Online International Interdisciplinary Research Journal, {Bi-Monthly}, ISSN 2249-9598, Volume-09, Issue-02, Mar-Apr 2019 Issue

Customer Awareness and Satisfaction of NBFC Services with Special Reference to

Thrissur District

a
Geetha G. Nair, bJancy Davy
a
Assistant Professor, Department of Commerce, NSS College, Nemmara Research
Fellow, Research and P.G. Department of Commerce and Management Studies St.
Josephs’ College(Autonomous), Irinjalakuda, Thrissur, Kerala India
b
Associate Professor and Research Guide (Rtd.) Research and P G Department of
Commerce and Management Studies St. Josephs’ College (Autonomous), Irinjalakuda,
Thrissur, Kerala India

Abstract
NBFCs have become impeccable alternatives to the Banking sector for fulfilling a wide
range of financial needs of the society. They offer prompt as well as efficient services
without much procedural formalities. This paper is an attempt to assess the level of
awareness and satisfaction of NBFC services in Kerala with special reference to Thrissur
district. The study highlights that there is no significant difference between level of
awareness about various services offered by NBFCs and the demographics of the
respondents. The level of satisfaction and demographic characteristics excluding
occupation of the respondents also show the same trend.
KEYWORDS: Non–Banking Financial Companies (NBFCs), customer awareness

INTRODUCTION
Non –Banking Financial Companies (NBFCs) are financial intermediaries that
supplement the banking services. RBI Act section 45(f) defines a Non-banking financial
company as “a financial institution which is a company and which has as its principal
business the receiving of deposit under any scheme or arrangement or in any other
manner, or lending in any other non-banking institution notified by the Reserve Bank”.
Non-Banking Finance Companies (NBFCs) are Financial Institutions involved
chiefly in the business of accepting deposits as well as providing advances and credits.
NBFCs are integral component of financial system, promoting competition, delivery of
customized services, diversification and spreading of risks during financial distress.
NBFCs are diverse groups of financial institution that reach out to the financial needs of
unbanked sectors of the economy. These institutions are recognized for their customer
centric services, simplified procedures, competitive rates and readiness in meeting
financial requirements of the society.
The Reserve Bank regulates and supervises three categories of NBFIs, viz. All-
India Financial Institutions (AIFIs), Primary Dealers (PDs) and NBFCs. Based on deposit
mobilization, NBFCs are classified into two major categories: NBFCs-D (deposit taking)
and NBFCs-ND (non-deposit taking). NBFCs-ND were sub-divided into two categories
in 2006 - Systemically Important Non-Deposit taking NBFCs (NBFCs-ND-SI) and other
Non -Deposit taking NBFCs (NBFCs-ND) based on asset size. NBFCs with an asset size
greater than `1 billion were considered as NBFC-ND-SI. The threshold for recognition of
NBFCs-ND-SI was increased to 5 billion in 2014(RBI Bulletin October 2017)

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 Online International Interdisciplinary Research Journal, {Bi-Monthly}, ISSN 2249-9598, Volume-09, Issue-02, Mar-Apr 2019 Issue

Review of Literature
Helina (2017) carried out a study to evaluate the role played by NBFCs in
complimenting banks and to ascertain the demographic profile of NBFC customers. The
study reveals that there is no significant relation between reasons for choosing the select
NBFCs and level of income of the customers. The study also reveals that gender of the
customers and purpose of loan are not correlated.
Steephan,William(2015) tried to assess the perception of customers towards
consumer loans offered by NBFCs. The results of the study reveal that perception on
NBFCs is greater than other financial institutions and there is a significant relationship
between brand and various factors affecting perception.
Sharma(2017) published a conceptual paper on the challenges and opportunities
of NBFCs in India. The paper argues that margin pressure, competition from banks,
dependence on government policies etc. are the major challenges faced by the NBFCs
and customer centric performance, unmatched credit delivery mechanism etc. are the
main advantages of NBFCs.
Significance of the Study
Finance is an important component for ordinary people to maintain their standard
of living. Non -Banking Financial Companies (NBFC) help the people to get rid of their
financial difficulties .It is flexible in its services and is a refuge to the needs of people
when formal banking have fixed and cumbersome procedures. In this context,
NBFCshave become a last resort to customers. NBFCs are essential social organizations
rendering variety of services to the socio-economic objectives of the society. NBFCs
offer different types of loans to the customers in Kerala for their socio- economic needs.
In this context, the present study is very significant and relevant.
Statement of the Problem
The Indian financial system is quite weak and does not wholly come under the
formal system. This is mainly because of the under developed industrial and banking
sector. The banks consisting of the commercial,private and foreign banks have diversified
services and products for the vast population. Inspite of this, the large number of people
does not come under the formal financial system. This is mainly due to the geographical
and economic inequality. It is in this context that NBFCs have taken over the role to cater
to the needs of these populations. They have special features like diversified products and
services and they have shown remarkable progress over the years. This paper is an
attempt to assess the level of awareness and satisfaction of NBFC services in Kerala.
Objectives of the Study
1. To study the level of awareness of customers on various services offered by
NBFCs in Kerala.
2. To study the satisfaction level of customers towards various services offered by
NBFCs in Kerala.
Hypotheses of the study
Ho1: There is no significant difference between the overall awareness level and gender of
the respondents.
Ho2: There is no significant difference between the overall awareness level and age of
the respondents.
Ho3 : There is no significant difference between the overall awareness level and
qualification of the respondents.

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 Online International Interdisciplinary Research Journal, {Bi-Monthly}, ISSN 2249-9598, Volume-09, Issue-02, Mar-Apr 2019 Issue

Ho4: There is no significant difference between the overall awareness level and
occupation of the respondents.
Ho5: There is no significant difference between the overall awareness level and income
of the respondents.
Ho6: There is no significant difference between overall satisfaction level and gender of
the respondents.
Ho7: There is no significant difference between overall satisfaction level and age of the
respondents.
Ho8: There is no significant difference between overall satisfaction level and
qualification of the respondents.
Ho9: There is no significant difference between overall satisfaction level and occupation
of the respondents.
Ho10: There is no significant difference between overall satisfaction level and income of
the respondents.
Scope of the Study
The NBFCs are highly important in Indian financial system as they deliver
diversified and customized financial services and products. The formal financial system
is highly weak in Indian context. The services provided by formal sector are limited and
are inwater-tight compartments. These NBFCs cater to the needs of the unbanked and
under privileged citizens. Thus, NBFCs are an unavoidable part of Indian financial
system. The study aims at highlighting the level of awareness and satisfaction of the
services of NBFCs. The study was conducted among the customers of NBFCs who have
availed various types of loan services. The area of the study is limited to Thrissur district
of Kerala only. The selected sample focuses only on the Systematically Important Non-
Deposit taking NBFCs’ customers.
Methodology
The study is being mainly undertaken based on primary data collected through
structured questionnaire. The sampling units consist of NBFCs customers in Thrissur
district. Non probability sampling technique is adopted for the selection of sample. The
total sample size is restricted to 110. Secondary data is being collected from different
sources like scholarly articles, textbooks and various websites. Data were analyzed using
mean, standard deviation, t test and One way Anova.
Results and Discussions
Table 1: Overall awareness level and demographics
Variables Categories N Mean SD F P value Decision
value
Male 67 19.10 2.230 >0.05
Gender .179 .858 Accept H01:
(Independent Female 43 19.19 2.471 (No
Sample t test) significant
difference)
Age Below 20 9 18.78 2.819 >0.05
(One way Anova) 21-30 19 18.37 2.006 Accept H02:
31-40 43 19.44 2.074 2.168 0.078 (No
41-50 21 18.48 2.316 significant
Above 50 18 20.17 2.618 difference)

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 Online International Interdisciplinary Research Journal, {Bi-Monthly}, ISSN 2249-9598, Volume-09, Issue-02, Mar-Apr 2019 Issue

Total 110 19.14 2.317

Upto SSLC 23 18.57 2.063 >0.05
Qualification Upto HS 13 18.31 2.057 1.670 .178 Accept H03:
(One way Anova) Upto Degree 50 19.58 2.540 (No
Upto PG 24 19.21 2.064 significant
Total 110 19.14 2.317 difference)
Govt. 43 19.77 2.359 2.133 .100 >0.05
Occupation Private 29 18.41 2.307 Accept H04:
(One way Anova) Business 18 18.94 2.235 (No
Others 20 19.00 2.103 significant
Total 110 19.14 2.317 difference)
Income 10000-20000 26 19.46 2.284 >0.05
(One way Anova) 20000-30000 36 18.86 2.320 .337 .798 Accept H05:
30000-40000 16 19.19 2.073 (No
Above 40000 32 19.16 2.516 significant
Total 110 19.14 2.317 difference)
** significant at 1% level
* significant at 5% level
Source:Compiled from primary data
Results of Hypotheses Testing
H01, HO2, Ho3, Ho4 and Ho5 were accepted at 5% level of significance, which
means that there is no significant difference between overall awareness level of the
respondents about the services offered by NBFCs and Demographics of the respondents.
Table 2:Overall satisfaction Level and Demographics
Variables Categories N Mean SD F P Decision
value value
Male 67 39.78 3.406 >0.05
Gender .069 .945 Accept H06:
(Independent Female 43 39.72 4.474 (No
Sample t test) significant
difference)
Age Below 20 9 40.67 3.571 >0.05
(One way Anova) 21-30 19 38.95 3.689 .364 .834 Accept H07:
31-40 43 39.81 3.881 (No
41-50 21 40.05 4.455 significant
Above 50 18 39.67 3.498 difference)
Total 110 39.75 3.839
Upto SSLC 23 38.30 4.685 >0.05
Qualification Upto HS 13 39.23 2.651 1.701 .171 Accept H08:
(One way Anova) Upto Degree 50 40.28 3.785 (No
Upto PG 24 40.33 3.384 significant
Total 110 39.75 3.839 difference)
Govt. 43 39.79 4.033 >0.05
Occupation Private 29 39.66 3.457 3.887 .011 Reject H09:
(One way Anova) Business 18 41.94 3.351 (significantly

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 Online International Interdisciplinary Research Journal, {Bi-Monthly}, ISSN 2249-9598, Volume-09, Issue-02, Mar-Apr 2019 Issue

Others 20 37.85 3.543 different)

Total 110 39.75 3.839
Income 10000-20000 26 40.08 3.654 >0.05
(One way Anova) 20000-30000 36 38.81 4.302 1.277 .286 Accept H10:
30000-40000 16 39.75 3.679 (No
Above 40000 32 40.56 3.435 significant
Total 110 39.75 3.839 difference)
** significant at 1% level
* significant at 5% level
Source: Compiled from primary data
Results of Hypotheses Testing
H06, H07, Ho8 and Ho10 are accepted at 5% level of significance which reveals
that there are no significant differences between the overall satisfaction of the customers
towards services offered by NBFCs and demographics of the respondents. Ho9 is rejected
at 5%level of significance which shows that overall satisfaction level is not the same for
different occupational groups of respondents.
As there is significant differences between the overall satisfaction level of the respondent
and the occupation. Post hoc test is conducted to find out group wise differences.
Tuckeys post hoc test is done and the results are as follows:
Table 3 :Multiple comparisons with regard to the Occupation

(I) (J) Mean Sig. 95% Confidence Interval

Occupation Occupation Difference Lower Upper
(I-J) Bound Bound
Private .136 .999 -2.18 2.45
Government Business -2.154 .168 -4.86 .55
Others 1.941 .218 -.67 4.55
Government -.136 .999 -2.45 2.18
Private Business -2.289 .171 -5.18 .60
Others 1.805 .339 -1.00 4.61
Government 2.154 .168 -.55 4.86
Business Private 2.289 .171 -.60 5.18
*
Others 4.094 .005 .96 7.23
Government -1.941 .218 -4.55 .67
Others Private -1.805 .339 -4.61 1.00
*
Business -4.094 .005 -7.23 -.96
*. The mean difference is significant at the 0.05 level.
Tuckeys Post Hoc Test reveals that the overall satisfaction level is significantly
different between business group and others group.
Findings
The study conducted to assess the level of awareness and satisfaction on NBFC
services revealed that among 110 samples selected for the study, 67 were males and 43
were females. Majority of the respondents were from the age group 31-40.Government
employees had the major share in utilizing the services of NBFCs in Kerala.50 percent of
the respondents were graduates. Majority of the respondents are aware of gold loans

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 Online International Interdisciplinary Research Journal, {Bi-Monthly}, ISSN 2249-9598, Volume-09, Issue-02, Mar-Apr 2019 Issue

offered by NBFCs and they are least aware about loans provided to Small and Medium
Enterprises (SME). The data analysis further reveals that there is no significant difference
between level of awareness about various services offered by NBFCs and the
demographics of the respondents. There is no significant difference between the level of
satisfaction and demographic characteristics of the respondents except for occupation.
Level of satisfaction significantly varies among business group and others group.
CONCLUSION
NBFCs due to its features and variety of services undoubtedly have a major role
in the Indian financial system. NBFCs have become an alternative to the Banking
services. They offer promptas well as efficient services without muchprocedural
formalities. The present study was conducted to assess the level of awareness and
satisfaction on NBFC services in Kerala. The results of the study reveals that majority of
the respondents are fully aware about gold loans while awareness about MSE finance is
very low among the respondents. There is no significant difference between level of
awareness about various services offered by NBFCs and the demographics of the
respondents. There is no significant difference between the level of satisfaction and
demographic characteristics of the respondents except for occupation. Level of
satisfaction significantly varies among business group and others group.

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