A RESEARCH REPORT

0N

“A STUDY ON CUSTOMER PERCEPTION TOWARDS DEMAT

ACCOUNT IN BHILAI”
Submitted in partial fulfilment for the award of the degree

Master of Business Administration

Chhattisgarh Swami Vivekanand Technical University, Bhilai

Guided By, Submitted By,

Mrs. Meenaksheesharma Chetnadansena

Roll no. -

MBA-2ndSem

Session: 2012 – 2013

ShriShankaracharya Group of Institutions

Faculty of Management Studies

(Managed by ShriGangajali Education Society, Bhilai)

JUNWANI, BHILAI-490 020 (CHHATTISGARH), INDIA

 DECLARATION
I solemnly declare that the report of the research work entitled “A Study on

Customer perception towards demat account in bhilai” is based on my own

work carried out during the course of study under the supervision of Prof.

Meenakshee Sharma, Faculty of MBA Department.

I assert that the statement made and conclusions drawn are an outcome of

this research work. I further declare to the best of my knowledge that this

report does not contain any part of any work which has been submitted for the

award of MBA degree or any other degree/diploma/certificate in this

University or any other University of India or abroad.

Chetnadansena

MBA 2ndsem
 CERTIFICATE

This is to certify that the work incorporated in the report “A Study on

Customer perception towards demat account” is a record of research work

carried out by CHETNA DANSENA bearing under my/our guidance and

supervision for the part fulfillment for the award of MBA Degree of

Chhattisgarh swami Vivekananda Technical University , Bhilai (C.G),India.

To the best of my knowledge and belief the report

1. Embodies the work of the candidates by her,

2. Has duly been completed,

3. Is up to the desired standard both in respect of contents and

language for external viva.

Mrs. Meenakshee Sharma

Assistant Professor

FMS SSGI
 ACKNOWLEDGEMENT

The project has been made possible through the direct and indirect co-

operation of various persons, for whom we wish to express our appreciation

and gratitude, but a complete acknowledgement would be encyclopedic.

First and foremost we express our profound gratitude to our project guide

Prof. Meenakshee Sharma for assigning us an interesting and challenging

project. It is only because of her invaluable guidance and encouragement; we

have dared to venture this task. If at all we have succeeded, we owe it to her

and we are left with a deep sense of gratitude for her. Under who’s able

guidance’s had the privilege to work and who guide us at every stage.

We express our deep sense of gratitude towards Prof. Meenakshee Sharma,

Lecturer of MBA Department, consistence guidance and morale

encouragement helped us to complete the project successfully.

At last we offer my thanks to all those people and other whose efforts and

contribution had made this possible.

Chetnadansena

MBA II semester
CONTENTS

i. DECLARATION I
ii. CERTIFICATE II
iii. ACKNOWLEDGEMENT III
iv. TABLE OF CONTENTS IV

1. INTRODUCTION 6

2. COMPANY PROFILE 12

3. LITERATURE REVIEW 22

4. RESEARCH METHODOLOGY 32

5. DATA ANALYSIS AND RESULTS 37

6. FINDINGS OF THE STUDY 76

7. RECOMMENDATIONS 78

8. LIMITATIONS 80

9. CONCLUSION 82

REFERENCES 85
CHAPTER – 1

INTRODUCTION
INTRODUCTION

In a 'Demataccount’,shares and securities are held electronically instead of the

investor taking physical possession of certificates. A demat account is opened
by the investor while registering with an investment broker (or sub-broker).
The demat account number is quoted for all transactions to enable electronic
settlements of trades to take place.

Access to the demat account requires an internetpassword and a transaction

password. Transfers or purchases of securities can then be initiated. Purchases
and sales of securities on the demat account are automatically made once
transactions are confirmed and completed

The advantage of demat account is tohelp in avoiding problems typically

associated with physical share certificates, for example: delivery failures
caused by signature mismatch, postal delays and loss of certificate during
transit. Further, it eliminates the risks associated with forgery and due to
damaged stock certificates. Demat account holders also avoid stamp duty (as
against 0.5 per cent payable on physical shares) and filling up of transfer
deeds.
 CHAPTER – 2

LITERATURE REVIEW
LITREATURE REVIEW

The commencement of demat account has transformed the capital market in

India. With the help of demat account buying and selling of shares has become
much faster and even process than trading with the assistance of a physical
broker. It provides for the assimilation of bank, broker, stock exchange and
depository participants. This helps to get rid of the painstaking procedure of
investing in stock exchange. Demat facilitates to keep the securities in
electronic form instead of paper form. It offers more advantageous than the
physical certificate form. Despite the advantages of demat,the awareness
levels among the investors relating to demat account is not adequate because
of numerous reasons. The investors are not sufficiently responsive of the
concept of demat account and the various financial institutions providing such
services.

Is a demat account a must?

Now a day, practically all trades have to be settled in dematerialized form.

Although the market regulator, the Securities and Exchange Board of India
(SEBI),has allowed trades of up to 500 shares to be settled in physical form,
nobody wants physical shares any more. So a demat account is a must for
trading and investing.
Why demat?
The demat account reduces brokerage charges, makes pledging/hypothecation
of shares easier, enables quick ownership of securities on settlement resulting
in increased liquidity, avoids confusion in the ownership title of securities,
and provides easy receipt of public issue allotments. It also helps you avoid bad
deliveries caused by signature mismatch, postal delays and loss of certificates
in transit. Further, it eliminates risks associated with forgery, counterfeiting
and loss due to fire, theft or mutilation. Demat accountholders can also avoid
stamp duty (as against 0.5 per cent payable on physical shares), avoid filling up
of transfer deeds, and obtain quick receipt of such benefits as stock splits and
bonuses
.

Steps involved in opening a demat account:-

First an investor has to approach a DP and fill up an account opening

form. The account opening form must be supported by copies of any
one of the approved d o c u m e n t s t o s e r v e a s p r o o f o f i d e n t i t y
(POI) and proof of address (POA) as specified by SEBI. Besides,
p r o d u c t i o n o f P A N c a r d i n o r i g i n a l a t t h e t i m e o f opening of
account has been made mandatory effective from April 01, 2006.All
applicants should carry original documents for verification by an
authorized official of the depository participant, under his signature Further,
the investor has to sign an agreement with DP in a depository prescribed
standard format, which details rights and duties of investor and DP.
DP should provide the investor with a copy of the agreement and schedule of
charges for their future reference. The DP will open the account in the system
and give an account number, which is also called BO ID (Beneficiary Owner
Identification number).The DP may revise the charges by giving 30 days
notice in advance. SEBI has rationalized the cost structure for
dematerialization by removing account opening
charges, transaction charges for credit of securities, and
c u s t o d y c h a r g e s v i d e circular dated January 28, 2005.Further, SEBI has
vide circular dated November 09, 2005 advised that with effect f r o m
January 09, 2006, no charges shall be levied by a depository on
D P a n d consequently, by a DP on a Beneficiary Owner (BO) when a
BO transfers all the securities lying in his account to another branch of the
same DP or to another DP of the same depository or another depository,
provided the BO Account/s at transferee DP and at transferor DP are one and
the same, i.e. identical in all respects. I n c a s e t h e B O A c c o u n t a t
t r a n s f e r o r D P i s a j o i n t a c c o u n t , t h e B O A c c o u n t a t transferee DP
should also be a joint account in the same sequence of ownership.

Rights:-
1. You can open more than one depository account in the same name with
single DP/ multiple DPs.
2. No minimum balance is required to be maintained in a depository
account.
3. You can give a onetime standing instruction to your DP to receive all the credits
coming to your depository account automatically.

Procedure

1. Fill account opening form (available with your DP).

2. Give your DP the duly filled account opening form with introduction
documents as may be required.
3. Sign agreement with DP (agreement will state rights & obligations
of both parties). The agreement will contain the fee structure of your DP. Your DP
would give you a copy of this signed agreement for your record.
4. DP would give you Client Id no. (Account no.) Your depository account is
opened. This Client Id no. along with your DP Id no. Forms a unique
combination.Boththese nos. should be quoted in all your future
correspondence with DP/NSDL / Issuing Company/their registrar &
transfer (R&T) agent.
5. Your DP would give you pre-printed instruction slips for depository services
viz., dematerialization, delivery instruction for trades, etc...Preserve these
carefully.
6.Your DP would give you a list of deadlines for giving instructions for various
depository activities viz., transfer for effecting sale, purchase etc.. If not,
check withtheDP.
Required Documents
The extent of documentation required to open a demat Account may vary
according to your relationship with the institution. If you plan to open a demat
account with a bank, a savings account holder has an edge over the non-
accountholder. In fact, banks usually offer additional incentives to customers
who open a demat account with them. Along with the application form, your
photographs (with co-applicants) and proof of identity/residence/date of birth
have to be submitted. The DPs also ask for a DP-client agreement to be
executed on non-judicial stamp paper. Here is a broad list (you won’t need all
of them though):

•PANcard
•A canceled check,
•Voter’sID
•Passport
•Ration card
•Driver’s license
•Photo credit card
•Employee ID card
•Bank attestation
•IT returns
•Electricity/ Landline phone bill

While they only ask for photocopies of the documents, they will need the
originals for verification. You will have to submit a passport size photograph on
which you sign across.

Benefits’ of demat account

The benefits of demat are enumeratedas follows:-

 Easy and convenient way to hold securities

 Immediate transfer of securities
 No stamp duty on transfer of securities
 Safer than paper-shares (earlier risks associated with physical certificates
such as bad delivery, fake securities, delays, thefts etc. are mostly
eliminated)
 Reduced paperwork for transfer of securities
 Reduced transaction cost
 No "odd lot" problem: even one share can be sold
 Change in address recorded with a DP gets registered with all companies
in which investor holds securities eliminating the need to correspond
with each of them separately.
 Transmission of securities is done by DP, eliminating the need for
notifying companies.
  Automatic credit into demat account for shares arising out of
bonus/split, consolidation/merger, etc.
 A single demat account can hold investments in both equity and debt
instruments.
 Traders can work from anywhere (e.g. even from home).

Benefit to the company

The depository system helps in reducing the cost of new issues due to lower
printing and distribution costs. It increases the efficiency of the registrars and
transfer agents and the secretarial department of a company. It provides
better facilities for communication and timely service to shareholders and
investors.

Benefit to the investor

The depository system reduces risks involved in holding physical certificates,

e.g., loss, theft, mutilation, forgery, etc. It ensures transfer settlements and
reduces delay in registration of shares. It ensures faster communication to
investors. It helps avoid bad delivery problems due to signature differences,
etc. It ensures faster payment on sale of shares. No stamp duty is paid on
transfer of shares. It provides more acceptability and liquidity of securities.

Benefits to brokers

It reduces risks of delayed settlement. It ensures greater profit due to increase

in volume of trading. It eliminates chances of forgery or bad delivery. It
increases overall trading and profitability. It increases confidence in their
investors.
Disadvantages of Demat

 Trading in securities may become uncontrolled in case of dematerialized

securities.
 It is incumbent upon the capital market regulator to keep a close watch
on the trading in dematerialized securities and see to it that trading does
not act as a detriment to investors.

 For dematerialized securities, the role of key market players such as

stock-brokers needs to be supervised as they have the capability of
manipulating the market.

 Multiple regulatory frameworks have to be conformed to, including the

Depositories Act, Regulations and the various Bye-Laws of various
depositories.

 Agreements are entered at various levels in the process of

dematerialization. These may cause worries to the investor desirous of
simplicity.
CHAPTER-3
RESEARCH
METHODOLOGY
Research Methodology

Research is the systematized effort to gain knowledge. And research methodology is a

way to systematically solve the research problems. It may be understood as a science
of studying how research is done scientifically. In it we study the various steps that are
generally adopted by a researcher in studying his research problem along with the logic
behindthem.
Research Methodology is the way to systematically solve a research problem. In it the
various steps are followed that are generally adopted in the study along with the logic
behind them. It is a conceptual structure with in which the study is conducted. It
constitutes the blue print for the collection, measurement and analysis of data.

Research objectives

1.To know the customer perception towards demat account.

2. To analyse the factor that influence demat account.
3. To understand which factor influence the most to the demat account.
 RESEARCH PLAN

RESEARCH PLAN

Research Design Causal

Research Method Used Survey

Research Instrument Questionnaire

Data Collection Primary Source

Sampling Design Convenience

Sample Size 100

Sample Location Bhilai

Sample Unit Investors of stock market

RESEARCH DESIGN

A research design is a basis of framework, which provides guidelines for the rest of research
process. It is the map of blueprint according to which, the research is to be conducted. The
research design specifies the method of study. Research design is prepared after
formulating the research problem.

Causal research, also known as statistical research, describes data and characteristics about
the population or phenomenon being studied. Descriptive research answers the questions
who, what, where, when and how...The description is used for frequencies, averages and
other statistical calculations. Often the best approach, prior to writing descriptive research,
is to conduct a survey investigation. Qualitative research often has the aim of description
 and researchers may follow-up with examinations of why the observations exist and what
the implications of the findings are.

In this research I have conducted Descriptive research to study the “Investors decision while
investing in stock market”. Descriptive includes survey and fact finding analysis of different
kinds.

RESEARCH MODEL:-

SERVICES

H1

FACILITIES

H2 PERCEPTION

RISK H3

RISK
H4

RETURN

Services provided by the bank has the significant impact on customer perception towards
demat account. It is taken as independent variable.

Facility is another independent variable, which has significant impact on customer

perception towards demat account.

Risk is another independent variable, which has impact on customer perception towards
demat account.
Return is another independent variable, which has impact on customer perception towards
demat account.

Perception is a dependent variable, which is affected by all these independent variables.

Hypothesis:

Hypothesis is a formal question that intends to resolve.

In my study, we have taken the following hypothesis:

H1: Services provided by the bank has significant impact on customer perception.

H2: Facilities provided by the bank, has significant impact on customer perception.

H3: Risk has significant impact on customer perception

H4: Return has significant impact on customer perception.

POPULATION

All the investors investing in stock market will constitute the population of the study.

SAMPLE

It is neither feasible nor desirable for the researcher to go through the population there
Sample Method was used and the researcher has taken 1OO samples, while adopting
Convenience Sampling.

QUESTIONNAIRE

For the purpose of research the researcher has used this particular researcher instrument-
Questionnaire. Keeping in mind the objective of the study questionnaire was prepared.
Questionnaire is comprised of two parts, the first part contains the questions related to the
topic of the research and second part contains the profile of respondent.

DATA COLLECTION
Data are the raw materials in which research works. The task of data collection begins after
research problem has been defined and research design chalked out. The data has been
collected by the researcher with the help of questionnaire while visiting the respective
investor.

Data collection is classified into two part, primary data and secondary data.

 Primary data
 Secondary data
The data referred to those which gathered for some other purpose and are already available
in the firm’s initial records and commercial, trade or government, publication.
On the other hand primary data don’t exist in record and publication. The researcher has to
gather primary data fresh for the specific study, undertaken by him.
In this project primary data were collected by survey methods i.e. Questionnaire.

SAMPLING PLAN

The first step in sampling plan is to decide the population. Once the population is
decided the research must concern him to fine:

 What sampling unit should be?

 What should be the sampling size?
 What sampling procedure should be used?
 What sampling method should be utilized in this project?
 CHAPTER-4
Analysis and Interpretation

Factor Analysis-

Factor analysis is by far the most often used multivariate technique of research studies,
specially pertaining to social and behavioral sciences. It is a technique applicable when there
is a systematic interdependence among a set of observed or manifest variables and the
researcher is interested in finding out something more fundamental or latent which creates
this commonality.

Factor analysis, seeks to resolve a large set of measured variables in terms of relatively few
categories, known as factors. This technique allow the researcher to group variables into
factors and the factors so derived may be treated as new variables and their value derived
by summing the values of the original variables which have been grouped into the factor.
Factor analysis is also important to check the reliability and validity of data.

Rotated Component Matrixa

Component

1 2 3 4 5

PX1 .033 .905 .168 .049 -.089

PX2 .277 .803 .162 -.001 -.005

PX3 .425 .634 .290 .136 -.001

SX1 .180 .181 .817 .121 -.106

SX2 .186 .146 .766 .151 .000

SX3 .163 .165 .675 -.235 .288

FX1 .574 .234 .255 -.028 -.128

FX2 .808 .074 .139 .032 .025

FX3 .804 .047 .130 .038 -.012

FX4 .629 .152 .055 .267 .134

RX1 .247 .194 -.014 .784 .131

RX2 -.002 -.044 .075 .794 -.063

RX3 .039 -.158 -.131 -.177 .641

RX4 .110 -.289 .202 .313 .560

RTX1 -.138 .379 .133 .158 .710

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

a. Rotation converged in 6 iterations.

Interpretation

 It is interpreted that all the three variables of perception gives the same meaning as
they are loaded in the same component i.e.2. So it is reliable.
 It is interpreted that all the threevariables of service gives the same meaning as they
are loaded in the same component i.e. 3.
 It is interpreted that all the four variables of facility gives the same meaning as they
are loaded in the same component i.e. 1.
  It is interpreted that two variable of risk are loaded in component 4 while other two
in component 5 which shows they give different meaning.
 It is interpreted that thereturn variable is loaded in component 5.
From the above interpretation it is clear that all the factors are reliable and
valid accept two variables of risk which are loaded in component 5, because return
factor are also loaded in component 5,so we ignore two variables of risk i.e. RX3 and
RX4.

Regression Analysis

Regression is the determination of a statistical relationship between two or

more variables. In simple regression, we have five variables, four variable (defined as
independent) is the cause of the behaviour of another one (defined as dependent
variable).Regression interpret what exists physically i.e., there must be physical way in
which independent variables like services, facilities, risk, return can be affected by
dependent variable perception..

It was found by Regression analysis test that there was two factor which is
significantly responsible for affecting customer perception towards demat account, that is
service and facility. In the regression analysis test the coefficient value of services is 0.003
and facility is 0.006, which is less than 0.05; the service and facilitiesare the major factor
which affects customer perception towards demat account.

Model Summary
Adjusted R Std. Error of
Model R R Square Square the Estimate
1 .542a .294 .264 .97442
a. Predictors: (Constant), RTX, FX, RX,
SX
 ANOVAb

Sum of
Model Squares df Mean Square F Sig.

1 Regression 37.201 4 9.300 9.795 .000a

Residual 89.253 94 .949

Total 126.453 98

a. Predictors: (Constant), RTX, FX, RX, SX

b. Dependent Variable: PX

Coefficientsa
Standardized
Unstandardized Coefficients Coefficients

Model B Std. Error Beta t Sig.

1 (Constant) .830 .751 1.105 .272

SX .354 .118 .296 3.010 .003

FX .346 .124 .273 2.795 .006

RX .080 .096 .075 .832 .408

CX .103 .064 .145 1.598 .113

a. Dependent Variable: PX

Reduction Model-
SERVICES
0.003

FACILITIES
CUSTOMER PERCEPTION
 0.006

.408

.113

Here shows the significance on employee empowerment and

shows that there is no significance on employee
empowerment
 CHAPTER-5

FINDING OF THE STUDY

FINDINGS:
  It is find by regression analysis test that their was two factors which
significantly responsible for customer perception towards demat account, that
is services and facilities.
 In the regression analysis test the coefficient value of services is 0.003 and
facility is 0.006 which is less than 0.05,the service and facility are the major
factor which affect customer perception.
 The coefficient value of risk is .408, and return is 0.113 which are greater than
0.05, so these factors don’t affects the customer perception.
 Coefficient value shows that most of the customers highly consider service
and facilities towards demat account.

After analysing the data it is found that:-

H1: Services provided by the bank has significant impact on customer perception.

H2: Facilities provided by the bank, has significant impact on customer perception.

H3: Risk has no significant impact on customer perception.

H4: Return has no significant impact on customer perception.

 CHAPTER-6
RECOMMENDATIONS
 Recommendation

 The bank should take care of services and facilities on demat account,

because it highly affects customer perception.

 There is lack of awareness among customer so; industry should create

awareness among them.

 There is need to provide optimum support to the customers.

 Industry should concentrate more on service and facilities.

 CHAPTER-7

LIMITATIONS

Limitations

This study is only modest attempt and not be claimed as comprehensive one, further
it is to be pointed that data are inebriation for the study and consequently the findings
mode out of it are reliable to the extent that the respondent have been for the right
nourishing the same.

During conducting this research I come across the following limitation: -

1. The research and survey was limited to only in Bhilai and Raipur..
2. Limitation of time:-The time available for conducting was not sufficient.
3. Limitation of response: -Respondents were least interested.
4. Small sample size:-Since the sample size taken was very small, the conclusion
cannot be generalized.
 CHAPTER-8

CONCLUSION OF THE STUDY

Service and facility is considered as most important factor in any organization. Both
Public and Private sector banks are providing Demat facilities and introducing various
new financial products. A Demat account is very much necessary for availing benefits
of these financal products. Finally, we can conclude that Banks need to improve their
service quality and charge reasonably for the Demat relevant services. By adopting the
policy of providing quality service at reasonable charges, banks can develop a new
business apart from the usual banking services, in the form of Demat relevant financial
products.

REFERENCE:-
 ANNEXURE

QUESTIONNAIRE

I am a student of ShriShankaracharya Group of Institution, Faculty of Management

Study, Bhilai (C.G). As a part of my curriculum, a research work on the topic “A
study on customer perception towards demataccout”is being conducted. I would
be grateful to you for providing candid responses. The collected data will be kept
private and confidential.

1. Following questions are about perception of Demat accounts

StronglyStrongly

Disagree< Neutral> agree

I believe that transaction through demat 1 2 3 4 5 6 7

account is easy for me.
I believe that transaction through demat 1 2 3 4 5 6 7
account is more convenience.
I believe that transaction through demat 1 2 3 4 5 6 7
account is good for taking financial decision
immediately.
2. Following questions are about services of demat account:-

StronglyStrongly

Disagree< Neutral> agree

I believe that demat account provide good 1 2 3 4 5 6 7

services
I can reduce overall transaction cost through 1 2 3 4 5 6 7
trading demat account
Switching facility can improve my overall 1 2 3 4 5 6 7
gain

3. Following questions are about facilities of demat account

StronglyStrongly

Disagree< Neutral> agree

I believe that demat account facilitates for 1 2 3 4 5 6 7

instant transfer or delivery of shares
Demat account provide facility of sms alert 1 2 3 4 5 6 7
I believe that demat account provide 1 2 3 4 5 6 7
nomination facility
I believe that demat account provide facility of 1 2 3 4 5 6 7
statement of account by email
4. Following question are about risk of demat account:-

StronglyStrongly

Disagree< Neutral> agree

I believe that there is no risk in opening of 1 2 3 4 5 6 7

demat account
I believe that demat account eliminate various 1 2 3 4 5 6 7
risk like forgery, theft etc.
I believe that sometimes small investor lossed 1 2 3 4 5 6 7
much of there saving because of unnecessary
bull runs
I believe that demat account reduce risk of 1 2 3 4 5 6 7
delayed settlement.

5. following question are about returns in demat account

StronglyStrongly

Disagree< Neutral> agree

I believe that hidden chages on demat account 1 2 3 4 5 6 7

can change my decision

PERSONAL DETAILS :-

NAME : _________________________________________
AGE : 20-40 40-60

GENDER : Male Female

ANNUAL INCOME ( IN LAKHS ) : 1.5-2.5 2.5-4 4 & above