AN ANALYTICAL STUDY ON INVESTMENT BEHAVIOUR OF NRIs IN KERALA WITH SPECIAL FOCUS ON MALABAR REGION
MINOR RESEARCH PROJECT REPORT Submitted to the University Grants Commission, New Delhi In partial fulfilment of the requirements for the Minor Research Project
By PRAVEEN MV Assistant Professor of Commerce
POST GRADUATE AND RESEARCH DEPARTMENT OF COMMERCE GOVT. COLLEGE MADAPPALLY VADAKARA-2 KOZHIKODE
CERTIFICATE
This is to certify that Minor Research Project titled “An Analytical Study on Investment Behaviour of NRIs in Kerala with Special Focus on Malabar Region" is an original work done by Sri. Praveen M.V, Assistant Professor, Post Graduate and Research Department of Commerce, Govt. College Madappally. He is permitted to submit the report to University Grants Commission.
Place: Madappally Date: Principal
DECLARATION
I hereby declare that the project report entitled “An Analytical Study on Investment Behaviour of NRIs in Kerala with Special Focus on Malabar Region" is a bonafied project work done by me and I further declare that this report has not been submitted anywhere for the award of any degree or other recognition.
Madappally Date: PRAVEEN M V.
Acknowledgement
I am very happy with completion of this project work and as far me is concerned it is great achievement. I am indebted to many people for their immense help and support for the completion of this work. With these few word officially I can convey my thanks but I cannot convey the depth of my gratitude to all those who helped me a lot.
I express my sincere thanks to the Principal, Govt. College Madappally and my gratitude to all the colleagues in the Post Graduate and Research Department of Commerce for their cooperation and valuable suggestions.
I am indebted to the University Grants Commission very deeply for sanctioning this project and allotting fund for the research work.
I express my thanks to all my post graduate students who were always with me for all the assistance while conducting study.
Moral and mental support from my family including my parents, wife and children were inevitable for the completion of this task otherwise I could not be able to complete this work in time
Moreover I am very thankful to the god almighty for giving health and strength to complete this work successfully.
Praveen M V
CONTENTS
List of Table List of Charts and Graphs List of Abbreviations
Chapters Descriptions Page No. 1.1 Introduction 1 1.2 Relevance of the Study 2 1.3 Statement of the Problem 3 1.4 Objectives of the Study 4 Chapter I 1.5 Hypotheses of the Study 5 1.6 Scope of the Study 5 1.7 Research Methodology 5 1.8 Chapterisation of the Study 6 1.9 Limitations of the Study 7 Chapter II Review of Literature 8 – 19 Chapter III A Theoretical Portrait 20 – 38 Chapter IV Analysis of Respondent's Profile 39 – 50 Chapter V Analysis of Investment Behaviour of NRIs 51 – 75 Findings, Suggestions and Conclusion 76 – 85 6.1 Findings 76 Chapter VI 6.2 Suggestion 83 6.3 Conclusion 85 Bibliography 86 – 93 Appendix
LIST OF TABLES
Sl. Table Page Index No. No. No. 1 3.1 District- Wise Number of NRIs in Kerala 22 2 3.2 NRI‟s Remittance by District 24 3 3.3 Remittance by Religion in Kerala 25 4 3.4 Country of Employment of NRIs of Kerala 26 5 3.5 Returned NRIs by District 27 6 4.1 Age-Wise Distribution of Respondents 41 7 4.2 Gender Wise Distribution of Respondents 42 8 4.3 Marital Status of Respondents 43 9 4.4 Education-wise Distribution of NRIs in Malabar 44 10 4.5 Religious-wise Distribution of Respondents 45 11 4.6 Place of Employment of NRIs 46 12 4.7 Duration of NRI‟s Stay Abroad 48 13 4.8 Employment Status-wise Distribution of NRIs 49 14 5.1 Income-wise Classification of NRIs in Malabar 52 15 5.2 Saving-wise Classification of NRIs in Malabar 53 16 5.3 Average Annual Investment-of NRIs in Malabar 55 17 5.4 Motivating source of Investment of NRIs 56 Investment Criteria wise distribution of NRIs in 18 5.5 Malabar 57 19 5.6 Level of Satisfaction of NRI Investors in Malabar. 59 20 5.7 Assumed Risk level of NRIs in Malabar 60 21 5.8 Investment Timing of NRIs in Malabar 61 22 5.9 Timing of Withdrawal of Investment 62 23 5.10 Investment Portfolios of NRIs in Malabar 65 24 5.11 Ranking of Investment Preferences of Religions 68
LIST OF CHARTS & GRAPHS
Sl. Table Page INDEX No. No. No. 1 3.1 Trends of NRIs In Kerala 23 2 4.1 Age-Wise Distribution of Respondents 41 3 4.2 Gender Wise Distribution of Respondents 42 4 4.3 Marital Status of Respondents 43 5 4.4 Education-wise Distribution of NRIs in Malabar 44 6 4.5 Religious-wise Distribution of Respondents 45 7 4.6 Place of Employment of NRIs 47 8 4.7 Duration of NRI‟s Stay Abroad 48 9 4.8 Employment Status-wise Distribution of NRIs 50 10 5.1 Income-wise Classification of NRIs in Malabar 52 11 5.2 Saving-wise Classification of NRIs in Malabar 54 12 5.3 Average Annual Investment-of NRIs in Malabar 55 13 5.4 Motivating source of Investment of NRIs 56 Investment Criteria wise distribution of NRIs in 14 5.5 Malabar 58 Level of Satisfaction of NRI Investors in 15 5.6 Malabar. 59 16 5.7 Assumed Risk level of NRIs in Malabar 60 17 5.8 Investment Timing of NRIs in Malabar 61 18 5.9 Timing of Withdrawal of Investment 62 Composition of Investment Portfolios of NRIs in 19 5.10 Malabar 66 20 5.10.1 Investments in Traditional Venues 66 21 5.10.2 Investment in Modern Venus 66 22 5.10.3 Amount wise portfolio of NRIs in Malabar 67 Ranking of Investment preferences of NRIs in 23 5.11 Malabar 69
LIST OF ABBREVIATIONS
CDS Centre for Development Studies DES Department of Economics and Statistics FCNRA Foreign Currency Non-Repatriable Account FDI Foreign Direct Investment FEMA Foreign Exchange Management Act GCC Gulf Co-operation Council KMS Kerala Migration Survey NBFC Non-Banking Financial Corporation NRE Non-Resident External NRI Non-Resident Indian NRK Non-Resident Keralites NRM Non-Resident Malabaris NRO Non-Resident Ordinary OCB Overseas Corporate Body PIO Person of Indian Origin PMC Pravasi Malayali Census RBI Reserve Bank of India RCI Religious Commitment Inventory UAE United Arab Emirates UK United Kingdom USA United States of America
Chapter I INTRODUCTION
1.1 INTRODUCTION
The study entitled "An Analytical Study on Investment Behaviour of NRIs in Kerala with Special Focus on Malabar Region" aims at investigating the investment behaviour and decision factors of NRIs in Kerala with special reference to Malabar region.
The Kerala model development or Kerala phenomenon has gained wider acceptability and much acclaim across the country. The human development index (HDI) in terms of health, education and standard of living is always above the national average and even higher than that of most developed countries. Kerala has attained a near total literacy along with negligible dropout rate in primary and secondary education. The infant mortality rate is the lowest in Kerala together with a higher life span. Many a great factors worked behind this exemplary social and economic growth. One of the deciding factors that contributed substantially to the socio-economic progress of Kerala is the remittance of NRIs. A major chunk of NRI population of India is Keralites who contributes around 25% of the economic output of the state thereby participating the growth process of Kerala economy. The Gulf countries altogether had a Keralites population of more than 2.5 million. In 2015 remittance from NRIs crossed an all time high of INR 1,00,000 crores.
Radical changes have been recorded in Kerala‟s socio-economic situation for the last 5 decades of which large scale migration to Middle East taken place. In the state of 32 million, one out of six employed Keralites, or
1 around 30 lakh people from the state, work abroad mainly in Persian Gulf. The result of a migration that started with the Kerala gulf boom, when Malayalees began migrating to the GCC countries for lively hood in 1970s. The areas where the impact of remittance are the main subject of investigation of this project. The main areas of investigation covers-investing behaviour of NRIs, factors affecting their investment, socio-economic impact of NRI‟s investment in Kerala State.
Everyone knows that NRIs are really the strongest foundation of Kerala‟s economy. A substantial financial investment in infrastructural sector in Kerala is the contribution of NRIs. Financial investment from NRIs is to be utilised in such a way as to helps the development of not only individuals but the state and nation also. Construction and modification of palatial houses have a demonstration effect in our society. After 90‟s there were lot of attractive investment platforms in India to channelize the remittance of NRIs to the productive sectors which provides double sided benefits ie., for both NRI‟s and the country. However, the recent trends in NRIs investment behaviour shows that the investment is more confined to the traditional sectors such as real estate, business, gold etc,. This makes the study more relevant in the socio economic condition of Kerala, particularly that of Malabar.
1.2 RELEVANCE OF THE STUDY
The number of Non Resident Indians and their quantum of remittances in the Kerala state have been increasing at a remarkable rate. The surveys conducted by the Dept.of Economics and Statistics, Kerala (Pravasi Malayali Census-2013) and the Kerala Migration Survey (KMS-2014) by Prof Zachariah and Prof. Irudaya Rajan (CDS, Kerala) reveals that remittances sent by the NRIs provides exodus support to at least one-sixth of the total population of the Kerala state. Kerala state receiving an alarming quantity of
2 remittance of NRIs but it is sure that these contributions are not productively channelised by concerned government. The lion‟s portion of NRIs remittances are merely goes to discernible consumption like palatial houses, luxury cars, liquor, gold, expensive weddings etc. at the same time, when the state is flush with NRI money, infrastructure projects in the state are in struggle due to lack of funds. The state‟s agro-economy is sagging and the manufacturing sector is languishing for want of investment and political commitment. All these facts indicates that there is a requirement of structural framework for diverting this “Alibaba‟s remittance” to the productive and active investment avenues. In order to get an idea in this behalf, a detailed study of investment behaviour of NRIs, the factors influencing such behaviour, mediating role of various socio- economic variable is essential. If Government is able to make this remittance productive, in turn it can ensure the following benefits.
. More employment opportunities for the educated youth of Kerala . Result into rapid and effective industrialization . Eliminate concentration economic power and financial disparity in the state economy . Support to the agriculture and business activities of the state. . Trim the debt burden of the state etc.
1.3 STATEMENT OF THE PROBLEM
The present topic is mainly selected to analyse the investment behaviour of NRIs especially Keralites with special focus on Malabar region. According to official data, NRI deposits in Kerala have now crossed the magic figure of Rs 1 lakh crore, increasing quickly by more than 17% from Rs 93,884 crore to Rs 1.1 lakh crore at the end of 2014-15. Remittances from NRIs are the foundation stones of the Kerala economy. However despite an inflow of Rs1 trillion, Kerala is one of the least industrialized states in India and has one of the highest unemployment rates in the country. “Keralites are
3 rich but Kerala is poor in terms of industrialization and employment”. The quantum of remittances that flowed into Kerala is almost three times the money that flowed into Maharashtra, four times the inflow into Tamil Nadu and almost 10 times the inflow into Gujarat in the form of NRIs remittance. All these states have efficiently used these remittances to build a strong, growing economy, why is it that the mass NRIs remittance into Kerala has not channelised into productive investments in the state? To answer these above research question five research objectives are set in.
1.4. OBJECTIVES OF THE STUDY
The purpose of this study is to identify the relationship of the factors that affect the investment behaviour of Non Resident Indians of Kerala with special focus on Malabar region. The objectives of the study are:
General objective: To analyze the investment behaviour of NRIs in Kerala Economy especially in Malabar region.
Specific objectives
1. To analyse relation between NRIs' Investment behaviour and decision factors 2. To study the satisfaction level of NRI investors. 3. To analyse the influence of education, religion and employment status in the investment portfolios of NRIs in Kerala. 4. To examine the sources of investment motives of NRIs. 5. To explore the importance of channelizing NRIs Investment into productive sectors.
4 1.5. HYPOTHESES OF THE STUDY
There are five hypotheses set for the study:
1. H0: There is no significant religious influence on investment portfolio of NRIs. 2. H0: There is no significant difference in investment portfolios of NRIs according to their educational status. 3. H0: There is no significant association between employment status of NRIs and investment timing. 4. H0: There is independence between age of NRIs and volume of investments. 5. H0: There is no significant difference in investment criteria between men and women NRI investors.
1.6 SCOPE OF THE STUDY
The Scope of the study limited to the NRIs of Malabar region who have invested their money in various investment venues in India. The Malabar region consists of 6 districts such as Palakkad, Malappuram, Kozhikode, Wayanad, Kannur and Kasaragode. The study was conducted on 300 respondents selected on the basis of multistage random sampling.
1.7 RESEARCH METHODOLOGY
This study will be quantitative as well as qualitative in nature for interpreting the issue in a comprehensive way. Besides it will be based on descriptive research design. Descriptive research design will be applicable to the existing problem. Here is an attempt to study the investment behaviour of NRIs in Malabar region of Kerala
Sampling size: The sample size is limited to of 300 number of NRI investors selected from various villages of Malabar region.
5 Sampling technique: The Multistage Stratified Random Sampling technique is used for the study so as to have an adequate representation of various groups of NRI investors of Malabar region of Kerala state.
Type of data: Primary and secondary sources of data were used for this study.
Data Collection: Primary data for this study was collected from NRIs of Kasaragode and Malappuram districts who have invested their fund in various venues of investment in India. The secondary data for the study was collected from published reports and websites (DES Kerala, KSPB and other relevant sites), books, magazines, and newspapers.
Tool for data collection: Data for this study was collected by using structured interview schedule.
Tools for analysis: the collected data were analysed with the help of scientific statistical tools such as: a. Percentages b. Graphs c. Chi-square test d. ANOVAs etc.
1.8 CHAPTERISATION OF THE STUDY
This study includes six chapters such as:
I. Introduction II. Review of Literature III. A Theoretical Portrait IV. Analysis of Respondent's Profile V. Analysis of Investment Behaviour VI. Findings, Suggestions and Conclusion
6 1.9 LIMITATION OF THE STUDY
. Validity and reliability of data depends on the openness of the respondents. There may be more chances of bias because study is only based on 300 respondents selected by means of multistage sampling.
. The size of the sample ie. 300 is very small as compared to total NRIs population in Kerala. Hence it may not represent the whole population.
. Inherited problems of interview schedule and unseen deficiency in framing of schedules may affect the accuracy of results.
7 Chapter II REVIEW OF LITERATURE
Literature review of near or related topics are act as platform for any researcher to clearly understand the actual research problem and helps to frame suitable methodology by which the study is to be conducted. The present study is about investment behaviour of NRIs in Kerala with special focus on Malabar region. Various research papers and work done earlier which is related to investment, investment behaviour and investment decisions, NRIs, foreign remittance, migration etc. included in this Chapter. The literature includes books, publications, reports of Govt. and non- government agencies, magazines, Ph.D. theses, etc. These studies have been reviewed carefully and briefly incorporated in this chapter.
2.1. The Dept. of Economics and Statistics, Kerala, Pravasi Malayali Census Report (PMC 2013) revealed that in 2013, there are 16.26 lakh people are working abroad and there are at least 50 lakh people of Kerala (1/6th of total population of Kerala are depend on NRIs and their remittance. The report also revealed that out of total NRIs in Kerala, approximately 78% are youngsters. The report also indicates that out of total NRIs 35% working at UAE and 28% are working at Saudi Arabia.
2.2. Zachariah and Irudaya Rajan, 2014, KMS., revealed that there has been a slow but steady northward shift in the origin of emigrants and receipt of remittance within Kerala. And there has been slow but steady hinduisation of emigration in Kerala. As per the report there are 24 lakh emigrants in Kerala and their remittance amounts to Rs 71.14 lakh Crores during 2014.
8 2.3. Mishra & Dash, 2010, People living in the same society and having same income level are different in their investment behaviour. The research indicated about factors influencing the decisions in India used two factors age and gender. They admit that various factors affect the investor's behaviour. People with different age and gender have different investment behaviours. People with different ages and gender have varying persecutions. The risk level of people of different age differs as well as gender also contributes to the level risk tolerance in decision making of investments.
2.4 Gnani, Ganesh & Santhi, 2012. Factors that affect the investor's behaviour have their intensity to affect. The study used five factors self-image or firm-image, accounting information, neutral information, advocate recommendation and personal financial needs. They admit that all these variables affect the investor's decision makings but with different intensity. Few have more affect and few have lesser affect. Accounting information has high intensity towards affecting investor's behaviour and advocate recommendation have least effect on investors decision making.
2.5. Anna, Andreas, George & Prasad, 2004.The empirical factors that influence the individual investor behaviour have varying degree of effects on the investors of Greeks Stock Exchange. The variables accounting information, subjective/personal, neutral information, advocate recommendation and personal financial needs were subdivided into other 27 variables. This study indicated the factors that have significant influence and the factors that have least influence on the Greek Stock Exchange investors. The research result showed the accounting information has significant and personal financial needs have least influence in Greek.
2.6. Aduda, Oduor & Onwonga, 2012. The conventional finance theories put emphasis on theories such as Modern Portfolio Theory as well as Efficient Market Hypothesis. The advancement of these theories in the form
9 of behavioural finance focuses on the cognitive and emotional factors that affect the individual decision making process. This study used overconfidence, cognitive dissonance, regret theory and prospect theory. The influence of these factors was checked on the investors of Kenya (Nairobi Stock Exchange). Investors show rational as well as irrational behaviours due to different emotional and cognitive factors.
2.7. Pandiyan&Aranganathan, 2012. Saving and investment are made by different types of investors. The study described the attitude of the salaried person towards investments. Investment is very important factor in the economic development of any country. The salaried person needs security and guaranty of the investments he made out of his salary. Many new salaried people make wrong decision regarding their investments. The need appropriate guidelines for the proper investments. Government should use proper measure to assure the investments and increase the saving habits among salaried persons.
2.8. Jain &Mandot, 2012, The research in Rajasthan and indicated that the investment decision is effected by the demographic factors. They have different attitudes towards decision making, some risk seekers and some risks averse. People with different ages, income level, knowledge, gender, marital status and occupation makes different decisions.
2.9. Iqbal & Usmani, 2011. The research conducted on Karachi stock exchange investors to get the factors influencing the decision making. The stock purchase decision is based upon the wealth maximization. Investors take family and friends recommendations as well as use accounting information but most of the investor's decision is based upon their own will and are not influenced by any one. Individual investor lacks skills due to which the decision making of investors suffers.
10 2.10. The Reserve Bank of India (1975) has assessed the potential increase in inflow of foreign remittances through banking channels as result of „MISA measures in Malappuram district of Kerala state and revealed that nearly 85 percent of total foreign remittance of Kerala were from GCCs especially from UAE, Saudi Arabia, Qatar, Bahrain, Kuwait and Oman.
2.11. Antony (1988) has stated that 70 percent savings of NRKs is used for the purchase of land and construction or repair of buildings which is used for residential purpose. The study also stated that only 19 % of the savings are invested in any type of income earning or productive assets. Other usage of savings is for education, marriage, repayment of loan and bank deposit.
2.12. Mathew E. T. and Gopinathan Nair (1978) In analyzing the socioeconomic dimensions of emigration, took into consideration the primary causes, costs and the concerns associated with migration. They conducted their study in a coastal region in Trivandrum district in two Panchayat wards and in the combined sample, 96 percent of the emigrants were in the Gulf region. The study noted that the emigrants invariably returned home in old age or consequent to retirement or disablement.
2.13. Prakash (1978) In a micro level study attempted to examine the impact of Gulf remittances in Kerala. He selected 95 households from Chavakkad village, a Gulf pocket, in Kerala. The study reported that the migrants‟ families receiving remittances enjoyed a pretty good consumption levels. Prakash pointed out that the entire income earned by the persons working abroad was either being used for consumption or invested in land and houses.
2.14. Gopinathan Nair (1986) observed that the foreign environment had affected adversely the physical and mental health of about 10 to 20
11 percent of the emigrants. The study pointed out that the schooling and medical care facilities are highly expensive in the Gulf region and accommodation is costly and very difficult to obtain.
2.15. Gopinathan Nair (1988) reported that in the case of some individuals, migration has resulted in higher income and asset levels and more comfortable living conditions for the households concerned, and better health for their members, more and better education to their children and more rational utilisation of resources. He also emphasized that such positive results are seldom found to extend to every migrant or household. For making an assessment of the migrants‟ performance – „success‟ or „failure‟ – the study looked into changes in income, assets, consumption, housing area, housing quality, intra family relationship and social relationship. The improvement in the economic base was considered an important criterion to categorize a migrant as a success case. But such an absolute reliance on income, without considering the well being of the migrants, narrows the scope of his analytical research work.
2.16. In an article, Thomas Isaac (1997) sought to answer questions pertaining to the issues: consequences of outflow of migrant workers on the domestic employment situation, impact of remittances on consumption, savings, investments and state domestic production, problems and prospects of reintegration of returned emigrants and implications for the distributions of assets and income. Isaac argues that it was the Gulf boom of the mid 1970s that catapulted Kerala into becoming a front ranking state in international migration along with Punjab and Goa. Isaac underlines the fact that unlike the migrants to Western countries the Gulf workers neither aspired to become permanent residents in the host country nor was there any possibility of their becoming so; Gulf migration is usually, a purely, temporary migration and
12 workers have time horizons, fixed in their labour contract, within which they attempt to maximize savings and remit them home.
2.17. Prakash, 1998. A study on the economic impact of large scale labour migration from Kerala to the Gulf found that Gulf migration and the migrants‟ remittances have been one of the major factors which had greatest impact on Kerala economy since 1970s. Prakash argued that even though gulf migration has helped the migrant households to attain higher levels of income, consumption and acquisition of assets, resulting in overall reduction of poverty in Kerala, it also pushed up the price level including the expenses on health care.
2.18. De Bondt and Thaler (1985) while investigating the possible psychological basis for investor behaviour, argue that mean reversion in stock prices is an evidence of investor over reaction where investors overemphasise recent firm performance in forming future expectations.
2.19. Suguna G (1986) studied an investor‟s attitude towards saving pattern in Coimbatore. There exists poor positive savings are increasing when the income increase but in the same perception. There exists high positive correlation between income and tax indicating that the tax are increasing when the income increases most of the bank executives expressed the view that due to insufficiency of income they were not able to contribute to savings scheme like public provident fund, post office time deposit.
2.20. Shanmugam (1990) studied a group of 90 investors to examine the factors affecting investment decisions. The study focused its analysis on investment objectives and the extent of awareness of factors affecting investment decisions. The study concluded that the investors were high risk takers, then interested in capital gains and current dividend income. Investors
13 possessed adequate knowledge of govt. regulations, monetary and fiscal policy.
2.21. Gupta L.C. (1991) argues that designing portfolio for a client is much more than merely picking up securities for investment. The portfolio manager needs to understand the psyche of his client while designing his portfolio. According to Gupta, investors in India regard equity, debentures and company deposits as being in more or less the same risk category and consider including all mutual funds, including all equity funds, almost as safe as bank deposits.
2.22. Sitkin and Pablo (1992), defined risk perception as risk assessment in uncertainty and it depends on the familiarity with organizational and management system. The authors also developed a model of determinants of risk behaviour and identified personal risk preferences and past experiences are the important risk factors and social influence also affects the individuals' perception.
2.23. Ippolito (1992) reported that fund selection by investors is based on past performance of the funds and money flows into winning funds more rapidly than they flow out of losing funds.
2.24. Sivanesan S (1997) revealed that his analysis has brought out various results arising from different tools of analysis. All relevant factors have been considered to bring out the relationship awareness. The investor‟s awareness increases with the duration of investment, when investors invest for a considerable long period they tend to acquire more awareness.
2.25. Sikidar and Singh (1996) carried out a survey with an objective to understand the behavioural aspects of the investors of the North Eastern Region towards equity and MFs investment portfolio. The survey revealed
14 that the salaried and self employed formed the major investors in MF primarily due to tax concessions.
2.26. Marcel Fafchamps and John Pender (1997) in their paper investigated the extent to which poor households are discouraged from making a non- divisible but profitable investment. Using data on irrigation wells in India, we estimate the parameters of a structural model of irreversible investment. Results shows that poor farmers fail to undertake a profitable investment that they could, in principle, self-finance because the non- divisibility of the investment puts it out of their reach. Irreversibility constitutes an additional disincentive to invest. Simulations show that the availability of credit can dramatically increase investment in irrigation and that interest rate subsidization has little impact.
2.27. Gordon J. Alexander, Jonathan D. Jones and Peter J. Nigro (1997), analyzed the various characteristics and investment knowledge of investors and found that the investors are knowledgeable about costs, risk and returns associated with mutual funds.
2.28. Raja Rajan (1997, 1998) highlighted segmentation of investors on the basis of their characteristics, investment size, and the relationship between stage in life cycle of the investors and their investment pattern.
2.29. Ramasamy T and Vinayakamoorthy S (2000) had concluded the study on “Investment – a development factor on savings”. The study reveals that, both savings and investment had equality. It means that an individual wants to have more investment, first he has to save that extent, savings and investment decisions are taken separated by an investor with different motives. The savings and investments are brought about by the changes in income. Whenever investment exceeds savings, the income level
15 raises. As a result savings has been raised by raise in the income level. It is concluded that the investment is dependent on savings.
2.30. Rajarajan V (2000) had conducted a study on the title of “Investors life styles and investment character”. The study reveals that active investors are dominated by the age group below 35 years, individuals group by above 50 years and passive investors by the age group of 35 to 50 years. Active investors group and passive investors group have short term perspective while making their investment decision. Most of the investors read two or more sources of information to make investment decisions and most of them tend to make investment decisions on their own.
2.31. Ranganayaki N (2003) has concluded a study on the title of “investors' perception towards investment with special to women investors.” A sample of 100 respondents in Sulur and adjoining areas was taken. It is concluded that recurring deposit and post office savings are most preferable investment avenues in the banking sector. It may be due to safety, liquidity and also for the benefits. Whenever, one thinks of women and investment the first thing that comes to mind is gold and Jewellery. But now-a-day's women are disproving the above said belief.
2.32. Suresh K Chadha (2000) indicates that, foreign capital is the engine of economic development. Traditionally various sources of capital for developing countries were either the demand for their output by industrial countries or foreign aid or loans from foreign banks or FDI.
2.33. Nurasyikin Jamaludin (2013) explored the role of religion in individuals‟ investment choice decisions. A survey involving 440 employees was used. The Chi-Square test results indicated significant differences in investment choice decisions between Muslim and non-Muslim respondents. There was an equal proportion of Muslims maintaining their savings in the
16 default fund as well as investing part of their savings in a unit trust fund. In contrast, a majority of non-Muslims preferred to invest part of their savings in the unit trusts. Religiosity was viewed from a multidimensional approach and accordingly two sets of instruments were used: the Religious Commitment Inventory (RCI-10) and Muslim Religiosity. The Chi-square tests results indicated no significant differences in investment choice decision among individuals with different levels of RCI and Muslim religiosity respectively. These results suggest that religiosity does not significantly influence individuals‟ investment choice decisions, particularly when it comes to investing part of their retirement savings in a unit trust.
2.34. Krishnamurthy Suresh, (2004) in an analysis of popular perceptions said that retail investors, swarmed back to the stock markets in the year2003-2004. The investments of households in shares and debentures rolled by 8.6% to Rs. 5,847 crore in 2003-2004. Households had deposited Rs. 1, 69,000 crore in bank deposits while investment in small savings nearly 19%. The data suggests that that in 2003-2004, the household investors had turned extremely conservative.
2.35 Kanchana R (2005) revealed that each and every individual saves a part of his income to meet his future needs. The percentage of income saved mainly depends on the income level, purpose of saving and objective of investments. In the same way, the choice of investment he adopts also depends on the return expected, percentage of income allotted for savings and the purpose of savings. 36.1% of salaried class people save 10-20%of their income whereas only 13.6% of salaried class people save more than 40% of their income. 34.7% of salaried class people have chosen bank deposits as the most preferable investment option. This is due to the reason, that the salaried class people‟s main investment objective is safety and regular income. This is being the reason, 36.8% of salaried class people have chosen safety as their
17 investment objective. Thus the most preferable investment option of the salaried class people at Chennai is the Bank deposit since it is the investment avenue which provides safety to their investment with a regular return.
2.36. Kaboor A (2010) examined the individual investors Financial Literacy of the investment options. The results of the study have brought out the investors attributes that determine investor financial literacy. The expanding and examining investor financial literacy would enable a researcher to understand the spread of financial literacy among investors of different cities. Inter regional disparities in financial literacy could be discerned and methods could be suggested to attain equal distribution of financial literacy among investors. Further grievance redressal mechanism operating at different levels may be studied for it efficiency.
2.37. Raju (1993) reported in his dissertation that households with and without foreign remittances have almost the same saving behaviour with marginal variation. The remittances per emigrants varied according to educational level. The most significant aspect of migration from the state is the large annual cash remittance which households in the Kerala have been receiving.
2.38. Chandra, (2008) the study investigates investor psychology and different aspects of behaviour in decision making. The basic purpose of this study is to find the impact behavioural aspects and the relationship between investors' behaviour and risk. He found out that investors are not always rational unlike the theories of standard finance. They are subject to several cognitive and emotional errors; they are suffering from several biases while taking the investment decision. Due to different investors‟ biases their perception change about risk taking. Results show that investors who are actually risk averse in their characteristics show the risk seeking behaviour by holding the losing investments.
18 Conclusion
It is noticed from the review of all the previous literature above no serious studies had been conducted in the area of investment behaviour of NRIs in Kerala in general and Malabar region in particular. There are large numbers of studies related migrations, NRIs remittances, investors‟ perception, investors‟ attitude etc. However, there is sufficient research gap demanding the detailed study of NRIs investment behaviour in Kerala especially in Malabar region.
19 Chapter III A THEORETICAL PORTRAIT
Non-Resident Indians (NRIs) are act as transducer of financial resources to Indian, especially Kerala economy. NRIs originated from Kerala are popularly known as NRKs. NRKs are one of the strong pillars of „Kerala Model Development‟. An Indian citizen residing and working abroad is popularly known as Non-resident Indian. “A non-resident Indian is a citizen of India who holds an Indian passport and has temporarily immigrated to another country for six months or more for employment, residence, education or any other purpose”.
3.1. Non Resident Indians – NRIs
“A person resident outside India who is either a citizen of India or a person of Indian origin” (NRI-definition-Foreign Exchange Management Act (FEMA), 1999).
“NRI is defined as a person resident outside India who is citizen of India. In terms of Regulation 2 of FEMA Notification No.13 dated May 3, 2000, Non-Resident Indian (NRI) means a person resident outside India who is a citizen of India. Person of Indian Origin (PIO) means a citizen of any country other than Bangladesh or Pakistan who had (a) at any time held Indian passport or (b) he or either of his parents or any of his grandparents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 or (c) the person is a spouse of an Indian citizen or a person referred to in (a) or (b)”.-(RBI-master circular No.8/July 2013.)
Later RBI has extended the above definition by adding student‟s migration also to the term NRI and accordingly students studying abroad also eligible for foreign investment, NRE, FCNR account etc.
20 3.1.1 Histories of NRKs- A snap shot
The history of migration of Keralites to foreign countries can be divided into three phases for convenience. First we have the pre- Second World War era, when a large number of manual labourors started migrating to the neighbouring states and countries like Malaysia and Singapore. The favourable conditions prevailed in these countries attracted thousands of youth to settle there. Mass recruitment in British Army during the Second World War also saw the youth of Kerala working in the hinterlands of India and beyond the borders including Burma and Singapore.
The second phase of migration was when India became independent country in 1947, unemployed youth were attracted to newly liberated from British colonies like Malaysia and Singapore and other south east Asian countries where manual labour force are scanty.
The third phase of migration happened during 1970‟s when the petrol dollar of gulf countries became a great attraction to the youth of Kerala who wanted live a better life. A major portion of the labour force of these west Asian countries is still from Kerala. The Housing and Employment survey undertaken by Economics and Statistics Department of Kerala (1980) was reported that by that time, 5.1 lakh persons from Kerala migrated outside the state for the purpose of employment and 2.1 lakh people out of this have crossed the border of the country. According to the PMC 2013 conducted by the same Department and KMS conducted by CDS, Trivandrum on behalf of Kerala state planning board unanimously revealed that number of NRIs in Kerala has been increased by more than ten times of the NRI‟s population in 1980.
3.1.2. Trend and Dimensions of NRIs Migration
According to Kerala Migration Survey (KMS)-2014, the migration of Keralites to foreign countries still continues even though there is little bit
21 declaims in the years from 2008 to 2011 due to global recession. The negative factor which pushes the migration is the state‟s inability to offer suitable jobs for the increasing number of educated youths in Kerala. The glamour of Gulf emigration and job situation and income providing by the foreign employers are the positive factors which pulls the youth population of Kerala towards foreign countries. As per the KMS 2014, the number of Non Resident Keralites is estimated at 24 lakh and their remittances are accounted at Rs.72, 680 crores. The district wise number of NRIs of Kerala during the period from 2003 to 2014 is given in the following table.
Table No. 3.1 District wise number of NRIs in Kerala Percentage of Districts 2003 2008 2011 2014 changes from 2003 to 2014 Trivandrum 1.68 3.08 2.3 2.41 43.45 Kollam 1.48 2.07 1.67 2 35.34 Pathamthitta 1.34 1.21 0.91 1.41 5.22 Alappuzha 0.75 1.32 1.44 0.93 24 Kottayam 1.06 0.89 1.17 1.08 1.89 Idukki 0.08 0.06 0.08 0.24 200 Ernamkulam 1.21 1.21 1.36 1.91 57.85 Thrissur 1.79 2.84 1.98 2.3 28.49 Palakkad 1.78 1.9 1.42 0.71 -60.65 Malappuram 2.72 3.35 4.09 4.56 67.65 Kozhikode 1.67 1.99 2.07 2.26 35.33 Waynad 0.08 0.13 0.27 0.23 187.5 Kannur 2.02 1.19 2.83 2.91 44.06 Kasaragode 0.71 0.68 1.2 1.04 46.48 Kerala 18.38 21.93 22.8 24 30.58 Sources: Department of Economics and Statistics (2013), Zachariah and Irudaya Rajan (2014) KMS.
22 It is visible from the above table that the stock of NRIs is increased from 18.38 lakh in 2003 to 24 lakh in 2014. The rate of increase in the number of NRIs in Kerala in the said period is nearly 31%. Idukki and Wayanad districts hold lowest number of NRIs in Kerala. Another interesting point is that during the period from 2003-2014, only one district, Palakkad reported a huge decrease (60.65%) in number of NRIs.
Figure 3.1 Trends of NRIs In Kerala
Trend of NRIs in Kerala for last 25 years
Years Number of NRIs in Kerala
2321750 2400375 2093520 1717695 1318489
819025 510214
1990 1994 1998 2002 2006 2010 2014 1 2 3 4 5 6 7
3.1.3. Remittance by NRIs in Kerala
Remittances by NRIs in Kerala are really had far reaching impact in growth and development of state‟s economy. Pravasi Malayali Census (PMC) in 2013 conducted Dept. of Economics and statistics and Kerala Migration Survey (KMS) conducted by Prof. Zachariah and Prof.Irudaya Rajan in 2014 clearly pointed out that there is constant rate of increase in the remittance of NRIs in Kerala. The following table shows the district wise house hold remittance in Kerala for the period from 2003 to 2014.
23 Table No 3.2 NRI’s remittance by district (2003-2014) . in Crores
Percentage of Districts 2003 2008 2011 2014 Changes from 2003-2014 Trivandrum 831 1388 1443 1847 122.26 Kollam 782 1294 1346 2168 177.24 Pathamthitta 412 639 633 1478 258.74 Alappuzha 578 570 699 2065 257.27 Kottayam 250 656 737 699 179.60 Idukki 17 451 55 228 1241.18 Ernamkulam 654 862 1865 3210 390.83 Thrissur 1395 1726 1307 2527 81.15 Palakkad 495 997 1003 1009 103.84 Malappuram 1248 1874 2752 3510 181.25 Kozhikode 585 1153 1189 1967 236.24 Waynad 29 164 176 303 944.83 Kannur 421 809 1566 1976 369.36 Kasaragode 269 337 358 1294 381.04 Kerala 7965 12511 15129 24374 206.01 Sources: Department of Economics and Statistics (2013), Zachariah and Irudaya Rajan (2014) KMS.
NRIs remittance in Kerala for 2014 were amounts to be Rs.24,374 crores. Comparing to the same in the year 2003 there were an increase by 206.01%. This amount is about 46 percent higher than the remittances in 2011. These numbers showing that the growth rate of remittances has increased more in recent years in spite of the decline in the annual increase of emigration from the state since 2008. In 2011 out of the total NRI remittances of Rs 15,129 crores, Rs 7029 crores were received by the Muslim community
24 alone. This amounts to about 46.5 percent of the total remittances. While comparing this percentage with their population percentage ie, 26.5 percentage of Kerala population. But in 2014 the picture has changed the remittance by Hindu NRIs came to first position of remittance. The following table shows the details of remittances by Religion:
Table 3.3 Remittance by religion in Kerala (2003-2014) “in Crores”
% of changes From Religion 2003 2008 2011 2014 2003 to 2014 Hindus 2846 4767 5510 9640 238.72 Christians 1996 2254 2590 5906 195.89 Muslims 3483 5490 7029 8828 153.46 Total 7965 12511 15129 24374 206.01 Sources: Department of Economics and Statistics (2013), Zachariah and Irudaya Rajan (2014) KMS. It is evident from the above table that even if there are continuous increases in the remittance from the year 2003 to 2014, percentage increase is little bit more in the case of Hindus remittance. It can be seen from the above table that till 2011 Muslim‟s remittance were dominated in remittance portfolio of Kerala by contributing nearly half of total remittance.
3.1.4 Country of Employment of NRIs of Kerala
After the Second World War and independence of India in 1947 Keralites have migrated to almost all countries. However the largest number of NRKs was flowing towards Gulf countries. The United Arab Emirates (UAE) claimed 1st position among all the countries by accommodating 37.5 percent of total NRKs But its relative share declined from 41.9 percent in 2008 to 38.7 percent in 2011 and to 37.5 percent in 2014.. Saudi Arabia also experienced declain of NRKs by nearly 20% from 2011 to 2014. The following tables provides the details of country of residence of NRKs
25 Table 3.4 Country of employment of NRKs ( in Percentage )
Countries 2008 2011 2014 UAE 41.19 38.7 37.5 Soudi Arabia 23.00 25.2 21.8 Oman 7.6 8.6 7.9 Kuwait 5.9 5.6 7.6 Bahrain 4.6 4.5 6.2 Quatar 5.5 6.5 4.4 Other West Asia 0 0.3 0.9 GCC total 88.5 89.4 86.3 USA 4.7 3.0 2.9 Canada 0.6 0.4 0.5 UK 1.8 2.0 1.6 Other Europe 0.4 0.5 0.8 Africa 0.6 0.6 0.6 Singapore 0.5 0.5 0.4 Maldives 0.3 0.3 0.1 Malaysia 0.5 0.6 0.4 Other SE Asia 0.4 0.7 2.2 Australia 1.0 1.1 1.6 Other countries 0.6 1.1 2.6 Total 100 100 100 Sources: Department of Economics and Statistics (2013), Zachariah and Irudaya Rajan (2014) KMS.
GCC in total holds nearly 90% of NRIs population of Kerala. Out of this dominant part takers are UAE (41.19%) and Saudi Arabia(23%). Kuwait and Bahrain are the other Gulf countries that have improved their relative share of NRKs. Apart from GCC, the prominent migrating destinations are
26 the USA and the United Kingdom. While the percentage of NRKs in the UK increased, that of has USA decreased.
3.1.5 Return of NRIs in Kerala
Since NRIs remittance is the major source of economic development in Kerala, stake holders are happy to hear the news of outward flow of migration. On the other side, there is a matching inflow of migrated people. The number of return NRIs has also increased. The number of return NRKs in 2014 was 12.48 lakh, which is about 52 percent of the number of NRKs. The numbers of returned NRKs were 11.50 lakh in 2011.Following table shows the return of NRIs by district.
Table No.3.5 Return NRIs by District.2014 (numbers in lakh)
Returned % of return Districts Total NRIs NRIs on total NRIs Trivandrum 2.41 2.19 90.87 Kollam 2 1.28 64.00 Pathamthitta 1.41 0.36 25.53 Alappuzha 0.93 0.70 75.27 Kottayam 1.08 0.34 31.48 Idukki 0.24 0.03 12.50 Ernamkulam 1.91 0.66 34.55 Thrissur 2.3 1.04 45.22 Palakkad 0.71 0.12 16.90 Malappuram 4.56 3.00 65.79 Kozhikode 2.26 1.07 47.35 Waynad 0.23 0.13 56.52 Kannur 2.91 1.09 37.46 Kasaragode 1.04 0.47 45.19 Kerala 24 12.52 52.17
27 The table reports that there is very large number of return of NRIs in Malappuram district (3 lakh people) followed by Trivandrum and Kollam districts by 2.19 lakh and 1.28 lakh NRIs respectively. While comparing the percentage of Returned NRIs to the total NRIs of these districts Trivandrum coming to first position (90.87%) Malappuram coming to second position (65.79%) and Kollam becomes fourth position (64%). The largest number of NRIs from Kerala in 2014 originated from Malappuram district; 4.56 lakh (19 percent of the total NRKs). Kannur District comes second with 2.91lakhs NRIs (12.13 percent of the total). Trivandrum and Thrissur district come 3rd and 4th position respectively. Wayanad and Idukki districts are coming to last positions ie.,13th and 14th respectively. In the Muslim dominated Malappuram district, the huge number of NRIs return reflected in their remittance also. Till 2014 Muslim community occupied the first position of quantum of remittance in Kerala whereas now Hindus‟ Remittance came to the first position in Kerala.
3.1.6 NRIs -Impact on Kerala
There is manifold and far reaching impact in the Kerala socio- economic scenario owing to large scale migration to foreign countries. The most important positive aspect of migration is the substantial reduction in the unemployment rate in Kerala. The social tension in 1980s was about 40 percent of employable persons are unemployed. This problem has been solving at large extent as foreign migration rate progressing. Most of the remittances received in Kerala were invested in building new houses, building complexes etc. which demanded greater number of manual labourers as the educated youth of Kerala were reluctant to engage in such work. A notable consequence of migration was the introduction of Vocational and Skill developing courses in Kerala. In order to migrate for better job, lot of unemployed youth joined in these courses. Fire and safety, paramedical,
28 computerized accounting, office automation, lift operation, refrigeration, catering courses etc offered vast job opportunities for Kerala youth abroad. NRis remittances make a substantial contribution to the annual income of most house hold in Kerala. The remittance of NRIs contributes about one third portion of net state domestic product (NSDP) of Kerala. Out of total per capita income of Kerala about 25 per cent share originated from foreign remittances.
Foreign migration is not freed from negative impacts in Kerala. Lack of proper structural framework for handling remittances resulted in lot of socio-economic lacunas in Kerala. The remarkable point is unproductive and dead investment of NRIs fund. Construction of huge size homes, purchase of luxurious cars and similar items are considered are dead investments since it will not generate future earning or income. Concentration of economic power in some people, household disparity in socio economic status, less opportunities to accommodate returning NRIs is became evil impact of migration.
3.2. Investment
The term investment may be interpreted in many ways as per different theories and principles. It is a general term used by many in many contexts. In generally speaking, investment can be considered as the application of money or kinds with the expectation of future benefits which is more than applied assets. The traditional expectation from investment is either to earn future income or to attain capital appreciation of assets. In the era of financial innovation, the purposes of investments are diversified. At present apart from earning future income and capital appreciation on assets, the platforms of investment are used to minimize and hedge risk, to ensure liquidity, to market making, to cover with life and property protection etc.
29 In the view point of Economists, investment is treated as the utilization of resources for the purpose of increase income or output of production in future. So money deposited in to banks and financial institutions or amount spend for purchasing land, building and machineries by expecting generation of future earnings etc., are considered as the example of investment Although there is a general broad definition to the term investment, it carries slightly different meanings for different industrial sectors. But in financial terminology, the investment refers to the buying of a financial product or any valued item with the anticipation that positive returns will be received in the future. Nutshell investment is the sacrifice of certain present value for the uncertain future reward.
3.2.1 Economic Definition of Investment
Investment implies the production of new capital goods, plants and equipments.
John Keynes refers investment as real investment and not financial investment.“Investment is a conscious act of an individual or any entity that involves deployment of money (cash) in securities or assets issued by any financial institution with a view to obtain the target returns over a specified period of time”.
3.2.2 Financial definition of Investment
Investment is the act of employment of fund with an intention of attaining additional earning or income or growth in assets value. Investment
Farlex Financial Dictionary. © 2012 Farlex, Inc
“The act of placing capital into a project or business with the intent of making a profit on the initial placing of capital. An investment may involve the extension of a loan or line of
30 credit, which entitles one to repayment with interest, orit may involve buying an ownership stake in a business, with the hope that the business will become profitable.Investing may also involve buying a particular asset with the intent to resell it later for a higher price. Many types ofinvesting exist, and each is s ubject to greater or lesser regulation in the jurisdiction in which it takes plac e. Legally,investing requires the existence and protection of individual proper tyrights. Investing wisely requires combination of astuteness, knowledge of the market, and timing”.
Sharp defined investment as” Investment is sacrifice of certain present value for some future uncertain value”.
F. Amling defined investment a “Purchase of financial asset that produces yield that is proportionate to risk assumed over some future investment period.
Investment may be defined as “a commitment of funds made in the expectation of some positive rate of return".
3.2.3 Types of investment
According to the nature of investors, investor‟s expectations, influencing factors, kind of assets in which fund is employed, quantum of investment and risk faced by the investors, investments can be classified into many types:
1. Autonomous Investment
Investment which does not change with the changes in income level is called as Autonomous or Government Investment. Autonomous Investment remains constant irrespective of income level. Which means even if the income is low, the autonomous, Investment remains the same. It refers to the
31 investment made on houses, roads, public buildings and other parts of Infrastructure. The Government normally makes such a type of investment.
2. Induced Investment
Investment which changes with the changes in the income level, is called as Induced Investment. Induced Investment is positively related to the income level. That is, at high levels of income entrepreneurs are induced to invest more and vice-versa. At a high level of income, Consumption expenditure increases this leads to an increase in investment of capital goods, in order to produce more consumer goods.
3. Financial Investment
Investment made in buying financial instruments such as new shares, bonds, securities, etc. is considered as a Financial Investment. However, the money used for purchasing existing financial instruments such as old bonds, old shares, etc., cannot be considered as financial investment. It is a mere transfer of a financial asset from one individual to another. In financial investment, money invested for buying of new shares and bonds as well as debentures have a positive impact on employment level, production and economic growth.
4. Real Investment
Investment made in new plant and equipment, construction of public utilities like schools, roads and railways, etc., is considered as Real Investment. Real investment in new machine tools, plant and equipments purchased, factory buildings, etc. increases employment, production and economic growth of the nation. Thus real investment has a direct impact on employment generation, economic growth, etc.
32 5. Planned Investment
Investment made with a plan in several sectors of the economy with specific objectives is called as Planned or Intended Investment. Planned Investment can also be called as Intended Investment because an investor while making investment makes a concrete plan of his investment.
6. Unplanned Investment
Investment done without any planning is called as an Unplanned or Unintended Investment. In unplanned type of investment, investors make investment randomly without making any concrete plans. Hence it can also be called as Unintended Investment. Under this type of investment, the investor may not consider the specific objectives while making an investment decision.
7. Gross Investment
Gross Investment means the total amount of money spent for creation of new capital assets like Plant and Machinery, Factory Building, etc. It is the total expenditure made on new capital assets in a period.
8. Net Investment
Net Investment is Gross Investment less (minus) Capital Consumption (Depreciation) during a period of time, usually a year. It must be noted that a part of the investment is meant for depreciation of the capital asset or for replacing a worn-out capital asset. Hence it must be deducted to arrive at net investment.
3.2.4 Importance of Investment
In order to increase the wealth individual, institution and nation, all these persons are required tot to invest their stock money. Investing process
33 allows to put fund or capital into running finance vehicles that is able to generate the expected benefits and earnings either at reasonable or at strong rate of return not only to the individual investors but also to the development of nation.
Following are the important reasons for investment. The same aspects will be the investment objectives.
1. Income
The main advantage of investment is its ability to generate income by means of interest on deposits, bonds, debentures and other creditor ship securities and dividend on shares and other ownership securities.
2. Appreciation of Capital
Apart from generating regular or stable income, some investment also ensures long term price appreciation which result into capital growth and wealth of investors.
3. Regulation by Govt.
Investment, especially in capital market and debt market is duly regulated and monitored by government through their agencies like SEBI,RBI,IRDA etc. Such regulation inculcate confidence in investors in related sectors.
4. Tax benefits
Some investment venues are used by the investors for tax planning purpose. There is only lower rate of tax on dividend as compared with other investments. More over investment in infrastructural bonds and income from certain govt. securites are getting special tax benefits.
34 5. Hedge against inflation
In the long term the securities price cover will helps the investors to hedge the inflationary pressure. Like that capital appreciation in real estate investment is much higher than inflation rate.
6. Collateral Assistance
Shares, bonds, treasury bills, mutual fund units etc, in which investment is made can be used as collateral assets for the purpose of acquiring loans and financial assistance from banks.
7. Other benefits
These benefits consist of ensured liquidity, flexibility, confidentiality, financial support after retirement (investment in pension plans)
In order to conduct an accurate study on investment behaviour, the researcher should be equipped with the information like importance, objectives and various sources of investment in India.
3.2.5 Investment Behaviour
Definition of investment behavior
Investment behaviors are defined as how the investors judge, predict, analyze and review the procedures for decision making, which includes investment psychology, information gathering, defining and understanding, research and analysis. The whole process is “Investment Behavior” (Slovic, 1972; Alfredo and Vicente, 2010).
Investment behaviour concept considers investment as a rational and logical decision making process in which the investors trying to choose a portfolio of securities or and assets. If investor is rational, he will be able to form a rational and correct expectation about investible assets, future return,
35 value appreciation and probable risk pattern. They obtain relevant and adequate information relating to investment options and its determinants in order to take efficient investment decision. Some people make investment decision on inadequate and incorrect information and such investment may move into wrong shoes.
Behaviour of investors are influenced by the complexity, structure, transparency and perceived performance of various investment alternatives. The important factors influencing investment behaviour are:
Type and nature of asset or securities
Basis of acquisition
Length of commitment
Sources and frequency of income
Quantity of risk associated
Stability and regularity of return
Psychological attitude and perceptions
Education and experience
Personality traits of investors like risk aversion, risk propensity rate,
extroversion and introversion, locus of control etc.,
Investment regulation by govt. and its agencies
Reason or objectives of investment etc.
Investment behaviour and attitude are likely to be affected by innovative practices and instruments in the investment environment. A wide variety of opportunities for the consumption and investment are available to those who have disposable income and savings. Investment venues are ample
36 and they are growing in number and variety. The financial innovation and engineering brought us a lot of innovative and attractive investment options for catering the need of different type of individual and institutional investors. Now the investors are enjoying flexibility and freedom of investment as a result of financial globalization and liberalization.
3.2.6. Investment Venues for NRIs.
Since NRIs remittances accelerates the growth and development of economy, both the central and state government and their agencies are framing lot of policy measures and hence emerging lot of investment options to cater the investment needs of NRIs scattered all over the world. The common investment platforms where NRIs can invest their available disposable fund are listed here.
Deposits in commercial and co-operative banks Primary market investment through ownership securities like shares and creditor ship securities like convertible and non- convertible debentures. Portfolio investment under (PIS) in secondary market on ordinary shares and convertible bonds/debentures. Real estate investment and immovable property investment except agriculture and plantation property or dwelling/farm house etc., Investment in business Investment in proprietary or partnership concerns in India. Investment in bonds on the requisite that fund is invested out of NRE/FCNR/NRO account or through inward remittance. Investment in mutual fund by following same requisites of investment in bonds.
37 Public deposits in Indian companies (including NBFCs registered with RBI) for a maximum period three years on repatriation basis and subject to certain conditions. Investment in gold Investment in CTDs of post office. Insurance investment (even though insurance is not a means of earning). Other innovative investment avenues like derivatives, commodity market, money market instruments,
3.2.7 Investment Portfolio
“A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non- publicly tradable securities, like real estate, art, and private investments. Portfolios are held directly by investors and/or managed by financial professionals and money managers. Investors should construct an investment portfolio in accordance with their risk tolerance and their investing objectives. Investors can also have multiple portfolios for various purposes. It all depends on one's objectives as an investor”. (Investopedia)
38 Chapter IV ANALYSIS OF RESPONDENTS' PROFILE
Introduction
This chapter deals with the analysis of the data obtained from the survey with the aid of percentage, table, charts, graphs and diagrams and the resultant interpretation. The investment behaviour of NRIs are affected by a number of factors such as demographic factors, their educational background, the nature of employment or business, attractiveness of various investment venues, place of domicile, the living standard, various obstacles and problems faced while investing etc.,. Hence the analysis part of this study is categorized into two chapters. First chapter (chapter 4) is an analysis of respondent‟s profile and second chapter (chapter 5) is framed to analyse the investment behavior of NRIs, impact of its determinants on investment pattern and portfolios.
Respondent’s Profile
In this study, the researcher making an attempt to analyse the investment behaviour of NRIs in Kerala (NRKs) especially originated from Malabar region. In connection with this a pilot study was undertaken. In order to avail maximum data related NRI‟s investment and to incorporate all relevant cases, the samples were drawn on the basis of multistage stratified random sampling technique. Optimum care was paid to choose respondents without any bias. Hence this may be relatively true representation of total NRIs population of Kerala. As per Kerala Migration Survey (2014) there has been a slow but steady northward shift in the increased number of NRIs in Kerala and their quantum of remittances. So the north part of Kerala ie., Malabar region is preferred for the present study.
39 Malabar region consists of six districts such as Palakkad, Malappuram, Kozhikode, Wayanad, Kannur and Kasaragode. NRIs are spread in all these six districts of Malabar. In the first stage, the six districts of Malabar were divided into two regions, viz. South Malabar and North Malabar. Palakkad, Malappuram and Kozhikode districts belongs to South Malabar whereas Wayanad, Kannur and Kasaragode form North Malabar. In the second stage, one district is selected from both regions. Malappuram district is selected from South Malabar and Kasaragode district is selected from North Malabar. In the third stage, one taluk each selected from early chosen districts. Tirur taluk and Kasaragode taluk were taken from Malappuram and Kasaragode districts respectively. In the fourth stage, 20% villages of the Tirur and Kasaragode were taken for the study. From 16 villages of Tirur taluk 2 villages and from 64 villages of Kasaragode taluk 6 villages were taken on random basis for primary data collection. From these villages 150 respondents each to represent two regions were selected and the necessary details were collected by means of a structured interview schedule. For the purpose of analyzing all dimensions of the investment behaviour of NRIs in Malabar, it is required to study the demographic factors and socio-economic features of the NRIs in Malabar. For this concern, the following important variables related with the respondents were studied. Age, sex, marital status, religion, country of employment, place of origin, duration of foreign stay, nature of employment are the parameters taken into consideration for this study. A profile of respondents was framed with help of tables, graphs, percentages etc,. This chapter will provide an analytical picture of the profile of selected respondents in this study.
4.1. Age of Respondents
Distribution of respondents on the basis of their age will be one of the important factors in the respondents' profile. Table 4.1 will gives us age wise
40 classification of the selected respondents.
Table 4.1. Age-wise distribution of respondents
Age Number Per cent Less than 25 78 26.00 26 -40 143 47.67 41-55 69 23.00 56 and above 10 3.33 Total 300 100.00 Source: Direct field survey
Figure 4.1.
160 Age -wise distribution of NRIs in Malabar 140 120
100
80 Number 60 Per cent
Number andPercent Number 40
20 0 Less than 25 26 -40 41-55 56 and above age group
It is seen from the table that out of total NRIs in Malabar, prominent age group is 26 to 40 (47.67%) . least number coming under the age group 56 and above (3.33%) . It means that from total respondents 221(78+143) respondents are youth. Only 10 respondents are still continuing in abroad even after the average common retirement age in Kerala (56 and above).
41 4.2 Gender of respondents
Gender is one factor which influences attitude and preference towards investment options. Classification of selected respondents on the basis of sex is given in the table 4.2
Table 4.2. Gender- wise distribution of respondents
Gender Number Per cent Male 259 86.33 Female 41 13.67 Total 300 100 Source: Direct field survey
Figure 4.2
Gender of respondents
Male Female
It is evident from the above table that the lion‟s portion of respondents is males. Among NRIs respondents 86.33% belongs to male NRIs while the women forming part only 13.67% of the 300 respondents.
42 4.3 Marital Status
Investment behaviour of NRIs in Kerala may be influenced by their marital status. Classification of selected respondents on the basis of their marital status is given below in the table 4.3.
Table 4.1.3 Marital Status of NRIs in Malabar
Marital status Number Per cent Married 232 77.33 Unmarried 68 22.67 Total 300 100 Source: direct field survey.
Figure 4.3 Marital status of NRIs in malabar
Number
232 68
Married Unmarried
It is clear from the above table that out of 300 selected NRIs respondents 232 numbers (77.33 per cent) are married and 22.67 percent are as unmarried or single.
4.4 Education Level
The education level of NRIs can be an important factor which affects their investment habits and behaviour. It is assumed that as education increases the ability for understanding and evaluating the investment
43 alternatives also increases. Classification of NRIs of Kerala on the basis of their education is given in the table below.
Table 4.4 Education-wise distribution of NRIs
Qualification Number Per cent Up to SSLC 57 19.00 HSE to Graduate 134 44.67 Post graduate 34 11.33 Professional 43 14.33 others 32 10.67 Total 300 100.00 Source : Direct field survey
Figure 4.4
Education of NRIs in Malabar % others 11% Up to Professional SSLC 14% 19%
Post graduate HSE to 11% Graduate 45%
The above table reveals that out of 300 respondents, dominant group is HSE to graduation ie 134 in numbers and 44.67 in per cent. NRIs in Malabar whose educational qualification is up to SSLC were only 19 per cent. 25.66 % of selected respondents have higher qualifications ie , professional qualification and post graduation. 32 respondents of NRIs have acquired other qualification like Diploma, Computer certificate course etc., after SSLC.
44 The hidden pattern in the table shows that educational qualification of NRIs in Malabar is relatively very high.
4.5 Religious Affiliation
The religious belief, faith, sentiments etc. may be an influencing factor on investment behaviour and decisions of NRIs in Kerala especially in Malabar region. Table 4.5 shows the religious mixture of selected respondents of this study.
Table 4.5 Religious-wise distribution of respondents
Religion Number Per cent Hindu 116 38.66 Muslim 149 49.67 Christians 35 11.67 Total 300 100.00 Source: direct field survey
Figure 4.5
NRIs Religious composition in Malabar
160 140 120 100 Hindu 80 Muslim 60 Christians 40 20 0 Number Per cent
45 It is visible from the above table that majority of respondents are Muslims ie. 149 in numbers and nearly 49.67 in percent. Hindus comes second with 38.66 percent and remaining 11.67 percent are Christians. It is known fact that Christian community relatively less in selected districts for the study. The fact is clearly reflected in the samples also.
4.6 Place of employment
Place of present employment of NRIs in Malabar may influence their investment behaviour. Since migration is a major source of culture transmission, investment practices and culture of country in which emigrants are presently working also reflects in investment made in their home country. Table 4.6 depicts the distribution of NRIs in Malabar on the basis of their place of employment.
Table 4.6 Place of employment of NRIs
Country Number Per cent USA 8 2.67 CANADA 4 1.33 UK 6 2.00 UAE 83 27.67 SAUDI ARABIA 61 20.33 KUWAIT 43 14.33 OMAN 25 8.33 QUATAR 28 9.33 BAHARAIN 22 7.33 OTHER ASIAN COUNTRIES 14 4.67 OTHER COUNTRIES 6 2.00 TOTAL 300 100 Source: Direct Field Survey
46 Figure 4.6 Country of Employment of NRI investors in Malabar
OTHER COUNTRIES OTHER ASIAN COUNTRIES BAHARAIN QUATAR OMAN KUWAIT
SAUDI ARABIA Number
UAE Employmentcountry UK CANADA USA
0 20 40 60 80 100 Number of NRIs
From the table above, it is visualized that out of 300 NRI s respondents of Malabar region, predominant group belongs to GCC countries. From the total 27.67 per cent NRIs are employed or working in UAE, followed by Saudi Arabia (23 per cent) and third position is goes to Kuwait(14.33 per cent). Least number of NRIs in Malabar region is employed in Canada and UK ie., 1.33 and 2.00 percent respectively. This data indirectly reveals that most of the remittances in Kerala are flowing from Gulf countries.
4.7 Duration of staying abroad.
Years spending in foreign countries by NRIs may be an important factor which influences their investment behaviour in Kerala. Table 4.7 provides classification of NRIs in Malabar on the basis of duration of stay in abroad.
47 Table 4.7 Duration of NRI’s stay abroad
Duration of Stay Number Per cent abroad Less than 5 years 54 18.00 5 to 10 years 67 22.33 10 to 15 years 89 29.66 15 to 20 years 61 20.33 Above 20 years 29 9.67 Total 300 100.00 Source: Direct field survey
Figure 4.7
Duration of stay abroad
Number
89
67 61 54
29
Less than 5 5 to 10 years 10 to 15 years 15 to 20 years Above 20 years years
The above tables shows that among total respondents, 29.66 per cent (maximum number -89) NRIs has been staying abroad for a period of 10 to 15 years, nearly 10 percent of NRIs staying abroad for more than 20 years. Out of 300 NRIs, nearly 40 per cent(18%, less than 5 years + 22.33% , 5 years to 10 years) has staying abroad up to 10 years.
48 4.8 Employment Status
Employment status or nature of work of NRIs is a major factor influencing investment behavior of NRIs. A particular relation exist between income from employment and investment behaviour of persons. Employment status are classified into six categories viz., Professionals, Business men Skilled workers, semi-skilled workers, Salaried staff and others. Professionals consists of doctors, engineers, teachers, nurses, lawyers, chartered accountants etc,. Business men mean NRIs carrying business abroad. Skilled workers consists of mechanics and electricians etc,. Semi-skilled group consists of masons, carpenters, drivers etc. Salaried staff under this study means NRIs drawing foreign government salary and banking staff. Others include all those NRIs who not coming under the above five groups. This group may consists of office workers, clerical staff, factory workers, field staff, accounting assistants, salesmen etc,. Table 4.8 depicts the classification of NRIs in Malabar on the basis of employment status or nature of work.
Table 4.8 . Distribution of NRIs on the basis of employment status
Employment status Number Per cent Professionals 52 17.33 Business 32 10.67
Skilled workers 54 18.00 Semi-skilled workers 72 24.00 Salaried staff (Govt, banks) 14 4.67 Others 76 25.33
Total 300 100 Source: Direct field Survey
49 Figure 4.8
Employment status -wise distribution of NRis in Malabar
Professionals
17% Business 25%
Skilled workers 11% Semi-skilled workers 5%
18% Salaried staff (Govt, 24% banks) Others
Table 4.8 indicates that Maximum number of respondents belongs to “Others” (76 in number)which consists of office staff, clerks, accounting staff, salesmen/women, catering workers, field staff, factory workers etc., Second position goes to semiskilled workers, out of total respondents, number of semi skilled workers is 72(24 percent) which consists of drivers, construction workers etc, Third position belongs to skilled workers (54 in number)., professionals are nearly 17 per cent of this respondents. Least number in these groups belongs to salaried staff (14 in numbers) which consists of foreign govt. employees and bank employees. While generally speaking, out of total NRIs in Kerala population of nurses, drivers, salesmen, semi-skilled workers and skilled workers are taking prime positions. (Pravasi Malayali Census, 2013, by Dept of Economics and Statistics, Kerala state)
50 Chapter V ANALYSIS OF INVESTMENT BEHAVIOUR OF NRIs IN MALABAR
Analysis is the process of answering to the question „what are the messages and conclusions are conveyed by each category of data collected under the study. Data analysis is most important stage of research which establishes relationship between research objectives and findings of the study. In this chapter, on the basis of information obtained from chosen respondents, investment behaviour of NRI investors are analysed and interpreted with the help of various mathematical and statistical tools such as percentages, tables, graphs, charts, ranking etc, and important statistical tests like ANOVA, Chi- square etc. information supplied by 300 NRI respondents from Malabar region are carefully processed, systematically sorted, grouped and classified and tabulated and interpreted scientifically. By adhering the research objectives, collected data is studied in multidimensional by considering various factors determining investment behavior of NRI investors viz. income, awareness or knowledge, attitude, experience, investment portfolios, educational status, religious affiliation etc.
5.1. Income of Respondents
The regularity, stability, timing and quantum of income of NRIs have an important impact on individual investment behaviour. Here income means annual income of NRIs and there were given five options to the respondents to answer promptly. Table 5.1 Annual income-wise distributing of NRIs in Malabar
51 Table 5.1 Income-wise classification of NRIs in Malabar
Annual Income (Rs) Number Per cent Up to 2.5 lakh 32 10.67 2.5 to 5 lakh 72 24.00 5 to 7.5 lakh 99 33.00 7.5 to 10 lakh 69 23.00 Above 10 lakh 28 9.33 Total 300 100.00 Source: Direct field survey
Figure 5.1
Annual income of NRIs in Malabar
100 90 80 70 60 50 Number 40 30 20 10 0 Up to 2.5 2.5 to 5 5 to 7.5 7.5 to 10 Above 10 lakh lakh lakh lakh lakh
Table 5.1 revealed that out of the total NRI respondents, 99 of the respondents belongs to the annual income group of 5 lakhs to 7.5 lakhs. 72 and 69 number of respondents belongs to 2.5 to 5 lakh and 7.5 to 10 lakh annual income groups respectively. 32 numbers of respondents come to lower annual income group (below 2.5lakh) and 28 numbers goes to highest annual
52 income group under this study. From the above table and chart it is evident that the pattern of respondents follow a bell shaped distribution. Ie out of total respondents, 9.33 per cent and 10.67per cent belongs to lower income class and higher income class respectively. Middle income group ( 5 to 7.5 lakh) is 33per cent . the second lowest and second highest annual income groups shares 24per cent and 23per cent respectively.
5.2. Savings of Respondents
Saving habits and portion of income set aside for investment are vital factors which affects individual investment behaviour of NRIs. Portion of income left after necessary and usual consumption only goes for investment purpose. According to general tendency, it is assumed in the study that average saving of individual may be maximum 60 of his income. Here saving means annual savings. Table 5.2 explains the savings wise distribution of NRIs in Malabar.
Table 5.2 Saving-wise classification of NRIs in Malabar.
Annual Saving (Rs) Number Per cent Up to 1.5 lakh 62 20.67 1.51 to 3 lakh 84 28.00 3.01 to 4.5 lakh 55 18.33 4.51 to 6 lakh 67 22.33 Above 6 lakh 32 10.67 Total 300 100 Source: Direct field survey
53 Figure 5.2
Savings- wise distrinution of NRIs in Malabar
90 80 70 60 50 40 Number 30 20 10 0 Up to 1.5 1.51 to 3 3.01 to 4.5 4.51 to 6 Above 6 lakh lakh lakh lakh lakh
Table 5.2 reveals that savings of the majority of respondent‟s ranges between 1.5 to 3 lakh. The group consists 84 respondents in number and 28 in percent. 20.67 per cent of the respondent group‟s saving is below 1.5 lakh. 10.67 per cent NRIs are saving more than 6 lakh annually. 67 number of the respondents saving annually amount ranging from 4.5 to 6 lakh.
5.3 Average Annual Investment.
A person may not park entire amount of his savings into investment. In general practice, savers will invest an amount which is less than that of saving. Hence here five options are given to the respondents to obtain their answer promptly. Table 5.3 shows the distribution of NRI respondents on the basis of their average annual investment.
54 Table 5.3 Average Annual Investment of NRIs in Malabar
Annual Saving (Rs) Number Per cent Up to 1lakh 44 14.67
1.to 2 lakh 63 21.00 2 to 3 lakh 111 37.00
3 to 4 lakh 55 18.33 Above 4 lakh 27 9.00
Total 300 100 Source: Direct Field Survey
Figure 5.3
Average annual investment of NRIs in Malabar
40.00 35.00 30.00 25.00 20.00 15.00 Per cent 10.00 5.00 0.00 Up to 1.to 2 2 to 3 3 to 4 Above 4 1lakh lakh lakh lakh lakh
From the table and figure No 5.3, it is clear that among 300 total respondents 111 of number belongs to the group which investing amount ranging from Rs.2 lakh to 3 lakh (37 per cent of total). 21 per cent of respondent‟s investment range is Rs 1 lakh to 2 lakh ie 63 respondents in numbers. Out of total only 9 per cent belongs to high investment group, Rs 4 lakh and above and14.67% invests annually up to Rs 1 lakh. 55 respondent‟s investment range is 3 lakh to 4 lakh.
55 5.4. Source of Investment motives
An individual select particular investment option or portfolio on the basis of information and advises received from different sources like own experience and decisions, advices received from friends and relatives, investment advisors or expert (insurance agents, brokers, investment consultant etc), advertisement and others. Table 5.4 shows the classification of NRI investor on the basis of motivating source.
Table 5.4 Motivating source of Investment
Investment motivating source Number Per cent Rank
Own ideas and experience 88 29.33 2 Friends and Relatives 39 13.00 4 Agents, brokers, consultants etc 104 34.67 1 Advertisement 46 15.33 3 Others 23 7.67 5 Total 300 100 Source ;Direct field survey
Figure 5.4
Motivating source of investment
Others 8% Own ideas and Advertisement experience 15% 29%
Agents, brokers, Friends and consultants etc Relatives 13% 35%
56 It is clear from the above table and figure the dominant source of investment motive is from agents, brokers, consultants etc. nearly 35 per cent of NRI investors depend these experts and advisors for selecting their investment. Least number of respondents relies on information provided by other source (Govt.publication, propaganda and others). Advertisement motivates 15 per cent of respondents. 88 numbers of total respondents selecting investment option from his own ideas and past experience.13 percent investors getting motivation from friends and relatives.
5.5 Investment Criteria/Objectives
While choosing specific investment option or portfolio, investors have some definite criteria or objectives. Investors are given six options to get their investment criteria/objectives such as regular income, capital appreciation, income and growth, liquidity, safety /security/risk covering and others (tax planning, charity etc.). Table 5.5 gives investment criteria of NRIs in Malabar.
Table 5.5 Investment Criteria wise distribution of NRIs in Malabar
Income Criteria Income Growth & liquidity Safety others Total growth No. of 67 106 45 43 29 10 300 respondents Per cent 22.33 35.33 15.00 14.33 9.67 3.33 100.00 Source: Direct field survey
57 Figure 5.5
Investment Criteria of NRIs in Malabar
No. of respondents
others 10
Safety 29
liquidity 43
Income & growth 45
Growth 106
Income 67
Out of total respondents, 106 (35.33 in per cent) of the respondents expecting growth or capital appreciation while investing. 22.33 per cent of respondents invested fund for earning regular or stable income. 15 per cent invested their money both for income and growth. 14.33 per cent (43 in number) want to convert their investment into cash as they required. 29 investors preferring safety and risk coverage while investing. Only 10 investors have other consideration for investment.
5.6. Satisfaction on present investment.
In order to analyse the level of satisfaction of NRIs in Malabar, five options were given in schedule such as highly satisfied, satisfied, partly satisfied, unsatisfied and highly unsatisfied. Partly satisfied means investors are satisfied with some futures of selected investment and some not satisfied.
58 Table 5.6 reveals the satisfaction level of NRIs in Malabar in connection with their present investments.
Table 5.6 Level of satisfaction of NRIs in Malabar
Satisfaction Level Number Percent Highly satisfied 41 13.67 Satisfied 132 44.00 Partly satisfied 62 20.67 Unsatisfied 44 14.67 Highly un satisfied 21 7.00 Total 300 100 Source: Direct field survey
Figure 5.6
Satisfaction Level of NRIs in Malabar
Highly un Highly satisfied satisfied 13% Unsatisfied 7% 15%
Partly satisfied 21% Satisfied 44%
The distribution of respondents shows that out of the total 41 number of respondents were highly satisfied with their current investment. The
59 maximum ie, 44 percent (132 in numbers) were satisfied with their investment‟s performance. 20.67 percent satisfied with some features of their investment and unsatisfied on some other. Nearly 22 percent (14.67+7) of respondents were unsatisfied with their present investments.
5.7 Assumed Risk Level
Risk aversion and risk propensity to investment will be different in investors according to their behavioral traits. In order to study the level of risk they are likely to assume while their investment three options are given. Table 5.7 depicts the assumed risk level of NRIs in Malabar.
Table 5.7 Assumed risk level of NRIs Assumed Risk level Number Per cent Low risk 162 54.00 Moderate risk 71 23.67 High risk 67 22.33 Total 300 100.00 Source: Direct Field survey
Figure 5.7
Assumed risk per cent of NRIs in Malabar
Low risk Moderate risk High risk
22%
54%
24%
60 According to the distribution out of 300 respondents, 54 per cent (162 in number)were ready to choose only low risk investment alternative. While 23.67 per cent of total respondents prefers moderate risk 22.33 per cent were ready to accept high risk.
5.8 Investment frequency
Timing of investment in this study means specific regular interval taken by investors whiles their investment. To know the time frequency of investment, five options are given to NRI investors.
Table 5.8 Investment timing of NRIs in Malabar
Frequency Number Per cent weekly 19 6.33 Monthly 107 35.67 Quarterly 74 24.67 Half yearly 26 8.67 Annually 74 24.67 Total 300 100 Source: Direct field survey Figure 5.8
Investment timing of NRIs in Malabar
Per cent
35.67
24.67 24.67
8.67 6.33
weekly Monthly Quarterly Half yearly Annually
61 Out of the 300 respondents, most of the respondents make investment monthly. 35.67 percent (107 in number) making monthly investment. 24.67 percent each making quarterly and annual investments. 26 respondents following half yearly investment plan and last 19 respondents were following weekly investment.
5.9. Timing of Withdrawal
The researcher required to know the approximate withdrawal period the investors are planning to make. Hence, three options given to investors to respond. Table 5.9 gives period of withdrawal by NRIs.
Table 5.9 Timing of Withdrawal of Investment
Period of Withdrawal Number of respondents Per cent 2 to 5 years 81 27 5 to 10 years 131 43.67 After 10 years 88 29.33 Total 300 100
Figure 5.9
Period of withdrawal of investment
2 to 5 years 5 to 10 years After 10 years
81 131 88 Number of respondents
62 Above table and figures indicates that among 300 respondents, most of the NRI investors (131 numbers) are planned to withdraw their investment within 5 to 10 years of their investment. 81 of them decided to withdraw within 2 to 5 years of their investment. 88 number of NRIs are planned to take back their parked fund only after 10 years.
5.10. Investment Portfolio of NRIs
An investment portfolio is a collection of financial assets like securities, commodities, currencies, cash equivalents, mutual funds etc for the purpose of minimizing risks. It may also consists non publicly tradable assets like real estate, bank deposits, indigenous investment like chits, kuris etc. Portfolio selection will be depend on many factors like investment objectives, risk aversion, availability and timing of fund etc. A study of investment behaviour without analyzing the portfolio is meaningless.
Under this study in order to have a clear picture of investment option or portfolios of NRI investors, the popular investment alternatives are bifurcated into traditional investment venues and modern investment venues.
I. Traditional investment venue consists of:
1. Residential property (RP) which means investment in land, building and other assets for residential or own usage. 2. Real Estate (RE) which means investment in land and building and other assets for trading purpose. 3. Bank and Post office Deposit (BP) amount invested in fixed deposit, saving deposits in banks and post office saving account. 4. Business Activities (BA) means investment of funds in proprietorship or partnership business. 5. Bullion investment (BI) mean amount invested in gold, silver, diamonds and other precious metals.
63 6. Insurance investment (II) means amount for availing life insurance policies from LIC and private insurers. 7. Kuris and Chit fund (KC) means amount invested in kuris and chit funds run by NBFCs and indigenous agencies and individuals. 8. Other traditional investment (OT) means investment in other investment venues like panam payattu, nidhis etc.
II. Modern Investment Venues consists of:
9. Corporate Securities (CS) refers to investment made in shares, stock, debentures issued by companies and corporations 10. Government Securities (GS) refers to amount invested in govt.securities and bonds 11. Mutual funds (MF) amount invested in various schemes of mutual funds 12. Provident and pension Fund (PF) amount invested in public provident fund and various pension and retirement schemes 13. Money market (MM) refers to amount invested in money market instrument like certificate of deposits, commercial papers etc. 14. Other modern investment avenues (OM) like derivatives, depository receipts etc.
Table 5.10 depicts investment portfolio of selected respondents on the basis of amount invested.
64 Table 5.10 Investment Portfolios of NRIs in Malabar
Amount in Code Crores Per cent Rank RP 2.37 24.82 1 RE 1.27 13.30 2 Traditional BP 1.02 10.68 5 Investment BA 1.1 11.52 3 venues BU 0.48 5.03 7 II 1.03 10.79 4 KC 0.31 3.25 10 OT 0.02 0.21 14 Total 7.6 79.58 CS 0.79 8.27 6 GS 0.16 1.68 11 Modern MF 0.47 4.92 8 Investment Venues PF 0.44 4.61 9 MM 0.06 0.63 12 OM 0.03 0.31 13 Total 1.95 20.42 Grand Total 9.55 100
65 Figure 5.10
Compsition of investment Portfolio of NRIs
Traditional Investment venues Modern Investment Venues
20%
80%
Figure 5.10.1Traditional venues Figure 5.10.2 Modern Venues CS GS MF PF MM OM 4% 0%
14% 6% 31% 3% 2%
15% 23% 40% 17% 13% 24% 8%
From the above table and figures, it is clearly found that from total respondents nearly 80 percent of investors are using conventional investment venues. Only 20 percent choosing modern investment venues. Out of total investment Rs.9.55 crores, 2.37 crore (nearly 25 per cent) invested in residential properties which claims 1st rank in all investment venues followed by investment in real estate(1.27 crore, 2nd rank), investment in business (1.1 crore, 3rd rank, investment in insurance (1.03 crores,4th rank) and bank / post office deposits (1.02 crore, 5th rank) respectively in descending order.
66 Among ranking of 14 alternatives first five ranks goes to traditional investment venues.
Out of total investment(Rs.1.95) in Modern investment venues, major portion belongs to investment in corporate securities which amounts to Rs.0.79 crores, followed by mutual fund investment (0.47 crore) and investment in pension and provident fund(0.44 crore) respectively in descending order. It is impliedly revealed from the distribution of respondents that, even if financial literacy in Kerala is high, most of the NRI investors still follow traditional investment practices. A negative remark is that least amount is invested in money market, derivative market and commodity market instruments.
Figure 5.10.3
Amount wise portfolio of NRIs
Rs.In Crores
2.37
1.27 1.02 1.1 1.03 0.79 0.48 0.47 0.44 0.31 0.16 0.02 0.06 0.03
RP RE BP BA BU II KC OT CS GS MF PF MM OM
Tradtional investment venues Modern Investment venues
It is visible from the chart that in conventional investment portfolios major portion of total investment of NRIs in Malabar goes to residential property, real estate, life insurance policies, business and deposits. Least amounts goes
67 to other traditional investment avenue like panam payattu, nidhis etc. in modern investment portfolios, more investment attracted by corporate securities, mutual fund and PF whereas least amount goes to derivative/commodity investment, money market investment and government securities even though these avenues are relatively secured.
5.11 Investment Preferences of NRIs in Malabar
Portfolio of investment may change according to investors' age, status, religion and other demographic/financial/natural consideration. table 5.11 shows the details of portfolios of NRI investors in Malabar, their religion and preferences of selection(rank)
Table 5.11 Ranking of Investment Preferences
Investment Hindus Muslims Christians venues Type Code Percent Rank Percent Rank Percent Rank RP 24.94 1 26.09 1 18.63 2 RE 8.65 4 18.48 2 7.84 4 BP 16.54 2 3.48 8 20.59 1 Tradi- BA 7.12 6 16.09 3 7.84 4 tional BU 3.56 10 6.52 6 3.92 8 II 10.69 3 11.74 4 6.86 5 KC 6.62 7 0.43 9 2.94 9 OT 0.51 13 0.00 11 0.00 12 CS 7.63 5 7.17 5 15.69 3 GS 2.04 11 0.43 10 5.88 6 MF 5.60 8 4.78 7 2.94 10 Modern PF 4.33 9 4.78 7 4.90 7 MM 1.27 12 0.00 11 0.98 11 OM 0.51 13 0.00 11 0.98 11
68 Figure 5.11
Investment preferences of NRIs 14 13 RP 12 12 12 RE 11 11 11 10 10 10 10 BP 9 9 9 BA 8 8 8 8 BU 7 7 7 Rank 6 6 6 6 II 5 5 5 KC 4 4 4 4 OT 3 3 3 2 2 2 2 CS 1 1 1 GS 0 MF Hindus Muslims Christians
From the above table and chart it is clear that there is a variation in investment preferences of NRIs. While Hindus giving first three ranks of preference to residential property, bank deposit and insurance, Muslims giving preferences to residential property, real estate and business activities. Christian's first three preferences are bank deposits, residential property and corporate securities. Modern investment avenues are least preferred by Hindus and Muslims as compared to Christians.
Testing of hypotheses of the Study
Hypothesis testing is a crucial part of any research. In general, it is the procedure used to evaluate our competing ideas about how the aspects of our study environment are structured. Statistical hypothesis testing is a mathematical means of calculating the probability that some relationship we posit is correct. Often, we evaluate specific relationships we think are
69 true. These relationships can be referred to as our hypotheses of interest. In this study there are five hypotheses related to investment behaviour and its influencing factors are put forth. In order to test these hypotheses ANOVAs and Chi-square tools are used.
Test 1
H0: There is no significant religious influence on investment portfolio of NRIs
H1: There is significant religious influence on investment portfolio of NRIs
Venue-Wise Investment portfolio (in lakh Rs)
Religion Total
II
PF
BP CS
RP GS
RE BA BU
OT
KC
MF
OM MM Hindus 98 34 65 28 14 42 26 2 30 8 22 17 5 2 393 Muslims 120 85 16 74 30 54 2 0 33 2 22 22 0 0 460 Christians 19 8 21 8 4 7 3 0 16 6 3 5 1 1 102 Total 237 127 102 110 48 103 31 2 79 16 47 44 6 3 955
Anova Table (one way)
Sum of Degree of Mean Source of Variation Squares freedom square Between Column SSC=18074 K-1=13 MSC=1390 Within Column SSE=14956 N-k=28 MSE= 534 Total SST=33030 N-1=41 F= 2.60
The table value of F at 5% level of significance for (13, 28) degree of freedom is 2.08. The calculated value of F (2.60)is more than table value of F.
70 Therefore H0 is rejected. Hence, there is significant religious influence on investment portfolio of NRIs.
Composition of investment portfolio of NRI investors in Malabar are seems to be faith based. Religious affiliation, belief, religiosity etc influencing the investment preference and behaviour of investors.
Test 2
H0: There is no significant difference in investment portfolios of NRIs according to their educational status.
H1: There is significant difference in investment portfolios of NRIs according to their educational status.
Venue-Wise Investment portfolio in lakh
Educational
Total
Status
II
PF
BP CS
RP GS
RE BA BU
OT
KC
MF
OM MM Up to SSLC 28 21 13 19 12 25 10 2 0 0 0 1 0 0 131 HSE to 429 Degree 120 61 46 56 19 40 18 0 27 3 19 19 1 0 Post 165 graduation 37 14 16 9 9 13 0 0 21 8 15 16 5 2 Professional 124 degree 31 19 14 8 3 9 0 0 23 4 9 4 0 0 Others 21 12 13 18 5 16 3 0 8 1 4 4 0 1 106 Total 237 127 102 110 48 103 31 2 79 16 47 44 6 3 955
Anova Table (one way) Source of Sum of Degree of Mean Variation Squares freedom square Between Column SSC=10844 K-1=13 MSC=834 MSE= Within Column SSE=12822 N-k=56 229 Total SST=23666 N-1=69 F= 3.642
71 The table value of F at 5% level of significance for (13, 56) degree of freedom is 1.905. The calculated value of F is more than table value of F. Therefore H0 is rejected. Hence, there is significant difference in investment portfolios of NRIs according to their educational status.
Education level of investors is one prominent factor which affecting investment behaviour of NRIs and selection of investment mix. Even though there enormous modern and innovative venues for investment, less educated NRI investors are still parking their hard earned money in conventional investment avenues like residential property, real estate, gold, bank deposits etc.
Test 3
H0: There is no significant association between employment status of NRIs and investment timing. H1: There is significant association between employment status of NRIs and investment timing.
Observed Frequency Timing of Investment Half Employment status Weekly Monthly Quarterly yearly Annually Total Professionals 0 26 8 1 17 52 Business 12 12 8 0 0 32 Skilled workers 0 19 12 7 16 54 Semi-skilled workers 0 23 27 8 14 72 Salaried staff (Govt, banks) 0 10 2 0 2 14 Others 7 17 17 10 25 76 Total 19 107 74 26 74 300
72 Expected Frequency Timing of Investment Half Employment status Weekly Monthly Quarterly yearly Annually Professionals 3 19 13 5 13 Business 2 11 8 3 8 Skilled workers 3 19 13 5 13 Semi-skilled workers 5 26 18 6 18 Salaried staff (Govt, banks) 1 5 3 1 3 Others 5 27 19 7 19
Degree of freedom = (c-1) (r-1) = (5-1) (6-1) = 20
Level of significance = 5%
Table value = 31.41
Calculated value = 104.98
Since calculated value is more than table value, null hypothesis (H0) is rejected. Therefore, there is significant association between employment status of NRIs and investment timing. Timing of receiving salary, remuneration and wages of NRIs are depending upon the nature of employment and their by influencing the timing of their investment.
73 Test 4
H0: There is independence between age of NRIs and volume of investments.
H1: There is dependence between age of NRIs and volume of investments.
Observed Frequency
Annual Investment Age group Up to 1lakh 1-2lakh 2-3 lakh 3-4 lakh >4 lakh Total < 25 years 23 25 24 5 1 78 25-40 years 11 17 69 34 12 143 41-55 years 10 20 15 11 13 69 > 55 years 0 1 3 5 1 10 Total 44 63 111 55 27 300
Expected Frequency
Annual Investment Age group Up to 1lakh 1-2lakh 2-3 lakh 3-4 lakh >4 lakh < 25 years 11 16 29 14 7 25-40 years 21 30 53 26 13 41-55 years 10 14 26 13 6 > 55 years 1 2 4 2 1
Degree of freedom = (c-1) (r-1) = (5-1) (4-1) = 12
Level of significance = 5%
Table value = 21.026
Calculated value = 68
74 Since calculated value is more than table value, null hypothesis (H0) is rejected. Therefore, there is dependence between age of NRIs and volume of investments.
Test 5
H0: There is no significant difference in investment criteria between men and women NRI investors. H1: There is significant difference in investment criteria between men and women NRI investors.
Investment Criteria
Gender Income Total Income Growth & Liquidity Safety Others growth Male 57 103 39 34 16 10 259 Female 10 3 6 9 13 0 41 Total 67 106 45 43 29 10 300
Anova Table (one way) Source of Sum of Degree of Mean square Variation Squares freedom Between SSC=2770 K-1=5 MSC=554 Samples Within Samples SSE=7016 N-k=6 MSE= 1169 Total SST=9786 N-1=11 F=2.11
The table value of F at 5% level of significance for (5, 6) degree of freedom is 4.95. The calculated value of F is less than table value of F. Therefore H0 is accepted. There is no significant difference in investment criteria between men and women NRI investors.
75 Chapter VI FINDINGS, SUGGESTIONS AND CONCLUSION
6.1 FINDINGS
Findings of this study explain the result of analysis of collected data. These findings are exactly in accordance with research problem and objectives. Data collected from selected 300 NRI respondents were systematically arranged and scientifically analyzed to identify, explain, extract and explore the relationship between the various variables related with investment behaviour of NRIs in Malabar region. The findings of this study are here:
Out of the total respondents, 50 per cent (150 in number) are from south Malabar and same percent from north Malabar region.
Out of total NRIs in Malabar, prominent age group is 26 to 40 (47.67%). least umber coming under the age group 56 and above (3.33%). Out of 300 numbers, 10 number NRI Investors are still doing job abroad even after the average retirement age of Kerala.
According to collected data, from the 300 NRI investors, lion's portion is men (86.33 percent). Women NRI investors are confined to 13.67 percent.
From 300 NRI investors in Malabar, 232 respondents are married.
It is interesting that out of 300 respondents, 243 NRI investors have good educational qualifications. Only 57 respondents have qualification SSLC and below. In education-wise classification of
76 respondents dominant group is HSE to graduation. NRI investors in Malabar region are relatively well educated.
Among 300 respondents in Malabar, nearly 50 percent belongs to Muslims (149 in number), Hindu respondents are 116 and Christians are 35. Christian's population relatively less in Malabar region and Muslim population is dominant in both selected districts (Malappuram and Kasaragode).
It is found that out of 300 NRI s respondents of Malabar region, predominant group belongs to GCC countries. As per data collected, nearly 86 percent NRI investors belongs to Gulf countries. From the total 27.67 per cent NRIs are employed or working in UAE, followed by Saudi Arabia (23 per cent) and third position is goes to Kuwait (14.33 per cent). Least number of NRIs in Malabar region is employed in Canada and UK. The study proven the general fact that most of the remittances in Kerala are flowing from Gulf countries.
Among total respondents, most of the NRI investors have been staying abroad for a period of 10 to 15 years, nearly 10 percent of NRIs staying abroad for more than 20 years. Out of 300 NRIs, nearly 40 per cent has staying abroad up to 10 years.
In connection with employment status of NRI investors in Malabar it is found that most of the respondents belongs to “Others” (76 in number)which consists of office staff, clerks, accounting staff, salesmen/women, catering workers, field staff, factory workers etc., Second position goes to semiskilled workers, out of total respondents, number of semi skilled workers is 72 in numbers which consists of drivers, plumbers, electricians, construction workers etc, Third position belongs to skilled workers. Professionals are nearly 17 per cent of
77 these respondents. Least number in these groups belongs to salaried staffs which consist of foreign govt. employees and bank employees.
It is found that out of the total NRI respondents, 99 of the respondents belong to the annual income group of 5 lakh to 7.5 lakh. 72 and 69 number of respondents belongs to 2.5 to 5 lakh and 7.5 to 10 lakh annual income groups respectively. 32 numbers of respondents come to lower annual income group (below 2.5 lakh) and 28 numbers goes to highest annual income group under this study. It is evident that the pattern of respondents follow a bell shaped distribution. Ie out of total respondents, 9.33 per cent and 10.67per cent belongs to lower income class and higher income class respectively. Middle income group ( 5 to 7.5 lakh) is 33per cent . The second lowest and second highest annual income groups' shares 24per cent and 23per cent respectively.
Study revealed that savings of the majority of respondent‟s ranges between 1.5 to 3 lakh. 20.67 per cent of the respondent group‟s saving is below 1.5 lakh. 10.67 per cent NRIs are saving more than 6 lakh annually. 67 number of the respondents saving annually amount ranging from 4.5 to 6 lakh.
It is found that among 300 total respondents, majority of NRIs investing an annual amount ranging from Rs.2 lakh to 3 lakh. 27 number of NRIs investing annually more than 4 lakh rupees (out of 27respondents, 5 NRI's average annual investment is more than 20 lakh). 55 respondent‟s investment range is 3 to 4 lakh pa.
The dominant source of investment motives of NRIs is agents (insurance agents, mutual fund agents), stock brokers, real estate consultants etc. Nearly 35 per cent of NRI investors depend these experts and advisors for selecting their investment. Least number of respondents relies on information provided by other source such as
78 Govt.publications, propaganda and others. Advertisement motivates 15 per cent of respondents.29.33 per cent of total respondents selecting investment option from his own ideas and past experience.
With regard to criteria of investment most of the respondents (35.33%) have growth approach, 22.33 per cent follows income approach, 15 percent follows conservative approach (moderate growth and income), 14.33 percent has liquidity approach, 9.67 per cent has safety approach and 3.33 percent have other criteria for investment.
While considering satisfaction level of present NRI investors it is found that the total 13.67 per cent of respondents were highly satisfied with their current investment. The maximum ie, 44 percent were satisfied with their investment‟s performance. 20.67 percent satisfied with some features of their investment and unsatisfied on some other. Nearly 22 percent (14.67+7) of respondents were unsatisfied with their present investments.
According to the study out of 300 respondents, 54 per cent were ready to choose only low risk investment alternative. While 23.67 per cent of total respondents prefer moderate risk 22.33 per cent were ready to accept high risk.
Out of the 300 respondents, most of the respondents make investment monthly.35.67 percent (107 in number) making monthly investment. 24.67 percent each making quarterly and annual investments. 26 respondents following half yearly investment plan and last 19 respondents were following weekly investment.
From the study it is clearly found that from total respondents nearly 80 percent of investors are using conventional investment venues. Only 20 percent choosing modern investment venues. Out of total investment Rs.9.55 crores, 2.37 crore invested in residential properties which
79 claims 1st rank in all investment venues followed by investment in real estate(2nd rank), investment in business Rs.1.1 crore,(3rd rank), investment in insurance Rs.1.03 crores(4th rank) and bank / post office deposits Rs. 1.02 crore, (5th rank) respectively in descending order. Among ranking of 14 alternatives first five ranks goes to traditional investment venues.
Out of total investment (Rs.1.95 crores) in Modern investment venues, major portion belongs to investment in corporate securities which amounts to Rs.0.79 crores, followed by mutual fund investment (0.47 crore) and investment in pension and provident fund (0.44 crore) respectively in descending order. It is impliedly revealed from the distribution of respondents that, even if financial literacy in Kerala is high, most of the NRI investors still follow traditional investment practices.
There is a variation in investment preferences of NRIs. While Hindus giving first three ranks of preference to residential property, bank deposit and insurance, Muslims giving preferences to residential property, real estate and business activities. Christian's first three preferences are bank deposits, residential property and corporate securities. Modern investment avenues are least preferred by Hindus and Muslims as compared to Christians.
Study find that in their investment portfolio, Muslims investors have a negative attitude towards bank and post office deposits while Christians showing a positive attitude towards modern investment venues like share market, mutual fund etc.
It is found that least amount is invested in money market, derivative market and commodity market instruments.
80 It is also found that in conventional investment portfolios major portion of total investment of NRIs in Malabar goes to residential property, real estate, life insurance policies, business and deposits. Least amounts goes to other traditional investment avenue like panam payattu, nidhis etc. in modern investment portfolios, more investment attracted by corporate securities, mutual fund and PF whereas least amount goes to derivative/commodity investment, money market investment and government securities even though these avenues are relatively secured.
The study indicated that among 300 respondents, most of the NRI investors (44%) are planned to withdraw their investment within 5 to 10 years of their investment. 27 per cent of them decided to withdraw within 2 to 5 years of their investment. 88 number of NRIs are planned to take back their parked fund only after 10 years.
An important inference from this study that there is significant impact of religious affiliation of NRI investors upon their investment portfolio selection. An analysis of the variance (One way Anova) of investment venues and religions, it is clear that the table value of F at 5% level of significance for (13, 28) degree of freedom is 2.08. The calculated value of F (2.60) is more than table value of F. Therefore H0 is rejected. Hence, there is significant religious influence on investment portfolio of NRIs. Composition of investment portfolio of NRI investors in Malabar are seems to be faith based. Religious affiliation, belief, religiosity etc influencing the investment preference and behaviour of investors. (test 1-One WayANOVA )
By analyzing the education level and investment portfolios of NRIs in Malabar it is seen that the investment portfolios of NRIs varying according to their educational status. As per this study education level
81 of investors is one prominent factor which affecting investment behaviour of NRIs and selection of investment mix. Only highly educated NRIs had invested in modern investment alternatives. Even though there enormous modern and innovative venues for investment, less educated NRI investors are still parking their hard earned money in conventional investment avenues like residential property, real estate, gold, bank deposits etc. (test 2- One WayANOVA)
While analyzing the association between employment status (nature of employment) and timing (frequency) of investment of NRIs it is found that the calculated value (104.98) is more than table value (31.41).So that there is significant association between employment status of NRIs and investment timing. Timing or frequency of receiving salary, remuneration and wages of NRIs are depending upon the nature of employment and their by influencing the timing of their investment.(Test 3-Chi-square)
An analysis of association between age of NRIs and investment volume (amount) revealed that there is dependence between age of NRIs and volume of investments. Table value is 21.026 and calculated value is 68. Since calculated value is more than the table value the dependence between age of NRIs and their investment volume is statistically proved. (Test 4-Chi-square)
By analyzing the impact of gender on investment criteria (investment objectives) it is found that there is no significant difference in investment criteria of men and women NRI investors. Calculated value F is 2.11 and table value at 5% level of significance for degree of freedom (5, 6) is 4.95. (test 5- One WayANOVA)
82 6.2 SUGGESTIONS
Investment meant either to earn income or to gain capital appreciation or for any other purpose. Employment generation increases in NSDP, industrial development, enhanced average standard of living are some of the expected output of investment. Despite, in Kerala lion's portion of NRIs investment misrouted to unproductive and dead investment sectors. to tackle this, the following suggestions radiate from the findings of the study on Investment behaviour of NRIs in Malabar
Government and related agency should frame policy measures and mechanisms to direct NRI remittances to productive investment venues.
Government should offer incentives and tax benefits to those NRI investors who take part in public infrastructural development activities of the state.
Government and public Companies/corporations should engineer new securities and instruments which specifically suitable for NRI investors.
State Government should take measures to bring investment in residential property, real estate and other conventional venues into regulatory frameworks.
State Government and its agencies should conduct "A village level investment awareness campaign" in order to nurture investment culture in urban as well as rural areas.
We know that most of the NRIs are well educated but have less investment attitude and experience. So in order to inculcate investment habits in youngsters as early, schools and colleges should set up "Investment Club" as functioning of ED club.
83 Political parties and local people should approach positively towards industrial concerns set up by NRIs with their hard earned money.
NRIs remittances are to be properly accounted and contribution made by NRIs should be duly recognized.
Government and other investment related agencies has to provide more value added services to NRIs investors and should resort single window clearance system to solve problems related to NRI's investment.
Government should charge slab-wise 'luxurious tax and duties' on extravagant/unproductive spending like marriage, house warming and other vanity events.
There should be an Investment Consultancy organization under the control of government to provide necessary advises and guidelines to NRIs and other investors of the state.
Efforts should be taken to design a flexible investment options to cater the need of various segment of NRI investors like religious segment, age segment, educational segment, gender segment etc.
Since NRIs are visiting their home place after few years interval most of their investment are managed by their spouse and near relatives. There should be proper platform to provide training and guidelines to these investment agents of NRIs. Kudumbasree, Ayalkoottam and other similar entity can be used for this sake.
As far as possible the Government should make efforts to make agreement with foreign countries where NRIs are employed to share at least one per cent as tax or whatever name called on their income earned abroad.
84 6.3 CONCLUSION
The study is carried out on the topic "An Analytical study on Investment Behaviour of NRIs with a Special Focus on Malabar Region". Adhering to the technique of multi-stage stratified random sampling 150 respondents each were selected from South Malabar and North Malabar regions. As per data has been collected, we noticed lot of investment behaviour and investment pattern of NRIs in Malabar. There are number of investment opportunities opened in front of NRIs which consists of conventional investment venues and modern or innovative venues. Most of the NRI investors are using conventional or traditional investment alternatives like residential property, real estate, bank deposits, insurance policy, bullions etc. Related agencies are required to take efforts to attract NRIs investment to modern investment sectors also which are scanty now. Majority of respondents were male, relatively educated, semiskilled workers. A lion's portions of NRIs were working in Gulf countries especially in UAE and Saudi Arabia.
There are five hypotheses emanate under this study. The statements are tested with the help of one way ANOVAs and Chi-Square test. As a result, it was triggered that there is significant religious influence on investment portfolio of NRIs in Malabar; there is significant difference in investment portfolios of NRIs in Malabar according to their educational status, there is significant association between employment status of NRIs and investment timing, there is dependence between age of NRIs and volume of investments and there is no significant difference in investment criteria between men and women NRI investors in Malabar region. Everyone knows the role of NRIs in development of Kerala Economy is not negligent. However to recognize their remittance with due consideration and channelize it towards productive investment sectors some important suggestions are offered as an output of this study.
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91 APPENDIX
Interview Schedule
An Analytical Study of Investment Behaviour of NRIs with Special Focus on Malabar Region.
1 Name : 2 Age : 3 Country of employment : 4 Marital Status Married Single
5 Gender Male female
Musli 6 Religion Hindu m Christian
others 7 Occupation/employment Professional Business
Semiskilled Skilled workers workers
Salaried Govt. others staff 8 Annual income up to 2 lakh 2.5 to 5 lakh
5 to 7.5 lakh 7.5 to 10 lakh
above 10 lakh 9 Annual savings Up to 1.5 lakh 1.5 to 3 lakh
3 to 4.5 lakh 4.5 to 6 lakh
above 6 lakh Average annual 10 investment
Up to 1 lakh 1 to 2 lakh
2 to 3 lakh 3 to 4 lakh
above 4 lakh 11 investment objective Income Growth
Income & Liquidity growth safety others 12 Source of Investment motive Own ideas & experience
Friends &relatives
Agents, brokers, consultants Advertisement
Others 13 Level of satisfaction Higly satisfied
Satisfied
Partly satisfied
unsatisfied
Highly unsatisfied 14 Timing of Investment Weekly Monthly
Quarterly Half yearly
Annually
Moderat 15 Risk Assuming High e Low 16 Amount Invested Traditional avenues Residential Rs......
property Real estate Rs...... Bank & Pos deposits Rs...... Bullion Rs...... Business Rs...... Insurance policy Rs...... Kuris and Chits Rs...... others Rs...... total Rs...... Corporate Modern avenues securities Rs...... Govt.Securities Rs...... Mutual fund Rs...... Provident fund Rs...... money market Rs...... others Rs...... Total Rs......
17 investment withdrawal 2 -5 years 5 -10 years after above 10 years
Any opinion and suggestion?
Thank you