging an average of over 15million messages per day as of September 2010.

Institute for Development and Research in Banking Technology (IDRBT): IDRBT was set up by

RBI in 1996.The main purpose of IDRBT is to adopt research and development as well as

consultancy in the application of technology to the banking and financial sector in the

country.



Structured Financial Messaging Solution (SFMS): the SFMS was launched on December 14,

2001 at IDRBT. SFMS is a secure messaging standard for intra-bank and inter-bank

application. It is similar to SWIFT which is the international messaging system used for

financial messaging globally. SFMS system is used for secure communication within the bank

and between the banks.

CONCLUSION:

Banking sector plays an important role in expansion of Indian economy. So banks need to

optionally leverage technology to increase penetration, improve their productivity and

efficiency, deliver cost-effective products and services, provide faster, efficient and

convenient customer service and thereby, contribute to the overall growth and

development of the country. Technology enables increased penetration of the banking

system, increases cost effectiveness and makes small value transactions possible.

Technology allows transactions to take place faster and offers unparallel convenience

through various delivery channels. Technology enhances choices, creates new markets, and

improves productivity and efficiency. Effective use of technology has a multiplier effect on

growth and development.

REFERENCES:

1. Ahmad,Uddin Jayanal and Raul, R.K (2005), public sector banks in India impacts of

financial sector reforms, new Delhi, kalpaz publication,pp-81

2. Shimizu, Satoshi (2010), The State of the Indian Banking Sector and its Role in India’s

High Growth, Pacific Business and Industries Vol. X, 2010 No. 36

3. Das, Santosh Kumar (2010), Financial Liberalization and Banking Sector Efficiency:

The Indian Experience, 12th Money and Finance Conference, 11 – 12th March 2010,

IGIDR, Mumbai

4. Statistical tables relating to banks in India 2010-11, reserve bank of India

5. Statistical tables relating to banks in India 2009-10,reserve bank of India

6. Rayudu,C.S,(2004),E-commerce E-business,Nagpur, Geetangali Press Pvt LTD.PP-74

7. Agarwal,kamlesh.N ,Lal, amit and agarwal, deeksha (2000), new delhi, rajkamal

electric press,pp-30

8. 'INFINET' - Indian Financial Network, assessed on-07-02-2012



9. Real Time Gross Settlement, 23 November 2011, en.wikipedia.org/wiki, assessed on-

07-02-2012

10. Society for Worldwide Interbank Financial Telecommunication, 4 February 2012

en.wikipedia.org/wiki/,assesed on -07-02-2012

11. Structured Financial Messaging System, 9 November 2011, en.wikipedia.org/wiki,

assessed on-07-02-2012

12. Saxena,M.K(2004),E-commerce fundamentals and applications,new delhi,mangal

deep publication

13. Information technology and banking- a continuing agenda, reserve bank of India

14. Tandon , dr. Deepak,et al( 2011), Indian banking technology, innovation and key

concerns, pp-18, Delhi ,published in India by Prem Singh Bisht for Kunal Books and

printed at Asian Offset Press.

15. Sawant, B.S. (2011), Technological Developments in Indian Banking Sector,

Vol.1,Issue.IX/Sept;11pp.1-4

16. Joseph.P.T,(2003),New Delhi, prentice hall of India private limited,pp-186

17. Ankit, Shah(2011), Factors Influencing Online Banking Customer Satisfaction and

Their Importance in Improving Overall Retention Levels: An Indian Banking

Perspective,

18. www.iiste.org, Information and Knowledge Management, ISSN 2224-5758 (Paper)

ISSN 2224-896X (Online) Vol 1, No.1, 2011

http://www.wikipedia.com,assesed/�





A STUDY OF ORGANIZATIONAL CLIMATE AND STRESS OF POLICE PERSONNEL

Dr. Priyanka Sharma*

Abstract: Police is recognised as the most stressful professions on the earth because of the

multiple factors. The nature of work, prolonged working hours, critical incident exposure,

strict organisational policies which form the climate of an organisation contribute to the

stress levels in a big way. Such organisational conditions constitute the climate, the positive

climate thus created have positive impact on the psyche of the people working in an

organisation similarly vice versa is also true. The present study is an attempt to explore the

impact of organisational climate at stress levels. Besides this its impact on both the sexes

and personnel’s working at different hierarchical levels is also explored. There is a significant

relationship between perceived organisational climate and stress level of the group of police

personnel but insignificant relationship exists between perceived organisational climate and

stress for the police personnel at different hierarchical levels. No significant relationship

between perceived organisational climate and & stress for both the sexes is seen.

*Assistant Professor, Department of Life Long Learning, University of Jammu, Jammu.



INTRODUCTION

Organizational Climate:

Organizations differ in physical structures as well as in attitudes and behaviours they elicit in

people. These differences are related to differing individual perceptions. Climate means all

those characteristics that distinguish one organization from the other and influence the

behaviour of the people in the organization. It not only affects the behaviour of the

individuals but also how organizations interact among themselves. At an individual level the

climate is an individual's description of the social setting (which comprise of physical

structure, organizational policies and interpersonal relations developed within the group) or

the context of which the person is the part. These individual descriptions are called

"Psychological Climate" and aggregation of psychological climates has been used to

represent the climate of larger units of analysis i.e. "Organizational Climate". Organizational

climate is about the perceptions of the climate environment and about absolute measures.

Organizational climate defined:

The concept of organizational climate is studied by various scholars and many of them have

given their own definition of organizational climate.

According to French, Katz and Rosenweig (1985), organizational climate is relatively an

enduring quality of the internal environment of an organization which is experienced by its

members, influences their behaviour, can be described in terms of the values of a

particular set of characteristics (or attributes) of the organization. Climate is often defined

as the recurring patterns of behaviour, attitudes and feelings that characterize the life in the

organization (Isaksen & Ekvall, 2007).

Drawing on these definitions, organizational climate is the relatively persistent set of

perceptions held by organization members concerning the characteristics and quality of

organizational culture.

Ekvall & Isaksen (2007) described two ontological interpretations of the organizational

climate.

Realistic or Objectivistic view: According to the Objectivistic view, climate refers to "a set of

conditions that exist to have impact on an individual's behaviour." These are "objective"

characteristic of an organization and can be observed in several ways e.g., by organizational

members as well as by outsiders.



Subjectivist view: In this view, the organizational climate is regarded as the organizational

members common perceptual and cognitive structuring of the situation. Organizational

members construct climate over time and events.

Measuring climate:

Measurement of climate seeks to identify the components of climate both in absolute and

perceptual terms. Generally, the areas of interest to be measured in climate are:

• External environment - organizational interface with it.

• Organizational leadership / mission.

• Organization structure / system

• Management practices.

• Working - co-workers! teams ! supervisor.

• Self - at work - your role, development, opportunities, motivation, commitment,

stress.

• Self - outside work - how work affects your life (good/bad) - vice-versa.

Stress: Define Stress (The stress response of the body) somewhat like an airplane readying

for takeoff virtually all system e.g. the heart and blood vessels, the immune system, the

lungs, the digestive system, sensory organs, and brain are modified to meet the perceived

danger. People can experience either external or internal stressors. External stressors

include adverse physical conditions such as pain, hot or cold temperatures or stressful

psychological environments such as poor working conditions or abusive relationships.

Internal stressors can also be physical like infections, inflammations or psychological. An

example of an internal psychological stress is intense worry about the harmful event that

may or may not occur.

Symptoms of stress:

Physical symptoms: Headaches, Twitching eyelid, Twitching nose, Facial or jaw pains, Dry

mouth or throat, Difficulty in swallowing, Ulcers on tongue, Neck pains, Dizziness, Speech

difficulties, Back aches, Muscles ache, Weakness, Constipation, Indigestion,

Nausea/vomiting, Stomach pains, Diarrhoea, Sexual inadequacy, Chest pains, Insomnia,

Accident proneness, High BP & Heart burn.



Emotional symptoms: Irritability, Moodiness, Depression, Unusual aggressiveness, Loss of

memory, Nightmares, Withdrawal, Neurotic behaviour, Anger, Thoughts of suicide, Feeling

of helplessness, Impulsive behaviour, Restlessness, Frequent episodes of crying,

Indecisiveness, Lack of sexual interest, Periods of confusion, Racing thoughts, Anxiety,

Feeling of panic.

Behavioural symptoms: Wrinkling forehead, High pitched nervous laughter., Nail biting,

Compulsive eating, Increased use of prescribed medicine, Loss of interest in physical

appearance, Compulsive dieting, Chronic procrastination, Sudden change of social habits,

Chronic tardiness, Foot or finger tapping, Hair pulling, Smoking, Drinking, Drug dependence,

Gnashing or grinding teeth.

Stressors at work place.

Some of the intense stressors at work place are enumerated as below:

Under participation in decisions that affect the work responsibilities.

Unrelenting and unreasonable demands for performance.

Lack of effective communication and conflict- resolution methods among workers

and employers.

Lack of job security.

Long working hours.

Excessive time spent away from home and family.

Office politics and conflicts between workers.

Non-commensurate wages with levels of responsibility.

Political interference.

Inadequate equipment and lack of training on equipment.

Harassment at work place and so on.

Definition of workplace stress:

Taber's Cyclopedic Medical Dictionary (2005) defines stress as "the result produced when a

structure, system or organism is acted upon by forces that disrupt equilibrium or produce

strain". "Workplace stress" has harmful physical and emotional response that can happen

when there is a combination of high demands in a job and a low amount of control over the

situation.



Stress in the workplace can have many origins or come from one single event. It can

influence both employees and employers alike. As stated by the Canadian Mental Health

Association (2000): Fear of job redundancy, layoffs due to an uncertain economy, increased

demands for overtime due to staff cutbacks act as negative stressors.

Employees who start to feel the "pressure to perform" can get caught in a downward spiral

of increasing effort to meet rising expectations with no increase in job satisfaction. The

relentless requirement to work at optimum performance takes its toll in job dissatisfaction,

employee turnover, reduced efficiency, illness and even death. Absenteeism, illness,

alcoholism, "petty internal politics", bad or snap decisions, indifference and apathy, lack of

motivation or creativity are all by-products of an over stressed workplace.

Causes of work place stress: Some of the most visible causes of workplace stress include:

Job insecurity, High demand for performance, technology, Workplace culture, Personal or

family problems etc. Job related stress is likely to become chronic because it is such a large

part of daily life and stress in turn reduces a worker's effectiveness by impairing

concentration, causing sleeplessness and increasing the risk for illness, back problems,

accidents and loss. Work stress can lead to harassment or even violence while on the job. At

its most extreme, stress that places such a burden on the heart and circulation can be fatal.

The Japanese even have word for sudden death due to overwork, Kauoushi.

Job stress and women: Women may suffer from mental and physical harassment at

workplaces, apart from the common job stress. Sexual harassment in workplace has been a

major source of worry for women, since long. Women may suffer from tremendous stress

such as 'hostile work environment harassment, which is defined in legal terms as 'offensive

or intimidating behaviour in the workplace can consist of unwelcome verbal or physical

conduct Subtle discriminations at workplaces, family pressure and societal demands add to

these stress factors

Police stress: The police service has the highest level of stress and maximum consequences.

Many studies have been conducted for understanding the level of stress among police

personnel and most of them have revealed alarming negative effects of stress on these

personals.

Police officers play a very significant role for maintaining law and order in the society

despite all the shortcomings and limitations in the police department especially concerning



the infrastructural facilities, work force shortages and periodic training. Police officers are

supposed to implement all the criminal laws for which they work round the clock and/ or

without any leave/ break, which cause tremendous mental pressure and physical exertion

on them. As a result, sometimes a few of them may have violent outbursts and/ or take

leave without any prior notice. Police officers are at high risk of experiencing exposure to

psychologically straining situations and potentially psycho-traumatic experiences.

A comprehensive review was done to develop an understanding about the nature of the

research done on the proposed topic as given below.

Studies on Organizational Climate

The police force faces demands and risks in the field of combat, over the course of their

daily working lives. To cope with these risks, such as violent offenders and a hostile

environment, police organizations have evolved into tightly organized hierarchies of

authoritarian leadership. Police bureaucracies pride themselves upon loyalty to

organizational rules and authority, much like a military organization obeys a strict chain of

command when it is engaged in decision-making.

The climate of the organization is perceived either favourably or unfavourably and has its

impact upon organizational effectiveness, stress and other variables. Various factors like

organizational context (goals and objectives), organizational structure (size, degree of

centralization), organizational processes (leadership style, decision making etc.), nature of

work (shifts etc.) and physical environment (employee safety, rewards etc.) constitute the

dimensions of the climate.

Arvindsson et. al. (2004) conducted a study on air traffic controllers at two levels in

Sweden to investigate how different organisational aspects such as organisational climate,

team climate, leadership, psychosocial work environment and safety culture will be affected

by ongoing organisational and technical changes. Concerning the organisational climate, no

statistically significant differences were found between the different groups stadied. The

climate was considered rather a stable and homogeneous attitudes and feelings that

characterise the life of an organisation. On the other hand, the psychosocial work

environment was considered more an expression of people's direct experience of their work

situation making it more sensitive to differences in the kind of comparisons made.



Organisational climate may affect quality of service and organisational commitment, and

"general organisational climate can influence perception of safety climate, and these

influence safety performance through their effects on knowledge and motivation" For this

reason it could be important for management to pay attention to climate to ensure safety

and quality of healthcare.

Stress is a perceptual phenomenon arising from a comparison between the demand on the

person and his ability to cope. More than any other service or job, the police service has the

highest level of stress and maximum consequences because of the nature and demand of

the service. A number of studies were carried out in different parts of the world for

understanding the level of stress among police personnel. Most of the studies conducted in

the past have revealed the alarming negative effects of stress on the police personnel. One

of the recurring problems with stress studies is that they attempt to examine the

phenomenon globally. This almost always has lead to generalized findings which may be

representative of the overall problem, but have certainly failed to adequately micro-

examine the intricacies of the issue. Gaines and Norman Tubergen (1989) examined

perceptions of stress relative to the demographic and assignment characteristics of police

officers in a medium sized city. The result of the study showed middle aged police personnel

perceived more stress as compared to their younger counterparts. Also, line officers were

more stressed than the ones posted at other places.

In a study conducted by Brown et. al. (1999) on police personnel conceptualized police

operational stressors as traumatic, routine and vicarious. They also revealed that women

officers were better at predicting psychological distress as compared to their male

counterparts.

Certain conclusions based on the research work done on stress and alcohol abuse by Frone

(2000) include:

• Research has expanded to include the sources of stress within the work role (i.e

work stressors) as well as sources of stress representing the integration of work and

family roles (work and family conflicts).

• Evidence is growing that work stressors and work- family conflicts are related to

alcohol use.



• Research is beginning to move beyond simple studies suggesting that work stressors

contribute to alcohol problems by moving towards examination of the more complex

questions of why work stressors lead to alcohol use, and why only some people who

encounter work stress develop alcohol problem.

Pancheri et. at. (2002) conducted a study to assess the subjective stress in the municipal

police of the city of Rome. "The rapid-stress- assessment scale" was administered on clerical

and traffic police officials of both the sexes. Significant differences between traffic and

clerical police officers were found in RSA total score, which was higher among traffic agents.

Traffic police officers were found significantly more often in the "high stress class". Gender

difference analysis showed higher stress score among women. The assessment of the over-

the-counter drug used showed that among the police officers habitually using drugs, only

traffic police subgroup scored higher on RSA. The prevalence of stress amongst the police

personnel was found at all levels as indicated in numerous studies conducted so far.

Goldfarb & Aumiller (2002) giving an overview of police work and analyzing the research of

the biggest stressors for police officers found major stressors as:

• Killing someone in the line of duty.

• Having your partner killed in the line of duty

• Lack of support by the department bosses.

• Shift work and disruption of family time/family rituals.

• The daily grind of dealing with the stupidity of the public, or the "asshole factor".

The extreme form of stress manifests itself in the form of suicide. There seem to be four

factors which find its expression along with the suicide:

• Divorce.

• Alcohol - not alcoholism. That was one of the early theories. But in actuality it was

the use of alcohol right before the act to "get up the nerve".

• Depression.

• A failure to get help. (Most officers who commit suicide have no history of having

sought counseling).

A survey on a population of 1206 police officers to assess levels of strain associated with a.

series of potential home and work related stressors was conducted by Collins & Gibbs

(2003). The findings of the study indicated that occupational stressors ranking most highly



within the population were not specific to policing, but to organizational issues such as the

demands of work impinging upon home life, lack of consultation and communication, lack of

control over workload, inadequate support and excess workload in general. A significant

association between gender and mental ill-health was found, with females more likely to be

stressed than the males. This study confirmed previous findings of organizational culture

and workload as the key issues in officer stress.

Deschamps et. at. (2003) attempted to find the most vulnerable group of employees within

the organization to fall prey of stress in terms of age, tenure, sex and rank. The police

officers with a high stress level belonged to the group with more than 15 years in service,

sergeant, officers and administrative employee rank, divorced experienced, age over 30, no

leisure time activities and no hobbies. In fact sources of stress in police population were

found both in the weariness of the job and private life planning.

Hea et. at., (2005) conducted a study for finding interactive effects of race and gender in a

multidimensional assessment of police occupational stress. The sample from a large urban

police department was divided into four subgroups. Results showed that dynamic factors

such as measures of work environment and coping mechanisms contributed more in

explaining police stress than static factors such as race and gender. Additionally, destructive

coping and work-family conflict (spillover) were the most stable correlates of police stress

across all subgroups included in the analysis.

Women in police service experience tremendous stress. In a survey conducted on police

personnel serving in Gujrat by Patel (2006) it was found that around 65 % women working

in police were under tremendous work pressure and stress, which was badly affecting their

family life. Erratic and long working hours were the main reason of stress resulting in

manifestation of anger on their spouses and children. The sample under study consisted of

group of constables, ASI's & PSI's. Reason for joining the police force for majority of the

women was unemployment, financial needs and government job. Only for 2% of the

surveyed women, wish to serve the masses was the motive behind. According to the

researcher motivating factor behind joining the police force had impact on the experienced

by the women.



METHODOLOGY:

The present study is an attempt to study the organizational climate of the police

organization and the stress experienced by the police personnel serving in the militancy

affected state of Jammu & Kashmir. The study aimed to analyze the effect of organizational

climate and stress on two demographic) variables viz, hierarchy and sex. The variables were

studied using two tools viz. i.e. the organizational climate scale constructed for police

organization and stress by using police stress questionnaires. Tools used in English language

and were administrated on the group and experiment in Hindi and examples of local The

high and low score for all the variables (perceived organizational climate and stress) were

analyzed using mean and standard deviation whereas, the mean differences of scores

between lower and middle hierarchical level and gender is analyzed with the help oft-score.

The relationship between the variables was assessed using correlation.

OBJECTIVES:

• To study the perceived organizational climate of police as perceived by the lower

and mid level police personnel.

• To analyze the stress level experienced by lower and mid level police personnel

• To assess the relationship between perceived organizational climate and stress level

of police personnel.

• To understand the impact of sex on the perceived organizational climate of police.

• To understand the impact of sex on the stress experienced by police personnel.

• To examine the relationship between perceived organizational climate and stress

level of female police personnel.

• To examine the relationship between perceived organizational climate and stress

level of male police personnel.

HYPOTHESIS:

There will be a significant difference in the perceived organizational climate of police

as perceived by the lower and middle level police personnel.

There will be a significant difference in the level of stress experienced by lower and

middle level police personnel.

There will be a significant relationship between perceived organizational climate and

stress level of police personnel.



There will be a significant difference in the perceived organizational climate of police

amongst the female and male police personnel.

There will be a significant difference in the level of stress experienced by female and

male police personnel,


stress level of female police personnel.


stress level of male police personnel.

RESULTS AND INTERPRETATION:

Hypothesis 1 states that there will be significant difference in the perceived organizational

climate of police as perceived by the lower and middle level police personnel.

Table (1): Mean S.D. & t-value for organizational climate of police personnel (lower &

middle level functionaries).

Variable

Lower Level

(N=439)

Middle Level

(N=210)

Total

(N=649)

t-value

Mean S.D. Mean S.D. Mean S.D.

Organizational

Climate

60.745 10.645 63.481 11.707 61.630 11.064 .003*

Graph a: Indicating the mean values of perceived organizational climate of overall, lower

and mid level police personnel.

5959.5

6060.5

6161.5

6262.5

6363.5

64

Axi

s Ti

tle

Perceived Organizational Climate

Lower Level (N=439)

Lower Level (N=210)

Total (N=649)



The mean score of perceived organizational climate is detailed in the Table (1) for the

overall group of police personnel studied; lower and middle level police personnel studied

as 61.630±11.064, 60.745±10.645, and 63.481±11.707 respectively. The values for all

variables are graphically represented as bar diagrams in Graph (a). The mean score for all

the three groups is slightly higher than the norm mean score i.e. 60.00.

From table (1) and graph (a) it is observed that mean difference between perceived

organizational climate between lower and middle level functionaries is highly significant.

Hence, the hypothesis 2 is accepted for perceived organizational climate scores for police

personnel at both hierarchical levels i.e. lower and middle level.

Hypothesis 2 states that there will be a significant difference in the level of stress

experienced by lower and middle level police personnel.

Table (2): Mean S.D. & t-value for stress level of police personnel (lower & middle level

functionaries).

Variable

Lower Level

(N=439)

Middle Level

(N=210)

Total

(N=649)

t-value

Mean S.D. Mean S.D. Mean S.D.

Stress 90.100 17.38 83.286 20.789 87.895 18.806 .000*

STRESS LEVEL

Graph b:indicating the mean values of stress scores of overall, lower and mid level police

personnel.

78

80

82

84

86

88

90

92

Category 1

Lower level (n=439)

Middle level (N= 210)

Total (N=649)



The mean score for stress for overall group of police personnel, lower and middle level

police personnel is 87.895±18.01, 90.100±17.38 & 83.28620.79 respectively. The mean

score for all the three groups is above the norm mean score i.e. 80.00.

From table (2) and graph (b) it is observed that mean difference of stress between lower

and middle level functionaries is highly significant. Hence, the hypothesis 2 is accepted for

significant difference in the stress level of police personnel at two hierarchical levels i.e.

lower and middle level.

Hypothesis 3 states that there will be a significant relationship between perceived

organizational climate and stress level of police personnel.

Table (3): Showing correlations between perceived organizational climate and stress for

overall, lower and mid level police personnel.

The overall, lower and mid level correlation score between perceived organizational climate

& stress is -0.25, -0.27 and -0.17 respectively. It is observed that moderate significant

negative correlation exists between the two variables i.e. perceived organizational climate

and stress. So, the hypothesis 3 is accepted for significant relationship between perceived

organizational climate and stress level of lower and mid level police personnel.

-0.3

-0.25

-0.2

-0.15

-0.1

-0.05

0

Category 1

Overall

Lower

Middle.

Variable Organizational climate & Stress

Overall -0.25*

Lower level -0.27*

Mid level -0.17



Hypothesis 4 states that there will be a significant difference in the perceived organizational

climate of police amongst the female and male police personnel.

Table (4): Showing means, S.D & t-value for organizational climate of female and male

police personnel.

VARIABLE

Females

(N=101)

Males

(N=548)

Total

(N=649)

t-value

Mean S.D Mean S.D Mean S.D

Organizational

Climate

57.673 10.906 62.359 10.948 61.630 10.948 .00*

Graph C: indicating the mean values of perceived organizational climate of police

amongst the females and male police personnel.

The mean score of perceived organizational climate for the overall group of police personnel

studied, for female and male police personnel are 61.630±10.948, 57.673±10.906, and

62.359±10.948 respectively. The mean score of perceived organizational climate for overall

group and male police personnel is slightly higher than the norm mean scores i.e. 60.00.

0

10

20

30

40

50

60

70

Females(N=101)

Males

Total(N=649)



From table (4) it is observed that the mean difference in the perceived organizational

climate between female and male police personnel is highly significant. Ice, the hypothesis 4

is accepted for significant difference in the perceived organizational climate scores for

female and male police personnel.

Hypothesis 5 states that there will be a significant difference in the level of stress

experienced by female and male police personnel.

Table 5 Showing means, S.D & t-value for stress level of female and male police personnel

VARIABLE

Females

(N=101)

Males

(N=548)

Total

(N=649)

t-value

Mean S.D Mean S.D Mean S.D

Stress 97.089 17.657 86.201 18.533 87.895 18.806 .00*

Graph d: indicating the mean values level of stress experienced by female and male police

personnel.

The mean score for stress for overall group of police personnel, female & male police

personnel is 87.895±18.806, 97.089±17.657 & 86.201±18.533 respectively. The mean score

0

20

40

60

80

100

120

Category 1

Series 1

Series 2

Series 3



for the female group is above the norm mean score i.e. 80.00. From table (5) and graph (d) if

is observed that mean difference of stress between female and male police personnel is

highly significant. Hence, the hypothesis 5 is accepted for existence of a significant

difference in the level of stress for female and male police personnel.


organizational climate and stress level of female police personnel.

Table (6): Showing correlation between perceived organizational climate and stress level

of female police personnel.

Variable Perceived organizational climate

and stress level

Female Police personnel -0.18

The correlation score between perceived organizational climate and stress is -0.18, which is

not significant. So, the hypothesis 6 is rejected for significant relationship between

perceived organizational climate and stress for female police pers


organizational climate and stress level of male police personnel.

Table (7): Showing correlations between perceived organizational climate and stress level

of male police personnel.

Variable Perceived organizational climate and

stress level

Male Police personnel -0.23

It can be observed from table (5) that the correlation scores between perceived

organizational climate and stress for male police personnel is -0.23, which indicates low or

insignificant correlation between the variables. So, the hypothesis 7 is rejected for



significant relationship between perceived organizational climate and stress for male police

personnel.

SUMMARY:

The present research is an attempt to study the organizational climate of the police

organization in the militancy affected state of Jammu & Kashmir. The researcher aimed to

ascertain the stress level of police personnel. The study also aimed to analyze the effect of

organizational climate and stress on two demographic variables viz, hierarchy and sex. The

results of the study were analyzed in line with the hypothesis framed for the study. The

organizational climate was assessed by using organizational climate scale constructed for

police organization and stress with the help of police stress questionnaire. The high and low

score for the two variables were analyzed using mean and standard deviation whereas, the

mean differences of scores between lower and middle hierarchical level and two genders is

analyzed with the help oft-score. The relationship between the variables was assessed using

correlation.

CONCLUSIONS:

All the conclusions are based on the formulated hypothesis and the findings.

1. The total perceived organisational climate score is higher amongst middle level and

high significant difference is found between two groups perceived organizational

climate.

2. The total stress score is higher for lower level police personnel and there is a non

significant difference between lower and middle level police personnel in stress.

3. There is a significant relationship between perceived organisational climate and

stress for the total group of police personnel but insignificant relationship exists

between perceived organisational climate and stress for the lower and mid level

police personnel.

4. The total perceived organisational climate score is higher amongst male police

personnel and there is a significant difference between male and female police

personnel in the perceived organizational climate.

5. The total stress score is higher for female police personnel and there is a significant

difference between male and female police personnel in stress.



6. There is non significant relationship between perceived organisational climate and &

stress for the female and male police personnel.

7. Amongst demographic variables sex and designation both contribute in elevating

stress level.

LIMITATIONS OF THE PRESENT STUDY:

1. Police personnel serving in Jammu province were only considered for present study.

2. The investigator has quoted most of the refereilces from western countries as very

few such type of studies have been conducted in India.

IMPLICATIONS OF THE RESEARCH:

1. The present study indicates the specific areas of organizational climate of police

organization which require improvement. Police administration can take appropriate

action to improve the areas requiring attention.

2. Comprehensive stress management training/ programmes could be formulated and

conducted for police personnel to reduce the stress level of police personnel.

3. The organizational climate scale developed and standardized for the Jammu police

could be further standardized on larger population for its wider application.

SUGGESTIONS' FOR THE FUTURE RESEARCH:

1. The sample of police personnel was drawn from three districts of Jammu province of

J&K state, for broader generalizations, it is suggested to undertake similar researches

in other parts of the state as well.

2. The tools used for the data collection were lengthy and direct questions were asked

on various issues pertaining to organization. This may have led to eliciting socially

desirable responses. Future researches may use certain projective techniques to

study the issues undertaken.

3. Tools to be used for study need to be translated in the local languages, especially for

the lower level police personnel, who have lower educational levels.

4. The scale constructed for assessing the organizational climate of police could be

standardized on larger population by the future researchers for wider usage.

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