C K Pithawalla Institute of Management

MBA IVth Sem

Research Proposal

Topic: “Awareness and preference regarding investment

avenues in Surat city ”

Prepared By: Mayur Jasani (12)

Dharmesh Savani (35)
 RESEARCH PROPOSAL
• Introduction
Overview of Topic:
Banking sector is affected by the monetary policy by RBI either positively or
negatively. RBI uses Banks as mediator through which it implies the policies. Liquidity,
profitability, NPAs, Loan rate and overall performance of the industry are some of the
important management aspects lead through Monetary Policy somehow. So, it is better to
understand the role of Monetary Policy, Banking sector scenario, correlation between
banking sector and monetary policy.

Why monetary Policy (Role)

The predominant goal of monetary policy is the promotion of price stability.

Monetary policy rests on the relationship between the rates of interest in an economy, that
is, the price at which money can be borrowed, and the total supply of money. Monetary
policy uses a variety of tools to control one or both of these, to influence outcomes like
economic growth, inflation, exchange rates with other currencies and unemployment. The
Money Supply is controlled by RBI through various Open market operations, CRR, SLR,
Repo Rate, Reverse Repo Rate and Bank Rate, Loan rate.

Banking Overview

The last decade has seen many positive developments in the Indian banking
sector. The policy makers, which comprise the Reserve Bank of India (RBI), Ministry of
Finance and related government and financial sector regulatory entities, have made
several notable efforts to improve regulation in the sector. The sector now compares
favorably with banking sectors in the region on metrics like growth, profitability and non-
performing assets (NPAs). A few banks have established an outstanding track record of
innovation, growth and value creation. This is reflected in their market valuation.
However, improved regulations, innovation, growth and value creation in the sector
remain limited to a small part of it. The cost of banking intermediation in India is higher
and bank penetration is far lower than in other markets. India’s banking industry must
strengthen itself significantly if it has to support the modern and vibrant economy which
India aspires to be. While the onus for this change lies mainly with bank managements,
an enabling policy and regulatory framework will also be critical to their success. The
failure to respond to changing market realities has stunted the development of the
financial sector in many developing countries. A weak banking structure has been unable
to fuel continued growth, which has harmed the long-term health of their economies.

Relationship why bank and monetary policy

The tools which are used in monetary policy that are directly related to the
banking industry as bank is in the business of borrowing and lending as its basic function.

Monetary policy and bank are having a deep relation that may be straight or
inverse. In India all banks have to follow the rules given by RBI and the same bank
governs monetary policy also.

Conditions for enhancing the effectiveness of monetary policy, however,

improved in the third quarter of the year, as the tightness in liquidity prompted
competition among banks, leading to higher deposit and lending rates. This was sited at
RBI site on its annual policy, second quarter review.

Do low central bank interest rates lead banks to take on more risks? The
arguments in support of this thesis can be broadly grouped under three headings: asset
substitution, search for yield, and leverage or with limited liability and information
asymmetry, banks might end up taking even more risk.
Objectives
- Monetary policy is the setting of the money supply by policymakers in
Central Bank. The money supply refers to the quantity of money available in the
economy.
To get the clear understanding how RBI and banks generates money supply in the
economy.
- Impact of monetary policy on Inflation.
- When RBI introduces monetary policy to control money supply in the
market, bank and its operation as banks are basically working in the same field. To
get basic idea of how liquidity, profitability, NPAs, overall growth of the banking
sector are affected.
- To know about the impact of monetary policy on banking sector growth
and that is taken as Comprehensive Project title.
- Impact of monetary policy on Liquidity and Profitability of bank.
- Impact of monetary policy on NPAs.

• Statement of the Problem.

Generally almost research has the problem statement itself the project title so here
problem statement is to study about “Impact of Monetary Policy on Indian Banks’
Growth”.

• Short Literature Survey

- Guidance will be taken from the faculty member of the college as well as
the mentor given from the college to prepare the project from various papers and
other sources. And other persons who are knowledgeable in this area would also
be referred to collect data as well as for the analysis part of the data.
- For the collection of data regarding the monetary policy and banking
growth various magazines like “Banking” “Banking Finance” and various
websites and annual reports of various banks.

- Appropriate measurement instruments for the monetary policy would be

CRR, SLR, Repo and Reverse Repo, bank rate, Open market operations.
- And to major the banking sector growth tools would be used like profit of
 the banks, its turnover, Liquidity ratios, NPA etc.

• Research Design and Hypothesis

Various types of research designs are available as named below and out of them
whatever will be applied that is explained briefly:
- Exploratory study - Descriptive study
- Formal study - Cross-sectional studies
- Observational studies - Case studies
- Experimental - ex post facto design

• In an experiment, the researcher attempts to control and/or manipulate the

variables in the study
• In an ex post facto design, the researcher has no control over the variables;
they can only report what has happened.
• Descriptive study tries to explain relationships among variables
• Another Formal Study and Exploratory study includes framing of
hypothesis and carries out the analysis from that result.

• Research Methodology
Data Collection Method:

- As per the requirement of the research, Secondary Data would be used.

Limitations of the Project:

- Time allocated for the comprehensive project may not be enough.

- Few of the information would be confidential so difficult to collect that.
• Data Sources
- Sources of data collection would be Internet links, magazines and annual reports
of the RBI and banks.

• Time Budget
We are given 3 and ½ month for the preparation of the comprehensive project. Almost
the major time will be taken for Findings of the data and Analysis of data from the
total allocated time.

• Tentative Chapter Plan

1. Initial pages: Acknowledge, Declaration, Institute Certificate.
2. Executive summary
3. Introduction/statement of problem
4. Detailed survey of literature
5. Objective of the study
6. Research Methodology
7. Limitations

8. Text of the study: Analysis

9. Conclusions and Recommendations
10. Bibliog raphy
11. App endices

• Expected Contribution of the study

- Group effort

• Ben eficiaries
- This Project would be beneficiary to the researcher to get the better
understanding of how monetary policy is affect the banking sector which is the
most crucial sector for RBI.

• A short write up on the researcher

Suresh Thummar: Amit Vaghani:

Cont: 90339 66080 Cont: 94276 58725

MBA student (4th Sem). MBA student (4th Sem)

CKPIM CKPIM
 • Bibliography/Appendices
• http://www.rbi.org.in
• http://www.gtu.ac.in/syllabus/MBA/MBA_new_syllabus_sem_-_IV.pdf