an analytical study on investment behaviour of nris … · declaration i hereby declare that the...
TRANSCRIPT
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.
Chapter I
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
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
Chapter VI
Findings, Suggestions and Conclusion 76 – 85
6.1 Findings 76
6.2 Suggestion 83
6.3 Conclusion 85
Bibliography 86 – 93
Appendix
LIST OF TABLES
Sl.
No.
Table
No. Index
Page
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
18 5.5
Investment Criteria wise distribution of NRIs in
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.
No.
Table
No. INDEX
Page
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
14 5.5
Investment Criteria wise distribution of NRIs in
Malabar 58
15 5.6
Level of Satisfaction of NRI Investors in
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
19 5.10
Composition of Investment Portfolios of NRIs in
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
23 5.11
Ranking of Investment preferences of NRIs in
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
1
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
2
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
3
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
4
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.
5
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.
6
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
7
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.
8
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.
9
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
10
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.
11
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
12
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
13
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
14
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
15
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
16
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
17
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
18
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.
19
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.
20
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.
21
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
22
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
Districts 2003 2008 2011 2014
Percentage of
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.
23
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
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.
1990 1994 1998 2002 2006 2010 2014
510214
819025
1318489
1717695
20935202321750 2400375
1 2 3 4 5 6 7
Trend of NRIs in Kerala for last 25 years
Years Number of NRIs in Kerala
24
Table No 3.2
NRI’s remittance by district (2003-2014) . in Crores
Districts 2003 2008 2011 2014
Percentage of
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
25
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”
Religion 2003 2008 2011 2014 % of changes From
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
26
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
27
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)
Districts Total NRIs Returned
NRIs
% of return
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
28
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,
29
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.
30
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
31
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
32
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.
33
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
34
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.
35
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,
36
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
37
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.
38
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)
39
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.
40
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
41
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.
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).
0
20
40
60
80
100
120
140
160
Less than 25 26 -40 41-55 56 and above
Nu
mb
er
and
Pe
rce
nt
age group
Number
Per cent
Age -wise distribution of NRIs in Malabar
42
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
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.
Gender of respondents
Male
Female
43
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.
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
Married Unmarried
232
68
Figure 4.3 Marital status of NRIs in malabar
Number
44
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
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.
Up to SSLC19%
HSE to Graduate
45%
Post graduate 11%
Professional14%
others11%
Education of NRIs in Malabar %
45
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
0
20
40
60
80
100
120
140
160
Number Per cent
NRIs Religious composition in Malabar
Hindu
Muslim
Christians
46
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
47
Figure 4.6
Country of Employment of NRI investors in Malabar
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.
0 20 40 60 80 100
USA
CANADA
UK
UAE
SAUDI ARABIA
KUWAIT
OMAN
QUATAR
BAHARAIN
OTHER ASIAN COUNTRIES
OTHER COUNTRIES
Number of NRIs
Emp
loym
en
t co
un
try
Number
48
Table 4.7 Duration of NRI’s stay abroad
Duration of Stay
abroad
Number Per cent
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
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.
5467
89
61
29
Less than 5 years
5 to 10 years 10 to 15 years 15 to 20 years Above 20 years
Duration of stay abroad
Number
49
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
50
Figure 4.8
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)
17%
11%
18%
24%
5%
25%
Employment status -wise distribution of NRis in Malabar
Professionals
Business
Skilled workers
Semi-skilled workers
Salaried staff (Govt, banks)
Others
51
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
52
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
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
0
10
20
30
40
50
60
70
80
90
100
Up to 2.5 lakh
2.5 to 5 lakh
5 to 7.5 lakh
7.5 to 10 lakh
Above 10 lakh
Annual income of NRIs in Malabar
Number
53
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
54
Figure 5.2
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.
0
10
20
30
40
50
60
70
80
90
Up to 1.5 lakh
1.51 to 3 lakh
3.01 to 4.5 lakh
4.51 to 6 lakh
Above 6 lakh
Savings- wise distrinution of NRIs in Malabar
Number
55
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
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.
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
Up to 1lakh
1.to 2 lakh
2 to 3 lakh
3 to 4 lakh
Above 4 lakh
Average annual investment of NRIs in Malabar
Per cent
56
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
Own ideas and experience
29%
Friends and Relatives
13%
Agents, brokers,
consultants etc35%
Advertisement 15%
Others 8%
Motivating source of investment
57
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
Criteria Income Growth
Income
&
growth
liquidity Safety others Total
No. of
respondents 67 106 45 43 29 10 300
Per cent 22.33 35.33 15.00 14.33 9.67 3.33 100.00
Source: Direct field survey
58
Figure 5.5
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.
Income
Growth
Income & growth
liquidity
Safety
others
67
106
45
43
29
10
Investment Criteria of NRIs in Malabar
No. of respondents
59
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
The distribution of respondents shows that out of the total 41 number
of respondents were highly satisfied with their current investment. The
Highly satisfied13%
Satisfied44%
Partly satisfied21%
Unsatisfied15%
Highly un satisfied
7%
Satisfaction Level of NRIs in Malabar
60
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
54%
24%
22%
Assumed risk per cent of NRIs in Malabar
Low risk Moderate risk High risk
61
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
weekly Monthly Quarterly Half yearly Annually
6.33
35.67
24.67
8.67
24.67
Investment timing of NRIs in Malabar
Per cent
62
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
Number of respondents81 131 88
Period of withdrawal of investment
2 to 5 years 5 to 10 years After 10 years
63
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.
64
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.
65
Table 5.10 Investment Portfolios of NRIs in Malabar
Traditional
Investment
venues
Code
Amount in
Crores Per cent Rank
RP 2.37 24.82 1
RE 1.27 13.30 2
BP 1.02 10.68 5
BA 1.1 11.52 3
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
Modern
Investment
Venues
CS 0.79 8.27 6
GS 0.16 1.68 11
MF 0.47 4.92 8
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
66
Figure 5.10
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.
80%
20%
Compsition of investment Portfolio of NRIs
Traditional Investment venues Modern Investment Venues
40%
8%24%
23%
3% 2%
Figure 5.10.2 Modern Venues
CS GS MF PF MM OM
31%
17%13%
15%
6%14%
4% 0%
Figure 5.10.1Traditional venues
67
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
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
RP RE BP BA BU II KC OT CS GS MF PF MM OM
Tradtional investment venues Modern Investment venues
2.37
1.27
1.02 1.1
0.48
1.03
0.31
0.02
0.79
0.16
0.47 0.44
0.06 0.03
Amount wise portfolio of NRIs
Rs.In Crores
68
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
venues Hindus Muslims Christians
Type Code Percent Rank Percent Rank Percent Rank
Tradi-
tional
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
BA 7.12 6 16.09 3 7.84 4
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
Modern
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
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
69
Figure 5.11
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
1 1
2
4
2
4
2
8
1
6
3
4
10
6
8
3
4
5
7
9 9
13
11
12
5 5
3
11
10
6
8
7
10
9
7 7
12
11 11
13
11 11
0
2
4
6
8
10
12
14
Hindus Muslims Christians
Ran
kInvestment preferences of NRIs
RP
RE
BP
BA
BU
II
KC
OT
CS
GS
MF
70
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
Religion
Venue-Wise Investment portfolio (in lakh Rs)
Total
RP
RE
BP
BA
BU
II
KC
OT
CS
GS
MF
PF
MM
OM
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)
Source of Variation
Sum of
Squares
Degree of
freedom
Mean
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.
71
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.
Educational
Status
Venue-Wise Investment portfolio in lakh
Total
RP
RE
BP
BA
BU
II
KC
OT
CS
GS
MF
PF
MM
OM
Up to SSLC 28 21 13 19 12 25 10 2 0 0 0 1 0 0 131
HSE to
Degree 120 61 46 56 19 40 18 0 27 3 19 19 1 0 429
Post
graduation 37 14 16 9 9 13 0 0 21 8 15 16 5 2 165
Professional
degree 31 19 14 8 3 9 0 0 23 4 9 4 0 0 124
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
Variation
Sum of
Squares
Degree of
freedom
Mean
square
Between Column SSC=10844 K-1=13 MSC=834
Within Column SSE=12822 N-k=56
MSE=
229
Total SST=23666 N-1=69 F= 3.642
72
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
Employment status
Timing of Investment
Weekly Monthly Quarterly
Half
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
73
Expected Frequency
Employment status
Timing of Investment
Weekly Monthly Quarterly
Half
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.
74
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
Age group
Annual Investment
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
Age group
Annual Investment
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
75
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.
Gender
Investment Criteria
Total Income Growth
Income
&
growth
Liquidity Safety Others
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
Variation
Sum of
Squares
Degree of
freedom Mean square
Between
Samples SSC=2770 K-1=5 MSC=554
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.
76
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
77
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
78
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
79
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
80
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.
81
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
82
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)
83
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.
84
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.
85
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.
86
REFERENCES
1. Zachariah K.C. and S. Irudaya Rajan, (2014): CDS-Kerala Migration
Survey,6th series. Working Paper 463,(CDS).Pp 34-64
2. Directorate of Economics & Statistics, Kerala ,(2013) Pravasi
Malayali Census Report, Vol.1 & 2 Pp.7.28-47
3. Mishra & Dash,( 2010) : Factors influencing investment generations in
India, Asian journal of Management Research,Pp.308
4. Gnani, Ganesh & Santhi,( 2012): A study on Individual Investors
behaviour with special reference to Geojith, IRACST, Volume
2,2.Pp.243.
5. Anna, Andreas, George & Prasad( 2004),Economic Factors and
Individual investment Behaviour, Journal of applied research,
V.20(4),Pp.93
6. Josiah Aduda, Odera Eric Oduor and Mactosh Onwonga (2012)The
Behaviour and Financial Performance of Individual Investors , Journal
of Finance and Investment Analysis, 2012, vol. 1, issue 3, Pp.34
7. Pandiyan& Aranganathan ( 2012).An Assessment Study on the
„‟Factors Influencing the Individual investor decision making
Behaviour" ISOR journal of Business and Management,V9,I5,p.37
8. Jain & Mandot, (2012), "The Impact of Demographic Factors on the
Decisions of Investors", ISOR journal of Business and
Management,V19,I8,p.1
9. Nair, P.R. Gopinathan, (1986): Asian Migration to Arab World:
Migration from Kerala (India), Working Paper No.181, Centre for
Development Studies, Trivandrum, p.7.
87
10. Ramasamy T and Vinayakamoorthy S (2000), “Investment – a
development factor on savings”, unpublished thesis.
11. Pandiyan andAranganathan, (May-June 2012)„‟Savings and
Investments Attitude of Salaried Class in Cuddalore District‟‟ IOSR
Journal of Business and Management (IOSRJBM) Volume 1, Issue 1,
PP 40-49
12. Awan, H andArshad, S (2012) „‟Factors valued by investors while
investing in mutual funds-a behavioral context‟‟, Interdisciplinary
journal of contemporary research in business, Volume 4, no 1
13. Iqbal,A and Usmani, S(2009)‟‟Factors Influencing Individual Investor
Behavior‟‟ South Asian Journal of Management Sciences, Vol. 3, No.
1, Page no, 15 – 26
14. Anna A.M, Andreas, G.M, George, S.V. (2004) ‟‟Economic
Factors.And Individual Investor Behavior‟‟The Case of the Greek
Stock Exchange, Volume 20, 93. Prasad Journal of Applied Business
Research.
15. Thomas Isaac TM (1997) “Economic Consequences of Gulf
Migration.” In Kerala's Demographic Transition: Determinants and
Consequences. Edited by Zachariah, KC and Rajan, S Irudaya. New
Delhi: Sage Publications.
16. Sikidar, Sujit and Singh, Amrit Pal (1996), “Financial Services:
Investment in Equity and Mutual Funds – A Behavioural Study”, in
Bhatia B.S., and Batra G.S.(ed.) Management of Financial Services,
Deep and Deep Publications, New Delhi, 136-145.
17. Shanmugam (1990), A study on investors awareness of investment, An
Unpublished M.Phil dissertation submitted to PSG CAS.
88
18. Sitkin and Pablo (1992), “Reconceptualising the Determinants of Risk
Behaviour”, academy of Management Review. Vol. 17, Issue 1, pp. 9-
39.
19. Lucey & Dowling, M (2005) “The Role of Feelings in Investor
Decision-making” Journal of economic surveys vol. 19, no. 2#
Blackwell publishing ltd. 2005, 9600
20. Kadariya.S, (2012) „‟Factors affecting investor decision making: A
case of Nepalese capital market‟ ‟Journal of Research in Economics
and International Finance (JREIF), Vol. 1(1) Page. 16 -30.
21. Aduda.J, Oduor.E.O & Onwonga.M (2012), ‟ The Behavior and
Financial Performance of Individual Investors in the Trading Shares of
Companies Listed At the Nairobi Stock Exchange, Kenya‟ ‟Journal of
Finance and Investment Analysis, Volume.1, no.3, 2012, Page no 33-
60.
22. Werner F.M & Thaler R, (1985), „‟ Does the Stock Market Overreact",
The Journal of Finance, Volume 40, No.3, Page no. 783 -805
23. Hodge.D.F, (2003), Investors perception of earning Quality,
Auditor Independence, and usefulness of the Auditor Financial
Information‟‟, Accounting Horizon page no.37-48.
24. Prakash, B.A, (1998): “Gulf Migration and Its Economic Impact:
The Kerala Experience”, Economic and Political Weekly, Vol.33,
No.50, December, 12, p.3210.
25. Banerjee,Sushanta K., V.Jayachandran and T.K.Ray, (2002): “Has
Emigration Influenced Kerala‟s Living Standard”, Economic and
Political Weekly, Vol.XXXVII, No.18, May 4.
26. Mathew E.T and P.R. Gopinathan Nair, (1978): op.cit. p. 1148.
89
27. Ranganayaki N (2003), Investors perception towards investment with
special reference to women investors, unpublished thesis.
28. Suguna G (1986) S, Courtesy from Group Project (1986), “A study on
investment behaviour of the working women in Coimbatore city"
29. Gordon J. Alexander, Jonathan D Jones and Peter J. Nigro (1997),
Mutual fund investing through employee sponsored pension plans-
invest knowledge and policy implications, Managerial Finance, Vol
23, Issue 8, pp. 5-29.
30. Syama Sundar, P.V., (1998), “Growth Prospects of Mutual Funds
and Investor perception with special reference to Kothari Pioneer
Mutual Fund”, Project Report, Sri Srinivas Vidya Parishad,, Andhra
University, Visakhapatnam.
31. Rajeshwari T.R and Rama Moorthy V.E (2002), Performance
Evaluation Of selected Mutual Funds and Investor Behaviour, PhD
Thesis, Sri Sathya Sai Institute of Higher Learning,
Prasanthinilayam, 2002.
32. Raja Rajan (1997, 1998), “Investment size based segmentation of
individual investors”, Management Researcher, 1997b, 21-28; “Stages
in life cycle and investment pattern”, The Indian Journal of Commerce,
51 (2 & 3), 1998, 27 – 36; “Investors demographics and risk bearing
capacity”, Finance India, 17(2), June 2003, pp.565 – 576;
33. Jamaludin., N. (2012). Individual retirement savings behaviour:
evidence from Malaysia. Retrieved from http://ro.ecu.edu.au/theses/432
34. Krishnamurthy Suresh, (2004), “Household turn conservative”,
Business Line, September 27, 2004, pp.3.
35. Kanchana R (2005), A survey on the preference of salaried class on
various investment options available to them.
90
36. Kaboor A (2010), Determinants of investor's Financial Literacy,
Unpublished Ph. D thesis.
37. Raju, G., (1993), Household Sector Savings and Deposit
Mobilization in Kerala, Unpublished PhD thesis, Kerala
university,Pp131-176.
38. Chandra, (2008) "the impact behavioural aspects and the
relationship between investors' behaviour and risk. The Journal of
Finance, Volume 48, No.6,Pp.16
Books
1. "Essential of Investments"(8Ed), Bodie, McGraw Hill publication.
2. "The Impact of Global Financial Crisis on Emerging Financial
market", Batten, Emerald Group.
3. "Fixed Income Securities", Veronese, Wiley.
4. "Multinational Financial Management"(7Ed), Shapiro, Wiley.
5. "Principles of engineering Economic Analysis" (5 Ed) , White, Wiley.
6. "Business Psychology and Organisation Behaviour"(3 Ed), McKenna,
Psychology Press.
7. "organizational Behaviour",Uma Sekharan, The Mc Graw hill
Companies
8. "investments", Zvi Bodie, Alex Kane, Alan J Marcus, Pitabas
Mohanty-Mc Grawhill education.
9. " The theory of Consumer Behaviour",Shri Prakash, Vikas Publishing
House
91
10. " Comprehending Behavioral Statistics"(4 Ed), Russel T Hurlburt,
Thomson International.
11. "Entrepreneurship - New Venture Creation" David H Holt, Pearson
Education.inc.
12. HBR guide to Finance basics, Harvard Business School.
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
6 Religion Hindu Muslim Christian
others
7 Occupation/employment
Professional Business
Skilled workers
Semiskilled 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
10 Average annual 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 & growth
Liquidity
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
15 Risk Assuming High Moderate 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.......................
Modern avenues
Corporate securities Rs.......................
Govt.Securities Rs.......................
Mutual fund Rs.......................
Provident fund Rs.......................
money market Rs.......................
others
Rs.......................
Total
Rs.......................
17 investment withdrawal after
2-5 years 5-10 years
above 10 years
Any opinion and suggestion?
Thank you