A STUDY ON FACTORS INFLUENCING INVESTORS TO INVEST IN SHRIRAM CHITS

Uthra.V, Research Scholar, Bharathiar University, Coimbatore, India. Address: No: 17, Raju Nagar No:3, Jothipuram (post), Coimbatore-641047, India Email: Uthravenugopal@gmail.com Mobile No: +91 9894865458

ABSTRACT
An investment is a commitment of funds made in the expectation of some positive rate of return. Investors who are investing in stocks, bonds and mutual funds now have chit fund as an alternative means of investment. But there are a number of reasons and factors influencing an individual investor to invest in Chit funds. Chit Fund is an attractive Investment Option which caters to people from all walks of life. It is especially beneficial to the Salaried Class, Professionals, Businessmen and Self Employed. The type of the study is descriptive in nature, sample technique used is Proportionate stratified sampling, and the sample size is 100 respondents. The respondents are the investors of shriram chits, Coimbatore. The data is collected from the sample through Questionnaire method. The statistical tools used for analysis are factor analysis, chi-Square and mean score. The mathematical tool used is percentage analysis. From the mean score analysis it is found that Chit fund is the investment avenue preferred by most of the investors followed by bank deposit and life insurance, Providing better service is the first feature that attracts the investors to invest in Shriram chits followed by it is convenient and contractual way to save and providing future savings in advance and investors get information about chit funds from friends and relatives before investing in chits followed by newspapers/magazines and self decision. From the factors analysis it is inferred that meet my family needs in future, meet my emergency needs, invest to live a safe and secure life and Capital growth is the reason for investment are the major security factors which have influenced the investors to invest in shriram chits. From the chi-square analysis it is found that here is significant relationship between the gender of the respondents and their investment made in Shriram chits to meet their family needs in future and their investment made in Shriram chits to meet their emergency needs. It is recommended that investors dont have much awareness about the financial planning so shriram chits can take steps to make the investors to understand about the financial planning and investors are interested to invest in 3 to 5 year plan so Shriram Chits can bring out more schemes for the investors for their benefit.

Key Words: Awareness, Chit Funds, Features, Investors, Investment options, 1. INTRODUCTION

An investment is a commitment of funds made in the expectation of some positive rate of return. Investors who are investing in stocks, bonds and mutual funds now have chit fund as an alternative means of investment. But there are a number of reasons and factors influencing an individual investor to invest in Chit funds. Chit Fund is an attractive Investment Option which caters to people from all walks of life. It is especially beneficial to the Salaried Class, Professionals, Businessmen and Self Employed. A chit fund is a type of savings scheme practiced in India, besides other forms of savings scheme offered by various public and private sector banks, post offices, insurance corporations etc. Each and every person can be specifically differentiated on various parameters. Their investment decisions depend on the various attributes. There are so many factors that influence their investment decisions. Everyone has their own requirements. So, accordingly they take decisions.Any investment is made with the primary objective of earning returns on the invested sum. Based on the type of investment instruments, returns can vary. Personal investment is affected by the level of knowledge an individual investor possesses about different investment instruments.

The knowledge of the relationship between risk and return along with the knowledge of industrial sectors, economic indicators, companies performance analysis techniques, portfolio management techniques, etc., affect the investment decisions of individuals. The sources of information regarding investment avenues also guide the investment decisions. Tax liabilities of an individual and the effect of taxation on the income generated from investment along with its understanding influences an individual's investment decisions. Security or safety is also very important in investing. Because, if someone is going to invest their hard money then definitely he will expect good returns. The safety of the funds invested should be the first priority of any investment and then the returns should be in proportion to the level of risk taken. One of the most important factors affecting personal investments is the availability of disposable funds. If the difference between net income and expenditure is either zero or negative, there will be limited amount available for investment. Apart from all these factors invested money should be convertible into cash in the hour of need and this is an important factor which affects personal investments. Chit Funds is a 1000 years old financial instrument intimately connected with millions of people in developing countries. Hugely popular in developing countries, such as India, China, Pakistan and Central Africa, chit fund is one of the best sources of saving money for low income groups, salaried people and the self-employed. 2. THEORETICAL BACKGROUND OF THE STUDY Chit Funds are indigenous financial institutions in India that cater to the financial needs of the low-income households, which have been excluded from the formal financial system. The uniqueness of Chit Fund as a method of Financial Planning stems from the fact that, it is both a tool for saving and borrowing. In other words, it serves the dual purpose of being an investment for your savings and in times of need the Subscriber can bid for the Prize Amount in order to meet any unexpected expenditure. A study conducted by the Institute for Financial Management and Research (IFMR) in India concluded that over thousands of crores of rupees are circulated through chit fund. Andhra Pradesh topped with 1.4 million households participating in chit funds circulating $1.6 billion. Tamil Nadu stood second with participation by 800,000 households circulating $820 million. The study also found that: Around 2.4 per cent of the participants are of households with monthly income less than Rs 10,000. Another 38.4 per cent are households with monthly incomes between Rs 10,000 and Rs 20,000. This means, that a good 70 per cent of the participants belong to low to middle income groups. Around 50% of the subscribers are below poverty line Fig 1.1 Chit funds survey

3. REVIEW OF LITERATURE Dale Adams (2002)1 Conducted a study on A study on microfinance This article examines the historical context of microfinance and its evolution. The concept of microfinance is not new. Savings and credit groups that have operated for centuries include the "susus" of Ghana, "chit funds" in India, "tandas" in Mexico, "arisan" in Indonesia, "cheetu" in Sri Lanka, "tontines" in West Africa, and "pasanaku" in Bolivia, as well as numerous savings clubs and burial societies found all over the world. Formal credit and savings institutions for the poor have also been around for decades, providing customers who were traditionally neglected by commercial banks a way to obtain financial services through cooperatives and development finance institutions. One of the earlier and longer-lived micro credit organizations providing small loans to rural poor with no collateral was the Irish Loan Fund system, initiated in the early 1700s by the author and nationalist Jonathan Swift. Swift's idea began slowly but by the 1840s had become a widespread institution of about 300 funds all over Ireland. Gaurav kabra (2005)2 Conducted a study on "Factors Influencing Investment Decision of Generations in India:" aims to gain knowledge about key factors that influence investment behavior and ways these factors impact investment risk tolerance and decision making process among men and women and among different age groups. The individuals may be equal in all aspects, may even be living next door, but their financial planning needs are very different. It is by using different age groups along with Gender that synergism between investors can be generated. In this context, demographics alone no longer suffice as the basis of segmentation of individual investors. Hence keeping this in mind, the present study is an attempt to find out Factors which affects individual investment decision and Differences in the perception of Investors in the decision of investing on basis of Age and on the basis of Gender. The study concludes that investors age and gender predominantly decides the risk taking capacity of investors. Itoop, M.L (2002)3 in his work "Economic Significance of Chit Funds in India" tried to identify the factors leading to the growth of Chit Funds in India especially in the 1980's. He also examined its utility as a saving instrument and supplier of easy credit and thus employment potential. The findings of the research revealed that Kuries help, industry, agriculture and even house construction. The only unproductive expenditure related to the money spent on marriages and on durable consumer goods. The study also found that the cost of credit is cheaper compared to the cost of credit with reference to commercial banks and other financial institutions. 4. STATEMENT OF THE PROBLEM Despite the growth of a wide range of savings avenues and the widespread network of banks and other financial institutions, Chit scheme still forms an important part in the asset portfolio of many households and firms in India. Though there are different avenues of savings and different categories of Chit Funds mobilizing the scattered savings of the people, what motivates the subscribers in preferring Chits and also particular types of Chit institutions has not been examined.
1

Dale, W. Adams (2002)," A study on microfinance ", Economic Development and Cultural Change, Vo1ume.26, No.3, pp. 547-60.
2

Gaurav kabra (2005)2, "Factors Influencing Investment Decision of Generations in India:, The Bombay State Cooperative Union Journal,Volume.7,Issue.1,April 2008,pp.30-43 3 Itoop, M.L (2002), "Economic Significance of Chit Funds in India, Journal of Banking and Finance, Volume.3, Issue.1, pp.45-56.

Hence it is worth examining the factors influencing the investors to invest in chit funds. This has motivated the researcher to undertake a study on the topic A Study on factors influencing the investors to invest in chit funds with reference to Shriram Chits 4.1 OBJECTIVES OF THE STUDY The objectives of the study are, 1. To identify the factors that influence the investors to invest in Shriram Chits. 2. To identify the features that attracts investors to invest in Chits. 3. To study the information sources influencing the investors to invest in Shriram Chit funds. 4. To identify the savings avenue preference among the investors. 4.2 SCOPE OF THE STUDY The present study entitled A Study on factors influencing the investors to invest in chit funds with reference to Shriram Chits hence examines factors that influence the investors to invest in chit funds. The study is an attempt to find the reasons for the growing popularity of Chit Funds as savings cum borrowing avenues even in the presence of various other avenues of savings and borrowings and also to understand how the Chit subscribers utilize the funds. 4.3 METHODOLOGY Type of Research The type of research used in this project is descriptive in nature. The main goal of this type of research is to describe the data and characteristics about what is being studied. Sample Size The population size is 400. The sample size chosen for the study is 100 and the respondents are the investors of Shriram Chits,Coimbatore. Sample method Proportionate Stratified sampling method was used in this project to collect the data from the total 400 subscribers. In this study the subscribers were stratified into a number of subpopulation or strata and sample items were selected from each stratum.The population is divided into 5 strata and 20 units are selected from each stratum. n i = (Ni / N) n Ni-Strata size N-Population n-Sample size No of strata-5 Sample size-20*5 = 100 samples n i = (80/400)*100 20 samples for each strata

Tools for Data Collection Primary method of data collection is done through questionnaire administered to the respondents. Secondary method of data collection is done through the websites, books, journals etc. Tools for Analysis Statistical tools such as percentage analysis, factor analysis and Chi-square are used for the analysis of data. Scoring and Ranking Method has been used to identify the determinants behind the preferences for joining Chit Funds. 5. DATA ANALYSIS AND INTERPRETATION This chapter deals with analysis and interpretation of data as collected through questionnaire collected from 100 investors who have invested in Shriram chits. 5.1 PERCENTAGE ANALYSIS Table 5.1.1 Distribution of the respondents on the basis of age Age(In Years) No. of Respondents Percentage <25 11 11 26-35 26 26 36-45 33 33 46-55 22 22 >56 8 8 Total 100 100 Source: Primary data. The above table shows that, most (33%) of the respondents are in the age group of 36 to 45 years. Table 5.1.2 Distribution of the respondents on the basis of gender Gender No. of Respondents Percentage Male Female Total 41 59 100 41 59 100

Source: Primary data. From the above table it can be inferred that, majority (59%) of the respondents are female. Table 5.1.3 Distribution of the respondents on the basis of occupation Occupation No. of Respondents Percentage Government Job 20 20 Private Job 46 46 Business 29 29 Others 5 5 Total 100 100 Source: Primary data. The table shows that, most (46%) of the respondents are going for private job.

Table 5.1.4 Distribution of the respondents on the basis of income Annual Income No. of Respondents Percentage <1,00,000 7 7 1,00,001-2,00,000 34 34 2,00,001-3,00,000 43 43 >3,00,001 16 16 Total 100 100 Source: Primary data. From the above table it can be inferred that 43% of the respondents belong to the income group of Rs. 2, 00,001-3, 00,000 Table 5.1.5 Distribution of the respondents according to their attraction towards the features of chit funds Features of chit funds No. of Respondents Percentage Better return and safety 14 14 Reduction in risk and transaction cost 12 12 Easy access to funds Regular saving Monthly Installments No market fluctuations Total 19 21 29 5 100 19 21 29 5 100

From the above table it can be inferred that most (29% )of the respondents feel that monthly installments in chit funds is the major feature that has attracted them followed by regular saving and easy access to funds. Table 5.1.6 Preference level of investors towards Investment Avenue INVESTMENT AVENUE MEAN RANK PREFERRED Bank Deposit Life Insurance Shares and debentures Post office Chit Funds Units of UTI & MF 2.89 3.33 3.93 3.69 1.97 5.22 2 3 5 4 1 6

From the above table it can be inferred that chit fund is the investment avenue preferred by most of the investors followed by bank deposit and life insurance.

Table 5.1.7 Reasons for preferring investment in Shriram chits Features Convenient and contractual way to save Provides future savings in advance A source of credit. Minimum Formalities Dual option for savings and borrowings Dividend reduced monthly subscription Transparency and openness Better Service Mean 4.33 4.71 4.92 4.74 5.29 5.21 4.99 1.81 Rank 2 3 5 4 8 7 6 1

From the above table it can be inferred that providing better service is the first feature that attracts the investors to invest in Shriram chits followed by it is convenient and contractual way to save and providing future savings in advance.

Table 5.1.8 Security Factors

Disagree 0 0 0 5

Agree

Security Factor

Meets my family needs in future Meets my emergency needs Invest to live a safe and secure life Capital growth is the reason for investment

56 47 47 33

44 53 53 62

Strongly Disagree 0 0 0 0

Strongly Agree

Neutral 0 0 0 0

From the above able it can be inferred that majority (56%) of the respondents strongly agree that they invest in chits to meet their family needs in future, majority (53%) of the respondents agree that they invest in chits to meet their emergency needs, majority (53%) of the respondents agree that they invest to live a safe and secure life and majority of the respondents (62%) agree that they invest for the purpose of capital growth.

Table 5.1.9 Awareness Factors Strongl y Agree Disagre e Strongl y Disagre e Disagree 0 3 0 0 Strongly Disagree Neutral Strongly Agree

Awareness Factor

Having good knowledge about chits 45 0 0 0 55 Having good knowledge of financial planning 20 19 0 19 42 Having good knowledge of investment plans 39 0 4 0 57 From the above able it can be inferred that majority (55%) of the respondents agree that they have good knowledge about chits, most (42%) of the respondents strongly disagree that they donot have knowledge about financial planning, majority (57%) of the respondents agree that they have good knowledge about investment plans. Table 5.1.10 Opinion Factors

Take suggestions from family Take suggestions from peers before investment

56 50

44 47

0 0

20 9 0 18 53 Take suggestions from financial expert From the above able it can be inferred that majority (56%) of the respondents agree that they take suggestions from family, most (50%) of the respondents strongly agree that they take suggestions from peers before investment, majority (53%) of the respondents agree that they take suggestions from financial expert. Table 5.1.11 Distribution of the respondents on the basis of the Information sources Information sources 1.Newspaper/Magazine 2.Television 3. Agents/Brokers. 4.Websites/Mail 5.Friends/Relatives 6.Self Decision Mean 2.56 4.29 4.65 4.55 1.01 3.94 Rank 2 4 6 5 1 3

It can be inferred from the above table that investors get information about chit funds from friends and relatives before investing in chits followed by newspapers/magazines and self decision.

Neutral

Agree

Opinion Factor

Agree

5.2 FACTOR ANALYSIS 5.2.1 Security Factor This part of the analysis helps to reduce a vast number of variables to meaningful interpretable and manageable factors. This analysis is to use find the major security factors that influences investors to invest in Shriram chits. Table 5.2.1.1 KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .521 Bartlett's Test of Sphericity Approx. Chi-Square 7.910 Df 6 Sig. .245 From the above table it can be inferred that KMO value is .532 which is adequate to conduct the factor analysis. Table 5.2.1.2 Communalities Factors Meet my family needs in future Meet my emergency needs Invest to live a safe and secure life Capital growth Extraction Method: Principal Component Analysis. The above table shows the communalities defined for each parameter based on the extracted factor. Therefore the initial value of the communalities should be 1 and the minimum accepted value is 0.5. It is observed from the table that all parameters are well defined by the extracted factor. Thus the 3 components are extracted through the principal component analysis. Table 5.2.1.3: Total Variance Explained Component Initial Eigen values Total 1 2 3 4 1.295 1.071 .871 .763 % of Cumulative % Variance 32.385 32.385 26.774 59.159 21.771 80.930 19.070 100.000 Extraction Sum of squared Variations Initial 1.000 1.000 1.000 1.000 Extraction .655 .592 .599 .520

1.295 1.071

The above table shows the most important representation of factor analysis as it is defined by the percentage of variance by each component. Since only those components whose Eigen values are more than 1 are considered. The 2 components have been taken as the factors which constitute 59.15%of variance of the aggregate parameter.

Table 5.2.1.4 Rotated Component Matrixa Factors Meet my family needs in future Meet my emergency needs Invest to live a safe and secure life Capital growth FACTORS 1: Meet my family needs in future Meet my emergency needs FACTORS 2: Invest to live a safe and secure life Capital growth Thus these are the major security factors which have influenced the investors to invest in shriram chits. 5.2.2 Awareness factor This analysis is to use find the major awareness factors that influences investors to invest in Shriram chits. Table 5.2.2.1 KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. Chi-Square Df Sig. .501 3.432 3 0.330 is .501 which is adequate to Component 1 2 .796 .730 -.118 .195

-.146 .244 .765 .694

From the above table it can be inferred that KMO value conduct the factor analysis. Table 5.2.2.2 Communalities Factors Initial Having good knowledge about chits Having good knowledge of financial planning Having good knowledge of investment plans Extraction Method: Principal Component Analysis.

Extraction 1.000 1.000 1.000 .589 .046 .553

The above table shows the communalities defined for each parameter based on the extracted factor. Therefore the initial value of the communalities should be 1 and the minimum accepted value is 0.5. It is observed that having good knowledge about chits and having good knowledge of investment plans are well defined by the extracted factor. Thus the 2 components are extracted through the principal component analysis.

Component 1 2 3

Table 5.2.2.3 Total Variance Explained Initial Eigen values Extraction Sum of Total % of Variance Cumulative % squared Variations 1.188 39.598 39.598 1.188 .997 33.239 72.838 .815 27.162 100.000

The above table shows the most important representation of factor analysis as it is defined by the percentage of variance by each component. Since only those components whose Eigen values are more than 1 are considered. Only one component has been taken as the factors which constitute 39.598% of variance of the aggregate parameter. 5.2.2.4 Rotated Component Matrixa Factors Having good knowledge about chits Having good knowledge of financial planning Having good knowledge of investment plans FACTORS 1: Having good knowledge about chits Having good knowledge of investment plans Component 1 .767 .214 .744

Thus these are the major awareness factors which have influenced the investors to invest in shriram chits. 5.2.3 Opinion factor This analysis is to use find the major opinion factors that influences investors to invest in Shriram chits. Table 5.2.3.1 KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .512 Approx. Chi-Square 10.714 Df 3 Sig. 0.13 From the above table it can be inferred that KMO value is .501 which is adequate to conduct the factor analysis. Table 5.2.3.2 Communalities Factors Initial Extraction Take suggestions from family 1.000 .125 Take suggestions from peers before investment 1.000 .578 Take suggestions from financial expert 1.000 .637 Extraction Method: Principal Component Analysis. The above table shows the communalities defined for each parameter based on the extracted factor. Therefore the initial value of the communalities should be 1 and the minimum accepted value is 0.5. It is observed that take suggestions from peers before investment and take suggestions from financial expert are well defined by the extracted factor.Thus the 2 components are extracted through the principal component analysis. Bartlett's Test of Sphericity

Table 5.2.3.3 Total Variance Explained Component Initial Eigen values Extraction Sum of squared Variations Total % of Cumulative Variance % 1.340 44.666 44.666 1.340 .973 32.446 77.112 .687 22.888 100.000

1 2 3

The above table shows the most important representation of factor analysis as it is defined by the percentage of variance by each component. Since only those components whose Eigen values are more than 1 are considered. Only one component has been taken as the factors which constitute 44.666% of variance of the aggregate parameter. Table 5.2.3.4 Rotated Component Matrixa Factors Take suggestions from family Take suggestions from peers before investment Take suggestions from financial expert FACTORS 1: Take suggestions from peers before investment Take suggestions from financial expert Component 1 .354 .760 .798

Thus these are the major opinion factors which have influenced the investors to invest in shriram chits. 5.2.4 Duration factor This analysis is to use find the major awareness factors that influences investors to invest in Shriram chits. Table 5..2.4.1 KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .523 Bartlett's Test of Sphericity Approx. Chi-Square 3.855 Df 6 Sig. 0.696 From the above table it can be inferred that KMO value is .501 which is adequate to conduct the factor analysis.

Table 5.2.4.2 Communalities Factors Initial Interested to invest for less than one year Interested to invest in 1 to3 year plan Interested to invest 3 to 5 year plan Interested to invest in more than 5 year plan Extraction Method: Principal Component Analysis.

Extraction 1.000 1.000 1.000 1.000 .440 .439 .594 .777

The above table shows the communalities defined for each parameter based on the extracted factor. Therefore the initial value of the communalities should be 1 and the minimum accepted value is 0.5. It is observed that Interested to invest 3 to 5 year plan and Interested to invest in more than 5 year plan are well defined by the extracted factor. Thus the 2 components are extracted through the principal component analysis. Table 5.2.4..3 Total Variance Explained Component Initial Eigen values Extraction Sum of squared Total % of Cumulative Variations Variance % 1 1.215 30.374 30.374 1.215 2 1.035 25.867 56.240 1.035 3 .914 22.850 79.091 4 .836 20.909 100.000 The above table shows the most important representation of factor analysis as it is defined by the percentage of variance by each component. Since only those components whose Eigen values are more than 1 are considered. Only one component has been taken as the factors which constitute 56.240% of variance of the aggregate parameter. 5.2.4.4 Rotated Component Matrixa Factors 1 Interested to invest for less than one year Interested to invest in 1 to3 year plan Interested to invest 3 to 5 year plan Interested to invest in more than 5 year plan .392 -.650 .762 -.157 Component 2 .536 -.127 -.113 .867

FACTORS 1: Interested to invest 3 to 5 year plan FACTORS 2: Interested to invest for less than one year Interested to invest in more than 5 year plan Thus these are the major duration factors which have influenced the investors to invest in shriram chits.

5.3 CHI SQUARE ANALYSIS This part of the analysis deals with the relationship between the demographic factors like gender and income of the respondents and the security factors and duration factors which influence the investors to invest in Shriram chits H10 : There is no significant relationship between the gender of the respondents and their investment made in Shriram chits to meet their family needs in future. Table 5.3.1 Relationship between the gender and their investment made in Shriram chits to meet their family needs in future Particulars Significant Value Result Relationship between gender of the respondents and their .042 Reject investment made in Shriram chits to meet their family needs in future Source: Primary data. The p value is .042. So there is significant relationship between the gender of the respondents and their investment made in Shriram chits to meet their family needs in future. H20 : There is no significant relationship between the gender of the respondents and their investment made in Shriram chits to meet their emergency needs.

Table 453.2 Relationship between the gender of the respondents and their investment made in Shriram chits to meet their emergency needs Particulars Significant Value Result Relationship between the gender of the respondents and their .355 Accept investment made in Shriram chits to meet their emergency needs Source: Primary data. The p value is .355. So there is no significant relationship between the gender of the respondents and their investment made in Shriram chits to meet their emergency needs H30 : There is no significant relationship between the gender of the respondents and their investment made in Shriram chits to live a safe and secure life.

Table 5.3.3 Relationship between the gender of the respondents and their investment made in Shriram chits to live a safe and secure life Particulars Significant Value Result Relationship between the gender of the respondents and .481 Accep their investment made in Shriram chits to live t a safe and secure life Source: Primary data. The p value is .481. So there is no significant relationship between the gender of the respondents and their investment made in Shriram chits to live a safe and secure life.

H40 : There is no significant relationship between the gender of the respondents and their investment made in Shriram chits for capital growth.

Table 5.3.4 Relationship between gender of the respondents and their investment made in Shriram chits for capital growth Particulars Significant Result Value Relationship between gender of the respondents and their .495 Accept investment made in Shriram chits for capital growth Source: Primary data. The p value is .495. So there is no significant relationship between the gender of the respondents and their investment made in Shriram chits for capital growth.

H50 : There is no significant relationship between the annual income of the respondents and their interest to invest for less than 1 year Table 5.3.5 Relationship between the annual income of the respondents and their interest to invest for less than 1 year Particulars Significant Value Result There is no significant relationship between the annual .613 Accept income of the respondents and their interest to invest for less than 1 year Source: Primary data. The p value is .613. So there is no significant relationship between the annual income of the respondents and their interest to invest for less than 1 year

H60 : There is no significant relationship between the annual income of the respondents and their interest to invest for 1 to 3 years. Table 5.3.6 The relationship between the annual income of the respondents and their interest to invest for 1 to3 years. Particulars Significant Value Result Relationship between the annual income of the respondents .241 Accept and their interest to invest for 3 to 5 years. Source: Primary data. The p value is .241. So there is no significant relationship between the annual income of the respondents and their interest to invest for 1 to 3 years.

H70 : There is no significant relationship between the annual income of the respondents and their interest to invest for 3 to 5 years. Table 5.3.7 Relationship between the annual income of the respondents and their interest to invest for 3 to 5 years. Significant Value Result Particulars Relationship between the annual income of the .464 Accept respondents and their interest to invest for 3 to 5 years. Source: Primary data. The p value is .464. So there is no significant relationship between the annual income of the respondents and their interest to invest for 3 to 5 years. H80 : There is no significant relationship between the annual income of the respondents and their interest to invest for more than 5 years.

Table 5.3.8 Relationship between annual income of the respondents and their interest to invest for more than 5 years. Particulars Significant Result Value Relationship between the annual income of the .747 Accept respondents and their interest to invest for more than 5 years. Source: Primary data. The p value is .747. So there is no significant relationship between the annual income of the respondents and their interest to invest for more than 5 years. RESULTS AND DISCUSSIONS 5.1 PERCENTAGE ANALYSIS Most (33%) of the respondents are in the age group of 36 to 45 years. Majority (59%) of the respondents are female. Most (46%) of the respondents are going for private job. Most( 43%) of the respondents belong to the income group of Rs. 2,00,0013,00,000 Most (29% )of the respondents feel that monthly installments in chit funds is the major feature that has attracted them followed by regular saving and easy access to funds. Majority (56%) of the respondents strongly agree that they invest in chits to meet their family needs in future, majority (53%) of the respondents agree that they invest in chits to meet their emergency needs, majority (53%) of the respondents agree that they invest to live a safe and secure life and majority of the respondents (62%) agree that they invest for the purpose of capital growth. Majority (55%) of the respondents agree that they have good knowledge about chits, most (42%) of the respondents strongly disagree that they dont have

knowledge about financial planning, majority (57%) of the respondents agree that they have good knowledge about investment plans. Majority (56%) of the respondents agree that they take suggestions from family, majority(50%) of the respondents strongly agree that they take suggestions from peers before investment, majority (53%) of the respondents agree that they take suggestions from financial expert.

5.1.1 MEAN SCORE Chit fund is the investment avenue preferred by most of the investors followed by bank deposit and life insurance. Providing better service is the first feature that attracts the investors to invest in Shriram chits followed by it is convenient and contractual way to save and providing future savings in advance. Investors get information about chit funds from friends and relatives before investing in chits followed by newspapers/magazines and self decision.

5.2 FACTOR ANALYSIS Security Factor Meet my family needs in future, meet my emergency needs, invest to live a safe and secure life and Capital growth is the reason for investment are the major security factors which have influenced the investors to invest in shriram chits. Awareness factor Having good knowledge about chits and having good knowledge of investment plans are the major awareness factors which have influenced the investors to invest in shriram chits. Opinion factor Take suggestions from peers before investment and take suggestions from financial expert are the major opinion factors which have influenced the investors to invest in shriram chits. Duration factor Interested to invest 3 to 5 year plan, interested to invest for less than one year and interested to invest in more than 5 year plan are the major duration factors which have influenced the investors to invest in shriram chits.

5.3 CHI SQUARE ANALYSIS There is significant relationship between the gender of the respondents and their investment made in Shriram chits to meet their family needs in future. There is no significant relationship between the gender of the respondents and their investment made in Shriram chits to meet their emergency needs There is no significant relationship between the gender of the respondents and their investment made in Shriram chits to live a safe and secure life. There is no significant relationship between the gender of the respondents and their investment made in Shriram chits for capital growth. There is no significant relationship between the annual income of the respondents and their interest to invest for less than 1 year There is no significant relationship between the annual income of the respondents and their interest to invest for 1 to 3 years.

There is no significant relationship between the annual income of the respondents and their interest to invest for 3 to 5 years. There is no significant relationship between the annual income of the respondents and their interest to invest for more than 5 years.

6. CONCLUSION Chit funds are a very good tool for nancing the activities of small businesses. In recent years, there have been some unscrupulous activities in the industry that have instigated the Government to take serious measures. The occasional failure of chit funds is generally attributed to expansion beyond capacity. A chit fund is not a scalable model unless the chit manager or company has sufcient personal resources as a backup for nancial contingencies. The regulatory hurdles that the chit companies face due to the stringent rules proposed by the Government progressively, have been a setback to the growth of the industry. The effect of the increased costs of operations for the registered chit companies has been to push these companies underground. Many companies have, in the recent past, either folded up or shifted their operations entirely to the informal arena becoming an unregistered chit fund. The unorganized chit fund market is huge and growing (6000 unregistered chit funds in Hyderabad out of the total 7300)13. This causes serious problems not only for the industry and its participants, but also for the Government, which loses its revenue. Therefore, in order to promote this concept, which is generally benecial to all the parties concerned, it is imperative that more rigorous research be done on the issues that they face. A strong lobby should also be developed in their favor. The day when the Government and the industry participants alike understand the importance of chit funds to the economy would mark the beginning of a new era.

APPENDIX 1 QUESTIONNAIRE Dear Sir/Madam, I am V.Uthra, conducting this entitled survey A Study on Factors Influencing Investors to Invest in Shriram Chits as a part of my research work. I request you to kindly fill up the following questionnaire, giving your free opinion. The given information will be kept confidential and used for academic purpose only. I will be thankful for your positive response. 1. Name 2. Age (in years) a) < 25 yrs 3. Gender a) Male b) Female b) 26-35 yrs c) 36-45 yrs d) 46-55 yrs e) > 55 yrs : ________________________

4. Occupation a) Government job c) Business b) Private job d) Others

If others please specify __________________________

5. Annual Income (in Rs) a) 1, 00,000 and below b) 1, 00,001 - 2, 00,000

c) 2, 00, 0001 3, 00,000 d) Above 3, 00,001 6. Which feature of the Chit fund attracts you the most? Better return and safety Reduction in risk and transaction cost Easy access to funds Regular Saving Monthly Installments No market fluctuations 7. Rank the savings avenue you prefer for the investment purpose (Rank 1=Highest rank and Rank 6= lowest rank) Savings Avenue 1. Bank Deposit 2. Life Insurance 3. Shares and debentures 4. Post office 5. Chit Funds 6. Units of UTI & MF Rank

8. Rank the factors according to the reasons for preferring investment in Shriram chits (Rank 1=Highest rank and Rank 8= lowest rank) Factors 1.Convenient and contractual way to save 2.Provides future savings in advance 3. A source of credit. 4.Minimum Formalities 5.Dual option for savings and Borrowings 6.Dividend reduced monthly Subscription 7.Transparency and openness 8.Better Service 9. Please tick mark the relevant answer as provided against each question Rank

Disagree Disagree

Strongly Agree

Meets my family needs in future Meets my emergency needs Invest to live a safe and secure life Capital growth is the reason for investment

Having good knowledge about chits Having good knowledge of financial planning Having good knowledge of investment plans

Strongly Disagree

Strongly Agree

Neutral

Awareness Factor

Agree

Neutral

Security Factor

Strongly Disagree

Agree

Disagree Disagree

Take suggestions from family Take suggestions from peers before investment Take suggestions from financial expert

Duration Factor Strongly Disagree Strongly Agree Neutral Agree

Interested to invest in less than 1 year investment Interested to invest in 1-3 year investment Interested to invest in 3-5 year investment Interested to invest in more than 5 year investment

10. Rank the information sources which influenced you to invest in Shriram chits (Rank 1=Highest rank and Rank 6= lowest rank) Information Sources 1.Newspaper/Magazine 2.Television 3. Agents/Brokers. 4.Websites/Mail 5.Friends/Relatives 6.Self Decision Comments and suggestions: __________________________________________________ ___________________________________________________________________________ __________________________________________________________________________ Rank

Neutral

Agree

Opinion Factor

Strongly Disagree

Strongly Agree

REFERENCES ARTICLE REFERENCES Dale, W. Adams (1978)," A study on microfinance ", Economic Development and Cultural Change, Vo1ume.26, No.3, pp. 547-60. Funds, IUP Journal on Applied Finance, Volume.2, Issue.1, pp.90-98. Itoop, M.L (1990), "Economic Significance of Chit Funds in India", Journal of Banking and Finance, Volume.3, Issue.1, pp 45-56. Joseph, M.A. (2002), "Chit Schemes: Relevance and Scope as Savings/Investment Alternatives", Savings and Development Journal, Volume.4, Issue, 2, pp.121-132. Krishnan, V(1999),Indigenous Banking in South India, The Bombay State Cooperative Union Journal,Volume.7,Issue.1,April 2008,pp.30-43 Nayar C.P.S(1993), Chit Finance: An Explorative Study on the Working of Chit Nayar (1994), "A study on Non- Banking Financial Intermediaries", Savings and Development Journal, Volume.1, Issue.7, pp.1-24. Radhakrishnan (1998),"Chit Funds and Finance Corporations Prajnan Journal, Volume. xvn, Issue.1,pp.34-43 Radhakrishnan (2005), "Chit Fund: A Poor Man's Credit Institution, Journal of finance, Volume.7, Issue.3, pp.56-72. Srinivas and Higuch(1996),"A Continuum of Informality of Credit: What Can Informal Lenders Teach Us?", Savings and Development Journal, Volume.4,Issue.2,pp.78-85 Stefan Klonner (2002), Understanding Chit Funds: Price Determination and the Role of Auction Formats in Rotating Savings and Credit Associations, The economies of developing country, Volume.2, Issue .4, p.9.

BOOK REFERENCES C A. Rajkumar Adukia,A Comprehensive Guide on Company Deposits (Including all allied provisions like chit funds, Nidhi Companies, Miscellaneous Companies, NHB ,RBI guidelines, state money lending provisions) ( 10th ed; New Delhi: Tata McGrawHill, 2008) S.Kevin,Security Analysis and Portfolio Management,( 10th ed; New Delhi:Prentice Hall, 2008) V.K.Bhalla,Investment ManagementSecurities Analysis and Portfolio Management,( 10th ed; New Delhi: Prentice Hall, 2006) Avdhani, V.A., Security Analysis and Portfolio Management,( 10th ed; Mumbai: Himalaya Publishing House, 2007)

WEBSITE REFERENCES www.fiuindia.gov.in/relatedacts-chitfunds.htm www.financial-management.utas.edu.au/benefits-and-conditions/chits-and-mutual funds www.ferry12345.hubpages.com/hub/Factors-influencing-investment-decision www.jstor.org/discover/10.2307/4479763?uid=2129&uid=2&uid=70&uid=4&sid=560 40282823 www.business.mapsofindia.com/india-market/non-banking finance companies.html www.freeprojects.in/a-study-on-customer-satisfaction-with-reference-to-chits

www.seminarprojects.com/s/sriram-chit-funds-mba-related-project-topic. www.ifmr.co.in/wp-content/uploads/2011/03/REPORT-Chit-Funds-InnovativeAccess-to-Finance.pdf www.wilmingtontrust.com/wtcom/index.jsp?fileid=3000223 www.moneyguideindia.com/growing-a-contingency-fund-chit-funds-better-thanrecurring-deposits/ www.scribd.com/doc/24904904/Project-Report-on-Factors-Affecting-InvestorsPreference-for-Investment-in-Mutual-Funds www.scribd.com/doc/34994547/CHIT-FUND-Innovation-Access-to-Finance