A

SYNOPSIS REPORT
ON
A STUDY ON IMPACT OF PLASTIC MONEY ON BROAD
MONEY IN INDIA
AT
ICICI BANK LTD
Submitted
By
G. AISHWARYA
H.T.NO: 1302-20-672-017

PROJECT SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

Department of Business Administration

AURORA’S PG COLLEGE

RAMANTHAPUR

(Affiliated to Osmania University)

2020-2022
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 Aurora’s PG College (MCA), Ramanthapur
Department of Management

SYNOPSIS

Title of the Project : A STUDY ON IMPACT OF PLASTIC

MONEY ON BROAD MONEY IN INDIA

Student Name : G. AISHWARYA

Hall Ticket Number : 1302-20-672-017

Signature of the Student :

Signature of the Guide :

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 TABLE OF CONTENTS
S. No. CHAPTER Page No

1.1 INTRODUCTION

1.2 NEED FOR THE STUDY

1.3 SCOPE OF THE STUDY

1.4 OBJECTIVES OF THE STUDY

1.5 RESEARCH METHODOLOGY

2.1 THEORITICAL REVIEW OF

LITERATIRE
2.2 ARTICLES

3.1 INDUSTRY PROFILE

3.2 COMPANY PROFILE

6 PROPOSED OUTCOMES

7 LIMITATIONS OF THE STUDY

8 CHAPTERISATION

10 BIBLIOGRAPHY

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AN INTRODUCTION

What is Plastic Money? The plastic money generally a credit or debit card with a magnetic

strip many people carry in their wallets or purses is the result of complex banking process.

Holders of a valid card have the authorization to purchase goods and services up to a

predetermined amount, called a credit limit

In particular these are required to appear on a credit card are name of the customer, 16 digit

card number, validity date, the name of the issuing bank, signature panel, magnetic strip and

personal identification number.

The History of Plastic Money

1900-1950’s

The Beginnings

With a history of “plastic money”, you cannot ignore charge cards. Charge cards laid the

groundwork for debit and credit cards. Company-issued charge cards can be found as far back as

the early 1900’s. These cards mainly just kept customers loyal to the company.“Charg-it” was the

first actual bank card and was issued in 1946. The card was invented by a banker in Brooklyn, by

the name of John Biggins. However, only local purchases could be made.

Plastic money is a very recent context replacing the traditional concept of paying though

cash. Plastic money is a term coined keeping in view the increasing number of transactions

taking place on the part of consumer for paying for transactions incurred by them to purchase

goods and services physically and virtually. It includes credit cards, debit cards, pre paid

balance cards, smart cards etc. In our study, we are typically focussing only on credit cards

and debit cards in order to find out the effectiveness of such cards in real life and consumers

perceive them. Also we would try to find out the specific areas that consumers prefer to
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spend more through these cards and which out of the two do they prefer for payment.

Credit cards as we know them today date back about 60 years, but buying on credit has been

around for a while. European merchants offered credit vouchers to customers as early as the

1890s. Stores also offered customers a paper or metal “card” that could be used only in their

stores and for years, it was up to each store to approve and monitor their customer’s

creditworthiness. That changed after the Second World War, with what is largely considered

to be the first plastic charge card: The Diners’ Club card, Introduced in New York City in

1950, the card allowed Diners’ Club members to eat at 27 restaurants in New York City on

credit. However cardholders had to pay the balance back in full to the Diners’ Club within 30

days.

Operation of Plastic Money Figure 1 illustrates the general structural model common to most

electronic money systems, including participants and their in-tractions. Cardholder is the

person in whose name the card is and who being in possession of the card is legally entitled

to buy goods and services from merchant establishment and is under an obligation to pay for

the goods and services. The cardholder is an agreement with the issuer to pay for the goods

and services bought on the card along with the various applicable charges and the interest due

on the card. This agreement is known as the ‘cardholder agreement’ and is ratified by the

cardholder as soon as he receives his card and sign on it. Merchant establishment (MEs) is a

shop or establishment which accept the card offered by the cardholder as a mean of payment

for the goods and services provided. The merchant establishment (MEs) enters into an

agreement with a bank, known as acquiring bank (since it acquires the business from the

MEs). Under this agreement, the merchant establishment provides goods and services to the

cardholder on credit and receives money from the acquiring bank within the few days

(generally 1-4 days). The MEs has to pay the commission to the acquirer for the services

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provided. The commission generally ranges between 2%-5% of the total sales value. MEs can

be divided into two main categories based on the machines provided to them by the acquirers.

The machines are provided based on the volumes of the sale of the MEs. A high volume MEs

provided with an electronic data capture (EDC) machine while a low volume MEs is

provided generally with an imprinters are known as ‘manual merchant’. Such merchants are given

‘floor limits’ by the acquirers. The floor limit is an amount specified by the acquirer, below

which the merchant need not take an approval but he must refer to hot card bulletin. If the

transaction amount is above the floor limit, the merchant must take approval from his

acquiring b a n k .

Acquiring bank is retained by the retailer or merchant to process the payment card transaction

on their behalf and licenses the merchant to accept credit cards of one or more of the

worldwide issuing bodies such as VISA, MASTER, DISCOVER etc. The acquirer need not

always be a bank but can be a financial institution. In India, acquirers are known to be banks

alone. The acquirers that processes the transaction, routes the authorization request to the

card issuing bank. The merchant provides his acquirer with the charge slips for the day’s

transaction, irrespective of whether the acquirer was the issuer of the cards accepted by the

merchant. Thus, it is clear that the acquirer need not necessarily be an issuer of the card

which will be accepted at the

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MEs. The acquirer pays the merchant the total transaction value minus a commission, known

as a service fee, which is agreed upon when the negotiations for the acquiring of the merchant

were taking place. The merchant thus gets the instant reimbursement for the goods sold.

Issuer/Issuing Bank is an institution which has issued the card to the cardholder. The issuer

has the responsibility for transaction that are put through on cards that they have issued and

responsible for debiting funds from the relevant cardholder’s account. The card cycle works

when cardholder buys certain goods at a shop and pays through his card. The merchant has

three copies of the chargeslips. One for his own records, one for the customer (which he

signs), and one for his acquirer. The merchant present the copy of the charge slip to his

acquiring bank. The acquiring bank pays the merchant, on the basis of charge slip the amount

of transaction minus its own commission. The rate of this commission is lesser than the rate

of the merchant commission. The issuer consolidates all transaction for each card issued and

presents the charges to the cardholder in the form of monthly bill or ‘statement’. The

cardholder has two options on receiving the statement. One is that he can pay off the full

amount due on his card on or before the due date, in which case, he is said to using his card

as a charge card rather than a credit card since he is not utilizing card facility on his card. The

second option is that he pays the minimum amount due (MAD) before the due date, or any

percentage greater than the MAD but lesser than the total amount due and ‘roll over’ or carry

over the balance amount to the next month for a small finance amount charge. The small

finance charges generally varies between 1.5%-3% per month. In USA there is law which

prohibits issuers from charging a finance charges 4% or more per month, unfortunately there

is no such law in existence in India at the moment. Of course, if cardholder fails to pay even

the MAD, he has to pay either a service charge or fixed finance charge(depending on the

rules of the issuer) plus the interest charges. In the certain cases, where the acquirer and the

issuer are the same, the cycle have the three players instead of four. In this case, the issuer

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makes a little more profit than with the presence of an acquirer in the cycle, since he doesn’t

have to pay the commission to the acquirer. When translated over a transactions per day, this

means a lot of saving to the issuer. Thus there are many issuers who are vigorously pursuing

the business of acquiring too. The actions in this model are: credit (loading) means

transferring the monetary value from the issuer to the payment instrument (e.g. electronic

purse) of client. Debit (purchase, payment) means transferring the monetary value from

payment instrument of client to the payment instrument of merchant (that is usually payment

terminal). In the terminal is then created payment transaction, that contains the electronic

money and other payment details.

NEED OF THE STUDY

This study will enable the banking industry to establish the extent of achievement of the

purpose for which plastic money was introduced and offer information for further strategy

formulation and enhancement to their competitive advantage. This study may enable other

service industries to see the effects of strategy formulation and implementation to the

challenges brought about by changes in the environment they operate. It may also encourage

the adoption of plastic money within their setting.

SCOPE OF THE STUDY

It is in light of the above problems that this study attempts to underscore the

important roles that plastic money has played in boosting banks’ performance in

India. What is the effect of plastic money on the financial performance of

commercial banks in India? This study seeks to answer the questions of whether

plastic money has had a positive impact or negative one on the aspect of growth in

relation to commercial banks. This study attempts to answer the research question:

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To what extent has the adoption of plastic money boosted commercial banks’

earnings in India?

OBJECTIVES OF THE STUDY

The objectives of the study are as follows-

1. To understand the belief of people in the direction of plastic cash.

2. To know the importance of plastic money within the daily life of customers

3. To study the benefits of debit card and credit score cards.

four. To recognize the problems faced by means of respondents the use of plastic money.

5. To have a look at the pleasure degree of consumers closer to plastic money.

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 RESEARCH METHODOLOGY

The research study is Exploratory in nature. The Study is been carried out

by taking a survey of 200 respondents by non-probabilistic convenience

sampling method

Secondary data is collected through reference books, research papers, articles, and websites

Type of Research

1. Exploratory research

2. Causal research

3. Descriptive research

In our Research we have used Exploratory Research.

Sources of Data

1) Primary sources

 Questionnaire

2) Secondary sources

 Textbooks

 Review articles

 Internet

Data Collection Method

1. Questionnaire

2. Interview

Population

Total 250 Randomly selected people mainly employed are taken for the Research.

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Sampling Method

Convenient Sampling

Convenience sampling is used in exploratory research where the researcher is

interested in getting an inexpensive approximation of the truth. As the name

implies, the sample is selected because they are convenient. This non-probability

method is often used during preliminary research efforts to get a gross

estimate of the results, without incurring the cost or time required to select a

random sample.

Sample Size

From the population of 50 I have taken 100 samples for the survey

Data Collection Instrument

1. Questionnaire

For our research purpose we have formed a structured questionnaire.

2. Interviews

At the time of our survey we had a personal meeting with the

respondents and got useful and implementable suggestions.

3. Google Docs Form of Questionnaire

For reducing time & cost we have also used the google docs questionnaire.

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REVIEW OF LITERATURE

Plastic Money: the Currency of Modern India

Indian purchasers have in no way had it so good. The soiled notes are genuinely out.
Carrying
coins is no more `a pain inside the neck' as consumers are relying more on the `plastic
card' which gives them cash on credit.
Plastic cash basically means debit playing cards and credit playing cards which is
having a magnetic stripe, logo, signature of the cardholder product of plastic.Credit
Cards have ultimately arrived in India. The card industry that's developing at the price
of 20% per annum is flooded with playing cards starting from gold, silver, worldwide,
clever to stable….The listing is endless. From simply gamers in early 80s, the
industry now houses over 10 foremost gamers vying for a chief bite of the card pie.

Currently 4 fundamental bishops are ruling the cardboard empire---Citibank, Standard

Chartered Bank, HSBC and State Bank of India (SBI). The industry, which is catering
to over 3.eight million card users, is anticipated to double with the aid of the financial
2003. According to a look at conducted by State Bank of India, Citibank is the
dominant player, having issued 1.five million playing cards so far. Stan chartfollows
way at the back of with zero.sixty seven million, while Hong Kong Bank has
zero.three million credit card customers. Among the nationalized banks, SBI tops the
list with 0.28 million playing cards, observed by using Bank of Baroda at 0.22
million.

Parties involved:
• Cardholder: The proprietor of the cardboard used to make a buy; the purchaser.
• Card-issuing bank: The monetary institution or different corporation that issued the
credit card to the cardholder. This financial institution bills the customer for
repayment and bears the threat that the cardboard is used fraudulently. American
Express and Discover were previously the simplest card-issuing banks for their
respective brands, however as of 2007, that is now not the case.
• Merchant: The person or commercial enterprise accepting credit card bills for
products or services offered to the cardholder
• Acquiring financial institution: The economic organization accepting price for the

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products or services on behalf of the merchant.
• Independent sales corporation: Resellers (to merchants) of the offerings of the
acquiring bank.
• Merchant account: This may want to refer to the obtaining bank or the independent
sales enterprise, however in widespread is the corporation that the merchant deals
with.

• Credit Card association: An association of card-issuing banks consisting of Visa,

MasterCard, Discover, American express, etc. That set transaction phrases for
merchants, card-issuing banks, and acquiring banks.
• Transaction community: The gadget that implements the mechanics of the digital
transactions. May be operated with the aid of an unbiased agency, and one agency can
also operate more than one networks. Transaction processing networks encompass:
Cardnet, Nabanco, Omaha, Paymentech, NDC Atlanta, Nova, Vital, Concord Essen,
and Visa Net.

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2.2ARTICLES

ARTICLE: 1

TITLE: Credit or Debit or Smart Cards.

AUTHOR: Freedman

YEAR: (2000)

ABSTRACT:

purported that there are three drivers in an PLASTIC MONEY system i.e. stored value cards (Credit

or Debit or Smart Cards), access drivers and electronic money (internet transactions). PLASTIC

Moneys overlooked mostly as because it uses new access devices that are not popularly known to the

people. Therefore, PLASTIC MONEY comprise of the value or money that is stored in the form of

stored value cards (Credit or Debit or Smart Cards) and the network money (money stored in the hard

drives of the computer).

ARTICLE: 2

TITLE: The banking institutions that have not upgraded their technology.

AUTHOR: Norton 1992 and Mishkin and Strahan 1999

YEAR: (1999)

ABSTRACT:

The banking institutions that have not upgraded their technology from time to time have lost their

market share by a considerable amount to other financial institutions. With the advancement of

technology, the data could be transferred from one country to the other within a short period of time.

Thus, it is becoming vital for successful banking because the work of the banks is more of

informational in nature.

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ARTICLE: 3

TITLE: functioning of banking sector.

AUTHOR: Bradley and Steward, 2002). Berger (2003)

YEAR: (2003)

ABSTRACT:

in his study has found out that there has been transformations in the functioning of banking sector due

to the development of technology based financial expertise and communication technology. The

results that new technology has created should be noticed through fundamentally varying financial

sector.

ARTICLE: 4

TITLE: Growth In E-Payment.

AUTHOR: Suoranta and Mattila

YEAR: (2003)

ABSTRACT:

There has been a considerable growth in Plastic money since the 90s when the use of technology in

banks was gaining widespread growth. Subsequently, it has generated curiosity in experts, regarding

the attitude of customers towards opting for technology or refraining from it. Generally, the literature

available on Internet banking revolves around on why the people are accepting or rejecting E-

payment. 

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ARTICLE: 5
TITLE: Common And Practical Technology.

AUTHOR: However, Lee

YEAR: (2003)
ABSTRACT:
states that the very common and practical technology acceptance model suffers from deficit in
providing adequate guidance to researchers. In spite of having an estimating power, it is not been able
to provide orderly assistance to scientists on how they can manipulate the mindset of people, so that
they can adopt e-payment. According to Lee et al (2003) there should be also be stress on factors that
make technology ease to operate. Current literature suffers from the drawback that it does not
facilitate a deeper insight on how consumers review that E-commerce will be helpful. In addition,
vigorous and theory based study on this factor or intervention is absent in Plastic money literature.
Venkatesh and Bala (2008) have added to the technology adoption model and categorized the
interventions into two elements:

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3.1 INTRODUCTION TO THE INDUSTRY

A bank is a financial institution that accepts deposits and channels those deposits into lending

activities. Banks primarily provide financial services to customers while enriching investors.

Government restrictions on financial activities by banks vary over time and location. Banks are

important players in financial markets and offer services such as investment funds and loans. In some

countries such as Germany, banks have historically owned major stakes in industrial corporations

while in other countries such as the United States banks are prohibited from owning non-financial

companies. In Japan, banks are usually the nexus of a cross-share holding entity known as the

keiretsu. In France, bancassurance is prevalent, as most banks offer insurance services (and now real

estate services) to their clients.

Introduction

India’s banking sector is constantly growing. Since the turn of the century, there has been a noticeable

upsurge in transactions through ATMs, and also internet and mobile banking.

Following the passing of the Banking Laws (Amendment) Bill by the Indian Parliament in 2012, the

landscape of the banking industry began to change. The bill allows the Reserve Bank of India (RBI)

to make final guidelines on issuing new licenses, which could lead to a bigger number of banks in the

country. Some banks have already received licences from the government, and the RBI's new norms

will provide incentives to banks to spot bad loans and take requisite action to keep rogue borrowers in

check.

Over the next decade, the banking sector is projected to create up to two million new jobs, driven by

the efforts of the RBI and the Government of India to integrate financial services into rural areas.

Also, the traditional way of operations will slowly give way to modern technology.

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 3.2COMPANY PROFILE

HDFC Bank Ltd is a major Indian financial services company based in Mumbai. The Bank is a

publicly held banking company engaged in providing a wide range of banking and financial services

including commercial banking and treasury operations. The Bank at present has an enviable network

of 2201 branches and 7110 ATMs spread in 996 cities across India. They also have one overseas

wholesale banking branch in Bahrain, a branch in Hong Kong and two representative offices in UAE

and Kenya. The Bank has two subsidiary companies, namely HDFC Securities Ltd and HDB

Financial Services Ltd. The Bank has three primary business segments, namely banking, wholesale

banking and treasury. The retail banking segment serves retail customers through a branch network

and other delivery channels. This segment raises deposits from customers and makes loans and

provides other services with the help of specialist product groups to such customers. The wholesale

banking segment provides loans, non-fund facilities and transaction services to corporate, public

sector units, government bodies, financial institutions and medium-scale enterprises. The treasury

segment includes net interest earnings on investments portfolio of the Bank. The Bank's ATM

network can be accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro,

Plus/Cirrus and American Express Credit/Charge cardholders. The Bank's shares are listed on the

Bombay Stock Exchange Limited and The National Stock Exchange of India Ltd. The Bank's

American Depository Shares (ADS) are listed on the New York Stock Exchange (NYSE) and the

Bank's Global Depository Receipts (GDRs) are listed on Luxembourg Stock Exchange.

HDFC Bank Ltd Was incorporated on August 30, 2094 by Housing Development

Finance Corporation Ltd. In the year 2094, Housing Development Finance Corporation Ltd was

amongst the first to receive an 'in principle' approval from the Reserve Bank of India to set up a bank

in the private sector, as part of the RBI's liberalization of the Indian Banking Industry. HDFC Bank

commenced operations as a Scheduled Commercial.

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LIMITATION OF THE STUDY

To know the perception of people towards plastic money.

To know the importance of plastic money in the daily life of consumers

To study the benefits of debit card and credit cards.

To know the problems faced by respondents using plastic money.

To study the satisfaction level of consumers towards plastic money.

PROPOSED OUT COMES

To study about the changing dimension and its impact on consumer perception towards plastic money

To study the influencing factors behind the use of plastic money

To identify the significant usage of plastic money

To assess the problems of using plastic money

To study the awareness and use of plastic money amongst the consumers

To study consumers’ reasons for preference of plastic money over hard cash

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 CHAPTERISATION

CHAPTER -1 - INTRODUCTION

This chapter includes the introduction of the topic, need, scope, objectives of the study,
Project limitations and methodology of the study.

CHAPTER - 2 REVIEW OF LITERATURE

This chapter includes the theoretical background and articles written by different authors
and brief explanation of the topic.

CHAPTER - 3 - INDUSTRY PROFILE & COMPANY PROFILE

CHAPTER - 4 - DATA ANALYSIS AND INTERPRETATION

This chapter includes the comparative analysis of the financial statements of the five years
data and it also includes the interpretation based on the study.

CHAPTER - 5 – SUMMARY AND CONCLUSION

This chapter includes the overall summary of the project and the conclusion based on the
study during the period.

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 BIBLIOGRAPHY

1. Kothari C.R, “Research Methodology: Research and Techniques”;

2. Vishwa Prakshans, New Delhi, 4th edition.

3. E.gordan and Natarajan, Financial Services, Himalaya Publishing House,

Mumbai. 5th edition.

Articles

1. College Student using the Credit Card

2. Smart card based Electronics Commerce characteristics and Roles

3. Credit card and Debit cards: What new? Where to?

4. Competition and Credit and Debit card Interchange Fees

5. Theory of Credit card Networks: A survey of Literature

6. An introduction to the economics of payment card networks

7. Credit card crisis in South Korea

8. Ethical Issues and Challenges

Books

1. Paper or Plastic: Money Management and Credit Card Education for High School

2. Plastic Money: Constructing Markets for Credit Cards in Eight Post-communist

Countries

3. Plastic Money Real? How Credit Cards Work - Math Book Nonfiction 9th Grade |

Children's Money & Saving Reference

4. Paying with Plastic: The Digital Revolution in Buying and Borrowing

Websites

1. www.rbi.gov.au

2. www.federalreserve.gov

3. www.direct.gov.uk
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4. www.paypal.com

5. www.google.com

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