A STUDY OF INDIAN RURAL MSMEs DURING DEMONETISATION & COVID-

19 TOWARDS DIGITAL BANKING

A Project submitted
to the
Rama Devi Women's University In partial
fulfillment of the requirement for The Degree of
Bachelor of Commerce
By

ROJALIN BISWAL

Roll No-71R0020112
Under the Guidance of
MR. ASHOK OJHA
Faculty in Commerce

P.G Department of Commerce, Rama Devi Women's University

Post Graduate Department of Commerce

Rama Devi Women's University

Bhubaneswar, Odisha
Session 2020-23

1
DECLARATION

I do hereby declare that the Project report entitled “A STUDY OF INDIAN RURAL
MSMEs DURING DEMONETISATION & COVID-19 TOWARDS DIGITAL BANKING”
submitted by me as a partial fulfilment of the requirements for the award of the
degree of Master of Commerce, in the course curriculum. It is a record of original
dissertation work carried out by me, under the guidance and supervision of MR.
ASHOK OJHA, Faculty in Commerce. The information has been collected from
genuine & authentic sources. The work has not been submitted for the award of
any other degree elsewhere in full or part.

2
 Date: ROJALIN BISWAL
Place: University Roll No
71R0020112

3
CERTIFICATE

This is to certify that the thesis entitled “A STUDY OF INDIAN RURAL MSMEs

DURING DEMONETISATION & COVID-19 TOWARDS DIGITAL BANKING”, is a

record bonafide research work done by ROJALIN BISWAL under my guidance and

supervision. It embodies the results of her original contribution. The project has

reached the standard of fulfilling the requirement of regulation regarding to Master

of Commerce. No part of his project has been submitted to any institution for the

award of any degree.

I wish all the best and success in future endeavors.

4
 MR. ASHOK OJHA

Post Graduate Department of Commerce

Rama Devi Women's University

5
 ACKNOWLEDGEMENT

“The satisfaction Euphoria that accompanies the successful completion of any work
would be incomplete unless we mention the name of the person, who made it
possible, whose constant guidance and encouragement served as a beckon of light
and crowned our efforts with success.” I consider it a privilege to express through
the pages of this report, a few words of gratitude and gratitude and respect to
those who guided and inspired in the completion of this project of “A STUDY OF
INDIAN RURAL MSMEs DURING DEMONETISATION & COVID-19 TOWARDS
DIGITAL BANKING”.

Hence with a sense of profound humility, I would like to express my heartfelt

indebtedness and deep sense of gratitude to my guide, MR. ASHOK OJHA, all
faculty of P.G. Department of Commerce, Utkal University for their guidance and
constant supervision as well as for providing necessary information regarding the
project and his constant support for completing the project.

Finally, I thank all those who have directly or indirectly helped me in my

project. I express my Profound thanks to all my teacher as well as friend who are
the constant source of encouragement for me.

6
Date: ROJALIN BISWAL
Place: University Roll No
71R0020112

7
 CONTENT PAGE NO

I. Title Page

II. Declaration

III. Certificate

IV. Acknowledgement

1. Introduction 11-14

2. Literature Review 15-20

2.1. Introduction

2.2. Research Gap

2.3. Objective of the Study

3. Research Methodology 21

3.1. Introduction

4. Conceptual Model 22-26

4.1. Convenience

4.2. Demonetization Effect

4.3. Performance Expectancy

4.4. Pandemic Effect

5. Data Interpretation and Data Analysis 27-36

5.1. Data Interpretation

5.2. Data Analysis

5.3. Data Normality

5.4. Results

6. Results and Discussion 37-40

7. Implications 41-42

7.1. Theoretical Implications

7.2. Managerial Implications

8. Conclusions 43-44

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 9. Limitations

10. Suggestion & Future Scope 44

11. References 47-55

12. Bibliography 56

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10
 CHAPTER NO CHAPTER NAME

1 Introduction

2 Literature Review

3 Research Methodology

4 Conceptual Model

5 Data Interpretation and Data Analysis

6 Results and Discussion

7 Implications

8 Conclusions

9 Limitations

10 Suggestion & Future Scope

11 References

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CHAPTER PLAN

CHAPTER-1 INTRODUCTION-

The use of digital services for banking in India is in a nascent stage, but the rate of
adoption is increasing at a cyclonic speed. Affordable electronic devices, cheap internet
and different medium of using DBS are fueling the rapid increase; yet, limited research
focuses on the differences in the rate of acceptance of digital banking services concerning
rural MSMEs.

CHAPTER 2-LITERATURE REVIEW-

The Second chapter deals with review of literature on change in the uses pattern of digital
banking services by Indian rural MSMEs during Demonetization and COVID-19 pandemic
related restriction and research gap and objective of the study.

CHAPTER 3-RESEARCH METHODOLOGY-

The Third chapter present the study was conducted using a questionnaire survey. In total, 148
rural MSME owners were considered for the analysis in this study. Rural MSMEs in India
are way behind in using digital banking services than their urban counterparts. The present
study uses IBM SPSS and AMOS to shed light on the prevalent factors that influence the
attitude to use digital banking services.

CHAPTER-4 CONCEPTUAL MODEL-

The Chapter Fourth includes convenience perceived, self-efficiency, demonetization effect

and performance expectancy.

CHAPTER 5-DATA ANALYSIS AND INTERPRETATION-

The Fifth chapter contain the analysis of collected data and their interpretation.

CHAPTER 6-RESULTS & DISCUSSION-

The Sixth chapter includes the study of results and discussion with data analysis, data
interpretation and data normality.

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CHAPTER-7-IMPLICATIONS-

The Seventh chapter shows the study of theoretical and managerial implications.

CHAPTER-8-CONCLUSIONS

The Eighth Chapter concludes the study and shows the limitations of the study.

CHAPTER-9-LIMITATIONS-

Due to the lockdowns during covid pandemic, data collection and surveys were too difficult
and it was almost impossible to collect data from all the areas.

CHAPTER-9-SUGGESTION, FUTURE SCOPE& REFERENCES –

The chapter Ninth presence the future scope and references of the study.

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14
 ABSTRACT

 PURPOSE
In the ever fast-changing modern world, through the use of digital banking services
(DBS), the old concept of banking in a traditional way has been completely
changed. It was made possible through the use of modern artificial intelligence
embedded technologies. It was done to meet the ever-growing demands of
customers through more user-friendly and time-saving uses of technologies. This
paper aims to uncover and analyse the factors affecting the adoption of digital
banking services by rural micro small and medium enterprises (MSMEs). MSME is
one of the most active sectors in India. It plays an important role in the economic
development of the country through exports and domestic supplies and by creating
employment opportunities.

 DESIGN/METHODOLOGY/APPROACH
The study was conducted using a questionnaire survey. In total, 148 rural MSME
owners were considered for the analysis in this study. Rural MSMEs in India are
way behind in using digital banking services than their urban counterparts. The
present study uses IBM SPSS and AMOS to shed light on the prevalent factors that
influence the attitude to use digital banking services.

 FINDINGS
It is found out that convenience (which includes perceived usefulness and perceived
ease of use), perceived self-efficacy, demonetization, performance expectancy and
pandemic effect have a significant effect on the attitude to adopt DBS. The findings
of the study will provide deeper insights for the banks as well as different
government agencies to revamp their strategies in changing the financial landscape
of the country through a “cashless economy”.

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  PRACTICAL IMPLICATIONS
Demonetization, a boom in e-Commerce in India, pandemic-related lockdowns or
restrictions and the government’s push for the digital economy will aid the use of
DBS at a faster pace. The outcome of the study will help both the government and
the financial institutions to chalk out strategies to cater to the rural MSMEs in
embracing DBS.

 ORIGINALITY/VALUE

The use of digital services for banking in India is in a nascent stage, but the rate of
adoption is increasing at a cyclonic speed. Affordable electronic devices, cheap
internet and different medium of using DBS are fuelling the rapid increase; yet,
limited research focuses on the differences in the rate of acceptance of digital
banking services concerning rural MSMEs.

16
INTRODUCTION

Presently, the world is in the grip of the devastation of Covid-19. It is not only
taking lives but also changing the economic status of people. Lockdowns were
implemented in almost every country to contain the spread of it. Due to these
lockdowns, the economic impact of this pandemic was experienced by almost every
country. Many countries are on the verge of an economic breakdown. In India, a
series of lockdowns started from 25th March 2020 and continued till 31st May 2020,
comprising of 68 days (Chauhan, 2020). We are now in Unlock 1 phase, and still,
there are partial lockdowns in many parts of the country. Both MSMEs and the
banking sector got affected due to these lockdowns; among them, micro small and
medium enterprises (MSMEs) were among the hardest hit sector. Social distancing
was one of the norms during this lockdown. While maintaining a safe distance of at
least a meter, the brick-and-mortar branches faced a complicated and challenging
task (DQI Bureau, 2020). To minimize the risks associated with the use of cash
during this pandemic, even, the Reserve Bank of India (RBI) Governor Shaktikanta
Das urged Indians to use digital banking services (ETBFSI,2020). The enormous
potential of internet banking is already getting special attention by the government,
academicians, researchers and financial institutions. This is done for the benefits of
the consumers, businesses and banking institutions. The usage of mobile banking is
drastically on the lower side in India despite its huge benefits
(Poddar et al., 2016). The Government of India, through its Digital India
concept, is promoting and encouraging people to embrace a cashless economy. To
promote digital banking, the Government of India took out initiatives in the form of
Lucky Grahak Yojana, Bharat Interface for Money, Aadhar Pay, etc. They have also
encouraged the use of an Unified Payments Interface (UPI) by giving different
incentives. The use of UPI has changed the digital landscape a lot in both urban

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 and rural regions of the country. With continuous support from the government,
almost all the banks and different financial institutions are investing a lot in digital
banking services. The banks or financial institutions must identify the factors
influencing the decision-making capability to adopt digital banking services by the
customers. Therefore, the purpose of this paper is to understand and analyze the
factors affecting the adoption of digital banking services in India in both the
situation related to demonetization and Covid-19. These two events being discussed
have changed the way we transact with our money. Both the circumstances
discussed demands businesses with limited or zero online presence to think about the
digital transformation of their business particularly in the digital financial
transactions front (Tafti et al., 2020).

In this technology innovative world, the banking sector is completely

keeping pace with each up-gradation in technology to give new and better services
to their customers by being at the forefront of technological innovation. After the
1990s financial sector reform in India, technology played a key role in bringing the
mainstream banking sector to the digital platform. With a plethora of better
applications, cloud computing, artificial intelligence, quick delivery of services,
process digitization, etc., the banking sector is always prepared to cater to the
growing customer demands. Across the globe, banks are exploring several ways to
convert their services to a more digital business model perspective. Everything
associated with the way banking activities are performed started changing from the
first online banking launched by ICICI bank in India in 1996 to the next two decades
(Dhananjay and Suresh, 2015). Digital banking services have entirely revamped the
way banks conduct their business. There was a change in focus from a banking
perspective to more on the needs of the customers. This is evident through the
increase in the use of digital platforms, the volume of online transactions and the
utilization of an online platform, directly or through different applications (Bankole
et al., 2011). Bankole and Corbitt (2003) defined

18
 mobile banking as an interactive channel where both the customers and the bank
interact virtually by using a mobile device. Flexibility, efficiency and convenience
in the use of mobile applications facilitate the use of mobile banking applications in
business and personal use (Rao and Troshani, 2007). The concept of anytime from
anywhere banking differentiates traditional banking and mobile banking (Kleijnen et
al., 2004; Herzberg, 2003; Laukkanen, 2007). With internet banking, making
payments through the transfer of funds or making bill payments or checking
balances round the clock makes the customer self-dependent as banking services are
always open for him/her as per his/her convenience. Modern technology has
completely revamped the functioning of different business entities all around the
world by providing enhanced efficiency. It also provides access to improved and
precise information (Uppal, 2008). The gradual increase in the use of information
technology (IT) by banks all around the world has helped in enhancing management
processes, discovering different market prospects, establishing new products or
services and in return, generating higher business revenues (Liao and Cheung,
2002).

Both demonetization and pandemic-related restrictions will impact consumer

behaviour of first-time adopters of digital banking services, as they will continue to
use it even after everything becomes normal (Tafti et al., 2020). The past few years
have seen immense growth in digital payments in India. This growth has shown the
customer’s preference towards firms having digital payments as an option (Goyal,
2021). As more consumers are shifting towards the digital platform of payments,
small and medium enterprises (SMEs) need to switch to this platform to match the
requirements of the consumers (Mansur, 2020). Given the recent trends and the
experiences related to pandemic-related restrictions, digital payments have changed
their status from being a means of convenience to a means of necessity
(Taftietal.,2020).

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 The pandemic forced many people, including the ones who resisted the use
of digital technologies in banking services, to adopt the use of digital banking
services. The longer duration of these lockdowns will help the customers to get
familiarized with digital banking services, and the chances of them moving to
physical branches will be less after the lockdowns are fully over (Khidhir, 2020).
Apart from all the negativity, the pandemic has given many opportunities to the
banking sector to launch many digital initiatives (ResearchDive, 2020). Live chats,
use of virtual assistants, WhatsApp Business, etc. became the new norm just after
the initial relaxation of protocols being followed for Covid-19 restrictions (Goyal,
2020). Due to the Covid-19 pandemic, consumers are forced more towards online
shopping, and it is quite evident through the Mastercard study, which points out that
nearly 49% of Indian online customers are interested to do more online purchase in
the future (Mansur, 2020). Businesses related to the selling of groceries,
pharmaceutical products, bill payments, recharges and online education have seen an
immense rise in digital payments (Tafti et al., 2020). Just after the outbreak of the
pandemic, even banks had to close their physical branches. For example, JP
Morgan closed around 1,000 branches, whereas Citigroup closed around 100
branches in the USA (Subbanna, 2020). There has been a rise of about 8% in both
the users of internet banking and mobile banking through financial apps as compared
to both pre-Covid-19 and during Covid-19-related restrictions (ANI, 2020). The
purpose of the study is to find out how demonetization and the current pandemic
have reshaped the usage of digital banking services. It also tries to find out the
factors that influences consumers’ adoption of these digital banking services. The
subsequent sections of the paper shed light on the different available literatures
related with the usage of digital banking services. The importance of demonetization
or the pandemic in reshaping the adoption of these banking services is evident
through the literatures. It also provides us with a clear picture about the different
factors that influence XJM20,1168 or become a hindrance in the adoption process
of digital banking services. The importance of digital banking services for
MSMEs, specially the rural MSMEs, is also highlighted in the subsequent sections
of this paper.

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Components of Digital Banking Services:
The following are some features of digital banking financial services.
1. Electronic Fund Transfer:
• In 1996, the Reserve Bank of India ordered the country's banking industry to adopt an
electronic money transfer system.
• Customers and financial institutions alike can benefit from EFT since it streamlines the
process of moving money across accounts at different financial institutions.

2. On-line Banking:

• Online banking is the most recently developed segment of digital banking.

• In recent generation electronic banking means Digital Banking services and this is the most
convenient banking where customers can handle greater number of banking services.

3. Automated Teller Machine:

• ATM is a very popular digital banking service. Bank customers can withdraw money at
any time from ATMs.
• ATMs can also provide cheque books, statement of account etc.

4. Unified Payment Interface:

• An example of a mobile app that facilitates cross-account fund transfers is Unified Payment
Interface.
• The National Payments Corporation of India created this streamlined method of making
mobile payments.

5. Digital Wallets:

• Digital Wallets stands for Electronic Wallets.

• To make purchases via a computer or mobile device, you may utilize what is known as a
"digital wallet."

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 Importance of digitization in Indian banking financial services

The convenience of digital banking for customers is a key feature of

this new banking model. There is less friction involved with common
financial tasks like making a purchase or checking your balance. The
convenience of online banking cannot be overstated, as transferring
funds between accounts or withdrawing cash from an
ATM previously required physical presence at a bank. Having the
option to conduct financial transactions online, and especially via
mobile banking, has been a boon to those who reside in rural areas.
The most fundamental banking services may be accessed with
the click of a button, which is a huge boon for folks in outlying
places. With the advent of online banking, people now have 24-hour
access to their money. Digital banking's major goal is to facilitate
online transactions like those utilized for online shopping. Consumers
in one country can readily use the banking systems of another thanks
to developments in digital technology. Dealing with digitally recorded
transactions reduces the likelihood of human error. Digital banking
applications enable actualization strategies enabled by AI and ML.

Role of digitization in Indian banking financial services

When it comes to our daily lives, a bank is not only something we run
across frequently, but also something that is crucial. It is essential to
invest in new resources in order to digitalize completely. The banking
sector must make the adoption of digital technology a top priority.
The banking industry in India was notoriously slow to adapt to the

22
 new technologies of the time. The use of online banking and other
cutting-edge services has creased dramatically in recent years.
Several major stakeholders in India's banking industry are working
together to bring about its digital transformation.

Internet Banking

Internet banking, or online banking for short, is a digital banking

platform that allows consumers to conduct a variety of monetary and
non-monetary activities from the comfort of their own homes. Online
banking has several advantages. This includes, among other things, its
reliability and security. Online banking customers may move funds
throughout their accounts easily. This has led to the development of
cyber banking, which also goes by the names Internet banking, online
banking, and online spending.

Challenges of digital banking financial system

Problems with digital banking arise from the fact that the
industry has yet to reach a stable state where it can replace
traditional banking for the masses. The banking industry faces a
number of both modern and historical difficulties.

(A) Traditional Challenges facing banking industry

Lack of Digital Literacy

India has a moderately high degree of literacy, yet only a

small fraction of the population is comfortable using
computers and the internet. People in societies that can't
afford to build up their communication and computing
networks are less likely to be fluent in modern
technologies.

Slow Digital Transformation

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 Particularly slow to embrace digital innovation is the
traditional banking industry. The majority of their
online presence consists on the delivery of essential
services including wire transfers, bill pay, and account
funding.

Cash Dependent Economy

A large portion of India's population is unorganized and

poor. Most Indians still prefer to transact in cash because
they lack access to modern financial systems and are
illiterate. the rural populace in India doesn’t have a good
knowledge of digital financial transactions.
Improper Customer Engagement

One of the biggest repercussions of the 2008 crisis was that

a number of people lost faith in the previous financial
system. Customer complaints must be addressed
immediately, and the customer should be guided toward a
problem free banking experience.

Strict Regulatory Standards

Regulations established by a bank's supervisory body are the

minimum requirements that any conventional bank must
meet. Indian banks, for instance, must adhere to a statutory
liquidity ratio in addition to the capital-asset ratio and the
cash reserve ratio.

Customer’s Preference for Traditional Branches

In India, you'll find a plethora of classic bank branches,

all of which are very busy. The one-on-one attention and
specialized service available at physical bank offices are
major draws for customers.

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(B) Upcoming Modern Challenges facing banking industry

Integrating Artificial Intelligence

In the banking industry, AI has first been utilized to

automate risk assessment and forecast future consumer
preferences. Software building blocks, such voice
synthesizers, are at the heart of integrating AI systems.
Main advantages of AI include fewer mistakes made by
humans, accessibility around the clock, digital help, and the
creation of novel products.

Payment Processing Costs

There are numerous processing fees linked with transactions.

Fees for processing are paid to the financial institution or
payment processor that is handling the transaction. Bank can
work to decrease the costs involved by implementing
technologies like block chain. In a corporate network, block
chain technology is an advanced database device that facilitates
transparent information sharing. Database information is stored
in "blocks" that form a "chain" in a block chain database.

Competition between Banks and Fintech Companies

If banks want to stay ahead of the competition, they need

to add more digital features to their brick-and-mortar
branches. There has been a rapid rise in the popularity of
fintech companies, which now pose a formidable threat to
more
established banks. Web and mobile apps can now provide
financial services such as lending, crypto currency
transactions, and device sales.

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 Increasing Competitions

Fintech, with their unique focus on the financial services sector,

are a formidable challenge. If established financial institutions
like banks and credit unions want to continue their current
success, they must learn from FinTechs. This makes complete
sense, as their success is tied to providing a simple experience
when dealing with the company.

Adoption of New Technology

Today, adapting to new technologies is a significant

obstacle for financial institutions. Because of makeshift
answers and antiquated procedures. Introducing novel
procedures and technologies might be especially
challenging for larger organizations. Artificial intelligence
(AI) and chatbots are just two examples of the cutting-edge
technology that is revolutionizing the financial services
sector.

To study the recent digital banking innovation services in India.

The current digital banking innovation services are described as

follows.

• Digital KYC
Digital KYC is an online KYC process for non-KYC
complaint customers. Digital KYC is efficient and reduces
the risk fraud. KYC means know your Customer. Digital
KYC is to enable the bank to have positive identification
of its relationship. Fintech Companies will be carry out the
KYC of its customers by digital mode.

• Application Programming Interface

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 The acronym API refers to the "Application Programming
Interface" used by developers. An Application
Programming Interface (API) is a communication
protocol between two programmes that operates
automatically and transparently to the user. An API, or
Application Programming Interface, is a set of commands
and routines used by computer programmes. This
application provides a great benefit. The API allows
businesses to share the information inside their apps.

• Chatbot
A chatbot is artificially intelligent computer software that
may be controlled by voice or text to encourage human
conversation. With a Chabot, you can provide service and
assistance to your customers whenever they need it, seven
days a week. Additionally, catboats are used in the Fintech
industry to simplify the customer experience while
searching for and applying for financial services. Chabot
may help your organisations in many ways, including
saving money, saving time, increasing productivity that
can be measured, and improving the quality of leads you
generate.
• Biometrics
Biometrics is the scientific study of how to identify and
classify individuals based on objective characteristics
such as their physical and behavioral characteristics. The
term "biometric information" is used to describe data such
as fingerprints and digital photos of your face. There are
various examples of Biometrics such as fingerprint, Facial
recognition and Voice Recognition. Biometrics is

27
 becoming increasingly important when it comes to
security in digital banking.

• Cloud Banking
The term "cloud banking" is used to describe the process
of creating a banking infrastructure to manage
fundamental financial services that are performed in the
cloud. In order to keep track of their customers'
information and interactions, banks turn to cloud-based
CRM software. The term "cloud banking" is used to
describe the process of creating a banking infrastructure
to manage fundamental financial services that are
performed in the cloud. In order to keep track of their
customers' information and interactions, banks turn to
cloud-based CRM software. A Cloud banking combines
digital assets like data algorithms etc.

• Block Chain
"Block Chain" is shorthand for a distributed ledger that
may be used to record and verify transactions in a
decentralized manner. Bitcoin, the first decentralized
digital money, relies on the underlying technology of
block chain. Data is stored in blocks that are linked
together in a blockchain. All digital transactions are
recorded on the Blockchain, a decentralized database that
is accessible to all participants.

• Fintech Companies
Fintech refers to the ways in which businesses in the
financial services sector have integrated technological
developments into their offerings. Fintech companies'
innovative business models, applications, processes, and
products may have far-reaching effects on the financial
services industry as a whole as a result of the
28
 technological advances that have made their development
possible.

LITERATURE REVIEW

MSME is one of the most significant and vibrant sectors for the development
of the country economically. It is considered as a backbone of the Indian economy.
It provides financial support to the economy, through employment generation
capability and 28.77% share in India’s gross domestic products (GDP) (MSME
Annual Report 2017-18). Approximately 58.5 million businesses were found to be
operational as per the Sixth Economic Census (2016). Among them, 59.48% of
businesses were found to be in rural areas. The top five states in terms of the number
of MSMEs are Uttar Pradesh, West Bengal, Tamil Nadu, Maharashtra and
Karnataka. The huge numbers of MSMEs are most relevant in the enhancement of
using digital banking services for realizing the dream of a cashless economy in
India. Digital banking services are a form of a virtual bank that provides all banking
activities online. It helps banking customers enjoy the comfort of accessing and
performing all traditional banking activities at their convenience. Money deposits,
withdrawals, transfers, account management, applying for financial products, loan
management, bill payment and other integrated services like an investment in mutual
funds or share market are some of the key forms of digital banking services. India is
a country with a boom in technological aspects and a rapidly growing financial
economy. Digital banking, being the need of the hour, has completely changed the
way we interact and transact with the banks and vice-versa. Since the
demonetization, the push for a cashless economy is connecting more and more users
towards digital banking. Internet banking, m-commerce through banks application or
from other financial institutions, through wallets, ATM services, etc. are the
different forms of using digital banking services. Through better access to data and
information,

29
 cost reduction and enhanced efficiency, the advancement of technology all over the
world has drastically revamped the operations of business organizations
(Uppal,2008).

Innovation in the field of IT in the 21st century has transformed the

functioning of business entities in almost every country. The availability and access
to better and high-speed internet have become affordable to almost every corner of
the country, which is helping with the growth of the financial service industry.
Affordable internet coupled with affordable IT and mobile devices is the main pillar
behind banks offering tailor-made electronic-based financial products to customers
within their convenience. Technological advancement in the field of internet
banking has completely changed the ways of financial activities and the nature of
banking from “physical” to “virtual”. Without diminishing the existing service
levels, banks, with the help of technology, are catering to the growing demands of
the customers in offering different banking products and services through non-
traditional or alternative delivery channels within customer’s convenience and
economical boundaries (Akincietal.,2004).

In this fast-moving era, convenience is becoming the prime aspect of

choosing a product or service, especially of the “Generation Y” population.
Effortlessly managing lives on the move and getting an efficient result is the need of
the hour. Therefore, banks offering innovative and cutting-edge solutions through
user-friendly applications or different mediums are getting the maximum attention
from the customers. The feature that distinguishes the services of e- banking from
traditional banking is proximity and convenient time (Ibrahim et al., 2006). The
knowledge about the perception of mobile users is critically important for the
success of m-commerce (Okazaki, 2006; Lee and Lee, 2007).

30
 The time-saving potential along with the convenience of online or mobile
banking services is valued the most by the younger consumers as compared with
older consumers (Howcroftet al., 2002). In the Indian context, it is found that the
adoption of new digital technologies is more in urban consumers than rural
consumers (Singh and Aggarwal, 2013). The incapability to provide “performance
to price value” is considered as the only reason for the consumer’s resistance to
mobile banking (Laukkanen et al., 2007). The growth of digital banking services
with the help of different applications by the banks or other financial
institutions, affordable devices and high-speed internet connections as well the
convenience of quick banking round the clock are changing the banking landscape.
Still, the growth is lagging behind the growth of digital innovations. The
responsibility to share the benefits of digital services lies with the bank.

They should make the customer aware of the benefits of it and should train
them with all necessary information (Mukherjee and Nath, 2003; Lin, 2011). Simple
and use of user-friendly technology in mobile banking increases the acceptance for
its use (Mortimer et al., 2015; Koksal, 2016). Influence of the society has a positive
significance in the usage of mobile banking (Laukkanen et al., 2007; Amin et al.,
2008; Riquelme and Rios, 2010; Puschel et al., 2010; Dasgupta et al., 2011).
Confidence in the mobile device and the positive experience with its uses
significantly influences the use of banking digitally (Iddris, 2013). Cultural
environment and several other economic factors are also significant aspects of the
acceptance of mobile banking (Amin et al., 2006; Ainin et al., 2007; Bankole et al.,
2011; Baptista and Oliveira, 2015; Koksal, 2016). Privacy-related to personal data
and the security of the device play an important part in mobile banking acceptance
(Wanget al., 2003; Hernandez et al., 2008). Security is one of the main factors
towards customers’ dependency on mobile banking (Sathye, 1999; Singhal and
Padhmanabhan, 2008; Riquelme and Rios,

31
 2010; Grewal, 2012; Deb and Lomo-David, 2014; Khatana and Dahiya, 2015). The
barriers of illiteracy, availability of products or services and cost faced by the
common population were prevailed by the revolutions and advancement in
information communications and technology. Cheap mobile service charges or
internet charges, increase in the purchase of unlimited data plans and the
government’s initiative is fuelling the growth of m-commerce and m-banking in
India (Grewal, 2012). Lack of trust in m-banking plays a major factor in its adoption
(Rahman, 2013). Psychological factors were found to be more important than
technological factors in the adoption of m-commerce. The rates of mobile banking
adoption can be improved by the endorsement of positive attitudes for m-commerce
by marketers (Mishra, 2014). “Perceived risk, perceived security risk, demographic
variables, and adoption behavior” were found to be a key factor in the acceptance of
internet banking in India (Mann and Sahni, 2012). Digital banking services are
beneficial for the business financially through the quick and easy use of banking
services respecting their convenience. It is evident that most of the MSMEs fail in
the management of their financial resources properly

(Ahmed and Sur, 2017).

The experiences gained through the use of digital banking services, both
from the customer and bank viewpoint, will act as a boost in reshaping the backend
operations of the bank by optimizing and digitalizing it (DQI Bureau, 2020).
According to Rajashekara Maiya, Vice President, Global Head for Business
Consulting, Infosys Finacle, this pandemic has presented banks with dual
opportunities. First, banks with no or medium usage for digital banking services
have to ramp up their resources to use and provide more need of the hour digital
services. The second opportunity is for those pure digital banks who were offering
digital-only services will have to look for ways to become “full-fledged

32
 service providers” (Srivats, 2020). India is categorized as a breakout country, which
means that the country is although having low penetration in digitalization, yet is
evolving at a rapid speed (Chakravorti et al., 2017). Demonetization along with the
push and encouragement from the Indian government as well the banks has fuelled
the rise in the digital payment landscape (Gupta and Dua, 2018; Athique, 2019;
Ahmed and Haq, 2019).

Looking on the brighter side of the pandemic-related restrictions, there has

been a surge in the use of online platform and e-commerce activities by consumers
(Dutt, 2020). Adopting a digital payment solution for the business increased the
revenue of firms by around 34%, as pointed out by some analyses. This is one such
trigger along with others that are making many businesses adopt digital payments
for their business (Mansur, 2020). It is rightly pointed out that the increase in
the use of digital payments during the pandemic can be somewhat termed to be a
forceful act, and to stop the decline in the use of it post the pandemic, financial
institutions should keep improving the security of the e- Wallets (Undale et al.,
2020). The government has a huge role to play in enhancing digital payments by
providing favourable ecosystems, promoting and creating awareness about the
benefits (Sobti, 2019). To create a smooth transition from cash-based payments to
the digital-based payments system, the government should enhance digital literacy
among the Indian population and by providing the required digital payment
infrastructure (Sivathanu, 2019).

The government is also promoting contactless payments and encouraging

people towards digital payments (Tafti et al., 2020). Convenience in using digital
banking services by MSMEs is making them accept these digital means of banking,
and this is the main reason in the increase in the adaptability level of MSMEs
towards digital banking services (Meher et al., 2021). The study on the usage and
adoption of digital banking services with respect to SMEs in Nigeria (Mbah and
Obiezekwem, 2019), SMEs in Kakamega County (Muchiri,

33
 2018) and rural people in Assam (Neog, 2019) focussed on several factors favouring
the using of digital banking services. Businesses generally hesitate to provide all
their financial details, especially transactions details in the digital platform due to
their sense of security (Meher and Gupta, 2020a, 2020b).

 RESEARCH GAP

Numerous research papers and articles were studied to understand the

adoption process of digital banking services. The study on MSMEs, especially rural
MSMEs, is too limited. There are more numbers of MSMEs in rural India, so the
study has significance in shaping digital banking penetration in rural India. Also, the
current scenario of Covid-19-related lockdowns adds a different dimension to the
adoption process.

 OBJECTIVE OF THE STUDY

The objective of the study is to find out the factors that influence consumers’
adoption process of digital banking services. The study also tries to find out the role
of demonetization and pandemic-related restrictions in adopting DBS by the rural
MSMEs. The proposed model will show all the motivating factors as well as the
hindrances towards adopting digital banking services among MSMEs in rural India.

34
 RESEARCH METHODOLOGY

The nature of our study is exploratory involving both qualitative and quantitative
aspects of research. It tries to understand the real thought process of the rural
MSMEs regarding their decision to adopt digital banking. A structured questionnaire
with multi-choice questions on a Likert scale (five points) was used to gather the
primary data for this study. The survey was conducted using an interview schedule
from 25th February 2020 to 15th June 2020. For online responses, Google forms
were used to collect the responses of MSME owners present in different
Facebook pages. And for off-line responses, an interview schedule was used to
conduct several field surveys (Data was collected with the help of Google Forms and
from different Facebook pages and with the help of the interview schedule through a
field survey). All the responses were collected in three phases – pre- pandemic
lockdown phase, Phases III and IV of lockdown and during Unlock 1 phase. A total
of 233 data was collected from Malda and Murshidabad districts and also from other
parts of West Bengal, among which a sample of 148 MSME owners was considered
for data analysis. The left-out 85 samples were either incomplete or were repetitive.
A Likert scale was used to measure all the items of the proposed study. All the
questions of the survey were closed-ended with multiple choices as options having
values ranged from 1 – totally disagree to 5 – totally agree.

Factor analysis, specifically principal component analysis (PCA), was

performed to reduce the factors by using IBM SPPS 25.0. Structural equation
modelling (SEM) and path analysis was performed using IBM AMOS 21.0.

35
CONCEPTUAL MODEL

 CONVENIENCE

With the surge in using the digital mode of payments in offline point-of- sale
counters, it is found out that convenience along with the scope to get better deals,
cashbacks and discounts are the most motivating factors in the use of it (Shah et al.,
2016).

Perceived usefulness (PU). Mobile banking provides an ample amount of

information and can be used as per the user’s convenience for different banking
services. This makes banking hassle-free and effortless as we can use it whenever
we need it. Any services that are perceived to be useful by the user can enhance job
effectiveness through improvement in productivity and job performance (Rao and
Troshani, 2007; Sangle and Awasthi, 2011; Khan and Khan, 2012; Ramdhony and
Munien, 2013).

Perceived usefulness (PU) can be defined as the user’s belief that the use of digital
banking services will be beneficial for them (Jeong and Yoon, 2013). Understanding
the user’s PU is important to increase the use of digital banking usage (Chaurasia et
al., 2019). Perceived ease of use (PEU). Customers are generally more inclined to
use those services that are devoid of any complexities and are easy to learn and use.
Acceptance of mobile banking technology by the customer gets enhanced whenever
it is simple and easy to understand (Chitungo and Munongo, 2013; Mortimer et al.,
2015; Koksal, 2016). Accessibility of new technology in banking influences a
customer’s initial keenness to adopt it (Ramayah et al., 2003). Users’ adoption of
mobile banking services through its hassle-free technology is being facilitated by the
perceived ease of use (PEU) (Kazemi et al., 2013; Jeong and Yoon, 2013;
Govender and Sihlali, 2014).

36
 For our study, both PU and PEU are clubbed together in the convenience
component. As both show customers’ ease in using the services, they are taken as a
single component:. Convenience has a significant effect on the attitude to adopt
digital banking services (DBS). Perceived risk (PR) Risk can be defined as the
“possibilities of financial loss”. Mobile theft, PIN theft, private data exposures, etc.,
all are directly responsible for the financial losses any human being or business
entities has to face. Perceived risk (PR) is the “degree of uncertainty” associated
with mobile banking (Gerrard and Cunningham, 2003). The mismatch between
customer requirements and anticipated results from digital banking technologies
gives rise to this type of risk (Koenig-Lewis et al., 2010). The different types of risks
related to economic, functional, psychological, social, etc. are also included in PR
(Luo et al., 2010). Other risks arise with the loss of PIN code (Kuisma et al., 2007)
and the loss of mobile devices (Luarn and Lin, 2005):

H2. PR has a significant effect on the attitude to adopt DBS.

 PERCEIVED SELF-EFFICACY (PSE)

Self-efficacy can be defined as “one’s belief or judgement on what customer

can do with the skill the customer possess within a particular domain” (Venkatesh
and Davis, 2000). Self-efficacy is defined as: “People’s judgments of their
capabilities to organize and execute courses of action required to attain designed
types of performances. It is concerned not with the skills one has, but with the
judgement of what one can do with whatever skills one possesses” (Bandura, 1986).
In the context of internet banking, perceived self-efficacy (PSE) is the perception of
one’s confidence in having the required knowledge and skills to carry out online
banking transactions. It is considered to be an influencing

37
 factor in the adoption of DBS (Luarn and Lin, 2005; Puschel et al., 2010;
Dasgupta et al., 2011):

H3. PSE has a significant effect on the attitude to adopt DBS.

 DEMONETIZATION EFFECT (DE)

Demonetization came into effect from 8th November 2016 after the
announcement by our Prime Minister. This was the third time that demonetization
came into effect in India after XJM 20,1 172 1946 and 1978 (Kapoor, PWC, 2016).
Digital wallets saw a huge surge in their usage post- demonetization (Nielsen Report
Part II, 2016). Auroville in Tamil Nadu and Akodara in Gujarat were the two places
in India to become fully cashless as they fully embraced ITeBS and all digital
platforms much before demonetization (Shepard, 2016). It had a huge impact on the
consumer adoption process of digital payment (Sobti, 2019):

H4. Demonetization effect (DE) has a significant effect on the attitude to adopt DBS.

 TRUST

In terms of mobile banking, trust can be described as “the belief that allows
individuals to willingly become vulnerable to the bank, the telecommunication
provider, and the mobile technology after having the banks, and the
telecommunication provider’s characteristic embedded in the technology artifact”
(Masrek et al., 2012). For digital banking, Yousafzai et al. (2009) have identified
three levels of trust, namely, “Trust in the bank” (Sohail and Shanmugham, 2003;
Saparito et al., 2004; Lee et al., 2007; Arnott, 2007;

38
 Hongyoun Hahn and Kim, 2009), “Trust in the internet” (Yousafzai et al., 2003;
Sohail and Shanmugham, 2003; Kim and Prabhakar, 2004) and “Trust in internet
banking information” (McCole, 2002; Wang and Emurian, 2005; Yousafzai et al.,
2009). Several studies show the importance of trust in the adoption process of any
services related to DBS (Lee and Turban, 2001; Suh and Han, 2002; Mukherjee and
Nath, 2003; Eriksson et al., 2004; Luarn and Lin, 2005; Lee et al., 2007; Nor and
Pearson, 2007; Cai et al., 2008; Zhou, 2011; Yu, 2012; Chong et al., 2014;
Hanafizadeh et al., 2014; Afshan and Sharif, 2016; Alalwan et al., 2017):

H5. Trust has a significant effect on the attitude to adopt DBS.

 PERFORMANCE EXPECTANCY (PE)

Performance expectancy (PE) refers to “the extent to which individuals in

performing certain activities will experience some benefits as a result of using
technology” (Venkatesh and Davis, 2000; Venkatesh et al., 2003). PE plays a key
role in the adoption of mobile payment in India (Sinha et al., 2015). It directly
impacts consumers’ intention to use mobile or internet banking (Zhou et al., 2010;
Luo et al., 2010; Hongxia et al., 2011; Yu, 2012; Wang and Yi, 2012; Oliveira et al.,
2014; Baptista and Oliveira, 2015; Tan and Lau, 2016; Tarhini et al., 2016; Alalwan
et al., 2017):

H6. PE has a significant effect on the attitude to adopt DBS.

39
  PANDEMIC EFFECT

It has created an opportunity for the banks to make the clients understand the
cost and time benefits of using DBS. Payments through a digital platform and the
use of digital currencies will probably play an important task after the Covid-19
pandemic. There will be an increase in the use of digital payments through the push
of the government to use this form of contactless payment (De et al., 2020). Covid-
19 has increased the use of DBS and has helped the banks to fast-forward their
digitization process (Seetharaman, 2020). The future is transforming to be a place
where every banking customer will demand more advanced financial services
(Krivaa, 2020) (Figure 1):

H7. The pandemic effect has a significant effect on the attitude to adopt DBS.

40
 DATA INTERPRETATION

 SAMPLE SIZE

The item-to-response ratio for an ideal sample size has a range of a minimum
of 1:4 to a maximum of 1:10 (Hinkin, 1995). As per the ratio, the range was
calculated as 112–280 respondents. This study is having 148 respondents, which are
within that ideal sample size range. The required sample size for the study was also
checked using an a priori sample size calculator. After adjusting the Figure 1.

Proposed model XJM 20,1 174 anticipated effect size (as 0.15), desired
statistical power level (as 0.9) and probability level (as 0.05), the minimum sample
required for this study came out as 129. Our study with 148 responses satisfied the
minimum required sample size for the study (Nitzl, 2016).

 DEMOGRAPHIC PROFILE

Out of the 148 MSME owners, 95.9% were male owners, and the rest 4.1% were
female (Table1).

Almost one-third of the respondents, i.e. 37.8%, were in the age category of 41– 50
years (Table 2).

Only 23% of the respondents were having a graduation or post-graduation degree,

with 20.9% of respondents having primary-level education (Table 3). The
services sector constituted of 41.2% respondents, and the rest 58.8% of the
respondents were from the manufacturing sector (Table 4).

41
 Those MSMEs among the respondents generating yearly revenue of up to INR15
lakhs were 50.7% of the total respondents of our study data. Only 10.9% of
respondents were generating INR16 lakhs or more yearly revenue (Table 5).

DATA ANALYSIS

Data were analyzed using PCA using SPSS 25.0, and the SEM analysis was
done using AMOS 21.0. Common method bias (CMB) was tested using Harman’s
single-factor test. CMB happens when “variations in responses are caused by the
instrument rather than the actual predispositions of the respondents that the
instrument attempts to uncover”. A data is without CMB only when the total
variance of a single factor is less than 50% (Podsakoff et al., 2012). The proposed
study is not having CMB, as the total variance for a single factor of this study is
21.364%.

42
 The survey of the study initially had 37 items as part of the questionnaire.
PCA was conducted to find out the components. Items having a factor loading score
of 0.5 or more were considered for the analysis, keeping in view the criterion for
acceptance (Hair et al., 2006). A total of nine items were dropped as their loading
scores were way less than 0.5. Finally, 28 items were considered for the final
analysis.

 DATA NORMALITY

Normality checks are done as a prerequisite for performing SEM (Byrne,

2016). As per the recommendation, the skewness and kurtosis of all the items
considered for the analysis of the proposed research model should be below 3 and 8,
respectively (Kline, 2011). All the items were found to be well within the
recommended boundaries.

 RESULTS
The Kaiser–Meyer–Olkin (KMO) is an index to measure the sampling adequacy to
show the appropriateness of factor analysis. The factor analysis is appropriate when
we get high values in the range (0.5–1.0) (Hair et al., 2006). The calculated KMO
value of our study is 0.794, which shows the appropriateness of our database (Table
6). The eight components were chosen based on the eigenvalue of 1 or more. It can
be seen that the model explains 67.934 of the total sample variance, which is more
than the recommended variance of 60% (Malhotra and Dash, 2011).

43
 The scree plot also confirms the number of components to be considered
for the analysis of the study as 8, based on the eigenvalue of 1 or more (Figure2).

The total variance explained also confirms that the components for our study
will be 8.

The cumulative percentage is 67.934, which is well above the standard required for
analysis of the data (Table 7).

Factor analysis of the data was done using PCA as the extraction method, and the
rotation method used here was varimax. All items having a factor loading score of
more than 0.5 were considered for the analysis, keeping in view the criterion for
acceptance (Hair et al., 2006).

All the constructs were clubbed into different components using the table generated
from the rotated component matrix (Table 8).

Reliability and validity of the measurement model. As the researcher has

established the statements related to this paper from various literature and has
measured it in a Likert scale, it is mandatory to measure the validity and reliability of
the scale of the given sample. The sample has been chosen absolutely to represent
the target population of the research; hence, the reliability and validity of the scale
will represent the construction of the particular measurement scale in

44
 the particular area. Because of the consistency of the responses of the respondents,
concurrency is also established.

The reliability of the constructs was checked using Cronbach’s a values, and those
items having a value of 0.7 or more were considered for this data analysis process
(Hair et al., 2006).

The overall Cronbach’s a value of the data was found out to be 0.847.

Cronbach’s a values are used to examine the internal consistency and reliability of
the constructs. As the values obtained are well above the threshold limits, construct
reliability is established (Table 9).

45
 The proposed model of our study was tested with SEM using AMOS 21.0
with maximum likelihood estimation. According to Anderson and Gerbing (1988), a
two-step approach was recommended and is applied in our SEM analysis. Testing
the reliability and validity of the measured scale using confirmatory factor analysis
(CFA) is the first step, namely, measurement model. SEM analysis for the structural
model is our second step. It is generally used to determine the “interrelationships
among the constructs” as well as to “test the hypotheses” and to “test the proposed
theoretical model”. The results generated from the CFA showed a statistically
significant x 2 (x 2 = 351.532, df

= 319,x 2 /df = 1.102). As per Hair (2014), the recommended level for goodness- of-
fit index (GFI), Tucker–Lewis coefficient (TLI) and comparative fit index (CFI) of a
measurement.

46
47
48
 model must be greater than 0.90. The CMIN/df and root mean square error of
approximation (RMSEA) should be below 3 and 0.080. The model fit indices
49
 generated through our data analysis are at par or exceed the common acceptance
level required for the fit statistics. GFI of the measurement model is 0.857, which is
just a fraction below the threshold and can be accepted for model fitness. It
demonstrates the fitness of our measurement model and validates the adequacy of
the data collected for our study (Table-10).

Table 11 is used to show the composite reliability (CR), average variance extracted
(AVE) and discriminant validity (DV).

CR of the latent factors (constructs) was generated to check the reliability of the data
related to the attitude to adopt DBS. The recommended value of the CR coefficient
is above 0.60 (Hair et al., 2006).

AVE shows the overall amount of variance in the proposed indicators. The
standard value of the AVE is expected to be above 0.50 (Hair et al., 2006). DV of
the constructs is found when the square root of the AVE is found to be more than the
correlation of the latent variables. In our study, DV is established as the square root
of AVE of each component is component and is found out to be more than the
correlation of the latent variables (Table 12).

The proposed measurement model is evaluated at par with the recommendation of

Hair (2014).

Structural model. After getting the CR, DV and model fitness of the measurement
model, SEM analysis is conducted to get the fitness of the structural model. The
generated result showed a statistically significant x 2 (x 2 = 366.264, df = 322,x 2/df
= 1.137).

The GFI, TLI and CFI of the structural model are generated as 0.857, 0.963
and 0.968, respectively. It is within the recommended level as per Hair (2014) with
GFI marginally within the reach of the threshold and can be considered for good
model fitness. The RMSEA of the structural model is 0.031. It shows that

50
 the proposed model is having satisfactory fitness generated from the observed data.

51
 RESULTS AND DISCUSSIONS

H1 (convenience), H2 (PR), H3 (PSE), H4 (DE), H5 (trust), H6 (PE) and H7

(pandemic effect –Covid-19) are the hypotheses of our study. To check whether the
proposed hypotheses of the study are accepted or rejected, the standardized
regression weight of each construct is analyzed along with the t- values of it at the
recommended significance level of less than 0.05. To accept the proposed
hypotheses, the t-vale or the critical ratio value is recommended to be more than 6 2
(Byrne, 2016). Table 13 shows the t-values and p-value associated with each
hypothesis along with the path scores.

Convenience (H1), which includes both PU and PEU, is found to be

significant with a t-value of 3.242, with a significance of 0.001. MSMEs understand
the benefits of using DBS. They also find it a bit easy to use the applications or the
online user interface of the banks to perform the banking services digitally. This is
considered to be the first step in adopting any kind of technological services. It
shows that the convenience of using any platform for performing different tasks will
lead to the actual usage of it. The results indicate that any services that are perceived
to be useful by the user can enhance job effectiveness through improvement in
productivity and job performance (Rao and Troshani, 2007; Sangle and Awasthi,
2011; Khan and Khan, 2012; Ramdhony and Munien, 2013). Also, the adoption of
DBS gets facilitated by PEU when there is a hassle-free technology for using DBS
(Kazemi et al., 2013; Jeong and Yoon, 2013; Govender and Sihlali, 2014).

52
 PR (H2) is found to be insignificant with a t-value of 0.014 and a p-value of
more than the limit of 0.05. Through the result, it is evident that MSMEs do not think that
there are many kinds of big risks involved in using DBS. Many are using DBS for the past
4–5 years, and they have not found any unkind risk happening with their transactions.
Their experience in using DBS has negated the effect of PR in the usage of DBS. It
contradicts the previous studies (Luarn and Lin, 2005; Kuisma et al., 2007 Koenig-Lewis et
al.,2010; Luo et al., 2010), which have shown PR to be an important factor in the attitude to
use banking services in a digital form. PSE (H3) is found to be significant with a t-value of
4.694, with a significance of 0.001. It shows that MSME owners have the confidence in the
capabilities of themselves that they can execute courses of action required to attain
designed types of performances. Better education levels, a better user interface of
applications and online platform and the ease in using mobile devices or devices used to
perform DBS have enhanced this confidence in themselves. The result shows that PSE
is an influencing factor in the adoption of digital banking services (Luarn and Lin, 2005;
Puschel et al., 2010; Dasgupta et al., 2011). DE (H4) is found to be significant with a t-
value of 4.431, with a significance of 0.001. The scarcity of cash during the demonetization
phase has pushed people to use the digital form of financial transactions. During this
period, DBS was an important and viable option for doing business, and many MSMEs

53
started using this period because of the demand of the hour from both consumer and
business perspectives. It had a huge impact on the consumer adoption process of digital
payment (Maji, 2017; Sobti, 2019; Goyal, 2021) and is evident from the result. Trust
(H5) is found to be significant with a t-value of –2.446, with a significance of 0.014. It is
negatively associated with the adoption of DBS. MSME owners are sceptical about trusting
the bank or the internet or the information provided by the banks or financial institutions. It
is also found significant in the previous studies related to DBS (Sohail and Shanmugham,
2003; Yousafzai et al., 2003; Yousafzai et al., 2009; Afshan and Sharif, 2016). PE (H6) is
also found to be significant with a t-value of 3.836 and a p-value of 0.001.

MSMEs have already experienced the benefits associated with it since the
demonetization period. Payments from consumers and payments to the vendors are
quickly processed through the use of DBS. Also, they can cater to tech-savvy
consumers by providing them with multiple payment options. PE plays a key role in
the adoption of mobile payment in India (Sinha et al., 2015) and directly impacts the
attitude to use DBS (Zhou et al., 2010; Wang and Yi, 2012; Oliveira et al., 2014;
Baptista and Oliveira, 2015; Alalwan et al., 2017). The result also shows the same
impact of PE on the attitude to use DBS. Pandemic effect (H7) is also found to be
significant with a t-value of 2.422 and a p-value of 0.015. With repeated lockdown-
related restrictions and the fear of the spread of the virus through the use of physical
currency, the use of DBS has become significant. The restrictions also forced people
to get their needs delivered directly to their home. In all the circumstances, DBS was
the best viable option. The result shows that the pandemic had a significant effect on
the attitude to use DBS, as is evident in various other studies (Tafti et al., 2020;
Krivaa, 2020; Seetharaman, 2020; De et al., 2020).

54
 The result, which is shown in Figure 3, shows that DE has the most impact on the
attitude to use DBS, with the highest path score of 0.274. It is followed by
convenience, PSE, PE and pandemic effect with a score of 0.247, 0.226, 0.223 and
0.159, respectively. Trust is negatively significant with a path score of –

0.126. It can be interpreted from the result that MSMEs got the thrust in using DBS
in the demonetization period. Convenience in using the digital platform of banking
services supported by their self-efficacy, and their experience of the benefits
from the use of it has changed and is changing their attitude to use DBS. Covid- 19
pandemic also has made their attitude align towards the use of DBS.

55
IMPLICATIONS

 THEORETICAL IMPLICATIONS

Research has previously pointed out the low penetration of digital banking in India
(Poddaret al., 2016), and almost negligible studies have pointed out its adoption by
rural MSMEs. As it is pointed out, the adoption of new digital technologies is more
in urban consumers than rural consumers (Singh and Aggarwal, 2013). This study
presents a unique viewpoint, as it has tried to show the impact of demonetization
and Covid-19 on the adoption of DBS. Both the situation demands businesses
with limited or zero online presence to think about the digital transformation of their
business, especially in the digital financial transactions front (Tafti et al., 2020).
Rural MSMEs are aware of the rise in digital banking consumers (Mansur, 2020)
and have experienced the benefits of it during both demonetization and Covid-19
periods. The proposed model has given a viewpoint wherein it is evident that
convenience in using DBS along with their PSE has given a positive result to its PE
parameter. The results from the analysis of the proposed model show that MSMEs
are leaning towards the rush in users of DBS and trying to incorporate it into their
organization. The role of the consumers in making the MSMEs switch to cashless
payments along with cash transactions is evident as we know that societal influence
has a positive significance in the approval of mobile banking (Laukkanen et al.,
2007; Amin et al., 2008; Riquelme and Rios, 2010; Puschel et al., 2010; Dasgupta et
al., 2011).

56
  MANAGERIAL IMPLICATIONS

From a more practical viewpoint, this research provides enough justification to use
an awareness campaign that shows the benefits of using DBS and the convenience
of using it. The government has a huge role to play in enhancing digital payments by
providing favourable ecosystems, promoting and creating awareness about the
benefits (Sobti, 2019). To create a smooth transition from cash-based payments to
the digital-based payments system, the government should enhance digital literacy
among the Indian population and by providing the required digital payment
infrastructure (Sivathanu, 2019). A clear and more evident picture that can be
interpreted from the business viewpoint is that the surge in consumers using digital
banking has benefitted the business a lot. They need to adopt various means of
providing customers with multiple payment options, including all digital payments
options. It is highly recommended that proper awareness and promotional campaign
should be in place on the part of MSMEs so that consumers become more aware of
their adoption of digital means of payments. Campaigns should directly show
the PU and PEU in using DBS and the benefits it can give to both the business and
the consumers.

57
 CONCLUSIONS

The financial situation bore a grim look during this pandemic lockdowns
with business either being completely shut or faced a tough situation with low
revenues. MSME owners were frustrated with their low sales and the way the
pandemic gripped every aspect of their business. This frustration was shown at the
time of our interaction with them. Our analysis shows that convenience, PSE, DE,
Covid-19 effect and PE significantly affect the decision- making process of the
owners towards the use of DBS for their business. PR is less significant, whereas
trust is significant but in the reverse direction. While formulating plans to add these
rural MSMEs to the cashless economy and the digital India concept, the government
and the banks should focus on providing custom made rural products that focus
primarily on their benefits aspects. During our field survey, many owners were
sceptical about their financial transactions being tracked and they being given the tax
burden. The government should educate them properly and should give them tax
relaxations for the initial periods to get them acquainted with the digital systems, not
only in banking but also in the digitalization of their business. The result of the study
points out that rural MSME owners understand the benefits of using DBS, but they
are concerned about two important factors before implementing them in their
business. One is the cost involved to incorporate it, and another is the trust involved
with the use of it. As most of the workforce is less educated, they prefer to deal with
cash rather than digital money being transferred in their accounts. Also, most of the
rural MSMEs belong to the informal and unstructured categories, they do not want
to fall under the purview of labour laws and taxes related to the payments to their
workforce.

58
LIMITATIONS

Due to the lockdowns associated with the Covid-19 pandemic, data

collection through field surveys was time-consuming and challenging. Travelling to
different districts was also not possible. That is why, maximum data is collected
from two districts, and few data were collected from other parts through an online
survey. Data from different areas would have given a different dimension to this
study.

SUGGESTION AND FUTURE SCOPE

Our country is moving towards a digitalized mechanism by promoting

“Make in India”, “Go Desi” and online transactions through UPI/wallets. Also, with
the boom in e-commerce, MSMEs are coping with their ability to adopt innovation.
DBS is also growing at the fastest rate. Lockdowns are also helping to spike the use
of it. This study can help bankers, government or academicians to formulate better
strategies to cater to the demands of businesses, especially rural MSMEs. Before the
implementation of any schemes or policies related to the use of DBS, the
government or the banks should understand and find out the means to win their trust
in using these digital services. Also, the micro rural MSMEs mostly cater to the local
markets; the government or banks should lure the local customers to use digital
payments services, which will lure local business in the adoption of it.

59
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