PREFACE

I am extremely happy to place before the esteemed teacher

COPERATIVE BANK, FINANCIAL POSITION IN INDIA. It is an attempt make

by me to find out the leading brands in Sagar City.

The Project Report has on objective to get the B.B.A. Students

familiar with real life business situations and gives an opportunity to the

student’s to understand the theoretical concepts of marketing and finance in

practical way.

The research starts with a short introduction of the company

followed by the line of the objective and research methodology.

Next Chapter Deals with the data analysis and interpretation that is

based on questionnaire. Then comes the limitation, suggestions conclusion of

the research report.

Student’s name : RAHUL CHOURASIYA

Class :BBA VTH SEM.

GIMS 1

ACKNOWLEDGEMENT

I wish to express my deep sense of gratitude to all who generously helped in

successful completion of the project work by sharing their valuable time and

knowledge.

I thankfully acknowlege Mr. Manish Jain (HOD BBA Dept) GIMS Sagar for

giving me the opportunity to conduct and survey.

I Would like to express my sincere thanks to “MISS RUPALI PATEL”

LecturerBBA Dept) and all other faculty members, GIMS sagar who directly and

indirectly rendered me all possible hlep and guidance for preparing the report.

Finally I would like to thanks my parents, my friends without whom completion

of my project report would not have been possible.

Student’s name : RAHUL CHOURASIA

Class :BBA VTH SEM.

GIMS 2

CERTIFICATE

A PROJECT REPORT ON CO-OPERATIVE BANK FINANCIAL

POSITION IN INDIA is prepared by RAHUL CHOURASIA under The guidance

of Miss RUPALI PATEL is a satisfactory in respect to comments

Contents and presentation of the Subject Matter.

Language

Submission with in due date.

Signature of Supervisor Signature of Examiner Signature of HOD

GIMS 3

DECLARATION BY THE CANDIDATE

Date:

I declare that the project report titled “CO-OPERATIVE BANK, FINANCIAL

POSITION IN INDIA” is my own work conducted under the supervision of

MISS RUPALI PATEL, Gyanveer Institute of Management and Science Sagar.

To the best of my knowledge the report does not contain any work, which has

been submitted for the award of any degree, anywhere.

Student’s name : RAHUL CHOURASIA

Class :BBA VTH SEM.

-

GIMS 4

TABLE OF CONTENTS Preface Acknowledgement Certificate Declaration by the Candidate

TOPIC NAME PAGE NO.

CHAPTER – 1 INTRODUCTION

(A) COMPANY PROFILE

(B) HISTORY

(C) KEY PERSON

CHAPTER – 2 OBJECTIVE

CHAPTER – 3 RESEARCH METHODOLOGY

(A) TYPE OF RESEARCH

(B) SOURCE OF RESEARCH

CHAPTER – 4 PRODUCT DETAILS

CHAPTER – 5 FINANCIAL POSITION

CHAPTER – 6 DATA ANALYSIS AND INTERPRETATION

CHAPTER – 7 SWOT ANALYSIS

CHAPTER – 8 LIMITATION

CHAPTER – 9 SUGGESTION AND CONCLUSION

CHAPTER – 10 BIBLIOGRAPHY

CHAPTER – 11 QUESTIONNAIRE

GIMS 5

GIMS 6

INTRODUCTION

WHAT IS BANKING?

Banking in a traditional sense is the business of accepting deposits of money from public For the

purpose of lending and investment. These deposits can have a distinct feature like being withdrawn

able by cheques, which no other financial institution can offer. In Addition, banks also offer financial

services, which include:

The Issue of demand draft & traveler’s cheque.

Credit cards

Collection of cheques, bill of exchange.

Safe deposit lockers

Custodian services.

Investment and Insurance Services.

The business of banking is highly regulated since banks deal with money offered to them by the

public and ensuring the safety of this public money is one of the prime responsibilities of any bank.

That is why banks are expected to be prudent in their leading and investment activities. Every bank

has a compliance department, which is responsible to ensure that all the services offered by the bank,

and the processes followed are in compliance with the local regulations and the Bank’s corporate

policy.

The major regulations and act govern the banking business are:-

Banking Regulation Act, 1949

Foreign Exchange Management Act, 1999

Indian Contract Act

Negotiable Instruments Act, 1881

Bank lends money either for productive purposes to individual, firms, Corporate etc. for buying

house property, cars and other consumer durables and for investment Purposes to individuals and the

others. However, banks do not finance any Speculative activity. Lending is risk taking. The

depositors of banks are also assured of safety of their money by deploying some percentage of

deposit in statutory Reserves like SLR & CLR.

GIMS 7

STANDARD ACTIVITIES OF BANK

Banks act as payment agents by conducting checking or current accounts for customers, paying

cheques drawn by customers on the bank, and collecting cheques deposited to customers' current

accounts. Banks also enable customer payments via other payment methods such as telegraphic

transfer, and ATM.

Banks borrow money by accepting funds deposited on current accounts, by accepting term deposits,

and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances

to customers on current accounts, by making installment loans, and by investing in marketable debt

securities and other forms of money lending.

Banks provide almost all payment services, and a bank account is considered indispensable by most

businesses, individuals and governments. Non-banks that provide payment services such as

remittance companies are not normally considered an adequate substitute for having a bank account.

Banks borrow most funds from households and non-financial businesses, and lend most funds to

households and non-financial businesses, but non-bank lenders provide a significant and in many

cases adequate substitute for bank loans, and money market funds, cash management trusts and other

non-bank financial institutions in many cases provide an adequate substitute to banks for lending

savings too.

REVENUE GENERATION

A bank can generate revenue in a variety of different ways including interest, transaction fees and

financial advice. The main method is via charging interest on the capital it lends out to customers.

The bank profits from the differential between the level of interest it pays for deposits and other

sources of funds, and the level of interest it charges in its lending activities.

This difference is referred to as the spread between the cost of funds and the loan interest rate.

Historically, profitability from lending activities has been cyclical and dependent on the needs and

strengths of loan customers and the stage of the economic cycle. Fees and financial advice constitute

a more stable revenue stream and banks have therefore placed more emphasis on these revenue lines

to smooth their financial performance.

RISK AND CAPITAL

Banks face a number of risks in order to conduct their business, and how well these risks are

managed and understood is a key driver behind profitability, and how much capital a bank is

GIMS 8

required to hold. Some of the main risks faced by banks include:

Credit risk : risk of loss arising from a borrower who does not make payments as promised.

Liquidity risk : risk that a given security or asset cannot be traded quickly enough in the

market to prevent a loss (or make the required profit).

Market risk : risk that the value of a portfolio, either an investment portfolio or a trading

portfolio, will decrease due to the change in value of the market risk factors.

Operational risk : risk arising from execution of a company's business functions.

The capital requirement is a bank regulation, which sets a framework on how banks and depository

institutions must handle their capital. The categorization of assets and capital is highly standardized

so that it can be risk weighted

ECONOMIC FUNCTIONS OF BANKS

The economic functions of banks include:

Issue of money, in the form of banknotes and current accounts subject to cheque or payment

at the customer's order. These claims on banks can act as money because they are negotiable

or repayable on demand, and hence valued at par. They are effectively transferable by mere

delivery, in the case of banknotes, or by drawing a cheque that the payee may bank or cash.

Netting and settlement of payments – banks act as both collection and paying agents for

customers, participating in interbank clearing and settlement systems to collect, present, be

presented with, and pay payment instruments. This enables banks to economies on reserves

held for settlement of payments, since inward and outward payments offset each other. It also

enables the offsetting of payment flows between geographical areas, reducing the cost of

settlement between them.

Credit intermediation – banks borrow and lend back-to-back on their own account as middle

men.

Credit quality improvement – banks lend money to ordinary commercial and personal

borrowers (ordinary credit quality), but are high quality borrowers. The improvement comes

from diversification of the bank's assets and capital which provides a buffer to absorb losses

without defaulting on its obligations. However, banknotes and deposits are generally

unsecured; if the bank gets into difficulty and pledges assets as security, to raise the funding

it needs to continue to operate, this puts the note holders and depositors in an economically

subordinated position.

GIMS 9

BANKING IN INDIA:-

Banking means accepting for the purpose of landing or investment of deposits of money from the

public repayable on demand or otherwise one withdraw able by cheque, draft or otherwise.

Banking in India has its origin as early as the Vedic period. It is believed that the transaction

From money lending to money banking must have occurred even before Manu, the great Hindu

Jurist, who has devoted a section of his work to deposits and advances and laid down the rules

relating to rate of interest, During Mugal Period, the native bankers played a very important role in

lending money and finance foreign trade and commerce. During the days of the east- India

Company, it was the turn of the agency house to carry on the banking business the general bank of

India was the first joint stock bank to be established in the year 1786. The others that followed were

the Bank of Hindustan and the Bengal Bank. The Bank of Hindustan is reported to have continued

till 1906 while the other two failed in the meantime. In the first half of the 19th century the east-India

company established three banks, the Bank of Bengal in 1809, the Bank of Bombay in 1840 and the

banks of Madras in 1843.

These three banks are also known as the presidency banks were amalgamated in 1920 and a new

Bank – the imperial bank of India established ion 27th January 1921. With the passing of the state

bank act 1955 the under taking of the imperial Bank of India is taken over by the newly constituted

the state bank of India.

NATIONALIZATION

The GOI issued an ordinance and nationalized the 14 largest commercial banks with effect from the

midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the step as a

"masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament

passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the

presidential approval on 9 August 1969.

A second dose of nationalization of 6 more commercial banks followed in 1980. The stated reason

for the nationalization was to give the government more control of credit delivery. With the second

dose of nationalization, the GOI controlled around 91% of the banking business of India. Later on, in

the year 1993, the government merged New Bank of India with Punjab National Bank. It was the

only merger between nationalized banks and resulted in the reduction of the number of nationalized

banks from 20 to 19. After this, until the 1990s, the nationalized banks grew at a pace of around 4%,

closer to the average growth rate of the Indian economy.

LIBERALIZATION

In the early 1990s, the then Narsimha Rao government embarked on a policy of liberalization,

licensing a small number of private banks. These came to be known as New Generation tech-savvy GIMS 10

banks, and included Global Trust Bank (the first of such new generation banks to be set up), which

later amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank

and HDFC Bank. This move, along with the rapid growth in the economy of India, revitalized the

banking sector in India, which has seen rapid growth with strong contribution from all the three

sectors of banks, namely, government banks, private banks and foreign banks.

The next stage for the Indian banking has been set up with the proposed relaxation in the norms for

Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which

could exceed the present cap of 10%, at present it has gone up to 74% with some restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time, were used to

the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave ushered

in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the

retail boom in India. People not just demanded more from their banks but also received more.

Currently (2007), banking in India is generally fairly mature in terms of supply, product range and

reach-even though reach in rural India still remains a challenge for the private sector and foreign

banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean,

strong and transparent balance sheets relative to other banks in comparable economies in its region.

The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The

stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange

rate-and this has mostly been true.

With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect M & As, takeovers, and asset sales.

In March 2006, the Reserve Bank of India allowed Warburg Pinups to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them.

In the Indian Banking Industry some of the Private Sector Banks operating are IDBI Bank, ING

Vyasa Bank, SBI Commercial and International Bank Ltd, Bank of Rajasthan Ltd. and banks from

the Public Sector include Punjab National bank, Vijaya Bank, UCO Bank, Oriental Bank, Allahabad

Bank among others. ANZ Grindlays Bank, ABN-AMRO Bank, American Express Bank Ltd,

Citibank are some of the foreign banks operating in the Indian Banking Industry.

GIMS 11

GIMS 12

ORGANISED BANKS UNORGANISED BANKS

INDIGENOUS

MONEY LENDERS

UNREGULED NON BANKERS

INDIAN BANKING INDUSTRY

RBI

NON SHEDULED COMM. BANKS

COMMERCIAL BANKS

SHEDULED COMM. BANKS

STATE BANK GROUP

NATIONALISED BANK

FOREIGN BANK

COOPERATIVE BANK

STATE COOPERATIVE BANK

CENTERAL COOPERATIVE BANK

INDIAN BANK

PRIMARY AGRICULTURE CREDIT SOCIETY

CO-OPERATIVE BANKS:-

Co-operative banks are small-sized units organized in the co-operative sector which operate both in

urban and non-urban centers. These banks are traditionally centered on communities, localities and

work place groups and they essentially lend to small borrowers and businesses.

The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary

cooperative banks located in urban and semi-urban areas. These banks, until 1996, could only lend

for non-agricultural purposes.

However, today this limitation is no longer prevalent. While the co-operative banks in rural areas

mainly finance agricultural based activities including farming, cattle, milk, hatchery, personal

finance, et cetera, along with some small scale industries and self-employment driven activities, the

co-operative banks in urban areas mainly finance various categories of people for self-employment,

industries, small scale units and home finance.

Co operative Banks in India are registered under the Co-operative Societies Act. The cooperative

bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and

Banking Laws (Co-operative Societies) Act, 1965.

These banks provide most services such as savings and current accounts, safe deposit lockers, loan or

mortgages to private and business customers. For middle class users, for whom a bank is where they

can save their money, facilities like Internet banking or phone banking is not very important.

Co-operative banks function on the basis of 'no-profit no-loss'. Co-operative banks, as a principle, do

not pursue the goal of profit maximization. Therefore, these banks do not focus on offering more

than the basic banking services. So, co-operative banks finance small borrowers in industrial and

trade sectors, besides professional and salary classes.

Co-operative banks differ from stockholder banks by their organization, their goals, their values and

their governance. In most countries, they are supervised and controlled by banking authorities and

have to respect prudential banking regulations, which put them at a level playing field with

stockholder banks. Depending on countries, this control and supervision can be implemented directly

by state entities or delegated to a co-operative federation or central body.

Even if their organizational rules can vary according to their respective national legislations, co-

operative banks share common features:

• Customer-owned entities: in a co-operative bank, the needs of the customers meet the needs of the

owners, as co-operative bank members are both. As a consequence, the first aim of a co-operative

bank is not to maximize profit but to provide the best possible products and services to its members.

GIMS 13

Some co-operative banks only operate with their members but most of them also admit non-member

clients to benefit from their banking and financial services.

• Democratic member control: co-operative banks are owned and controlled by their members,

who democratically elect the board of directors. Members usually have equal voting rights,

according to the co-operative principle of “one person, one vote”.

• Profit allocation: in a co-operative bank, a significant part of the yearly profit, benefits or surplus

is usually allocated to constitute reserves. A part of this profit can also be distributed to the co-

operative members, with legal or statutory limitations in most cases. Profit is usually allocated to

members either through a patronage dividend, which is related to the use of the co-operatives

products and services by each member, or through an interest or a dividend, which is related to the

number of shares subscribed by each member.

Co-operative banks are deeply rooted inside local areas and communities. They are involved in local

development and contribute to the sustainable development of their communities, as their members

and management board usually belong to the communities in which they exercise their activities. By

increasing banking access in areas or markets where other banks are less present – SMEs, farmers in

rural areas, middle or low income households in urban areas - co-operative banks reduce banking

exclusion and foster the economic ability of millions of people. They play an influential role on the

economic growth in the countries in which they work in and increase the efficiency of the

international financial system. Their specific form of enterprise, relying on the above-mentioned

principles of organization, has proven successful both in developed and developing countries.

The Co operative banks in India started functioning almost 100 years ago. The Cooperative bank is

an important constituent of the Indian financial system judging by the role assigned to co operative,

the expectations the co operative is supposed to fulfill, their number, and the number of offices the

cooperative bank operate Though the co operative movement originated in the West, but the

importance of such banks have assumed in India is rarely paralleled anywhere else in the world.

The cooperative banks in India play an important role even today in rural financing the

Businesses of cooperative bank in the urban areas also have increased phenomenally in recent years

due to the sharp increase in the number of primary co-operative banks.

Co operative Banks in India are registered under the Co-operative Societies Act. The cooperative

bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and

Banking Laws (Co-operative Societies) Act, 1965.

GIMS 14

Cooperative banks in India finance rural areas under:

Farming

Cattle

Milk

Hatchery

Personal finance

Cooperative banks in India finance urban areas under:

Self-employment

Industries

o Small scale units

Home finance

Consumer finance

Personal finance

Some facts about Cooperative banks in India

Some cooperative banks in India are more forward than many of the state and private sector

banks.

According to NAFCUB the total deposits & landings of Cooperative Banks in India is much

more than Old Private Sector Banks & also the New Private Sector Banks.

This exponential growth of Co operative Banks in India is attributed mainly to their much better

local reach, personal interaction with customers, and their ability to catch the nerve of the local

clientele.

There are two main categories of the co-operative banks.

(a)Short term lending oriented co-operative Banks - within this category there are three sub

categories of banks viz state co-operative banks, District co-operative banks and Primary

Agricultural co-operative societies.

(b) Long term lending oriented co-operative Banks - within the second category there are land GIMS 15

development banks at three levels state level, district level and village level.

The cooperation banking structure is divided into following five categories

1. Primary urban cooperative banks

2. Primary agriculture credit societies

3. District central cooperation bank

4. State cooperative bank

5. Land development bank

Primary urban cooperative bank:

The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary

cooperative banks located in urban and semi-urban areas. These banks, till 1996, were allowed to

lend money only for non-agricultural purposes. This distinction does not hold today. These banks

were traditionally centered around communities, localities work place groups. They essentially lent

to small borrowers and businesses. Today, their scope of operations has widened considerably.

Primary agriculture credit societies:

Agriculture continues to be the most vital sector of Indian economy, contributing a major share to

our national income and also providing livelihood to the majority of our population. A strong base of

agriculture growth is must for the overall economic development in a country like India. So to help

the farmers and make the financial help for them these cooperative societies are established .these

societies finance farmers not only for their short term requirements (use of improved seeds,

fertilizers, insecticides, etc)but for medium and long term(irrigation and land development

activities)activities also.

District central cooperation bank:

These are the principal co-operative societies in the districts, in a state, the primary object of which is

financing other co-operatives, particularly the PCAs in the district. The DCCBs came in to existence

after the passing of Co-operative Societies Act1912. These institutions also undertake banking

business.

These institutions act as Balancing Centers of Finance at the district level. They provide the short

term and medium term credit to the agriculturists. They also supervise the PCAs in the districts.

GIMS 16

State cooperative bank:

The state cooperative bank is the apex body of cooperative bank in any state. The long-term

cooperative credit structure has two tiers in many states with Primary Cooperative Agriculture and

Rural Development Banks (PCARDB) at the primary level and State Cooperative Agriculture and

Rural Development Bank at the state level. under the Banking Regulation Act 1949, only State

Cooperative Apex Banks, District Central Cooperative Banks and select Urban Credit Cooperatives

are qualified to be called as banks in the cooperative sector.

Land development bank:

The long term credit needs of the agricultural sector are met by another type of co-operative

institutions known as Land Development Banks. The Land Development Banks meet the

requirements of the farmers for developmental purposes viz., provision of equipment like pump-sets,

tractors and machinery and land improvement in the form of leveling, bundling, reclamation of land,

fencing, sinking of new wells and repairs to old wells, Loans are granted on the security of mortgage

of immovable property of the farmers.

Credit cooperatives are the oldest and most numerous of all the types of cooperatives in India. The

cooperative credit institutions in the country may be broadly classified into urban credit cooperatives

and rural credit cooperatives. There are about 2090 urban credit cooperatives and these societies

together constitute for about 10 percent of the aggregate banking business and therefore regarded as

an important segment of the banking system. The urban credit cooperatives are also popularly known

as Urban Cooperative Banks. The rural credit cooperatives may be further divided into short-term

credit cooperatives and long-term credit cooperatives. With regard to short-term credit cooperatives,

at the grass-root level there are around 92,000 Primary Agricultural Credit Societies (PACS) dealing

directly with the individual borrowers. At the central level (district level) District Central

Cooperative Banks (DCCB) function as a link between primary societies and State Cooperative

Apex Banks (SCB).

GIMS 17

TYPES OF CO-OPERATIVES

The Co-operative Movement was introduced into India by the Government as the only

method by which the farmers could overcome their burden of debt and keep them away from

the clutches of the money-lenders. The Co-operative Credit Societies Act, 1904 was passed by

the Government of India and rural credit societies were formed.

(1)The Primary Agricultural Credit/Service Societies –

The agricultural co-operative credit structure in the Punjab State is broadly divided into

two sectors, one dealing with the short-terms and medium-terms finance and the other with the

long-term credit. In the State, the short-term and medium-term credit structure is based on a

three-tier system, i.e. the Apex Co-operative Bank at the State level, the Central Co-operative

Bank at the district / tensile level and the Primary Agricultural Credit Societies at the village

level. The major objectives of the primary agricultural credit service societies are to supply

agricultural credit to meet the requirements of funds for agricultural production, the

distribution of essential consumer commodities, the provision of storage and marketing

facilities and for light agricultural implements and machinery.

The first Agricultural Credit Society in the Firozpur District was registered on 4 October

1911, at the Village of Khalchi Kadim in the Firozpur Tensile. Originally, the movement was

confined to the credit societies only and, thus, credit dominated till the partition (1947).

After the partition, the Co-operative Movement began to spread to other field, viz labour,

construction and farming. In 1979-80, the number of agricultural cooperative credit societies

in

the District was 309 with a membership of 1, 21,761. The loan advanced during the same year

amounting to Rs. 2,180.35 lakhs and the deposits to Rs. 26.84 lakhs.

(2) Agricultural Non-Credit Societies –

When the non-credit societies were brought officially under the protection of the

Movement. The World War II came as a God send boon with respect to the development of

the Cooperative Movement. Prices of agricultural goods began to rise and touched new peaks.

The repayment of loans was accelerated and deposits began to increasing. The number of

societies also rose. Another interesting development in co-operative during the War was the

extension of the Movement to non-credit activities, namely consumer’s co-operative

GIMS 18

marketing societies, integration of societies, etc.

(3) Agricultural co-operative Marketing Societies –

Marketing has occupied a far smaller place in the co-operative picture in India than in

many countries. The full utilization of loans advanced depends upon the arrangements for the

marketing of surplus produce. These societies also provide other agricultural Facilities and

make arrangements for the supply of domestic items in the rural areas. At the State level, the

Punjab State co-operative Supply and Marketing Federation is playing an important role in

building up an integrated structure for remunerative marketing and storing of agricultural

produce.It has played an important role in the Green Revolution in the State by arranging

ready supplies of essential farm inputs needed by the cultivators.

GIMS 19

KEY PERSONS

Sharanegowda Bayyapur ( President)

Ramesh vaidya ( Director)

K. Sharanappa ( Director )

Pampanagowda Badarli ( Director )

S. B. Reddy ( Director )

Halappa achar ( Director )

Shyamrao Kulkarni ( Director )

Vishwanath patil ( Director )

Rajshekhar Naik ( Director )

Amregowda ( Director )

M. Venkagowda ( Director )

Pratap Patil maski ( Director )

R.TimmayyaShetti (Apex Bank rep.)

GIMS 20

OBJECTIVE OF THE STUDY

The objective of research is as follows:

1. First objective is to find out various loan schemes provided by the bank.

2. To learn various aspects of loan provided by bank.

3. To know the problem faced by customers when obtaining the loan.

4. To Know about the study of Swot Analysis.

GIMS 21

RESEARCH METHODOLOGY

Research Design:

The research design indicates the type of research methodology under taken to

collect the information for the study.

The researcher used both descriptive and analytical type of research design for his

research study. The main objective of using descriptive research is to describe the state

of affairs as it exits at present. It mainly involves surveys and fact finding enquiries of

different kinds. The researcher used descriptive research to discover the characteristics

of customers. Descriptive research also includes demography characteristic of

consumer who use the product.

The researcher also used analytical research design to analyze the existing facts

from the data collected from the customer.

Area of study:

The area of study is confined to Co-operative Bank , Sagar City. .

Sampling design:

A Sample design is a definite plan for obtaining a sample from a given population. It

is the procedure used by the researcher in selecting items for the sample.

Sample size:

Sample size=45 samples, variance and confidence methods are used for

determining sample size.

Sampling Technique:

The researcher adopted simple random sampling for the study.

GIMS 22

SOURCES OF DATA

DATA COLLECTION METHOD

Primary data:

Primary data is the new or fresh data collected from the respondents through

structured scheduled questionnaire.

Secondary data:

The secondary data are collected through the structured questionnaire, and also from

the past records maintained by the company.

GIMS 23

PRODUCTS AND SERVICE DETAILS

LOAN AND CREDIT FACILITY

The Jodhpur central cooperative bank provided following loan and credit facilities

PERSONAL LOAN SCHEME:-

Under this scheme the loan is provided for fulfillment of personal and family needs by taking care of

refund capacity of applicant. The applicant can enjoy this facility by following two types-

Term loan for maximum 5 years.

Renewal of Credit limit each year according to last year’s transactions.

ELIGIBILITY:- Domicile of Jodhpur city whose age is between 21to 55 years.

Employee of Government/ self governed, semi government, leading banks, urban

cooperative bank/court, financial institution, education institutes etc.

The self employed person who earns fixed income and files income tax return also having

PAN card.

Organizer of standing committee.

LOAN/ CREDIT LIMIT:- Maximum loan amount is 2 lacks.

8 times of Gross Monthly salary or rs.2 lacks whichever is less.

In the case of businessman/ professionals the calculation of average monthly salary is to be

done according to the IT return of past three years.

15 times of monthly salary of manager of selection committee or 2 lacks

Whichever is less

INTEREST RATE:- According to the decision taken by bank the rate of interest is 16%.

RECOVERY OF LOAN:- Maximum 5ve years, in the case of employee 5ve years or date of retirement whichever is

earlier.

The advance cheque is taken according to EMI installments of other banks.

GIMS 24

FOR SECURITY OF LOAN:- The bank requires the guaranty of 2 persons having creditability of loan amount who are

recognized by bank.

The collateral security is also accepted by bank in the case of non remunerated and

employer who having loan of more than 50000 and lake of contract of direct recovery.

DOCUMENTS REQUIRED FROM APPLICANT:- Photo of applicant

Residential proof

Two guarantors

Income certificate of applicant and guarantor

In the case of salaried employee the guarantee certificate passes by his employer.

In case of loan amount which is more than 50 lacks the evaluated rate of fixed assets for

mortgage.

The nominal membership fee and deposit amount.

EXECUTION OF DOCUMENTS AFTER SENCTION OF LOAN:- Promissory note.

Loan contract.

Deed of security papers.

Mortgage letter (in the case of mortgage of fixed assets)

Advanced cheque (according to the installments)

Other documents.

LOAN FOR PURCHASE OR CONSTRUCTION:-

GIMS 25

Under this scheme an applicant may apply for loan related to purchase of a plot, construction of a

building, purchase and repairs of building.

ELIGIBILITY:-

Domicile of Jodhpur city whose age is between 21to 55 years.

Employee of Government/ self governed, semi government, leading banks, urban

cooperative bank/court, financial institution, education institutes etc.

The self employed person who earns fixed income and files income tax return also having

PAN card.

Standing committee admin

LOAN/ CREDIT LIMIT:-Maximum loan amount is 15 lacks for loan related to purchase of a plot, construction of a building,

purchase and repairs of building.

INTEREST RATE:-

The interest rate is 10.50% in the case of normal purchase or repairs of plot and in the case of

purchase or repairs of commercial building, shops the rate of interest is 14%.

TIME PERIOD OF LOAN:-

This loan can be taken Maximum for 15 years.

FOR SECURITY OF LOAN:-The bank requires the guaranty of 2 persons having creditability of loan amount who are recognized

by bank.

DOCUMENTS REQUIRED FROM APPLICANT:- Photo of applicant

Populated area plot strap which is on the name of applicant

Cost estimate and construction cost map which is approved by official engineer

Income certificate of applicant.

Two guarantors and their income statement with photo.

The nominal membership fee and deposit amount.

GIMS 26

VEHICLE LOAN (for personal use):-

Under this scheme the loan is to be given for four wheeler (car, jeep etc.) for personal use only.

ELIGIBILITY:-

Domicile of Jodhpur city.

Employee of Government/ self governed, semi government, leading banks, urban

cooperative bank/court, financial institution, education institutes etc.

The self employed person who earns fixed income and files income tax return also having

PAN card.

Standing committee admin

LOAN/ CREDIT LIMIT:-The loan provides up to 5 lacks for purchasing of four wheeler for personal use.

INTEREST RATE:-

The rate of interest for four wheeler is 14%.

TIME PERIOD OF THE LOAN:-

The time limit set by the bank authority for this kind of loan is maximum 7 years.

FOR SECURITY OF LOAN:-The bank requires the guaranty of 2 persons having creditability of loan amount who are recognized

by bank.

DOCUMENTS REQUIRED FROM APPLICANT:- Photo of applicant and his legal license.

Vehicle quotation and income statement of applicant.

Fixed assets for mortgage.

Two guarantors with their income statement and photo.

The nominal membership fee and deposit amount.

GIMS 27

FINANCIAL POSTION IN INDIA

GIMS 28

GIMS 29

GIMS 30

GIMS 31

DATA ANALYSIS AND INTERPRETATION

1. Capital Adequacy Ratio

Capital adequacy ratio is the ratio that signifies the amount of capital on Risk Weigted Asset

of the Bank.

Chart No 1: Capital Adequacy Ratio

The banks should have 9% capital adequacy ratio, the corporation bank has much more than

the standerd rate. Even the ratio is decreasing it is above the standerd.

GIMS 32

2. Return on Average Asset

Return on average asset signifies that the ratio between net profit after interest and tax to the

average asset utilised by the bank to earn the returns.

Profit after Tax Return on Average Asset = 100

Average AssetChart No 2: Return on Average Asset

In the year 2006 the ratio was 1.28, but in the year 20 07 there was decrease in the ratio. But

in the year 2008 it goes to 1.34. It clearly shows that there is increase in the returns. In the year 2008

there is only 25.5% increase in the asset but there is a 45% increase in the returns.

GIMS 33

3. Return on Equity

Return on equity shows the relationship between profit earned and equity.

Chart No 3: Return on Equity

Profit after Tax Return on Equity = 100

Equity + ReservesReturn on equity is increasing every year. The ratio is 13.12, 13.71 and 17.51 in the year of

2006, 2007 and 2008 respectively. There is increase of 45% in returns against only 13% increase in

the equity.

GIMS 34

4. Earnings per Share

Earnings per share signify that the earnings available for the each share held by the

shareholder.

Profit after Tax Return on Equity = 100

No of sharesChart No 4: Earnings per Share

The ratio is increasing year by year. That shows the bank is earning sufficient funds to its

shareholders. From 2006 – 2008 the ratio has almost increased by 70%, this is good indicator for its

shareholders of the Bank.

GIMS 35

5. Book value per Share

Book value per share signifies the value of the book of each equity share of the bank. Book

value consists of equity share capital and reserves of the bank.

Equity Share Capital + Reserves Book Value Per Share =

No of sharesChart No 5: Book Value per Share

There is increasing trend in the ratio, it because of the increase in the reserves of the bank. It

is good indication from the investor’s point of view.

GIMS 36

6. Yield Spread

It is the difference between yields on advances over cost of deposits. It is useful to know the

spread of yields over cost of deposit; more the spread bank is more efficient in lending and accepting

deposit.

Yield Spread = Yield on Advances- Cost of Deposits

Chart No 6: Yield Spread

The yield spread is decreasing year on year basis. This is because the percentage increase in

yield on advance is less than percentage increase in cost of deposits of the bank. The bank is

inefficient in earning high yield on the advances granted by them.

GIMS 37

7. Non Interest income to Total Income

This ratio indicates the relationship between non interest income and total income. Non-

interest income arises out of the activities other than the lending.

Chart No 7: Non Interest Income to Total Income

The ratio was 14.78 in the year 2006, but there was slight increase in it in the year 2007. It

shows the bank earnings are increased out of lending business. But in the year 2008 the ratio has

decreased.

GIMS 38

8. Gross NPA to Gross Advances

This ratio shows the relationship between Gross NPA to Gross Advances of the bank. It states

that the percentage of Non Performing Assets out of total advances granted by the bank.

Chart No 8: Gross NPA to Gross Advance

The ratio is decreasing from 2006 – 2008. It means the NPAs are decreasing from year to

year. It is good indication for the bank.

GIMS 39

SWOT ANALYSIS

FINDINGS

GIMS 40

WeaknessLack of professionalism: The

members lack right training and educations that is necessary for

customer satisfaction

Lack of infrastructure: The banks

lack in implementation of latest technology such as ATMs and computers

Lack of technical knowledge: The

members generally lack domain

certification i.e. financial degrees etc.

Small area of operation: The bank operates only in a limited area

StrengthsBusiness among members: The bank

focuses on the development of their

members

Trust within the members: Trust is

the key factor for effective functioning of

a cooperative bank

Affordable interest rates: The bank

offers Loans at reasonable interest rates

to their members

ThreatsCompetition: Increasing focus of

commercial banks towards untapped rural sector

Increasing interest rates: Increasing

inflation and liquidity fluctuation results in rise in interest rate by the RBI

Small network for operation: Unlike commercial banks, the cooperative

banks operates in a limited area

Changes in Technology: Unable to adapt to rapid changes in technological

environment

OpportunityLarge untapped area for Expansion: As in India, the major part of the population lives in villages

Trust in Cooperatives: Better understanding among the member and the rural customer

Linkage of Cooperatives: Direct connection with RBI and other cooperatives

Government Support: The government offers subsidies to the cooperative banks that is in turn transferred to the customers

Project appraisal methods try to reduce the subjectivity involved in assessing the capacity of

the borrowers with respect to repayment capacity. The availability of computerised software makes

the technicalities of the assessment much simpler as compared to earlier. The project can be

appraised by using some of the methods like healthy discussion can be held with the members of

management of borrowings firms to get better idea about the business, its viability and the capacity

of management to take decision in exceptional situation.

The study revealed that the different aspects of a project are not independent entities but are

highly inter-related and a meaningful project appraisal depends upon the appreciation of these

fundamental facts. The appraisal of a project is undertaken by the bank with the objective of

determining the market potential of a project, to determine repayment capacity of sanctioning unit

and selecting an optimal strategy. The methods of analysis vary from project to project, but there are

certain common aspects of study from the angle of technology and engineering.

An analysis of a region economy provides a general framework within which the assessment

of any project is made. This analysis indicates whether the project is in a potential environment,

which enjoys priority for economic development of the region/state concerned. This exercise itself

usually involves the investigation of six different aspects; Economic, Technical, Organizational,

Managerial, Operational and Financial. The relative importance of these different aspects can vary

considerably according to circumstances and type of project.

The study also revealed that in a large majority of cases, it is possible to quantify project

costs and benefits. Future costs and benefits are calculated, using either market are shadow prices

and on the basis of past performance in case of expansion projects. Further both costs and benefits

are put under subsidence to initiate the projects estimated rate of return. The latter is then compared

with the minimum earning power. While the rate of return is an important test that all projects with

quantifiable costs and benefits must pass, importance and significance is usually overestimated.

The rate of return is a necessary confirming test of projects that have to be justified within a

much wider frame of reference, in which basic project objectives and the nature of project benefits

increased employment and improved income distribution play major roles.

LIMITATIONSGIMS 41

The rate of interest may vary according to market environment.

These figures are according to publish in annual report and according to employees of Sagar

cooperative bank.

The report is according to my perception only and can’t be taken as final decision.

This study only relates to one organization, so conclusions drawn may not be finding its utility in

all the other banks.

Even the employees of the bank hesitated to give the complete & accurate data.

SUGGESTION AND CONCLUSION

GIMS 42

SUGGESTIONS:

1. More mass awareness campaigns should be organized in order to enhance market share of bank.

So Bank should concentrate on its advertisement itself.

2. Bank should refocus on its interest rate as responded by people. Periodic review of the interest

rate should be done.

3. There should be computerized system in the bank as it will reduce the time wastage of manual

work and will lead to the better performance of the bank.

4. Training of the employees should be there to meet the needs of the time.

5. Proper posting of the staff should be done.

6. Customer’s satisfaction must be the top priority of the bank.

7. Maximum practical exposure should be provided to the job trainees so that they may handle the

various enquiries of customer effectively.

8. Communication gap within the bank and with the head-office should be reduced.

9. Infrastructure facilities should be provided to the branch of Cooperative Bank, as it is catering to

the 5-6 nearby villages.

10.Banks is also advised to have proper internal control measures for monitoring its functions and

transactions.

CONCLUSION

GIMS 43

The study concludes that Cooperative Bank, which was established for mainly for the service

of rural sector, still is not on the line to its goal. It is lacking at various elements, particularly at the

branch levels, which reveals the edge of other public and private sector banks over the Cooperative

bank, the lines at which the bank is lacking behind. Indiscipline and lack of commitment in these

banks make people’s trust in the cooperative sector a casualty.

Some of the co-operative banks are quite forward looking and have developed sufficient core

competencies to challenge state and private sector banks. But there is shortage of staff in this bank

and the traditional manual banking which is affecting the business and customer services. People are

still unaware of the services provided by the Cooperative Banks due to lack of advertisement.

There is a need to analyze and pick up early warning signals. A change is needed today in the

cooperative banks which is built on confidence in human capital - the most important of all resources

- in commitment, creativity and innovation brought about by proactive management, membership

and employees. The ability to capture knowledge and wisdom gives cooperative banks their

competitive advantage. A prerequisite is that participants from all parts of a cooperative organization

know and understand its purpose, core values and visions.

In this way, by keeping in mind the certain shortcomings, appropriate measures to overcome

them should be adopted. So that the real purpose of the Cooperative bank must be realized with a

competitive advantage and the gap between the customer perception of the Cooperative Bank and the

other private and public sector bank, can be reduced.

Some of the Innovations needed for the resurgence in the cooperative movement are;

1) Change of mindset,

2) Human resource development,

3) Use of information technology,

4) Adoption of innovative process technology for manufacturing,

5) Value addition to the services and the products,

6) Leadership with vision, dedication, commitment and innovative approach to organize the

cooperatives.

The innovations will help in transforming the whole system of cooperative management

for betterment and cooperatives must not lag behind in keeping pace with the changing socio-

economic environment.

GIMS 44

BIBLIOGRAPHY

Books Refered:

Co-operative movement in world book.

Websites: www.google.com. www.co-operative bank movement.com. www.rbi.org.in.

Questionnaire ____________________________________________________________________________________

GIMS 45

1. Which type of account do you have? Please tick.

SB FD Both Other

2. Have you taken ever any loan from this bank?

Yes No

3. How do you come to know about the schemes and services of the bank?

Personal Visit Advertisement Word of Mouth Other

4. Which type of rate of interest do you prefer, offered?

Yearly Half yearly Monthly

5. Do you avail any appreciation from bank for being a good customer?

Yes No

6. In future service of which bank will you prefer?

SBOP Cooperative Stick to same some other

7. What factors motivate you while going for a particular banking service?

Interest rate Schemes & terms Popularity of bank All Other

8. Do you agree that image or brand of the bank has its influence on the customers?

Agree Disagree

9. Do you think that computerized Banking is the essential of modern banks?

Strongly Disagree Somewhat Disagree Neutral

Somewhat Agree Strongly Agree

10. Do you think that customer differ in his perception for a Government Bank & private bank?

Strongly Disagree Somewhat Disagree Neutral

Somewhat Agree Strongly Agree

Signature

GIMS 46