Project Report

On
“PLASTIC MONEY”
Conduct at
The Sangrur central co-operative bank ltd b/o Malerkotla

Submitted in the Partial Fulfillment of the Requirement for the award of

Degree of Bachelor of Business Administration

Under the guidance of

Prof: Aalia
Guru Harkrishan Girls College,
Phallewal Khurd

Submitted by:
Vipanjot kaur
Roll no. 7654
BBA 6 th -Sem

1
 Acknowledgement
The most pleasant task of the report writing is to expressing my thanks and
gratitude to all those, with whose guidance, cooperation and sincere advice. I
have been and complete my report entitled ‘Vipanjot Kaur’ with reference to
‘The Central Cooperative Bank Malerkotla .
I am especially grateful to Mr.Harjinder Singh (Manager) for providing me an
opportunity to complete my six months training in this prestigious organization
and for his timely guidance.
My sincerest thanks to Mr.Kulwinder Singh who helped me very much in
completing my project. Word are insufficient to express my appreciation for the
sincerely acknowledge, suggestions, invaluable and continuous motivations
provided by them.
I am highly thankful to Mr . Vijay Kumar , Mr. Baldev Kumar without the help
of these people it would not have been possible to collect the data. Last but not
the least, I express gratitude to my project guide Prof Aalia Khalid GHGC
Phallewal’ Whose contributions are no less in the completion of my project.

Vipanjot Kaur

2
 Declaration
I Vipanjot Kaur student of BBA in Guru Harkrishan Girls College Phallewal
Khurd ,Sangrur affiliated to Punjabi university Patiala will take a Pleasure
declaring that the project on title “Plastic Money” is an original work and the
same has not been submitted in the institution for the award of any other degree.
This project being submitted Punjabi university Patiala in partial fulfillment of
the requirement for the reward of the degree of Bachelor of Business
Administration. The content of this report is based on the information collected
by the me. The feasible suggestion have been duly incorporated in consultation
with the supervision.

Vipanjot Kaur

3
 Certificate
This is to certify that the dissertation and entitle. A study uses of “PLASTIC
MONEY” is a benefited research work carried out by VIPANJOT KAUR
student of BBA finance GHGC PHALLEWAL KHURD during the year 2018. In
partial fulfillment of the requirement of the reward of the degree Bachelor of
Business Administration and same study has not been formed in this institution
for the award of any degree.

Prof :Aalia

4
 Contents
Table of contents page no.
 Acknowledgement
 Declaration
 Certificate
 Service Sector in India 6-10
 Banking sector in India 11-23
Plastic Money 24-71
 Meaning of Plastic Money
 Types of Plastic Money
 Advantages and disadvantage

Review of literature 72-74

Research and methodology 75-79
Data analysis 80-97
Bibliography 98-103
Questionnaire 104-107

5
 Service Sector in India
Service Sector in India today accounts for more than half of India's GDP.
According to data for the financial year 2006-2007, the share of services,
industry, and agriculture in India's GDP is 55.1 per cent, 26.4 per cent, and
18.5 per cent respectively. The fact that the service sector now accounts for
more than half the GDP marks a watershed in the evolution of the Indian
economy and takes it closer to the fundamentals of a developed economy. 
Services or the "tertiary sector" of the economy covers a wide gamut of
activities like trading, banking & finance, infotainment, real estate,
transportation, security, management & technical consultancy among several
others. The various sectors that combine together to constitute service
industry in India are:

 Trade

 Hotels and Restaurants

 Railways

 Other Transport & Storage

 Communication (Post, Telecom)

 Personal service

 Insurance

 Community Service

 Public Administration; Defence

6
 Service Sector of Indian Economy
Service sector of Indian Economy of India's GDP during 2006-07. This
sector plays a leading role in the economy of India, and contributes to
around 68.6 percent of the overall average growth in GDP between
2002-03 and 2006-07. 
There has been a 9.4 percent growth in the Indian economy during 2006-07 as
against a rise of 9 percent in the same during 2006-07. During this growth in
Indian economy, the service sector witnessed a rise of 11 percent in the year
2006-07 against the 9.8 percent growth in 2005-06. The service sectors of Indian
economy that have grown faster than the economy are as follows:

 Information Technology (the most leading service sectors in

Indian economy)

 IT-enabled services (ITeS)

 Telecommunications

 Financial Services

 Community Services

 Hotels and Restaurants

There has been a 13 percent hike in the service sectors of trade, hotels,
transport and communication in India's economy as compared to the
10.4 percent rise in the previous year. The financial services that
comprise of banks, real estate, insurance, and business services
witnessed a rise of 11.1 percent during 2006-07 against the 10.9 percent
growth in the previous year. Service sectors including community, social,
and personal services experienced a growth of 7.8 percent during 2006-
07 as against 7.7 percent growth in the previous Year.
7
The service sector of India has also witnessed a remarkable rise in the
global market apart from the Indian market. It has experienced a rise of
2.7 percent in 2006 from that of 2 percent in 2004. The broad-based
services in the trade sector has undergone a large-scale rise. The
software services in Indian economy increased by 33 percent which
registered a revenue of USD 31.4 billion
Growth of Service Sector
Everything that grows also changes its structure. Just as a growing tree
constantly changes the shape, size, and configuration of its branches, a
growing economy changes the proportions and interrelations among its
basic sectors—agriculture, industry, and services and Between other
sectors—rural and urban, public and private, domestic- and export-
oriented (. Are there common patterns in how growing economies
change? Which changes should be promoted and which should be
discouraged? Think about these questions while reading this chapter and
the three that follow it. Industrialization and Post industrialization ,One
way to look at the structure of an economy is to compare the shares of its
three main sectors—agriculture, industry, and services—in the country’s
total output and employment.1Initially, agriculture is a developing
Economy’s most important sector. But as income per capita rises,
agriculture loses its primacy, giving way first to a rise in the industrial
sector, then to a rise in the service sector. These two consecutive shifts
are called industrialization and post industrialization (or
“deindustrialization”). All growing economies are likely to go through
these stages, which can be explained by structural changes in consumer
demand and in the relative labor productivity of the three main economic
sectors.

8
Industrialization
As people’s incomes increase, their demand for food—the main product
of agriculture reaches its natural limit, and they begin to demand
relatively more industrial goods. At the same time,
Because of new farm techniques and machinery, labor productivity
increases faster in agriculture than in industry, making agricultural
products relatively less expensive and further diminishing their share in
gross domestic product (GDP). The same trend in relative labor
productivity also diminishes the need for agricultural workers, while
employment opportunities in industry grow. As a result industrial output
takes over a larger share of GDP than agriculture and employment
in industry becomes predominant. At the same time,
Because of new farm techniques and machinery, labor productivity
increases faster in agriculture than in industry, making agricultural
products relatively less expensive and further diminishing their share in
gross domestic product (GDP)
Post industrialization
As incomes continue to rise, people’s needs become less “material” and
they begin to demand more services—in health, education,
entertainment, and many other areas. Meanwhile, labor productivity in

9
services does not grow as fast as it does in agriculture and industry
because most service jobs cannot be filled by machines. This makes
services more expensive relative to agricultural and industrial goods,
further increasing the share of services in GDP. The lower
Mechanization of services also explains why employment in the service
sector continues to grow while employment in agriculture and industry
declines because of technological progress that increases labor
productivity and eliminates jobs. (Figure 9.2). Eventually the service
sector replaces the industrial sector as the leading sector of the
economy. Most high-income countries today are post industrializing—
becoming less reliant on industry—while most low income countries are
industrializing— becoming more reliant on industry (Figure 9.3). But even
in countries that are still industrializing, the service sector is growing
relative to the rest of the economy (Data Table 2). By the mid- 1990s
services accounted for almost two-thirds of world GDP (Map 9.1), up
from about half in the 1980s.

Banking in India
Banking in India originated in the last decades of the 18th century. The
first banks were The General Bank of India, which started in 1786,
and Bank of Hindustan, which started in 1790; both are now defunct. The
oldest bank in existence in India is the State Bank of India, which
originated in the Bank of Calcutta in June 1806, which almost
immediately became the Bank of Bengal. This was one of the three
presidency banks, the other two being the Bank of Bombay and the Bank
of Madras, all three of which were established under charters from the
British East India Company. For many years the Presidency banks acted
as quasi-central banks, as did their successors. The three banks merged
10
in 1921 to form the Imperial Bank of India, which, upon India's
independence, became the State Bank of India in 1955.
History
Merchants in [Calcutta] established the Union Bank in 1839, but it failed
in 1848 as a consequence of the economic crisis of 1848-49.
The Allahabad Bank, established in 1865 and still functioning today, is
the oldest Joint Stock bank in India.(Joint Stock Bank: A company that
issues stock and requires shareholders to be held liable for the
company's debt) It was not the first though. That honor belongs to the
Bank of Upper India, which was established in 1863, and which survived
until 1913, when it failed, with some of its assets and liabilities being
transferred to the Alliance.The period between 1906 and 1911, saw the
establishment of banks inspired by the Swadeshi movement. The
Swadeshi movement inspired local businessmen and political figures to
found banks of and for the Indian community. A number of banks
established then have survived to the present such as Bank of
India, Corporation Bank, Indian Bank, Bank of Baroda, Canara
Bank and Central Bank of India.The fervour of Swadeshi movement lead
to establishing of many private banks in Dakshina Kannada and Udupi
district which were unified earlier and known by the name South
Canara ( South Kanara ) district. Four nationalised banks started in this
district and also a leading private sector bank. Hence undivided
Dakshina Kannada district is known as "Cradle of Indian Banking".During
the First World War (1914–1918) through the end of the Second World
War (1939–1945), and two years thereafter until the independence of
India were challenging for Indian banking. The years of the First World
War were turbulent, and it took its toll with banks simply collapsing
despite the Indian economy gaining indirect boost due to war-related
11
economic activities. At least 94 banks in India failed between 1913 and
1918 as indicated in the following
Number of Authorised Paid-up
Years banks capital Capital
that failed (Rs. Lakhs) (Rs. Lakhs)
1913 12 274 35
1914 42 710 109
1915 11 56 5
1916 13 231 4
1917 9 76 25
1918 7 209 1
Nationalisation
Banks Nationalisation in India: Newspaper Clipping, Times of India, July
20, 1969
Despite the provisions, control and regulations of Reserve Bank of India,
banks in India except the State Bank of India or SBI, continued to be
owned and operated by private persons. By the 1960s, the Indian
banking industry had become an important tool to facilitate the
development of the Indian economy. At the same time, it had emerged
as a large employer, and a debate had ensued about the nationalization
of the banking industry. Indira Gandhi, then Prime Minister of India,
expressed the intention of the Government of India in the annual
conference of the All India Congress Meeting in a paper entitled "Stray
thoughts on Bank Nationalisation."[2] The meeting received the paper
with enthusiasm.
Thereafter, her move was swift and sudden. The Government of India
issued an ordinance ('Banking Companies (Acquisition and Transfer of
Undertakings) Ordinance, 1969')) and nationalised the 14 largest

12
commercial banks with effect from the midnight of July 19, 1969. These
banks contained 85 percent of bank deposits in the
country[2]. Jayaprakash Narayan, a national leader of India, described
the step as a"masterstroke of political sagacity." Within two weeks of the
issue of the ordinance, the Parliament passed the Banking Companies
(Acquisition and Transfer of Undertaking) Bill, and it received
the presidential approval on 9 August 1969.
A second dose of nationalization of 6 more commercial banks followed in
1980. The stated reason for the nationalization was to give the
government more control of credit delivery. With the second dose of
nationalization, the Government of India controlled around 91% of the
banking business of India. Later on, in the year 1993, the government
merged New Bank of India with Punjab National Bank. It was the only
merger between nationalized banks and resulted in the reduction of the
number of nationalised banks from 20 to 19. After this, until the 1990s,
the nationalised banks grew at a pace of around 4%, closer to the
average growth rate of the Indian economy.
Adoption of banking technology
The IT revolution had a great impact in the Indian banking system. The
use of computers had led to introduction of online banking in India. The
use of the modern innovation and computerisation of the banking sector
of India has increased many fold after the economic liberalisation of 1991
as the country's banking sector has been exposed to the world's market.
The Indian banks were finding it difficult to compete with the international
banks in terms of the customer service without the use of the information
technology and computers. The RBI in 1984 formed Committee on
Mechanisation in the Banking Industry (1984)[6] whose chairman was Dr
C Rangarajan, Deputy Governor, Reserve Bank of India. The major
13
recommendations of this committee was introducing MICR[7] Technology
in all the banks in the metropolis in India.This provided use of
standardized cheque forms and encoders. In 1988, the RBI set up
Committee on Computerisation in Banks (1988)[8] headed by Dr. C.R.
Rangarajan which emphasized that settlement operation must be
computerized in the clearing houses of RBI in Bhubaneshwar, Guwahati,
Jaipur, Patna and Thiruvananthapuram.It further stated that there should
be National Clearing of inter-city cheques at
Kolkata,Mumbai,Delhi,Chennai and MICR should be made Operational.It
also focused on computerisation of branches and increasing connectivity
among branches through computers.It also suggested modalities for
implementing on-line banking.The committee submitted its reports in
1989 and computerisation began form 1993 with the settlement between
IBA and bank employees' association.[9]
In 1994, Committee on Technology Issues relating to Payments System,
Cheque Clearing and Securities Settlement in the Banking Industry
(1994)[10] was set up with chairman Shri WS Saraf, Executive Director,
Reserve Bank of India. It emphasized on Electronic Funds Transfer
(EFT) system, with the BANKNET communications network as its carrier.
It also said that MICR clearing should be set up in all branches of all
banks with more than 100 branches.
Committee for proposing Legislation On Electronic Funds Transfer and
other Electronic Payments (1995)[11] emphasized on EFT system.
Electronic banking refers to DOING BANKING by using technologies like
computers, internet and networking,MICR,EFT so as to increase
efficiency, quick service,productivity and transparency in the transaction.

14
Number of ATMs of different Scheduled Commercial Banks Of India as
on end March 2005
Apart from the above mentioned innovations the banks have been selling
the third party products like Mutual Funds, insurances to its clients.Total
numbers of ATMs installed in India by various banks as on end March
2005 is 17,642.[12]The New Private Sector Banks in India is having the
largest numbers of ATMs which is fol off site ATM is highest for the SBI
and its subsidiaries and then it is followed by New Private Banks,
Nationalised banks and Foreign banks. While on site is highest for the
Nationalised banks of India.[9]
Public Sector

The public sector is that portion of society controlled by national, state or

provincial, and local governments. In the United States, the public sector
encompasses universal, critical services such as national defense,
homeland security, police protection, fire fighting, urban planning,
corrections, taxation, and various social programs.
The public sector overlaps with the private sector in producing or
providing certain goods and services. In other instances, a service may
shift from the private sector to the public. This is less common, but health
care is one area where some governments are providing or
experimenting with services previously furnished by private providers.
15
The following are the list of Public Sector Banks in India

 Allahabad Bank
 Bank of Baroda
 Bank of India
 Canara Bank
 Central Bank of India
 Corporation Bank
 IDBI Bank
 Punjab & Sind Bank
 Punjab National Bank

Definition of 'Private Banking'

Personalized financial and banking services that are traditionally offered
to a bank's rich, high net worth individuals (HNWIs). For wealth
management purposes, HNWIs have accrued far more wealth than the
average person, and therefore have the means to access a larger variety
of conventional and alternative investments.
Private Sector Banks In India
 Bank of Punjab

 Bank of Rajasthan

 Centurion Bank

 City Union Bank

 Dhanlaxami Bank

 Development Credit Bank

 Federal Bank

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  Jammu & Kashmir Bank

 Karnataka Bank

 |United Western Bank

 UTI Bank

Cooperative Banks
Introduction to Cooperative Banks
A cooperative is an enterprise in which individuals voluntarily organize to
provide themselves and others with goods and services via democratic
control and for mutually shared benefit. Members generally contribute to,
and control via a democratic process, the cooperative's capital.
Moreover, cooperatives often provide education and training to their
members. Over the years the cooperative form has extended to credit
unions, wholesale and/or retail consumer groups, residential
organizations, producer enterprises, and marketing associations. In the
late 1990s, some 4,70,000 cooperatives in the United States claimed
over 100 million members (mostly individuals, but also some businesses)
and provided nearly every type of good and service imaginable: from
health care to housing, insurance to agriculture, and childcare to
manufacturing. Certain broadly defined economic advantages
accompany each specific cooperative type. For example, members of a
consumer cooperative are entitled to receive a patronage dividend.
Distributed from net earnings, the amount of current dividends received
per member is determined by the amount members spent on the
cooperative's products since the last period's payout. Moreover,
members working within the cooperative can qualify for substantial in-
store merchandize discount
The International Cooperative Alliance (ICA), which includes a majority of
17
nationally based producer cooperatives, defines cooperatives more
narrowly. A firm's admission to the ICA requires internal governance
procedures such as free and voluntary membership and a one member-
one vote democratic administration. In particular, qualification requires
adherence to a set of worker-control parameters. These cover
participation in the firm's decision making (including management
appointments), profit sharing, and employee ownership. Excluded from
the ICA's definition are firms that incorporate some, but not all, of the
above characteristics. For instance, firms that have employee stock
ownership plans and profit-sharing programs without allowing for worker
decision-making rights fail to qualify as cooperatives. Adherence to these
and other relatively stringent rules is a condition for membership in the
ICA.

The 7 co-operative principles are :

 Voluntary and open membership

 Democratic member control

 Member economic participation

 Autonomy and independence

 Education, training and information

 Co-operation among Co-operatives

 Concern for Community

A co-operative bank is a financial entity which belongs to its members,

who are at the same time the owners and the customers of their bank.
Co-operative banks are often created by persons belonging to the same
local or professional community or sharing a common interest.
18
Co-operative banks differ from stockholder banks by their
organization, their goals, their values and their governance. In most
countries, they are supervised and controlled by banking
authorities and have to respect prudential banking regulations,
which put them at a level playing field with stockholder banks.
Depending on countries, this control and supervision can be
implemented directly by state entities or delegated to a co-operative
federation or central body.
Even if their organizational rules can vary according to their respective
national legislations, co-operative banks share common features :
 Customer's owned entities: in a co-operative bank, the needs of
the customers meet the needs of the owners, as co-operative bank
members are both. As a consequence, the first aim of a co-operative
bank is not to maximise profit but to provide the best possible products
and services to its members. Some co-operative banks only operate with
their members but most of them also admit non-member clients to benefit
from their banking and financial services.

 Democratic member control: co-operative banks are owned and

controlled by their members, who democratically elect the board of
directors. Members usually have equal voting rights, according to the co-
operative principle of  "one person, one vote".

 Profit allocation: in a co-operative bank, a significant part of the

yearly profit, benefits or surplus is usually allocated to constitute
reserves. A part of this profit can also be distributed to the co-operative
members, with legal or statutory limitations in most cases. Profit is
usually allocated to members either through a patronage dividend, which
is related to the use of the co-operative's products and services by each

19
member, or through an interest or a dividend, which is related to the
number of shares subscribed by each member.
Co-operative banks are deeply rooted inside local areas and
communities. They are involved in local development and
contribute to the sustainable development of their communities, as
their members and management board usually belong to the
communities in which they exercise their activities. By increasing
banking access in areas or markets where other banks are less
present - SMEs, farmers in rural areas, middle or low income
households inurban areas - co-operative banks reduce banking
exclusion and foster the economic ability of millions of people. They play
an influential role on the economic growth in the countries in which they
work in and increase the efficiency of the international financial system.
Their specific form of enterprise, relying on the above-mentioned
principles of organization, has proven successful both in developed and
developing countries.
Cooperative banking is retail and commercial banking organized on
a cooperative basis. Cooperative banking institutions take deposits and
lend money in most parts of the world.
Cooperative banking, as discussed here, includes retail banking carried
out by credit unions, mutual savings banks, building
societiesand cooperatives, as well as commercial banking services
provided by mutual organizations (such as cooperative federations) to
cooperative businesses.

Larger institutions are often called cooperative banks. Some are tightly

integrated federations of credit unions, though those member credit

20
unions may not subscribe to all nine of the strict principles of the World
Council of Credit Unions (WOCCU).
Like credit unions, cooperative banks are owned by their customers and
follow the cooperative principle of one person, one vote. Unlike credit
unions, however, cooperative banks are often regulated under both
banking and cooperative legislation. They provide services such as
savings and loans to non-members as well as to members, and some
participate in the wholesale markets for bonds, money and even equities.
[2] Many cooperative banks are traded on public stock markets, with the
result that they are partly owned by non-members. Member control is
diluted by these outside stakes, so they may be regarded as semi-
cooperative.
Cooperative banking systems are also usually more integrated than
credit union systems. Local branches of cooperative banks elect their
own boards of directors and manage their own operations, but most
strategic decisions require approval from a central office. Credit unions
usually retain strategic decision-making at a local level, though they
share back-office functions, such as access to the global payments
system, by federating.
Some cooperative banks are criticized for diluting their cooperative
principles. Principles 2-4 of the "Statement on the Co-operative Identity"
can be interpreted to require that members must control both the
governance systems and capital of their cooperatives. A cooperative
bank that raises capital on public stock markets creates a second class
of shareholders who compete with the members for control. In some
circumstances, the members may lose control. This effectively means
that the bank ceases to be a cooperative. Accepting deposits from non-
members may also lead to a dilution of member control.
21
Cooperative banking, as discussed here, includes retail banking carried
out by credit unions, mutual savings banks, building
societiesand cooperatives, as well as commercial banking services
provided by mutual organizations (such as cooperative federations) to
cooperative businesses

CHAPTER-1
INTRODUCTION

2.1 ORIGIN OF THE PLASTIC MONEY

The origin of the Plastic money can be traced back to 1914, when
22
American company Western Union began issuing metal plates to customers who
would buy on credit. The transactions would be recorded on these plates.
However, the credit card as we know it took another 40-odd year to evolve. An
American gentleman, Frank McNamara was acutely embarrassed in a New York
restaurant, when he realized that he had forgotten to carry his wallet. When he
finally got out of the restaurant after plenty of apologizing McNamara was
suddenly struck by the idea of replacing cash with a more convenient alternative.
And that’s how “The Diners Club” card was born. In 1950 the Diners Chub in
New York pioneered a charge card for meals, heralding the arrival of "plastic
money," a credit account that the user paid off, with interest, at the end of each
month. Eight years later American Express Company developed a card used for
goods and services at member establishments across the country, again with the
provision that the borrower pay the total balance monthly. The growth and
popularity of plastic money in India has been phenomenal in the last few years.
The Indian economy is booming with a refreshing youthfulness in its march to
success. Plastic money entered the Indian market, promising a cashless society.
But if we evaluate it after a decade, certain deviations are easily seen, like the
change in focus from cashless society to plastic money as a debt instrument. As
a new product, people used to flash colourful cards. However, the present plastic
money definitely lacks sufficient infrastructure. A credit card in India is gaining
ground. A number of banks in India are encouraging people to use credit card.
The concept of credit card was used in 1950 with the launch of charge cards in
USA by Diners Club and American Express. Credit card however became more
popular with use of magnetic strip in 1970. Plastic money in India became
popular with the introduction of foreign banks in the country. Plastic money is
financial instruments, which can be used more than once to borrow money or
buy products and services on credit. Basically banks, retail stores and other
businesses issue these.
23
2.2 INTRODUCTION AND MEANING OF THE PLASTIC MONEY
The plastic money are same as paper but the only difference is that they
are made of plastic and more secured but in traveling and shopping people used
to carry huge cash which was very unsecured and also increasing crime rate.
Then the cards are introduced in the world to resolve the issue of carrying huge
cash. Then the credit cards are known as Plastic Money. The usage of plastic
money(Cards) has increased in the mode of payment of huge amount and time
by time there are lots of different types of plastic money has introduced which
enhanced the features of plastic money like we can use it to anywhere in the
world and etc.. The plastic notes also secure the government for copying
because paper note easily copied but plastic note can not be copied.. Credits
cards have been rightly called “plastic money”. The objective of credit card is to
provide convenience and security. It eliminates cumbersome cash transactions
and protects from the possible danger of pick pocketing a lot of cash .There is
mainly usually an interest –free credit for 30-40 days. Groceries, hotel charges,
telephone bills and taxes etc. could be paid through credit cards (plastic money).
These plastic cards have the photo identity and holder’s signature embossed on
the card. It also has the issuing bank’s name and validity period of the card. The
bank issuing the credit card knows well the customer and his creditworthiness.
The development of credit card is one of recent phenomena in banking sector.
Many Indian and foreign banks have issued plastic money to their customers.
The issuing bank ties up with a number of establishment including hotels, shops-
petrol pumps, hospitals, departmental stores in which honors the credit cards.
The issuing bank provides the facility of plastic cards to select number of the
customers depending upon their monthly income, creditworthiness or to
company executives, businessmen and high and middle income individuals etc.
Basically, the use of credit cards helps the holder to take advantage of the two
24
essential aspects of the financial services functions.
a) Transmission of payments
b) The granting of credit.
The development of the credit card has facilitated the use of these two functions
together.

Major Banks issuing plastic money in India

 State Bank of India credit card (SBI credit card)

 Bank of Baroda credit card or BoB credit card
 ICICI credit card
 HDFC credit card
 IDBI credit card
 ABN AMRO credit card
 Standard Chartered credit card
 HSBC credit card
 Citibank Credit Card

These cards are performing the function of money with different ways.
These cards are accepted worldwide, in which you can utilize your own
money and also bank’s money. The card through which you spend your
own money is known as debit card. The card through which you spend the
amount of bank as loan is called credit card.

Plastic money are meant to empower people with higher purchasing power,
special rewards and added advantage of availing hotel stay, flight tickets,
shopping bonanza, gift certificates etc.Credit cards, a type of plastic money,
seem to have turned into a necessity from a fancy. Previously, they were mostly

25
pointed out as ‘vanity of wallets’ by the critics and those who defended a
random use of credit cards. People would love to flaunt their haughtiness and
status by the number of credit cards peeking out of the pockets of their polished
leather wallets. However, presently banks and financial organizations have
devised multitude of cards to make diverse ends meet of diverse types of users.
As a result, both the masses of card members and multifarious ness of cards are
increasing. It is utterly difficult to find out whether the increased number of
users influences from introduction of various cards or if the variations in credit
cards result in-from the growing interest amongst people. Whatsoever be the
case, credit cards are evidently becoming one of the most preferred modes of
carrying money and payment. Credit cards also give access to online banking
benefits to the users.

Members can take advantage of online banking for making payments, balance
transfer, recharging their mobiles, paying electricity and other bills and in
knowing remaining credit limit too. Diverseness in cards is brought up to
complement to purchase and payment ability, and also lifestyle of people. For
example, there are frequent fliers and travelers who may opt for credit cards,
especially designed for them, to get discounts on ticket booking, reservation of
accommodations, booking of car rental services, cost-effective deals on
shopping, visiting places, amusement parks or eating at fine restaurants etc.

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 PLASTIC MONEY: Freedom of Purchasing

Multiple categories of credit cards assist people in multiple ways including

acquiring reliable health check up and wellness programs, for business and
corporate people to offer them special business class benefits with special
rewards and money saving advantages to help managing their expenses better.
The business users are also entitled to higher credit limits to aid extended
capacity to spend money, especially when they are touring on either business or
pleasure purposes. Business credit cards include special facilities to help
corporate people managing employee care with add on cards for employees.
Business cards also assist cardholders distinguish their personal expenses from
business expenses as well as offer users with many additional perks and rewards
such as airline rewards, cash back rewards etc.

If you are mainly focus on availing rewards, then concentrate on the reward
point credit cards and cash back credit cards. These kinds of cards offer yielding
incentives for using cards to purchase. While purchasing with these credit cards,
the users accumulate points which they can redeem with various kinds of
rewards. Cash back credit cards offer cash rewards to card members when these
members use them more. Points and cash rewards increase as the usage of the
cards gets higher. If you are a punctual credit card payer and do not indulge in
27
postponing your payment cycles, then this type of credit cards suits you better.
Otherwise, you have risks of accumulating repayable amount which would one
day appear as a too large amount to pay off and generate bad credit reports for
users. While cash back credit cards offer rewards in cash, the general reward
point credit cards offer rewards in kind on rolling up of points. These rewards
can be anything such as gift cards, jewelers, electronic gadgets or home
appliances, stay at premium class hotels or suites, flight tickets and many more.
If you advocate shopping, the best way to de-stress and most enjoyable leisure,
then apply for any retail rewards card or credit card offering ease of payments.
Retail rewards credit card team up with prominent branded retailers ubiquitous
around the world. On shopping from those retailers, card members receive
rewards, either in cash or reward certificates. There are also those basic cost
curtailing credit cards like low interest cards that may charge lower introductory
APR before starting to charge higher rates after particular period, also may offer
fixed interest rates etc. Plastic money not only eases the fear of carrying large
amount in cash, but it can also stop the corruption of hoarding black money,
which lets the country down financially. In today’s materialistic world, every
one is running behind money or you can say that the whole world is running
behind money. In addition, these days, things have become costlier and without
hard cash it is difficult to make any outright purchase, if you are an impulsive
buyer. Nevertheless, with ‘Plastic Money’, i.e. Payment Cards, you can do it
without carrying any money on you. There is no burden of carrying a bunch of
notes, no fear of losing or forgetting the wallet at home. Welcome to the age of
‘Plastic Money’. Influence of western lifestyle has changed things in India too.
India is also turning to ‘Plastic Money’. Making payment through cards is so
simple and faster.

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2.3 ELIGIBILITY FOR GETTING THE CARD

The following are the factors on which depends the eligibility of an

individual for obtaining the card.

1. He should have a savings current account in the bank.

2. His assets and liabilities on a particular date are reported to bank.
3. A statement of annual or monthly income.
4. He is considered credit worthy up to certain limit depending upon his
income, assets and expenditure.
5. The eligible customer limit is asked to fill in an application form giving
the details of account number, name, address, income, wealth status and a
proof of his income/ wealth etc.

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2.4 PARTICULARS DISPLAYED ON THE PLASTIC MONEY

1. NAME OF THE CUSTOMER-

30
 Every card or plastic money displays the
name of the customer .it should be spelled correctly .In case, it doesn’t the
customer can contact the customer service cell / helpline and get the necessary
correction done. This facility is provided free of cost by the banks.

2. 16-DIGIT CARD NUMBER-

A unique 16 digit number is allotted to every
customer.

3. VALIDITY DATE-
The card mentions the period through which it is valid.
The card is usually valid from the day it is received by the customer up to and
including the last of the month indicated on the card. After that the card has to
be renewed.

4. NAME OF THE ISSUING BANK-

The card indicates on the top the name of
the issuing bank.

5. SIGNATURE PANEL-
The back of the card contains a signature panel. The
customer must put his signature panel to prevent misuse by any other person.
The identifies the card holder signature on the panel would imply that
cardholder has given his content to abide by the terms and conditions governing
the use of credit card. The card is valid only if signed.

6. PIN (PERSONAL IDENTIFICATION NUMBER)-

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 Each cardholder is
issued a password or PIN to enable use of the card for accessing his/her card
account on the ATM and internet and also for availing any privileged, benefit or
service that may be offered by bank on the card. The PIN is communicated to
the cardholder entirely at his/her risk who shall not disclose the PIN to any
person and shall be liable for the all transactions made with the use of the PIN
whether with or without the knowledge of the cardholder.

2.5 DIFFERENT TYPES OF PLASTIC MONEY

2.5.1 CREDIT CARD

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 A credit card is plastic money that is used to pay for products and
services at over 20 million locations around the world. Credit cards in India are
gaining ground. A number of banks in India are encouraging people to use credit
card. The concept of credit card was used in 1950 with the launch of charge
cards in USA by Diners Club and American Express. Credit card however
became more popular with use of magnetic strip in 1970.Credit card in India
became popular with the introduction of foreign banks in the country. Credit
cards are financial instruments, which can be used more than once to borrow
money or buy products and services on credit.
The institution which issues the card makes the payment to the outlet on
your behalf; you will pay this 'loan' back to the institution at a later date. If
consumer carry a balance, credit cards can be like expensive loans made by
banks, gasoline companies and department stores. The credit card issuer gives
credit card to consumer. Consumer use the card to pay for items and services up
to certain total amount-your credit “limit” The store merchant or services
provider collects what you owe from the card issuer, whom you replay. You’re
allowed to pay off what you owe little by little each month, as long as you pay a
minimum amount each time. You’re charged interest on the balance you owe (as
high as 26% each year) at the end of each period, unless you pay the full balance
each time your bull arrives. It is a normal card whereby a holder is able to
purchase without having to pay cash immediately. This credit card is built
around revolving rounding principle. Generally a limit is set to the amount of
money a cardholder can spend a month using the card. At the end of every
month, the holder has to pay a percentage of outstanding. Interest is charged for
the outstanding amount which varies from 30 to 36% per annum. An average
consumer prefers this type of card for his personal purchase as he is able to defer
payment over several months.

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Precautions taken after receiving credit card
To Avoid:

 Bending the Card.

 Exposure to electronic devices and gadgets.

 Direct exposure to sunlight.

 Be cautious about disclosing your account number over the phone unless you
know you're dealing with a reputable company.

 Never put your account number on the outside of an envelope or on a

postcard.

 Draw a line through blank spaces on charge or debit slips above the total so
the amount cannot be changed.

 Don't sign a blank charge or debit slip.

 Tear up carbons and save your receipts to check against your monthly
statements.

 Cut up old cards - cutting through the account number - before disposing of
them.

 Open monthly statements promptly and compare them with your receipts.
Report mistakes or discrepancies as soon as possible to the special address
listed on your statement for inquiries. Under the FCBA (credit cards) and the
34
 EFTA (ATM or debit cards), the card issuer must investigate errors reported
to them within 60 days of the date your statement was mailed to you.

 Keep a record - in a safe place separate from your cards - of your account
numbers, expiration dates, and the telephone numbers of each card issuer so
you can report a loss quickly.

 Carry only those cards that you anticipate you'll need.

To Do:

 Please sign on the signature panel on the reverse of the Card immediately
with a non-erasable ball-point pen (preferably in black ink). This will
ensure that the benefits of membership are yours and yours alone.

 Keep the Card in a prominent place in your wallet. You will notice if it is
missing.

Reasons credit card being rejected at retail outlet:

 One may have exceeded the borrowing limit or defaulted (constantly) on

minimum payment due.

 The card has crossed its expiration date.

 Non-receipt of dues of one-card blocks future transactions on any other

card(s) held of the same card-issuing bank.

 The magnetic stripe on the reverse of the card is damaged i.e. has been
scratched or exposed to continuous heat/direct sunlight or magnetic field-
like card kept near a TV set / other electronic appliances.

 Systems or technology failures have in rare instances also led to non

35
 acceptance of cards when swiped through an Electronic Terminal.

The following are some of the plus features of credit card in India

 Hotel discounts
 Travel fare discounts
 Free global calling card
 Lost baggage insurance
 Accident insurance
 Insurance on goods purchased

Some facts of credit cards

1. The first card was issued in India by Visa in 1981.

2. The country's first Gold Card was also issued from Visa in 1986.

3. The first international credit card was issued to a restricted number of

customers by Andhra Bank in 1987 through the Visa program, after
getting special permission from the Reserve Bank of India.

4. The credit cards are shape and size, as specified by the ISO 7810 standard.
It is generally of plastic quality. It is also sometimes known as Plastic
Money. The credit card is very popular among all ages of people in these
days. So let’s have a little discussion on the advantages and
disadvantages of owning a credit card.

ADVANTAGES OF CREDIT CARD

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TO THE CARD HOLDERS-
o EASY TO USE- The most advantageous part of the credit cards is its use.
Due to the simplified processes of the credit card operations, credit cards
are even used in the groceries too. In these days of extreme business
people don’t like to stay on the queue for the cash payments. So credit
cards are just the right option for them. There is no necessity to check
even if you are paying the correct amount of money. Let your credit card
do everything!
o INCREASING PURCHASING POWER-There is another vital plus
point of having the credit card. You may shop online through the credit
cards. In these days of heavy Internet use, the concept of online shopping
is gaining some rapid popularity. Almost each and every object is
merchandised through the online shopping. It seems that the payment
schemes of those online shopping websites are very much restricted. But
almost all the online shopping websites accept the payment through the
credit cards. So if you own a credit card then you may buy anything
available at the online store.
o EASY TRANSFER OF MONEY-Among some other facilities of having
the credit card, the payback system is one of the most important. If you
want to transfer some amount of money into the account of any other
person, then you could use your credit card. To enjoy this facility, you
have to select your credit card company carefully. Now, you could avoid
the tough bank duties by using your credit card only.
o PROTECTION- protection is given to cardholders because the credit
card company is jointly liable with the retailers for any purchase made
with its credit card.

37
 TO THE SHOPKEEPERS-
o GURANTEED PAYMENT- if the merchant accepts a credit card, it
signifies a guarantee of payment. Thus, credit cards provide protection
from bad debts.
o OVERSEAS VISITORS- overseas visitor may purchase more, providing
a new market for the retailers.
o INCREASED TURNOVER-a shopkeeper accepting bank credit cards is
likely to have more turnovers as compared to the shopkeeper who does not
accept the cards.
TO THE BANKS/CREDIT CARD COMPANIES-
o SOURCE OF INCOME-a bank enjoy income from the issue of credit
cards from different sources such as:
 A small joining fee to be paid by card holders at the time of obtaining
credit card.
 An annual fee to be paid by the cardholders each time the card is renewed.
 Income from the interest charged to customers who use their cards to take
extended credit.
o PLANNING THE MARKETING STRATEGY- credit card companies’
providing credit service in the form of credit cards can use the same to
determine what merchandise or services the customer considers
chargeable. Once a group of goods has been identified as potentials
market, the credit card company has frame of reference with in which to
plan and develop its marketing strategies.

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DISADVANTAGES OF CREDIT CARD.

o THEFT-The first disadvantage regarding the credit cards is its theft

concern. If you lost your credit card anyway and if it went to the wrong
hands, it could be a massacre. So you could have to face huge problems.
So it is necessary for you to keep the credit card safely. If the credit card is
theft or lost, then inform your credit card service provider as early as
possible. If informed, the service provider will stop any kind of valid
transactions through your credit card.
o CREDIT CARD DEBT-There is another disadvantage of the credit cards,
which is manageable too. The problem is associated with the ‘credit card
debt’. Here are lots of people who became the victim of credit debt in past.
But you could get rid of this problem by using your credit card properly
and pay the balance in proper time. Factually, you could improve your
credit score by the proper use of your credit card.

2.5.2 CHARGE CARD

Charge cards, also called travel and entertainment cards, are a little
different from credit cards. Charge cards, such as American Express and Diners
Club, have no credit limit. You can usually charge as much as want, but you are
required to pay off your entire balance when your bill arrives, with one
exception. It you charge air fare, cruise fees or hotels fees for a hotel room
booked through a travel agent on an American Express card, you pay off your
balance over 36 months.. Charge card companies make their profits by charging
very high annual fees- up and by charging merchants relatively high fees each
time a customer pays using the company’s charge card. A charge card carries

39
all the features of credit cards. However, after using a charge card you will have
to pay off the entire amount billed, by the due date. If you fail to do so, you are
likely to be considered a defaulter and will usually have to pay up a steep late
payment charge. When you use a credit card you are not declared a defaulter
even if you miss your due date. If you don’t pay your charge card bill in full,
you’ll get a one-month grace period, when no interest is charged. After that,
you’ll be charged interest that averages about 18%. If you don’t pay after about
months, three months, your account will be closed and your bill sent to the
collections departments.

2.5.3 CASH ADVANCES

Many people use their credit or charge cards to obtain cash advances,
Cash advances are generally more expensive than standard credit card charges.
Most banks charge a transaction fee up to 4% for taking a cash advance. They
also charged interest from the date the cash advance is posted, even if you pay it
back in full when your bill comes. Finally, the interest rate is often higher or
cash advances than it is on ordinary credit card charges.

40
2.5.4 DEBIT CARDS
Debit card is more advanced than ATM card in that it can use at
specified retail or departmental stores also in addition to specified bank
branches. Debit cards are plastic cards containing electro –magnetic
identification .banks issue these cards to their customers who use them to pay
for their purchases at specified sale terminals.
Debit cards combine the functions of ATM cards and checks. Debit card area
issued by banks but is used at stores, not at the banks themselves. When you pay
with a debit card, the money is automatically deducted from your checking
account. Many banks issue a combined ATM/Debit card that looks just like a
credit card and can be used in places where credit cards are accepted. But don’t
be mistaken- they are not credit cards. The money you spend comes out of your
checking account immediately.

Debit cards are substitutes for cash or check payments, much the same way that
credit cards are. However, banks only issue them to you if you hold an account
with them. When a debit card is used to make a payment, the total amount
charged is instantly reduced from your bank balance. A debit card is only
accepted at outlets with electronic swipe-machines that can check and deduct
amounts from your bank balance online.

41
 Many people prefer debit cards over checks for two reasons:

1. You do not have to carry checkbook and present identification, but are still
able to make purchases directly from your checking account.
2. You pay your bills immediately, unlike when you use a credit card and get
the bill later.

Features of Debit Card

1. Obtaining a debit card is often easier than obtaining a credit card.

2. Using a debit card instead of writing checks saves you from showing
identification or giving out personal information at the time of the
transaction.

3. Using a debit card frees you from carrying cash or a checkbook.

4. Using a debit card means you no longer have to stock up on traveler's

checks or cash when you travel.

5. Debit cards may be more readily accepted by merchants than checks,

especially in other states or countries wherever your card brand is
accepted.

6. The debit card is a quick, "pay now" product, giving you no grace period.

2.5.5 ATM CARD

Many banks including SBI, HDFC bank, Indian bank etc. have issued
ATM cards through 24 hours banking can be done at specified branches. The
ATM cards will allow the customer to withdraw at specified branches
through debit to own savings or current accounts by use of ATM’s .Here
42
 electronically customer card is identified by code number and the customers
account is debited and is handed over to the customer. An ATM card is useful
to a card holder as it helps him to withdraw cash from banks even when they
are closed. This can be done by inserting the card in the ATM installed at
various bank locations.

Advantages of ATM Card

 ATMs are convenient because they are located at convenient

places.
 ATMs offer money on the spot to customer.

2.5.6 PETRO CARD

Petro Card is a credit card-size plastic card that allows the customers to
pay for fuel with a card. The Petro Card is a variation of the Smart Card. It has
an embedded microprocessor chip, which keeps track of the money consumer
load on their card and the balance available on the card .This card works when
consumer can get the Petro Card after they enroll into the Petro Bonus
programmed of company selling petrol and other fuel. To initialize this card,
they have to first take it to a participating Petro Bonus dealer. Consumers will
pay a sum of money to the dealer who will issue a Petro Card. Then the card will
be placed on a 'reader'. Consumers have to enter the pin code which is given lo
and behold! Loaded onto the card will be the sum of money that consumer
wants. Once the card is loaded, consumer can use it to buy petrol, diesel,
lubricants or any other product or service available at the pump. Usually the

43
 initial loading has to be for a minimum amount of Rs .500 and in multiples of
Rs.100 thereof. Consumer will also be getting a receipt of the amount loaded
.Each time consumer buy petrol, the person at the petrol bunk will swipe
consumer card. By doing so the amount of credit on the card is
reduced. At any point in time, consumer not only knows
how much money has left in his Petro Card.

2.5.7 IN -STORE CARD

The purpose of in –store cards issued by retailers or a company differs

from that of bank and T&D cards. These are used by the departmental stores
mainly as marketing tools to retain customers and increase turnover. The main
features of in-store are as below:

1 These are issued by big departmental stores or retailers.

2 The customers can use these cards only in that retailer’s outlets or for
purchasing the company’s products.
3 They cost a little or no cost to the retailer.
These are usually developed by the traders in partnership with banks or finance
companies who undertake the administration and sometimes the financing
involved.

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 Types of in-store cards
Following are the different types of in-store cards that are available:

I. Budget card-
This card requires monthly payments on behalf of the holder
.the cost of goods purchased is spread over a certain period.
II. Option cards-
Here, the payment can either be made in full or is at the
cardholder’s discretion. However, option available is subject to a minimum
repayment and interest is charged on the balance outstanding amount.
III. Monthly cards-
The cardholder is required to make the payment every
month. No extension of credit is given beyond a month .this card differs from
the budget card, where outstanding credit can be settled in 30 monthly
statements.
Electronically processed card that stores monetary value .Value can be
stores on a chip or magnetic strip on the card. Typically used by public utilities
where a large number of small value transactions can replace cash e.g.…,
MTNL Card, BEST Card.

2.5.8 AGRICULTURE CREDIT CARD

In order to facilitate quicker and easier floe of credit to agricultural
sector which is a priority sector, some top ranking agriculturists and cultivators
were given credits cards by 21 public banks. These cards were given to them
after they produced documentary evidence of the land owed and cultivated by
them, and their titles and other details. These cards are encouraged by RBI and
45
 government.
Before deciding the extant of credit to be given to the agriculturists, the banks
obtains details as to:
1 The holdings of the agriculturists
2 The annual report
3 Crop income and other sources of income
4 Ownership of land

2.5.9 SMART CARD

Smart card contains an electronic chip which is used to store cash. This
is most useful when you have to pay for small purchases, for example bus fares
and coffee. No identification, signature or payment authorization is required for
using this card. The exact amount of purchase is deducted from the smart card
during payment and is collected by smart card reading machines. No change is
given. Currently this product is available only in very developed countries like
the United States and is being used only sporadically in India. It has an
implanted computer chip incorporated in the card plastic which gives it the
power to perform many different functions like having a PC in your wallet!
Multiple applications on the same card e.g. Credit, debit, electronic cash, driving
licenses, secure identification hence you need to carry fewer cards in your
wallet. Chip can record data or value or both and can store up to 80 times more
information than a magnetic chip. Terminal on which the card is used has a chip
reader in addition to the magnetic stripe a reader.

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2.5.10 CO-BRANDED CARD

Co-branded cards are credit cards issued by card companies that have
tied up with a popular brand for the purpose of offering certain exclusive
benefits to the consumer. Banks enter each into partnership with a non-bank to
market credit cards. Both parties are into the alliance for financial gain as the
non bank partner is a profit-making company the bank gains an additional
customer base while the non-bank partner can offer credit cards to its members.
A customized card for a specific retailer or service provider, such as shoppers
Stop that wishes to solicit custo The issuer looks after the card operations while
the co-branded partner shared marketing costs and responsibility.. For example,
the Citi-Times card gives you all the benefits of a Citibank credit card along
with a special discount on Times Music cassettes, free entry to Times Music
events, etc.

2.5.11 AFFINITY CARDS

The card issuer ties up with popular organizations/ institutions which are
often non-profit organizations (Citi-WWF card or the Standchart-Cricket cards)
to offer an affinity card. When the card is used, a certain percentage is
contributed to the organization /institution by the card issuer. To grow a
portfolio, the bank enters into partnership with a non-bank to issue a card which

47
 may have a third party name on the face of the card If the non-bank partner is a
non-profit organization, the card is known as an affinity card. As credit card
issued by a member in conjunction with an organization or collective group (e.g.
a professional organization or special interest group) which is identified on the
card. The issuer often pays the organization a royalty per card or per transaction
charged.E.g. Tollygunge Club card, Delhi Golf Club card.

2.5.12 ADD ON CARD

An Add on card allows you to apply for an additional credit card within
the overall credit limit. You can apply for this card in the name of family
members like your father/ mother/ spouse/ brother/ sister/ all children above 18
years of age. Your billing statement would reflect the details of purchases made
using the add-on card. You are liable to make good all the payments for the
purchases made using the add-on card(s). Normally an issuing bank permits two
add-on cards per credit card. Some credit card issuing companies do set a limit
for each transaction, as well as for the total value of transactions allowed on a
particular add-on card every month.

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2.5.13 OTHER CARDS

2.5.13.1 MASTER CARD

MasterCard is a product of MasterCard International

and along with VISA are distributed by financial institutions around the world.
Cardholders borrow money against a line of credit and pay it back with interest
if the balance is carried over from month to month. Its products are issued by
23,000 financial institutions in 220 countries and territories. In 1998, it had
almost 700 million cards in circulation, whose users spent $650 billion in more
than 16.2 million locations.

49
2.5.13.2 VISA CARD

VISA cards is a product of VISA USA and along with

MasterCard is distributed by financial institutions around the world. A VISA
cardholder borrows money against a credit line and repays the money with
interest if the balance is carried over from month to month in a revolving line of
credit. Nearly 600 million cards carry one of the VISA brands and more than 14
million locations accept VISA cards.

2.5.13.3 AMERICAN EXPRESS

The world's favorite card is American Express

Credit Card. More than 57 million cards are in circulation and growing and it is
still growing further. Around US $ 123 billion was spent last year through
American Express Cards and it is poised to be the world's No. 1 card in the near
future.
In a regressive US economy last year, the total amount spent on American
Express cards rose by 4 percent. American Express cards are very popular in the
50
U.S., Canada, Europe and Asia and are used widely in the retail and everyday
expenses segment.

2.5.13.4 DINNER CLUB INTERNATIONAL CARD

Diners Club is the world's No. 1 Charge Card.
Diners Club cardholders reside all over the world and the Diners Card is a all-
time favorite for corporate. There are more than 8 million Diners Club
cardholders. They are affluent and are frequent travelers in premier businesses
and institutions, including Fortune 500 companies and leading global
corporations.

2.5.13.5 JCB CARDS

The JCB Card has a merchant network of 10.93 million in

approximately 189 countries. It is supported by over 320 financial institutions
worldwide and serves more than 48 million cardholders in eighteen countries
world wide. The JCB philosophy of "identify the customer's needs and please
the customer with Service from the Heart" is paying rich dividends as their
51
customers spend US$4 billion annually on their JCB cards.

2.5.13.6 PHOTO CARD

If your photograph is imprinted on a card, then you have

a photo card. This helps in identify the user of the credit card and is therefore
considered safer. Besides, in many cases, your photo card can function as your
identity card as well.

2.5.13.7 GLOBAL CARDS

Global cards provide convenience and flexibility rather than

cash when while travelling abroad for business or personal reason.

2.6 FACTORS AFFECTING USAGE OF THE PLASTIC MONEY

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The following are certain factors that affect the usage of credit cards:

1. INCOME OF THE HOLDERS –Income group in which the cardholder falls

affects to a great extent the usage of the card. Individual with high income
group are found to be making increased use of their cards as compared to the
lower income group. They purchase more goods and relatively luxury goods
and find it easier to make payments through credit cards.
2. EDUCATION-Many credit card companies use education as an indicator for
soliciting preferred customers. Because the more highly educated person, the
more likely he or she to use plastic money.
3 AGE OF FAMILY HEAD-Families that are in an age range of 25-40 are
likely to incurs more expenditure and consequently likely to use credit cards
more than other group. Whereas an old age person is likely to make use of
plastic money.
4 SOCIO-ECONOMIC STANDING-An individual with a relatively high
social standing is more likely to be a user of a bank credit card than is a person
of relatively lower social standing.
5 ATTITUDE-attitude of the card holder also to great extent affects the usage.
an unfavorable attitude is due to (i) the fear that use of a card may make the
cardholder rely heavily on credit,(ii) the belief that cards should be used only
in times of emergency needs. But favorable attitude of the cardholder who
views credit cards as an easy mechanism for making payments is likely to
make all payments through card.
6 REWARDS-Rewards are the one of the factor that affects the usage of the
plastic money. In order to attract the prospective customers, many schemes,
rewards are being offered by the banks in forms of fee saving, discounts,
attractive gifts etc. so that why consumers are attracted to obtained plastic
53
 money.
Thus the credit cards companies have to consider the above factors while
formulating its marketing strategies to target:
a) Merchants to install the credit card system.
b) Potential cardholders to get the credit card issued,
c) The existing cardholders to encourage greater use of their cards
2.7 ADVANTAGES OF THE PLASTIC MONEY

1) SUBSTITUTED FOR CASH- Plastic money is simple to operate,

convenient to carry huge amount of cash with him while going for shopping.
A small piece of card services the purpose.

2) EASY ACCESS TO MONEY- In case of immediate need for money, we

can withdraw / debit the required amount from the account and thus eliminate
any risk of getting stranded while traveling.

3) EASY AVAILABILITY- Every bank these days provide Credit cards as

soon as the account becomes functional. The cash ATM machines are also
open 24/ 7, therefore whenever in need one does not have to wait for the
54
 banks to open, but can take out the money using the card.

4) MILES OF CARDS- Most credit cards companies give miles on every

purchase. This implies that by using the card for purchasing an item, there are
points added which get accumulated in the account of the user. Ultimately,
when a good amount of such points get collected, the customer can use them
for purchasing any item for free, thus making a double use of money.

5) INSURANCE COVER– some of the banks provide complementary personal

accident insurance cover free of cost in the event of loss in air accident or rail,
road accident. The cardholders nominate an assignee in his application form
for obtaining plastic cards. The assignee must send a preliminary notice of
claim to the specific insurance company within two months of death to record
the claim. The assignee also has to fill up a form available from the insurance
company and return it duly completed along with additional documents such
as
(i) FIR /police report
(ii) Post mortem report
(iii) Death certificate

6) ENHANCES IN PURCHASING POWER- Plastic money are designed to

suit the holders needs and give them the flexibility to buy what they want and
pay when they want. Ability to use money of the bank up to certain limit
enhances their purchasing power. However, the credit limit applies
collectively to any additional cards that may have been issued to the holder.

7) WITHDRAW CASH FROM ANY BANK- the holder can withdraw cash
from any branch of the major banks worldwide.

55
8) ADDITIONAL FINANCIAL SECURITY -plastic money is accepted in
mostly all countries. They are very helpful to the holder during business trip
or holiday travel. Cards provide a sense of additional financial security.

9) CONVENIENT METHOD OF PAYMENTS- plastic money is a

convenient method of payment as opposed to cash or cheques.There is no
danger of loss of money.

10) NO NEED TO CARRY HUGE CASH- The one of the advantage of

plastic money is that you won’t have to carry your cash around all the time
and the people have no fear of theft and it is easy to operate.
2.8 DISADVANTAGES OF THE PLASTIC MONEY

1) JUST A PLASTIC- After all, Credit card is just a plastic and can get either
lost / stolen. This results in crimes in which hefty purchases are made under
the name of the account holder. Such cases might get solved in the favors of
the petitioner, but there is still an identity theft which is a very serious issue.

2) SHOPS USING OTHER VENDORS- There are many stores which accept
cards of a particular company only. Here cash is the only medium of payment
for those who use a credit card of a different company.

3) LESS GLOBAL AVAILABILITY- There are many companies which do

not allow their cards to be used in areas where they have a regional conflict
with.

4) WORN OUT MAGNETIC STRIP- The magnetic strip can get worn out
due to excessive usage. If such a situation happens while traveling, and this is
the only source of cash that the customer has, then he/ she has to wait till the
time they receive a new card, which can take a minimum of 48 hrs.
56
5) RISK OF FRAUD-Fraud, theft has risen drastically over the years. No
doubt, anti-fraud organizations are there to tackle such kind of misuse of
credit cards, still high risk is an unwanted disadvantage to credit card
companies/banks.

6) MONETARY CONTROL-Monetary controls either restrictive or

expansionary imposed by the government have a affected the lending rates
and consequently the interest rates on the bank credit cards. Thus is beyond
the control of any credit card companies.

7) RISK OF LOSS OF CARD- The one of the disadvantage of plastic money

is that it may also lost or stealing of a card which may be serious. It leads one
with a liability of several lakhs of rupees. These days, pick pockets prefer
credit cards because of unlimited access to money.

2.9 PLASTIC FRAUD

State – of –art thieves concentrating on plastic cards. in the past, this type of
fraud was not very common. Today it is a big business for criminals. Plastic
cards bring new convenience to your shopping and banking, but they can turn
into nightmares in the wrong hands.
The following are the types of frauds.
1. Stolen cards at the office
2. Extra copies of charge slips
3. Discarded charge slips
4. Unsigned credit cards
5. Loss of multiple cards
6. Strange request for your PIN numbers
7. Legitimate cards
57
 8. Altered cards
9. Counterfeit cards

2.10 GROWTH OF PLASTIC MONEY IN INDIA

The number of credit and debit card users in India is climbing fast, and rising
affluence is likely to erode Indians’ lingering reluctance to spend on credit

Indians have traditionally valued thrift and frugality. But the spread of affluence
in the wake of rapid economic growth is challenging these values, at least for
many middle-class and high- income families. One sign of this is the
phenomenal growth in the number of credit and debit cards in India—in the past
three years, the number of credit cards has more than doubled and the number of
debit cards has almost quadrupled. However, despite these impressive rates of
growth, the Indian market for financial cards is only beginning to show its
enormous potential. Future growth will be driven by rising consumerism,
intensifying competition among card issuers and an expanding
financial architecture—although a culture of credit-based purchasing may take
some time to develop.

PLASTIC TRENDS

By January 2007 there were 22m credit cards in India. The number of debit
cards was much larger, at 70m. However, the difference is potentially
misleading, as it does not accurately reveal the relative importance of credit and
debit cards as payment mechanisms. Although there are fewer credit than debit
cards in circulation, the total volume and value of credit card transactions is

58
much higher. During the first ten months of fiscal 2006/07, for instance, the
value of credit card transactions reached Rs335bn (around US$7.4bn)—
nearly five times higher than for debit cards.
Along with growth in the number of cards issued, the value of credit card
transactions has risen rapidly. The total value of such transactions almost
doubled between 2003/04 and 2005/06, to around Rs339bn. In the case of debit
cards, the number of cards has risen fourfold since 2003/04, but growth in the
value of transactions has been much more modest, rising by 21% to reach
Rs59bn in 2005/06.
The latest available data, which covers the first ten months of 2006/07,
indicate continued robust growth, with the number of credit and debit cards
rising by 28% and 41% respectively in year- on-year terms. Over the same
period, the value of credit card transactions grew by 20% and that of debit card
transactions increased by 38%.

Drivers of growth

Several factors have combined to fuel the astonishing growth in the use of credit
and debit cards in India. Apart from the convenience offered by cards, these
factors include the following:

 Rising consumerism. The process of economic liberalization that began in the

1990s has resulted in the availability of a huge variety of foreign and
domestic consumer goods. Such goods have also become more affordable for
upper- and middle-class Indians, who have benefited the most from economic
reforms, high economic growth and globalization. The rise in consumerism
generated by these trends has sparked robust demand for financial cards,
especially credit cards.
59
 Improved payment infrastructure. Demand for credit and debit cards has also
been fuelled by improvements in payment infrastructure across the country
that has greatly enhanced their utility for cardholders. Most Indian banks
have been widening their networks of automated teller machines (ATMs) in
order to expand their business. There were over 21,000 ATMs across the
country in March 2006—more than seven times the figure five years earlier
in March 2010. Banks have also been installing increasing numbers of point
of sale (POS) terminals (electronic data-capture swipe machines for accepting
debit and credit card payments) at merchant establishments. In 2006 there
were an estimated 300,000 merchant establishments with POS terminals,
about ten times the number in 2010.
 Competition and lower costs. With so many banks offering credit and debit
cards, the competition among them to attract potential customers to apply for
new cards or to switch their loyalties has intensified.
Competition has also produced a number of benefits for the customer.
For many types of credit cards, banks no longer charge an annual fee. Credit
card holders who make large purchases can pay for these over a period of
time through equated monthly installments (EMIs) offered by the card-
issuing banks. The interest rate on such EMIs is kept lower than the normal
credit card interest rate. In addition, most banks now offer free debit cards to
customers that open personal banking accounts. These debit cards also double
up as ATM cards.

 Co-branding. Co-branded credit cards, which involve tie-ups between the

issuing banks and companies selling products and services, are becoming
increasingly popular in the Indian market. In addition to the standard facilities
conferred by a credit card, the specific advantages relating to the product or
service of the partnering company have proved attractive bait. Citibank’s co-
60
 branded card with Jet Airways, India’s leading airline, allows cardholders to
accumulate air miles that can be redeemed in the form of free flights,
discounts on tickets and seat upgrades. Similarly, ICICI Bank’s co-
branded card with India times, an internet retailer, entitles the cardholder to
discounts and reward points for the purchase of various products and services
through the site.

2.11 CURRENT STATISTICS

The scenario has changed dramatically in the last of couple of years with the
entry of State Bank of India (SBI), a domestic major in the banking sector. More
and more nationalized banks and private sector banks like ICICI and HDFC
Bank are aggressively launching credit card with value added features.

Between 2008 and 2011, there’s been a 55 per cent increase in the number of
payment cards in circulation–from 3 million in 2008 to 44 million in 2011. Of
this, some 14 million are credit cards; the rest are debit cards.

14million

2011

3million

2008 55%

40% 95%
61
Given the explosive growth in e-payments, Visa International commissioned the
National Council of Applied Economic Research (NCAER) to conduct a study
on e-payment systems in India. A look at the key findings:

Switching from cash to e-payment puts more money in the bank. The study
estimates that it costs a bank –

1. Rs 10 to process a cash withdrawal for a walk-in customer,

2. Rs 4 at an ATM
3. Rs 1 when a debit card is used at a merchant establishment.

Banks lend money based on their reserves.

The e-payment boom

In India, credit cards have been around for at least 25 years, but it needed the
ATM revolution to really accelerate card usage. Card volumes, which were at $1
billion in 2008, swelled to $23 billion by the end of 2011. But the numbers are
still low: of the total banking population of 150
million, there are only 14 million credit card customers, largely because they are
unsecured loans, and eligibility norms are more stringent.

Other e-payment systems like the electronic clearing system or ECS are popular

for bulk and retail payments, as they mean lower transaction costs and less
manual work.

For instance

ECS for bulk stock transactions and remittances grew to Rs 9,676 crores in
2011, up from Rs 67.4 crores in 2008. Simultaneously, electronic funds transfer
62
(EFT) for individual payments such as credit, debit, smart cards, prepaid and
ATM cards grew to Rs 15,711 crores in 2011 from Rs 0.6 crores in 2000. Both
the ECS and the EFT systems work on a deferred net settlement basis.

Interestingly, in the 90s, there has been a marked decrease in the growth rate of
cheque issued, from 5.50 per cent in 2000-2003 to a negative growth of -
1.89 per cent in 2008-11. There has also been a decrease in the value of
transactions through cheque over the same period. Similar shifts in payment
methods have occurred in developed economies during the transition from paper
to e-payment systems. In the US, for instance, annual cheque transactions fell
from $49.5 billion in the mid-1990s to $42.5 billion in year 2008.

Debit cards or cash?

The ‘buy now pay now’ character of debit cards has proved very popular and
there’s been a dramatic increase in the number of debit cards in India i.e. 68 per
cent of payment cards are now debit cards, up from 2 per cent in 2011. The year-
on-year growth rate for these cards is put at 76 per cent.

68%

2%

63
 2001

2008

However the NCAER study has zeroed in on one critical detail in the upward
graph for debit card penetration–ATM cash withdrawals account for over 80 per
cent of debit card volumes.

And that’s closely linked to the phenomenal growth of ATMs–from 1,100 in

1999 to 14,000 in 2008. Savings account holders who receive a debit card as a
default accessory in most automated banks, go on to use the card to withdraw
cash from their accounts, and then pay for transactions with paper currency. It’s
been found that over 90 per cent of debit card holders withdraw cash from
ATMs to pay for goods and services. Proof that India is still largely a cash-
based economy– more than 90 per cent of personal consumption expenditure is
still made by cash.

2.12 FUTURE TRENDS

Spending pattern through plastic money will change drastically. Traveling,

dining and jewellery are the top three purchases that Indians make through credit
cards. Two years ago, it was jewellery and apparel purchases that formed the
largest chunk of purchases through plastic money. Fuel accounts for a very small
portion of credit card purchases as these are largely paid through debit cards.

The credit card companies say that consumers spend Rs 50,000 crore annually
which is expected to grow at 50% over the next 4-5 years. Travel has definitely
become much larger a segment than what it was two years ago. Airline tickets,
64
both domestic and international, are now bought through credit cards making it
the largest category for credit card purchases.

With air travel becoming affordable and eating out a regular feature in Indian
households, the trend will only gain momentum in future feels experts. Travel
and dining corner about one-fourth of the total credit card purchases which
signifies the shift in Indian spending habits. Earlier, purchases of both consumer
durables and jewellery items were larger than the hospitality segment. Going
forward, this trend should continue.

Jewellery, consumer durables, fuel purchases, apparel are a much smaller

segment than travel and dining which comprise the largest chunk of credit card
purchases. Eating out has in fact become a big concept now. Experts say, while
travel and hotel bills along with dining, account for about 25-35 % of the total
value of purchases through credit cards, purchase of jewellery accounts for 10-
11 % of the purchases . Apparel purchases account for 8-10 % and consumer
durables like TV and mobile phones account for nearly 6-7 % of the purchases
through plastic money.

Two years ago, the figures were largely skewed in favour of jewellery and
apparel purchases while travel and hospitality was a small component. With
87% of all transactions in plastic money happening through credit cards, debit
cards in India continue to be used largely for cash withdrawals. There are about
65 million debit cards in India of which State Bank of India alone accounts for
25 million debit cards. ICICI Bank is said to have 11 million cards. This is
largely in line with the fact that both the players are the biggest banks in India
and will have the highest number of savings accounts.

Utility payments are another segment where more payments are being made
65
through plastic money in the last two years. In the last two years, the number of
customers paying their electricity and water bills through credit cards has risen
though the overall customer base is still small. Credit card is one of the fastest
growing businesses in financial services in India. There are currently 25 million
credit cards in India and ICICI Bank is the largest player with 8.5 million cards
issued. Citibank, SBI-GE Card and HDFC Bank are the other prominent players
in the sector.

There were almost 29 million debit card users as of 2006, with a projected 34.4
million users by 2016.However, online services like paypalare emerging as a
way for people to pay their debts in new, secure and convenient ways.
Technology also exists to have devices implanted into phones, keys and other
everyday devices so that the ability to pay at the point of sale is even more
convenient.

CHAPTER-2
REVIEW OF LITERATURE

This chapter presents the review of selected studies having relevance to present
studies. In this chapter, an attempt has been made to present the review of the
literature of plastic money.

1.1 REVIEW OF LITERATURE

1) Popular Plastics & Packaging (2012):

66
 The article reports on the plan of
the Indian government to introduce plastic currency that will have
enhanced security features to counter the growing problem of
counterfeiting in the country. (Sep2012)

2) Khurana, Sunayna1, Singh, S. P (2011):

In today's busy world, nobody
has the time to withdraw money from the bank account for shopping.
Everybody is interested in carrying the plastic money (credit card and
debit card) in their wallet for shopping as it gives convenience, safety,
easiness and even style. This study is carried out to identify customer
preferences and expectations from credit/debit card services. The main
objective is to identify the factors that influence the choice of credit cards,
customer satisfaction, and consumer behavior regarding the credit card
in Tier-III cities.Results show that the choice of credit card depends upon
income, gender and profession of the respondent. Customer satisfaction
depends upon income, frequency of usage in a month and amount of
usage per month. (Feb2011)

3) Keynes’s (2010-2011) :
In this paper, we revisit the contents and method of
Keynes’s Indian Currency and Finance (1971a). By focusing on the
rationale of his proposal for a new international monetary system
combining cheapness with stability, we argue that Keynes’s analysis of
monetary developments in Asia in the first years of the twentieth century
may provide useful hints for an overall rethinking of the major faults of
today’s Bretton Woods II system. (2010–11)

4) Alvares, Cliford (2009):

67
 The article reports on the problem regarding fake
currency in India. It is said that the country's battle against fake currency
is not getting easier and many fakes go undetected. It is also stated that
counterfeiters hitherto had restricted printing facilities which made it
easier to discover fakes. According to chief economist Soumendra K.
Dash, the solution to the problem is to provide people incentive to use
plastic cards and make cashless transactions. (3/8/2009)

5) Shepherd, Leah Carlson (2009):

The article focuses on the growth of debit
cards for health savings accounts in the U.S. The cards can be used by
patients to pay for their pharmaceuticals, medical equipment and hospital
expenses, among others. According Jody Dietel of WageWorks, a debit
card is the easiest and most cost-effective method for accessing their
funds for health care. Despite the market exit of some players, the future
of the debit cards is still optimistic for industry observers. (Oct2009)

6) Martin, Edward (2008):

The author comments on issues related to credit
cards. He asserts that he has never owned a credit card. After the
mortgage crisis, Bank of America Chief Executive Ken Lewis has
expressed concern about credit-card defaults. The author criticizes the use
of credit cards, particularly the idea of renting his own money back while
paying nearly 14%, on average, for the privilege. (Dec2008)

7) Mudd, Douglas A (2007):

68
 The article presents a perspective on the
history of credit card in the U.S. According to the author, the future of
money in country is increasingly identified with the credit card. The
author indicated that Americans are used to easily available credit.
Furthermore, credit cards have become an important factor in the
American market. (2007)

CHAPTER -3

RESEARCH METHODOLOGY

3.1 OBJECTIVE OF THE STUDY

1. To know the perception and satisfaction level of People towards plastic
money.
2. To know the problems faced by respondents using plastic money.
3. To study the Growth of plastic money.
4. To identify the factors affecting the usage of plastic money.

69
SCOPE OF STUDY
The scope of project is limited because the study was conducted at Ludhiana city
only. So the study of the project is limited up to availability of the information
from various books or other published data and also information provided by the
respondents through filling questionnaire.

NEED OF THE STUDY

The project is an integration of learning both in the area of finance and
marketing which focuses on most important aspects related to plastic money in
India. The need of the study is to know the attitude and perception of consumers
towards plastic money, know their satisfaction level, to identify the factors why
the plastic money usage has increased and the annual demand of plastic money.
The study is done to know the procedure for getting plastic money and various
issues like educating consumers, advertisement & promotion and distribution
strategies for effect.

3.2 RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. It
may be understood as a science of studying how research is done systematically
& scientifically. The scope of research methodology is wider than that of
research method. Thus when we talk of research methodology we will not only
talk of the research method but also consider the logic behind the methods we
use in the context of our research study and explain why we are using a
particular method or techniques

RESEARCH DESIGN
Research design is the blue print for the collection, measurement and analysis of
70
data. It is framework for conducting the research project. It details the
procedures necessary for obtaining the information need to structure or solve
research. My project research will be exploratory followed by
descriptive because the entire project is based on questionnaire and analysis so
that the detailed description will be there in the project, so this will be
descriptive design.

SAMPLE PLAN
Sampling is an effective step in collection of primary data and has a great
influence on the quality of results. The sampling plan includes the population,
sample size and sampling design.

SAMPLING TECHNIQUE
For conducting the study, convenience-sampling method was adopted because
the respondent people were chosen from those who already have used plastic
money. The respondents were interviewed with help of a structured
questionnaire.

SAMPLE UNIT
It refers to smallest possible individual eligible respondents .In my study the
sampling unit is single individual respondents consumer who are mainly a
resident of Ludhiana.

SAMPLE SIZE
Sample size for the project from 50 respondents and sample is mainly
considered for customers.
71
POPULATION
Population refers to part of universe from the sample for conducting the research
is selected .the population for my research is the residents of Ludhiana city who
are mainly aware of plastic money.

COLLECTION OF THE DATA

The data for this project is collected from primary sources and secondary
sources.
PRIMARY DATA:
The data relating to the project is collected by direct investigation and survey
.For collecting data structured questionnaire is prepared.

SECONDARY DATA
The secondary data is collected by getting information from various books,
magazines and internet sites.

DATA ANALYSIS AND INTERPRETATION

For the purpose of analyzing, raw data was summarized into different tables and
from these tables the results were derived. The questions, which had alternative
choices, were analyzed by taking percentage. The analysis of data is done by
preparing pie charts and bar diagrams

3.3 LIMITATION OF THE STUDY

Despite the possible efforts in concluding the research, they were some of the
limitations which I have conducting my study are;

1. Due to time and resources constraints the survey was conducted in the city
72
 of Ludhiana as a result of which many facts have been left unexplored

2. The exact conclusion could not be made because sample size was not too

large to get the right results. There may be difference in the reality and the

findings.

3. Some of the respondents were unwilling to share the information.

4. Some of the respondents were not interested in giving answer as they

appeared to be busy or any other reason.

5. All the data was collected through interview and questionnaire method so

some facts could have been ignored.

6. Finding and suggestions have been given from personal point of view.

ANALYSIS AND INTERPRETATION

1. Idea about plastic money

TABLE-4.1

Options Responses Percentage

Credit card 11 22%
Debit card 7 14%
ATM card 26 52%
Any other 6 12%
Total 50 100%

73
 FIGURE-4.1

Responses
60% 52%
50%
40% Responses
30% 22%
20% 14% 12%
10%
0%
Credit Card Debit Card ATM Card Any Other

INTERPRETATION

Table 4.1 shows 22% consumers think credit cards because it empowers the
consumer to make payments of goods and services up to a preset limit at some
interest rate. 14% consumer prefer Debit card because Debit cards combine the
functions of ATM cards and checks.52% used ATM card .

2. Using plastic money from how many number of year.

TABLE-4.2

Options Responses Percentage

0-1 year 25 50%
1-5 year 18 36%
Above 5 7 14%
Total 50 100%

FIGURE-4.2

74
 Responses
60%
50%
50%

40% 36%
Percentage
30%

20%
14%
10%

0%
0-1 Year 1-5 Year Above 5

INTERPRETATION
Table 4.2 shows that 50% people used plastic money less than one year because
the awareness and usage of plastic money is increased now’s a days and another
reason is that it provides more facilities as compared to previous year.36%
people used from one year to between five year.14% people used plastic money
more than five years because they are aware earlier.

3. Payments for purchases of goods and services

TABLE 4.3
Options Responses Percentage
Cash 17 34%
Card 23 46%
Cheque 3 6%
ECS 7 14%
Total 50 100%

FIGURE 4.3

75
 Responses
7; 14%

3; 6%
Cash
Card
17; 34%
Cheque
ECS

23; 46%

INTERPRETATION
Table 4.3 shows that 34% people make their payments through cash and 46%
make payments of goods and services through cards, 3% make their payments
by cheque and 7% use ECS for making payments of goods and services

4. Cards that is more friendly to consumers.

TABLE-4.4
Options Responses Percentage
Credit cards 12 24%
Smart cards 4 8%
ATM card 28 56%
Any other 6 12%
Total 50 100%

FIGURE-4.4

76
 Responses
Any Other 12%

ATM Cards 56% Percentage

Smart Cards 8%

Credit Cards 24%

0% 10% 20% 30% 40% 50% 60%

INTERPRETATION
Table 4.4 shows 24% consumer think bank credit cards are more friendly
because it empowers the consumer to make payments of goods and services up
to a preset limit at some interest rate. 8% consumer prefer smart card because
these card are built in safe guard against fraudulent operations.56% used ATM
card because it allows to withdraw cash from own saving and current account at
specified branch by use of ATM’s.12% consumers using her credit card.

5. Consider more reliable, secured and carried and kept easy

TABLE-4.5

Option Responses Percentage

Yes 38 76%
No 12 24%
Total 50 100%

FIGURE-4.5

77
 Respnses
12; 24%

Yes
No

38; 76%

INTERPRETATION
Table 4.5 shows 76% Respondents said that plastic money provided more
security because there is no loss of money and it is more convenient
method payment as opposed to cash or cheque. 24% Respondents said that
it does not provide security because credit card is just a plastic and can get
either stolen/lost. Such cases might get solved but there is still identity
theft which is very serious issue.

6. Plastic money to be safest modes of transaction

TABLE-4.6

Option Responses Percentage

Yes 33 66%
No 17 34%
Total 50 100%

FIGURE-4.6

78
 Responses
70% 66%

60%

50%

40% Percentage
34%
30%

20%

10%

0%
Yes No

INTERPRETATION
Table 4.6 shows 66% respondents think that plastic money is the safest
mode of transaction because cards provide a sense of additional financial
security on the other hand 34 % respondents does not think that it is safest
mode of transaction .

7. Views about the charges taken by banks for providing credit cards.

TABLE-4.7
Options Responses Percentage
Cheapest 15 30%
Reasonable 28 56%
Excessive 7 14%
Total 50 100%
FIGURE-
4.7

79
 Responses
7; 14%

15; 30% Cheapest

Reasonable
Excessive

28; 56%

INTERPRETATION
Table 4.7 shows 30% people feel charges taken by banks for providing
credit card cheapest because it provided number of benefits like financial
security, rewards, insurance cover as opposed to cash or cheque.56%
people said it is reasonable charges which are charge by the banks. 14%
said excessive charges are taken because reason is that interest charge to
them source of revenue to banks or credit card companies.

8. Duplicity of Paper money are you shifting to Plastic Money

TABLE-4.8

Option Responses Percentage

Yes 31 62%
No 19 38%
Total 50 100%

80
 FIGURE-4.8

Responses

19; 38%

Yes
No

31; 62%

INTERPRETATION
Table 4.8 shows 62% people are shifting to Plastic Money due to duplicity
of Paper money and 38% have another reason for shifting paper money to
plastic money

9. Security measurement you expect for stepping misuse of Plastic Money

TABLE-4.9

Options Responses Percentage

Password 32 64%
Photo card 4 8%
PIN 9 18%
Biological imprints 5 10%
Total 50 100%

81
 FIGURE-4.9

Responses
5; 10%

9; 18% Password
Photo card
PIN
Biological imprints
4; 8%

32; 64%

INTERPRETATION
Table 4.9 shows 64% people prefer password for security measurement
due to misuse of plastic money and 8% and 18 are in favour of photo card
and PIN and 5 % respondents are given biological imprints for for security
measurement.

10. There should be any limit on daily/monthly transaction value

TABLE-4.10

Option Responses Percentage

Yes 23 26%
No 27 54%
Total 50 100%

FIGURE-4.10
82
 Responses

Yes
27; 54% No
23; 46%

INTERPRETATION
Table 4.10 shows 26 % respondents think that there should be any limit on
daily/monthly transaction value and 54% gives their view that there should
not be any limit on daily/monthly transactions value.

11. Credit card/Debit card transaction in country over cash transaction

will help to crab black money circulation in economy

TABLE-4.11

Option Responses Percentage

Yes 12 24%
No 31 62%
No comment 7 14%
Total 50 100%

83
INTERPRETATION
Table 4.11 shows 24 % respondents think that Credit card/Debit card
transaction in country over cash transaction will help to crab black money
circulation in economy on the other hand 62 % respondents does not think it
will help to crab black money circulation in economy and 14 % respondents
does not give any comment regarding this.

12.Services provided by plastic money are according to your expectations

TABLE-4.12

Options Responses Percentage

Strongly agree 3 6%
Agree 8 16%
Neither agree-nor 7 14%
disagree
Disagree 18 36%
Strongly disagree 14 28%
Total 50 100%

FIGURE-4.12

Responses
3; 6%
14; 28% Strongly agree Agree
Neither agree nor Disagree
8; 16% disagree
Strongly agree
7; 14%
18; 36%

INTERPRETATION
Table 4.12 shows 16% and 6% consumer are agree and strongly agree that plastic
money provide service according to their expectations because the reason is that more
84
protection to card holder , enhances their purchasing power and it is substituted for
cash .14% consumer are neither agree nor disagree. 36% and 28% consumer are
disagree and strongly disagree because plastic money also suffer from certain draw
backs such as loss / stealing of credit cards and many shops can except only credit
cards of particular company.
13.From where you get knowledge about your plastic money.

TABLE-4.13

Options Responses Percentage

T.V Media 4 8%
Reference group 17 34%
Newspaper 2 4%
Salesman 18 36%
Billboard 1 2%
Any other 8 16%
Total 50 100%

FIGURE-4.13

Responses
8; 17%

1; 2% Reference group
Newspaper
salesman
17; 37%
Billboard
Any other

18; 39%

2; 4%

INTERPRETATION
Table 4.13 shows that 8% consumer get the knowledge about plastic money TV
Media .34% for reference group, 4% from newspaper, 36% from salesman, 2% from
85
bill board and 16% from any other Mostly consumers are get knowledge about plastic
money from salesperson and from their reference group because they provide more
information as compared to from bill board, newspaper and TV media.
14. Benefit that considered most in plastic money.
15.

TABLE-4.14

Options Responses Percentage

Withdraw cash from any branch 7 14%
Convenient method of payment 2 4%
Simple to operate 8 16%
Protection from danger of pick 27 54%
pocketing a lot of cash
Any other 6 12%
Total 50 100%
FIGURE-4.14

Responses
60% 54%
50%
40%
30%
20% 14% 16% 12%
10% 4%
0%
Responses

INTERPRETATION
Table 4.14 shows 14% people like plastic money because it provides the benefit
of withdraw cash from any branch, 4% people like that it is convenient method
of payment, 16% considered it is simple to operate. 12% consider other benefit
86
and 54% consumer consider benefit that it provides protection from the danger
of pick pocketing a lot of cash.
16.Basic Defaults in the Plastic money.

TABLE-4.15

Options Responses Percentage

The price of credit is high 14 28%
Additional fees add to the cost 16 32%
Credit makes it easy to 8 16%
overspend
Other 12 24%
Total 50 100%

FIGURE-4.15

Responses
Other 24%

Credit makes it easy to overspend 16%

Responses

Additional fees add to the cost 32%

The Price of credit is high 28%

0% 5% 10% 15% 20% 25% 30% 35%

INTERPRETATION
Table 4.15 shows 28% respondents said price of credit is high and 32% think that
plastic money default is that it adds additional fees to add. 16% consumer said credit
card makes easy to overspend because it increase the expenditure and purchasing
power and they also think that after taking credit cards their needs are going to
increased. 24% consumer said that there is any other reason in the default of plastic
money.

17. Satisfaction from plastic money service.

87
 TABLE-4.16

Options Responses Percentage

Very low 4 8%
Low 6 12%
Moderate 22 44%
High 16 32%
Very high 2 4%
Total 50 100%

FIGURE-4.16

Responses
50%
45% 44%
40%
35% 32%
30% Responses
25%
20%
15% 12%
10% 8%
5% 4%
0%
Very low Low Moderate High very High

INTERPRETATION
Table 4.16 shows 12% and 8% people are satisfied low and very low because
credits cards are also lost or theft and many companies are not allow their
cards to be used in areas where they have a regional conflict.44% people are
moderate statisfied.32% and 4% are satisfied high and very high because of
plastic money provide number of the benefits such as need not carry huge
cash and it is simple to use.
18.Reason for choosing Plastic money.
TABLE 4.17

88
 Options Responses Percentage
Increasing purchasing 14 28%
power
Flexibility of payment 9 18%
Insurance cover 4 8%
Enjoy the facility of free 5 10%
credit
Substituted for cash 18 36%
Total 50 100%

FIGURE-4.17

Responses
40% 36%
30% 28%
20% 18%
8% 10%
10%
0% Responses
er t er t
en di sh
o w
ym cov cre r ca
g p a ce e fo
sin ofp r an f fr e ted
ha y su o tu
urc b ilit In ility sti
i b
gp Fle
x ac Su
sin hef
ea yt
cr jo
In En

INTERPRETATION
Table 4.17 shows 28% people select plastic money for increased their purchasing
power ,18% for flexibility of payment,8% people for insurance cover factor,10% for
the enjoy the facility of free credit and 36% people used because of substituted of
cash. The majority of people liked because of substituted of cash which is simple and
convenient to carry huge amount of cash while going for shopping.

19. plastic would still be use in 10 years from now

TABLE-4.18

89
 Option Responses Percentage
Yes 36 72%
No 14 28%
Total 50 100%

FIGURE-4.18

Responses
80%
72%
70%

60%

50%
Responses
40%

30% 28%

20%

10%

0%
Yes No

INTERPRETATION

Table 4.18 shows 72% most of the respondents assumes that would still be use
in 10 years from now and 28% respondents assumes that would not be use in 10
years from now
RESULTS AND DISCUSSION

5.1 OBSERVATION AND FINDINGS

1. Most of the answer indicate towards agreement, it clearly shows

90
 customers think that plastic money provide more security, convenience
and number of the benefits.

2. Customers are unsatisfied with plastic money services so they spread

negative word when they are asked are you satisfied with plastic money or
service provided by plastic money are according to their expectations.
Many of the respondents give negative answer. Clearly, the services of
credit cards have not met the expectations of customers

3. As it can seen that friends or the existing users of credit card significantly
influenced the purchase of plastic money. Mostly consumers are get
information from his reference groups and from salesman.

4. The interest charged by credit card companies and banks is not very high.
Customers are aware of this fact & almost all of them expressed this
displeasure.

5. Plastic money is chooses because it is substituted for cash and to

increasing the purchasing

6. Basic default in plastic money is additional fees add to the cost and the
price of credit is high.

7. It is find that most of the people are shifting to plastic money due to
duplicity of paper money and ATM’s are one of the more friendly because
it allows to withdraw cash from own saving and current account at
specified branch by use of ATM’s

91
 5.2 RECOMMNDATIONS AND SUGGESTIONS

I made survey regarding plastic money and done analysis on the collected
data. In my survey I want o give some suggestions regarding the research
problem.
1. More awareness should be created by advertising campaign so that the
consumers get complete knowledge about the plastic money. The print
media and electronic media should also be used for providing information
about plastic money.
2. Most of the respondents in the survey said that plastic money does not
provide the quality of service according to their expectations. So it is
being recommended that it should increase manpower in order to improve
the quality of service.
3. Banks or credit card companies should try to reduce its charges in order to
satisfy the consumers.
4. Some of the respondents have credits cards but they can’t use it. So it is
recommended that more stress is required on promotional strategy for
providing more convenience to make non active users to become an active
user of the plastic money
5. The companies and bank must conduct the satisfaction survey time to
time so that company could know the satisfaction level and attitude of the
consumer. It will be more beneficial to company in making new strategies
& policies.
6. According to customer, convenience should have limit on daily/monthly
transaction value.

92
5.3 CONCLUSION

The plastic money is rising up in the market. The day will come when all the
transaction will be done through plastic money, yet there are further
technologies which have been implemented in Japan and US but India is still
growing in its first phase. The day will come when all the transaction done by
cards. People will start keeping bunch of cards in their pockets instead of
currencies. Thus in these growing phenomenon there doesn’t seems any
declination instead it growing at a higher rate.THIS END WILL ONLY
INCREASE

Consumers were not only more open to the possibility of owning a financial
card, but were also more than willing to use their cards to settle dues. The status
symbol aspect of owning and using cards, too, played its part in bringing about
such robust growth over the space of a single year. Debit cards, in particular,
proved immensely popular.There are many ethical issues and challenges for
plastic money issuing banks/companies. Security relating to card should be first
priority for each bank/company.

Consumers prefer these cards mostly for shopping online E-commerce has given

a better way to use the plastic money. At last it is concluded that plastic money
has a very bright future in the coming years because of the increasing trend of
ecommerce.

93
 BIBLIOGRAPHY

BOOKS

 G. Ramesh Babu, 2005, FINANCIALSERVICES IN INDIA, 1 st Edition,

Ashok Kumar Mittal publishing, New Delhi.
 Nalini prava Tripathy,2007,FINANCIAL SERVICES, published by Asoke
K. Ghosh, Prentice-Hall of India Private Limited,New Delhi.

INTERNET SITIES

 www.creditcardsbasic.com
 www.mycreditcard.com
 Indiainfoline.com/pdf
 5paisa.com/ ind.af / credit / debit.asp
 Indiainfoline.com/b-school/biz.asp
 www.allcreditcardsreview.com

WEBLIOGRAPHY

 Popular Plastics & Packaging; Sep2012, Vol. 57 Issue 9, p68-69, 2p

 Khurana, Sunayna1,Singh, S. P.IUP Journal of Bank Management; Feb2011,
Vol. 10 Issue 1,p71-87, 17p, 31 Charts
 Journal of Post Keynesian Economics Winter 2010–11, Vol. 33, No. 2255 ©
2011 M.E. Sharpe, Inc
 Alvares, Cliford, Business Today; 3/8/2009, Vol. 18 Issue 5, p24-24, 1/3p, 1
Chart
 SHEPHERD, LEAH CARLSON, Employee Benefit News; Oct2009, Vol. 23
Issue 13,p1-23, 3p
94
 Martin, Edward, Business North Carolina, Dec2008, Vol. 28 Issue 12, p5-
5, 1p
 Mudd, Douglas A, Credit Control; 2007, Vol. 28 Issue 3, p48-53, 5p

95
 QUESTIONNAIRE

I am Parveen Kaur student of Guru Harkrishan Girls College, Phallewal Khurd

conducted a study on Plastic Money.

 Name: ----------------------------
 Address: ----------------------------
 Contact No ----------------------------
 Age: ----------------------------
 Marital Status Married Single
 Gender: Male Female
 Profession: Student Business
Service Other
 Annual Income: 0-180,000Rs 180,000-300,000 Rs
300,000-500,000Rs Above 500,000 Rs
 No of family member’s: up to 4 4- 6
above 6
Please Tick ( ) in the box given below the questions to answer :-
Q1. Idea about plastic money? Which?
(a) Credit card (b) Debit card
(c) ATM card (d) any other
Q2. Since how long you have been using plastic money?
(a) 0-1 year (b) 1-5 year
(c) Above 5 year

Q3.How do you make your payments for purchases of goods and services?
(a) Cash (b) Card
96
 (c) Cheque (d) ECS
Q4 Which of the following cards do you find to be user friendly?
(a) Credit card (b) Smart card
(c) ATM card (d) Any others

Q5.Which you consider more reliable, secured and carried and kept easy?
(a) Paper money (b) Plastic Money
(c) Both (d) No comments
Q6.Do you find use of Plastic money to be safest modes of transaction?
(a) Yes (b) No
-If No then Comment _________________________
Q7. What are your views about the charges taken by banks for providing credit
cards?
(a) Cheapest (b) Reasonable

(c)Excessive

Q8. Due to Duplicity of Paper money are you shifting to Plastic Money?
(a) Yes (b) No
Q9.Which Type of security measurement you expect for stepping misuse of
Plastic Money?
(a) Password (b) Photo card
(c) PIN (d) Biological Imprints

Q10.Do you think that there should be any limit on daily/monthly transaction
value?
(a) Yes (b) No
(c) No comments
Q11. Do you think that more credit card/Debit card transaction in country over
97
cash transaction will help to crab black money circulation in economy?
(a) Yes (b) No
(c) No comments
Q12 Do you feel services provided by plastic money are according to your
expectations?
(a) Strongly agree (b) Agree
(c) Disagree (d) Strongly disagree
(e) Neither agree - nor disagree
Q13 From where you get knowledge about your plastic money?
(a) T.V Media (b) Reference group
(c) Newspaper (d) Salesman
(e) Billboard (f) Any other
Q14Which of the following benefit is most considered by you in plastic money?
(a) Withdraw cash from any branch
(b) Need not approach a bank for taking credit
(c) Convenient method of payment
(d) Simple to operate

Q15 What are the basic defaults in this service?

(a) The price of credit is high
(b) Additional fees add to the cost
(c) Credit makes it easy to overspend
(d)Other
Q16 Are you satisfied with facility provided by plastic money?
(a)Very low (b) Low
(c)Moderate (d) High
(e)Very high
98
Q17You likes plastic money most because
(a)Increasing purchasing power
(b)Flexibility of payment
(c)Insurance cover
(d)Enjoy the facility of free credit
(e) Substituted for cash

Q 18 Do you think plastic would still be use in 10 years from now?

(a) Yes (b) No
Q19Where do you see the Future of Cash & Credit card/Debit card?
____________________________________________________________
____________________________________________________________
____________________________________________________________

99