A study on customer awareness on green banking in selected public and private sector banks in Chennai

The study aims to identify the awareness on Green banking among the customers of six different banks. Also it aims to find the customers usage relating to Green Banking service.

A STUDY ON CUSTOMER AWARENESS ON GREEN BANKING IN SELECTED PUBLIC AND PRIVATE SECTOR BANKS IN CHENNAI

M Narmadha

Assistant Professor, SRM University - Ramapuram Campus, Chennai

ABSTRACT

Green Banking means promoting environmental-friendly practices and reducing your carbon footprint from our banking activities Green banking will be mutually beneficial to the Consumers, banks, industries and the economy The study aims to identify the awareness on Green banking among the customers of six different banks Also it aims to find the customers usage relating to Green Banking service It is necessary to identify various initiatives taken by bank on the concept of green banking in order to influence customer and make them user friendly Researcher will study the impact of different age group of customers with regard to green initiatives taken by public and private sector banks

Key words: Green Banking, Customer Awareness, Green Banking Initiatives, Online

Banking

Cite this Article: M Narmadha A Study on Customer Awareness on Green Banking in

Selected Public and Private Sector Banks in Chennai International Journal of Management,

7(2), 2016, pp 24-35

http://www.iaeme.com/ijm/index.asp

1 INTRODUCTION

Today every business organizations and corporations are adopting “GO GREEN” concept because of the increasing friendly attitude of the society towards the environment Banks play a critical role in the economic development of the nations by providing various Socio-Economic activities like Job creation, wealth generation, Poverty eradication, entrepreneurial activity etc Besides these activities, banks are introducing the practices of green banking in order to protect the environment and to reduce carbon emission

Green Banking means promoting environmental-friendly practices and reducing your carbon footprint from our banking activities Green banking will be mutually beneficial to the Consumers, banks, industries and the economy For consumers this shift towards green banking means that more deposit and loan products will be available through online and mobile banking It also means better deposit rates on CDs, money market accounts and savings accounts Green banks should also have lower fees and give rate reductions on loans going towards energy-efficient projects This is banking beyond pure profit Another important aspect of green banking is the involvement and outreach from the individual banks to their local community

ISSN 0976-6502 (Print)

ISSN 0976-6510 (Online)

Volume 7, Issue 2, February (2016), pp 24-35

http://www.iaeme.com/ijm/index.asp

Journal Impact Factor (2016): 8.1920 (Calculated by GISI)

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IJM

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2 MEANING OF GREEN BANKING

Green Banking means promoting environmental – friendly practices and reducing your carbon footprint from your banking activities This comes in many forms:

Using online banking instead of branch banking

Paying bills online instead of mailing them

Opening up accounts at online banks, instead of large multi-branch banks

Finding the local bank in your area that is taking the biggest steps to support local green initiatives

Green banks give more weight to environmental factors, their aim is to provide good environmental and social business practice, they check all the factors before lending a loan, whether the project is environmentally friendly and have any implications in the future, and loan will be awarded only when all the environmental safety standards are followed

3 CUSTOMER AWARENESS

Generally speaking awareness comprises a human's perception and cognitive reaction to a condition or event Awareness does not necessarily imply understanding, just an ability to be conscious of, feel or perceive To create more awareness for the customers, many banks can be involved in programmes that support the environmentally friendly products and services

4 GREEN BANKING FINANCIAL PRODUCTS

Green banking product coverage includes:

 Green Loans: means giving loans to a project or business that is considered environmentally

sustainable

 Green Mortgages: Banks offer green mortgage with better rates or terms for energy efficient

houses The savings in monthly energy bills can offset the higher monthly mortgage payments and save money in the long run

 Green Credit Cards: These cards offer an excellent incentive for customers to use their green

card for their expensive purchases

 Green Deposits: Banks offer higher rates on commercial deposits, money market accounts,

checking accounts and savings account if customers opt to conduct their banking activities online

 Green Reward Checking Accounts: Customers can earn higher checking account rates if

they meet monthly requirements that might include receiving electronic statements, paying bills online or using a debit or check card

 Green Saving Accounts: In case of Green Saving Accounts, banks make donations on the

basis of savings done by customers’ The more they save, the more the environment benefits

in form of contributions or donations done by banks

 Mobile banking and online banking: These new age banking forms include less paperwork,

less mail, and less travel to branch offices by bank customers, all of which has a positive

impact on the environment

5 GREEN BANKING INITIATIVES BY INDIAN BANKS

Only six banks were taken for this study They are as follows:

PUBLIC SECTOR BANKS

State Bank of India (SBI)

SBI had launched Green Channel Counter (GCC) facility at their branches in 2010 The bank had also collaborated with Suzlon Energy Ltd for the generation of windmills It has become a signatory to the

initiatives Export Import Bank of India (EXIM) and SBI entered into an agreement for building solar plant in India

Punjab National Bank (PNB)

According to Corporate Social Responsibility Report 2010-11 (PNB, 2011), they had taken various steps for reducing emission and energy consumption PNB is conducting Electricity Audit of offices as

an energy conversation initiative The bank had organized more than 290 Tree Plantation Drives It started emphasizing on green building practices such as energy efficient lights, fans, etc The organization had signed a ‘Green Pledge’ under which they had set up the butterfly park at the compound of Guruvayur temple which houses 18 types of medicinal plants The organization had sanctioned nine wind energy projects with an aggregation limit of 185.81 crore They were also awarded with a second prize for ‘Best Wind Energy Power Financer’ by wind power India 2011

Canara Bank

According to Canara Bank (2013), the bank had taken many green initiatives such as: - As a part of green banking initiative, the bank had adopted environmental friendly measures such as mobile banking, internet banking, etc Canara bank had set up e-lounges like internet banking, pass book printing, ATM, online trading, etc The bank is also not extending any finance to the units which are producing ozone depletion substances While appraising any project, they ensure the borrower to obtain

No Objection Certificate (NOC) from central or state pollution control board

PRIVATE SECTOR BANKS

ICICI Bank Ltd

ICICI bank had adopted ‘Go Green’ initiative, which involves activities such as Green products/offerings, Green engagement and green communication with customers as per ICICI Bank (2014):-

Green Products and Services: The bank is offering green products and services like

Instabanking

It is a service which gives convenience to the customers to do banking anywhere and anytime through internet banking, mobile banking, etc

‘Vehicle Finance’

They are offering 50% waiver on processing fee of auto loans on the car models which uses alternate sources of energy like the Civic Hybrid of Honda, Tata Indica CNG, Reva electric cars

Home Finance

The bank had reduced the processing fee for the customers who are purchasing homes in LEED certified buildings

Green Engagements

During Diwali 2013, the organization had conducted an environmental awareness program for employees and customers It has also become partners with the Green theme CNBC – overdrive auto awards The bank is celebrating World Environment Day every year on June 5

Green Partners: The organization is looking forward for partnerships with national and international

green organizations and NGO’s

HDFC Bank Ltd – HDFC bank is taking up various measures in reducing their carbon footprints in

the area of waste management, paper use and energy efficiencies as per HDFC Bank (2013):-

The bank is encouraging their employees to prevent any wasteful use of natural resources and emission

of greenhouse gases They are reducing the use of paper through issuing e-transaction The organization is exploring renewable energy by setting up of 20 solar ATMs They are also managing their waste by tying up with vendors for recycling of paper and plastic The bank is procuring green

products which are compliant with the norms of the Central Pollution Control Board and which are rated by Energy Star

Axis Bank Ltd – AXIS bank implementing several initiatives in green banking such as per Axis Bank

(2013):-

In august 2011, the bank had initiated the process of collecting all the dry waste generated from the corporate office and recycles it to notepads, notebooks and envelopes The corporate office of the bank, located in Mumbai, is designed and constructed a ‘Green Building’ Car-pooling has been initiated by

a bank to reduce carbon footprint They are also encouraging their customers to use e-statements and other electronic communications to reduce paper consumption Annual reports are being sent through emails The organization had initiated Independent ATM Deployment (IAD) model in which ten solar based ATM has been set up in Coimbatore circle

6 REVIEW OF LITERATURE

Schmidheiny and Zorraquin (1996), “Green banking is generally defined as promoting environmentally friendly practices that aid customers in reducing their carbon footprint through their banking operation activities These practices include such things as online banking, statements, bill payments, and account opening Banks also invest in internal initiatives to reduce their own carbon footprint”

Sahoo, Pravakar and Nayak, Bibhu Prasad (2008), in their research article on “Green Banking in India” highlighted that banking sector is one of the major stake holders in the industrial sector; it can find itself faced with credit risk and liability risk Thus the banks should go green and play a pro-active role to take environmental and ecological aspects as part of their lending principle, which would force customers to go for mandated investment for environmental management, use of appropriate technologies and management systems

Dharwal, Mridul and Agarwal, Ankur (2011), in research article on “Green Banking: An Innovative initiative for Sustainable Development” concluded that Indian banks need to be made fully aware of the environmental and social guidelines to which banks worldwide are agreeing to As far as green banking is concerned, Indian banks are far behind their counterparts from developed countries If Indian banks desire to enter global markets, it is important that they recognize their environmental and social responsibilities

Nigamananda Biswas (2011) interpreted Green Banking as combining operational improvements, technology and changing client habits in market place Adoption of greener banking practices will not only be useful for environment, but also benefit in greater operational efficiencies, a lower vulnerability to manual errors and fraud, and cost reductions in banking activities

Khawaspatil, S.G and More, R.P (2013), in their research article concluded that in-spite of a lot

of opportunity in green banking and RBI notifications, Indian banks are far behind in implementation

of green banking Only few banks have initiated in this regard There is a lot of scope for all banks and they can not only save our earth but also transform the whole world towards energy consciousness Banks must educate their customers about green banking and adopt all strategies to save earth and build banks’ image

Sharma, K& Gopal in their study “A study on Customer Awareness on Green Banking initiatives

in selected Public & Private sector banks with special reference to Mumbai” identified the opinion and awareness of bank employees and customers as regards to green banking concept in Public and Private sector banks They found that green initiatives like Communication through press, Bank environmental policy, Concession on energy savings, Solar ATMs, Green CDs is not familiar in green initiatives by the bank as per the respondents

7 STATEMENT OF THE PROBLEM

Indian Banks introduced Green Banking services since 1996 As the use of Green Banking services are increasing day –by-day, it is important to study the customer awareness towards Green Banking services in Chennai city This study is one of such an attempt

AIM OF THE STUDY

The study aims to find out the awareness of the customers towards the use of Green Banking During the research, the researcher identifies the awareness on Green banking among the customers of six different banks Also it aims to find the customers usage relating to Green Banking service One has to approach the branch in person, to withdraw cash or deposit a cheque or request a statement of accounts

In true Green banking, any inquiry or transaction is processed online without any reference to the branch (anywhere banking) at any time Providing Green banking is increasingly becoming a "need to have" than a "nice to have" service To enhance the level of awareness of customers, a detailed study

on the awareness of customers and their usage about various factors affecting Green Banking must be studied

OBJECTIVE OF THE STUDY

1 To study the awareness on Green Banking among the customers

2 To know which age group of customers is using different Green Banking facilities

3 To find out the factors influence the adoption of Green Banking services

4 To suggest ways to promote Green Banking in India

LIMITATIONS OF THE STUDY

1 The geographical scope of the study is limited to Chennai city

2 The sample size is confined to 200

3 Only six banks were taken for the study

4 The respondents were unable to spend much time for filing up the questionnaire

5 Time was a limiting factor in conducting the study

8 RESEARCH METHODOLOGY

The research methodology used in this study is based on primary as well as secondary data The primary data was collected from the study conducted through questionnaire The information is collected by issuing questionnaire to some of the respondents’ directly in person and to the remaining

respondents through E – Mail Secondary data for the study has been collected from Websites of various banks and Journals related to Banking

SAMPLING METHOD

General public of the city and Sampling Units are chosen on the basis of Convenience Sampling SAMPLE SIZE

200 Respondents

TOOLS USED:

The following statistical tools have been used for the purpose of analyzing data collected

 Percentage Analysis,

 Chi – square Test,

 Kolmogorov – Simornov test,

 One – way ANOVA Test

9 DATA ANALYSIS AND INTERPRETATION:

PERCENTAGE ANALYSIS:

Table 1 AGE OF RESPONDENTS Criteria No of respondents % of respondents

Source: Primary Data

From the above table 4.1 it is inferred that 28.5% of the respondents belong to the age group of

30-40, 27% of the respondents belong to the age group of 40-50, 23.5% of the respondents belong to the age group above 50 and the least 21% of the respondents belong to the age group of 18-30

Table 2 NAME OF THE BANK Criteria No of respondents % of respondents

Source: Primary Data

It is clear from the table 4.8 that majority of the respondents keep accounts with SBI Bank – 39% and the least is ICICI Bank with 5%

Table 3 NO.OF RESPONDENTS WHO USE NET BANKING SYSTEM

Source: Primary Data

It is known from the table 4.10 that 94% of the respondents are using Net Banking system and 6%

of the respondents are not using Net Banking system

Table 4 AWARENESS ABOUT GREEN BANKING Criteria No of respondents % of respondents

Source: Primary Data

Criteria No of respondents % of respondents

It is inferred from the table 4.14 that 97% of the respondents are aware of the Green Banking services provided by their bank and 3% of the respondents are not aware of the Green Banking services provided by their bank

Table 5 VARIOUS GREEN BANKING INITIATIVES PROVIDED BY THE BANK

Source: Primary Data

It is more than 200 respondents because respondents have aware more than one initiative

It is evident from the table 4.15 among all Green Banking initiatives, customers are aware of Green Checking with 88%, Online Bill Payment with 78%, Facility of e – statement registration with 75% and they are not aware of Green Mortgages(68%), E – Investment services(61%), Conducting Workshops and Seminars(60%), etc

CHI-SQUARE ANALYSIS

HYPOTHESIS:

H0: There is no relationship between age of customers and awareness of Green Banking

H1: There is a relationship between age of customers and awareness of Green Banking

Awareness of Green Banking * Age of customers

Green Banking Initiatives

No of respondents

% of respondents

No of respondents

% of respondents

Reduced wastage of papers and

energy through Net Banking

approach

Conducting Workshops and Seminars

Providing recyclable debit cards and

Table 6 (Crosstabs) Awareness of

Green Banking

AGE OF CUSTOMERS

TOTAL 18-30 30-40 40-50 50 & above

Source: Primary Data

Table 7 Chi-Square Tests

Value df Asymp Sig (2-sided) Pearson Chi-Square

Likelihood Ratio

Linear-by-Linear Association

N of Valid Cases

3.546(a) 4.964 .005

200

3

3

1

.315 .174 .944

Source: Primary Data

 4 cells (50.0%) have expected N less than 5 The minimum expected N is 1.26

Since the p value (0.315) is greater than the table value (0.05).Therefore, this test shows that there

is no relationship between the age of customers and their awareness of Green Banking (Chi – square = 3.546, p = 0.315)

This correlation is flagged as not significant, with the same p – value that was given for the Chi – square test

HYPOTHESIS

H0: There is no relationship between age of customers and usage of Green Banking

H1: There is a relationship between age of customers and usage of Green Banking

Usage of Green Banking * Age of customers

Table No 8(Crosstabs)

above

Source: Primary Data

Table 9 Chi-Square Tests

Value df Asymp Sig (2-sided) Pearson Chi-Square

Likelihood Ratio

Linear-by-Linear Association

N of Valid Cases

3.496(a) 3.082 1.472

200

3

3

1

.321 .379 .225

Source: Primary Data

 4 cells (50.0%) have expected N less than 5 The minimum expected N is 2.52

This test shows that there is no relationship between age of customers and usage of Green Banking (Chi – square = 3.496, p = 0.321) Therefore, H0 is accepted

KOLMOGOROV – SMIRNOV TEST FOR A SINGLE SAMPLE

RANKING THE DIFFERENT MODES OF GREEN BANKING

Table 10

Source: Primary Data

It is revealed from the table 5.15 that the respondents ranked ‘1’ for Solar Powered ATMs, Second place is for Net Banking and 3rd place is for Mobile Banking

ONE – WAY ANOVA

HYPOTHESIS

H0: There is no significant difference in the convenience of using Green Banking with regard to age of customers

H1: There is a significant difference in the convenience of using Green Banking with regard to age of customers

H0: There is no significant difference in the savings in time by using Green Banking with regard to age

of customers

H1: There is a significant difference in the savings in time by using Green Banking with regard to age

of customers

H0: There is no significant difference in the feature availability with regard to age of customers

H1: There is a significant difference in the feature availability with regard to age of customers

H0: There is no significant difference between risk privacy and age of customers

H1: There is a significant difference between risk privacy and age of customers

Table 11 ANOVA based on age

Sum of Squares df

Mean Square F Sig

CONVENIENCE

SAVINGS IN TIME

FEATURE

AVAILABILITY

RISK PRIVACY

Between Groups Within Groups Total

Between Groups Within Groups Total

Between Groups Within Groups Total

Between Groups Within Groups Total

8.978 663.022 672.000 26.540 605.040 631.580 4.868 534.712 539.580 4.002 443.918 447.920

3

196

199

3

196

199

3

196

199

3

196

199

2.993 3.383

8.847 3.087

1.623 2.728

1.334 2.265

.885

2.866

.595

.589

.450

.038

.619

.623

Source: Primary Data

 This test shows that there is no significant difference in the convenience of using Green Banking with regard to age of customers Therefore, H0 is accepted at 5% level of significance

 This test shows that there is a significant difference in the savings in time by using Green Banking with regard to age of customers Therefore, H0 is rejected at 5% level of significance

 This test shows that there is no significant difference between feature availability and age of customers Therefore, H0 is accepted at 5% level of significance

 This test shows that there is no significant difference between risk privacy and age of customers Therefore, H0 is accepted at 5% level of significance

10 FINDINGS

GENERAL FINDINGS

 28.5% of the respondents fall in the age group of 30 – 40 and minimum age group is

18 – 30

 Among the respondents, 98% of the respondents avail Net Banking services

 Majority of the respondents (97%) are aware about Green Banking

 Among the various Green Banking initiatives provided by the bank, majority of the respondents are aware of Green Checking with 88%, Online Bill Payment (78%), Facility of e-statement registration(75%) and they are not aware of Green Mortgages (68%), E – Investment services(61%), Conducting Workshops and Seminars(60%)