CHAPTER-I

INTRODUCTION TO SUBJECT

1.1 THEORETICAL FOUNDATION

1.1.1 Introduction

Banking is the pivotal of Indian economy. Banking, if we equate it with money lending, it

perhaps as old as civilization itself when ‘money’ in its modern form was not in

existence, people in order to obtain the goods and services, offered other goods and

services in return. This was - Barter an inconvenient system. Nevertheless people could

lend and borrow in the form of any other mutually acceptance form.

Banking institutions today form the heart of the financial structure of any country

whether it is developed or developing.

So, banks are like:

“Oxygen for economy which is necessary for the generation & management of the blood

i.e. the finance of the economy and circulates through the network of the bank i.e. “the

Network of Branches”.

Banks lending, investing and related activities facilitate the economic process of

production, distribution and consumption. Banks encourage investments and thereby help

in capital formation.

1.1.2 Definition of Banking:

Acc. To Sec. 5 (b)

“Banking is defined as accepting for the purpose of lending or investment of deposits of

money from public, repayable on demand or otherwise and withdrawals by cheque, draft,

order or otherwise.”

“Financial institution whose primary activity is to act as a payment agent for

customers and to borrow and lend money. Banks are important players of the market and

offer services as loans and funds”.

Banking Regulation Act of India, 1949 defines Banking as “accepting, for the purpose of

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lending or of investment of deposits of money from the public, repayable on demand or

otherwise or withdrawable by cheque, draft order or otherwise.” The Reserve Bank of

India Act, 1934 and the Banking Regulation Act, 1949, govern the banking operations in

India.

1.1.3 Evolution of Banking:

Origin: Its origin in the simplest term, can be traced to the origin of authentic history

soon after society recognized the benefits of using money as a medium of exchange, it

recognized the need for a “safe place” to store it. This “safe place” ultimately evolved

into financial institutions that “accept deposits and disburse loans” i.e. the modern

commercial banks.

Origin of the word “BANK”: On the other hand, even the origin of the word “BANK” is

shrouded in mystery. According to one view point, the Italian business houses carrying a

crude form of banking were called “Banchi Bancherii” According to another view point,

the word “Bank” is derived from the German word “Bank” which means heap or wound.

Subsequently, Italians started using the name “Banco” which means accumulation of

money or of stock.

Origin of Commercial Banking: The origin of commercial banking can be traceable in the

early times of human history. In the ancient Rome & Greece, the practices of storing

precious metals and coins at safe places and loaning out money for public and private

purposes on interest was prevalent. In England, banking had its origin with the London

Goldsmiths, who in the 7th century began to accept deposits from merchants and others

for safe keeping of money and other valuables. As public enterprise, banking made its

first appearance in Italy in 1157 when the Bank of Venice was founded.

1.1.4 History of Banking in India

There are three different phases in the history of banking in India.

1) Pre-Nationalization Era.

2) Nationalization Stage.

3) Post Liberalization Era.

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1) Pre-Nationalization Era:

In India the business of banking and credit was practices even in very early times. The

remittance of money through Hundies, an indigenous credit instrument, was very popular.

The hundies were issued by bankers known as Shroffs, Sahukars, Shahus or Mahajans in

different parts of the country.

The modern type of banking, however, was developed by the Agency Houses of Calcutta

and Bombay after the establishment of Rule by the East India Company in 18th and 19th

centuries.

During the early part of the 19th Century, ht volume of foreign trade was relatively small.

Later on as the trade expanded, the need for banks of the European type was felt and the

government of the East India Company took interest in having its own bank. The

government of Bengal took the initiative and the first presidency bank, the Bank of

Calcutta (Bank of Bengal) was established in 180. In 1840, the Bank of Bombay and IN

1843, the Bank of Madras was also set up

These three banks also known as “Presidency Bank”. The Presidency Banks had their

branches in important trading centers but mostly lacked in uniformity in their operational

policies. In 1899, the Government proposed to amalgamate these three banks in to one so

that it could also function as a Central Bank, but the Presidency Banks did not favor the

idea. However, the conditions obtaining during world war period (1914-1918)

emphasized the need for a unified banking institution, as a result of which the Imperial

Bank was set up in1921. The Imperial Bank of India acted like a Central bank and as a

banker for other banks.

The RBI (Reserve Bank of India) was established in 1935 as the Central Bank of the

Country. In 1949, the Banking Regulation act was passed and the RBI was nationalized

and acquired extensive regulatory powers over the commercial banks. In 1950, the Indian

Banking system comprised of the RBI, the Imperial Bank of India, Cooperative banks,

Exchange banks and Indian Joint Stock banks.

2) Nationalization Stage:

After Independence, in 1951, the All India Rural Credit survey, committee of Direction

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with Shri. A. D. Gorwala as Chairman recommended amalgamation of the Imperial Bank

of India and ten others banks into a newly established bank called the State Bank of India

(SBI). The Government of India accepted the recommendations of the committee and

introduced the State Bank of India bill in the Lok Sabha on 16th April 1955 and it was

passed by Parliament and got the president’s assent on 8th May 1955. The Act came into

force on 1st July 1955, and the Imperial Bank of India was nationalized in 1955 as the

State Bank of India

The main objective of establishing SBI by nationalizing the Imperial Bank of India was

“to extend banking facilities on a large scale more particularly in the rural and semi-urban

areas and to diverse other public purposes.

In 1959, the SBI (Subsidiary Bank) act was proposed and the following eight state-

associated banks were taken over by the SBI as its subsidiaries.

Name of the Bank Subsidiary with effect from

1. State Bank of Hyderabad 1st October 1959

2. State Bank of Bikaner 1st January 1960

3. State Bank of Jaipur 1st January 1960

4. State Bank of Saurashtra 1st May 1960

5 State Bank of Patiala 1st April 1960

6. State Bank of Mysore 1st March 1960

7. State Bank of Indore 1st January 1968

8.State Bank of Travancore 1st January 1960

With effect from 1st January 1963, the State Bank of Bikaner and State Bank of Jaipur

with head office located at Jaipur. Thus, seven subsidiary banks State Bank of India

formed the SBI Group.

The SBI Group under statutory obligations was required to open new offices in rural and

semi-urban areas and modern banking was taken to these unbanked remote areas.

On 19th July 1969, then the Prime Minister, Mrs. Indira Gandhi announced the

nationalization of 14 major scheduled Commercial Banks each having deposits worth Rs.

50 crore and above. This was a turning point in the history of commercial banking in

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India. Later the Government Nationalized six more commercial private sector banks with

deposit liability of not less than Rs. 200 crores on 15th April 1980, viz.

Andhra Bank.

Corporation Bank.

New Bank if India.

Oriental Bank of Commerce.

Punjab and Sind Bank.

Vijaya Bank.

In 1969, the Lead Bank Scheme was introduced to extend banking facilities to every

corner of the country. Later in 1975, Regional Rural Banks were set up to supplement the

activities of the commercial banks and to especially meet the credit needs of the weaker

sections of the rural society. Nationalization of banks paved way for retail banking and as

a result there has been an alt round growth in the branch network, the deposit

mobilization, credit disposals and of course employment.

The first year after nationalization witnessed the total growth in the agricultural loans and

the loans made to SSI by 87% and 48% respectively. The overall growth in the deposits

and the advances indicates the improvement that has taken place in the banking habits of

the people in the rural and semi-urban areas where the branch network has spread. Such

credit expansion enabled the banks to achieve the goals of nationalization, it was

however, achieved at the coast of profitability of the banks.

Consequences of Nationalization:

The quality of credit assets fell because of liberal credit extension policy.

Political interference has been as additional malady.

Poor appraisal involved during the loan meals conducted for credit disbursals.

The credit facilities extended to the priority sector at concessional rates.

The high level of low yielding SLR investments adversely affected the profitability

of the banks.

The rapid branch expansion has been the squeeze on profitability of banks emanating

primarily due to the increase in the fixed costs.

There was downward trend in the quality of services and efficiency of the banks.

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3) Post-Liberalization Era

Thrust on Quality and Profitability: By the beginning of 1990, the social banking goals

set for the banking industry made most of the public sector resulted in the presumption

that there was no need to look at the fundamental financial strength of this bank.

Consequently they remained undercapitalized. Revamping this structure of the banking

industry was of extreme importance, as the health of the financial sector in particular and

the economy was a whole would be reflected by its performance.

The need for restructuring the banking industry was felt greater with the initiation of the

real sector reform process in 1992. the reforms have enhanced the opportunities and

challenges for the real sector making them operate in a borderless global market place.

However, to harness the benefits of globalization, there should be an efficient financial

sector to support the structural reforms taking place in the real economy. Hence, along

with the reforms of the real sector, the banking sector reformation was also addressed.

The route causes for the lackluster performance of banks, formed the elements of the

banking sector reforms. Some of the factors that led to the dismal performance of banks

were.

Regulated interest rate structure.

Lack of focus on profitability.

Lack of transparency in the bank’s balance sheet.

Lack of competition.

Excessive regulation on organization structure and managerial resource.

Excessive support from government.

Against this background, the financial sector reforms were initiated to bring about a

paradigm shift in the banking industry, by addressing the factors for its dismal

performance.

In this context, the recommendations made by a high level committee on financial sector,

chaired by M. Narasimham, laid the foundation for the banking sector reforms. These

reforms tried to enhance the viability and efficiency of the banking sector. The

Narasimham Committee suggested that there should be functional autonomy, flexibility

in operations, dilution of banking strangulations, reduction in reserve requirements and

adequate financial infrastructure in terms of supervision, audit and technology. The

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committee further advocated introduction of prudential forms, transparency in operations

and improvement in productivity, only aimed at liberalizing the regulatory framework,

but also to keep them in time with international standards. The emphasis shifted to

efficient and prudential banking linked to better customer care and customer services.

1.1.5 Law of banking

Banking law is based on a contractual analysis of the relationship between the bank

(defined above) and the customer—defined as any entity for which the bank agrees to

conduct an account.

The law implies rights and obligations into this relationship as follows:

1. The bank account balance is the financial position between the bank and the

customer: when the account is in credit, the bank owes the balance to the

customer; when the account is overdrawn, the customer owes the balance to the

bank.

2. The bank agrees to pay the customer's cheques up to the amount standing to the

credit of the customer's account, plus any agreed overdraft limit.

3. The bank may not pay from the customer's account without a mandate from the

customer, e.g. a cheque drawn by the customer.

4. The bank agrees to promptly collect the cheques deposited to the customer's

account as the customer's agent, and to credit the proceeds to the customer's

account.

5. The bank has a right to combine the customer's accounts, since each account is

just an aspect of the same credit relationship.

6. The bank has a lien on cheques deposited to the customer's account, to the extent

that the customer is indebted to the bank.

7. The bank must not disclose details of transactions through the customer's account

—unless the customer consents, there is a public duty to disclose, the bank's

interests require it, or the law demands it.

8. The bank must not close a customer's account without reasonable notice, since

cheques are outstanding in the ordinary course of business for several days.

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These implied contractual terms may be modified by express agreement between the

customer and the bank. The statutes and regulations in force within a particular

jurisdiction may also modify the above terms and/or create new rights, obligations or

limitations relevant to the bank-customer relationship.

1.1.6 Banking channels

Banks offer many different channels to access their banking and other services:

A branch, banking centre or financial centre is a retail location where a bank or

financial institution offers a wide array of face-to-face service to its customers.

ATM is a computerised telecommunications device that provides a financial

institution's customers a method of financial transactions in a public space without

the need for a human clerk or bank teller. Most banks now have more ATMs than

branches, and ATMs are providing a wider range of services to a wider range of

users. For example in Hong Kong, most ATMs enable anyone to deposit cash to

any customer of the bank's account by feeding in the notes and entering the

account number to be credited. Also, most ATMs enable card holders from other

banks to get their account balance and withdraw cash, even if the card is issued by

a foreign bank.

Mail is part of the postal system which itself is a system wherein written

documents typically enclosed in envelopes, and also small packages containing

other matter, are delivered to destinations around the world. This can be used to

deposit cheques and to send orders to the bank to pay money to third parties.

Banks also normally use mail to deliver periodic account statements to customers.

Telephone banking is a service provided by a financial institution which allows its

customers to perform transactions over the telephone. This normally includes bill

payments for bills from major billers (e.g. for electricity).

Online banking is a term used for performing transactions, payments etc. over the

Internet through a bank, credit union or building society's secure website.

Mobile banking is a method of using one's mobile phone to conduct simple

banking transactions by remotely linking into a banking network

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1.1.7 General Aspect of Bank’s Services According to Crowther, a bank “collects money from those who have it to spare or who

are saving it out of their incomes, and it lends this money to those who require it.” The

bank has the following features:

1) It deals with money; it accepts deposits and advances loans.

2) It also deals with credit; it has the ability to create credit.i.e. the ability to expand

its liabilities as a multiple of its reserves.

3) It is commercial institution; it aims at earning profit.

4) It is a unique financial institution that creates demand deposits which serve as a

medium of exchange and, as a result, the banks manage the payment system of the

country.

1.1.8 Services of Commercial Banks or Modern Banks

Accepting Deposits: The first important function of a bank is to accept

deposits from those who can save but cannot profitably utilize this saving

themselves. To attract from all sorts of individuals, the banks maintain

different types of accounts:

Fixed Deposit Account: Money in these accounts is deposited for fixed

period of time (say one, two, or five years) and cannot be withdrawn before

the expiry of that period.

Current Deposit Account: These accounts are generally maintained by the

traders and businessman who has to make a number of payments every day

and money can be withdrawn from these accounts in as many times.

Saving Deposit Account: The aim of these accounts is to encourage and

mobilize small savings of the public. Certain restrictions are imposed on the

depositors regarding the number of withdrawals and the amount to be with

drawn in a given period.

Recurring Deposit Account: the purpose of these accounts is to encourage

regular savings by the public, particularly by the fixed income group.

Home Safe Account: Under this scheme a safe is supplied to the depositor to

keep it at home and to put his small savings in it.

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Advancing of Loans: The second important function of a bank is advancing

of loans to the public. After keeping certain cash reserves, the banks lend their

deposits to the needy borrowers. Various types of loans granted by the banks

are:

Money at call: Such loans are very short period loans and can be called by

the bank at a very short notice of say one day to fourteen days.

Cash Credit: It is a type of loan which is given to the borrower against his

current assets, such as shares, stocks, bonds, etc. The bank opens the account

in the name of the borrowers and allows him to withdraw borrowed money

from time to time upto a certain limit as determined by the value of his current

assets.

Overdraft: Sometimes, the bank provides facilities to its customers though

which they are allowed to withdraw more than their deposits.

Discounting of Bills of Exchange: Through this method, a holder of a bill of

exchange can get it discounted by the bank.

Term Loans: The banks have also started advancing medium term and long

term loans. The maturity period for such loans is more than one year. The

interest is charged on the entire amount of the loan and the loan is repaid

either on maturity or in installments.

Credit Creation: A unique function of the bank is to create credit. In fact,

credit creation is the natural outcome of the process of advancing loans as

adopted by the banks. When a bank advances loan to its customers, it does not

lend cash but opens an account in the borrower’s name and credit the amount

of loan to this account. Thus, whenever a bank grants loan, it creates an equal

amount of bank deposits. Creation of such deposits is called credit creation.

Promoting Cheque System: banks also render a very useful medium of

exchange in the form of cheques. Through a Cheque, the depositor directs the

bankers to make payment to the payee. Cheque is the most developed credit

instrument in the money market.

Agency Functions: Banks also perform certain agency functions for and on

behalf of their customers:

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o Remittance of Funds

o Collection and Payment of credit instruments

o Execution of Standing Orders

o Purchasing and Sale of Securities

o Collection of Dividends on Shares

o Income Tax Consultancy

o Acting as Trustee and Executor

1.1.9 Broad Classification of Banks in India:

The RBI:

The RBI is the supreme monetary and banking authority in the country and has the

responsibility to control the banking system in the country. It keeps the reserves of all

scheduled banks and hence is known as the “Reserve Bank”.

Public Sector Banks:

State Bank of India and its Associates (8)

Nationalized Banks (19)

Regional Rural Banks Sponsored by Public Sector Banks (196)

Old Generation Private Banks (22)

Private Sector Banks:

Foreign New Generation Private Banks (8)

Banks in India (40)

Cooperative banks

State Co-operative Banks

Central Co-operative Banks

Primary Agricultural Credit Societies

Land Development Banks

State Land Development

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Development Banks:

Development Banks mostly provide long term finance for setting up industries. They

also provide short-term finance (for export and import activities)

Industrial Finance Co-operation of India (IFCI)

Industrial Development of India (IDBI)

Industrial Investment Bank of India (IIBI)

Small Industries Development Bank of India (SIDBI)

National Bank for Agriculture and Rural Development (NABARD)

Export-Import Bank of India

1.1.10 Reserve Bank of India (RBI)

The Reserve Bank of India (RBI) is the central bank of India, and was established on

April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934.

Since its inception, it has been headquartered in Mumbai. Though originally privately

owned, RBI has been fully owned by the Government of India since nationalization in

1949.

RBI is governed by a central board (headed by a Governor) appointed by the Central

Government. The current governor of RBI is Dr.Y.Venugopal Reddy who succeeded Dr.

Bimal Jalan on September 6, 2003). RBI has 22 regional offices across India.The Reserve

Bank of India was set up on the recommendations of the Hilton Young Commission. The

commission submitted its report in the year 1926, though the bank was not set up for nine

years.

Monetary Authority

Formulates, implements and monitors the monetary policy.

Objective: maintaining price stability and ensuring adequate flow of credit to

productive sectors.

Regulator and supervisor of the financial system

Prescribes broad parameters of banking operations within which the country’s

banking and financial system functions

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Objective: maintain public confidence in the system, protect depositors’ interest

and provide cost-effective banking services to the public. The Banking

Ombudsman Scheme has been formulated by the Reserve Bank of India (RBI) for

effective redressal of complaints by bank customers

Manager of Exchange Control

Manages the Foreign Exchange Management Act, 1999.

Objective: to facilitate external trade and payment and promote orderly

development and maintenance of foreign exchange market in India.

Issuer of currency

Issues and exchanges or destroys currency and coins not fit for circulation.

Objective: to give the public adequate quantity of supplies of currency notes and

coins and in good quality.

Developmental role

Performs a wide range of promotional functions to support national objectives.

Related Functions

Banker to the Government: performs merchant banking function for the central

and the state governments; also acts as their banker.

Banker to banks: maintains banking accounts of all scheduled banks.

Owner and operator of the depository (SGL) and exchange (NDS) for government

bonds.

There is now an international consensus about the need to focus the tasks of a

central bank upon central banking. RBI is far out of touch with such a principle,

owing to the sprawling mandate described above.

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1.1.11 Economic Functions

The economic functions of banks include:

1. 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 and/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.

2. 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 economise 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.

3. Credit intermediation – banks borrow and lend back-to-back on their own account

as middle men

4. 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.

5. Maturity Transformation – banks borrow more on demand debt and short term

debt, but provide more long term loans. In other words, they borrow short and

lend long. With a stronger credit quality than most other borrowers, banks can do

this by aggregating issues (e.g. accepting deposits and issuing banknotes) and

redemptions (e.g. withdrawals and redemptions of banknotes), maintaining

reserves of cash, investing in marketable securities that can be readily converted

to cash if needed, and raising replacement funding as needed from various sources

(e.g. wholesale cash markets and securities markets).

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1.1.12 Supervisory Functions:

In addition to its traditional central functions, the Reserve bank has certain nonmonetary

functions of the nature of supervision of banks and promotion of sound banking in India.

The Reserve Bank Act, 1934, and the Banking Regulation Act, 1949 have given the RBI

wide powers of supervision and control over commercial and cooperative banks, relating

to licensing and establishments, branch expansion, liquidity of their assets, management

and methods of working, amalgamation, reconstruction and liquidation. The RBI is

authorized to carry out periodical inspections of the banks and to call for returns and

necessary information from them. The nationalization of 14 major Indian scheduled

banks in July 1969 has imposed new responsibilities on the RBI for directing the growth

of banking and credit policies towards more rapid development of the economy and

realization of certain desired social objectives. The supervisory functions of the RBI have

helped a great deal in improving the standard of banking in India to develop on sound

lines and to improve the methods of their operation.

1.1.13 Promotional Functions:

With economic growth assuming a new urgency since Independence, the range of the

Reserve Bank’s functions have steadily widened. The Bank now performs a variety of

developmental and promotional functions, which, at one time, were regarded as outside

the normal scope of central banking. The Reserve Bank was asked to promote banking

habit, extend banking facilities to rural and semi-urban areas, and establish and promote

new specialized financing agencies. Accordingly, the Reserve bank has helped in the

setting up of the IFCI and the SFC: it set up the Deposit Insurance Corporation of India in

1963 and the Industrial Reconstruction Corporation of India in 1972. These institutions

were set up directly or indirectly by the Reserve Bank to promote saving habit and to

mobilize savings, and to provide industrial finance as well as agricultural finance. As far

back as 1935, the RBI set up the Agricultural Credit Department to provide agricultural

credit. But only since 1951 the Bank’s role in this field has become extremely important.

The Bank has developed the co-operative credit movement to encourage saving, to

eliminate money-lenders from the villages and to route its short term credit to agriculture.

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1.1.14 Types of Banks in India

1) Public Sector Banks

The public sector banks in India is formally owned and managed by the Government of

India. The government owns these banks. In India 20 banks were nationalized in 1969

and 1980 respectively. Social welfare is there main objective. It basically constitutes of

the following:

State Bank of India and its subsidiaries: State Bank of India and its associates are

called State bank group. This group comprises of the State Bank of India (SBI)

and its seven subsidiaries viz. State Bank of Patiala, State Bank of Hyderabad,

State Bank of Travancore, State Bank of Bikaner and Jaipur, State Bank of

Mysore, State Bank of Saurashtra and State Bank of Indore.

Nationalized Banks : This group consists of private sector banks that were

nationalized by the Government of India. On the 19th July 1969, fourteen major

Indian bans having deposits of more than Rs. 50 crores were nationalized. The

undertakings of these fourteen banks were taken over by and have vested in 14

new corporate bodies established under the baking companies (acquisition and

transfer of undertaking) act, 1970. It has been amended by banking companies

act 1994, according to which the share capital upto 49% of the nationalized banks

can be held by the public and the cost of the share capital will be owned by the

Government of India. These 14 banks are now manages by the Govt. of India

through the board of directors appointed by it. On 15 th April 1980, six more

banks having deposits not less than Rs. 200 crores were also nationalized. The

undertakings of these banks were taken over and vested in six corresponding new

banks under the banking companies (acquisition and transfer of undertakings) act,

1980.

Rural Banks : These were established by the RBI in the year 1975 of Banking

Commision. It was established to operate in rural areas to provide credit and

other facilities to small and marginal farmers, agricultural laborers, artisians and

small entrepreneurs.

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2) Private Sector Banks

Initially all the banks in India were private banks, which were founded in the pre

independence era to cater to the banking needs of the people. In 1921, three major banks

i.e. Banks of Bengal, Bank of Bombay, and Bank of Madras, merged to form Imperial

Bank of India. In 1935, the Reserve Bank of India (RBI) was established and it took over

the central banking responsibilities from the Imperial Bank of India, transferring

commercial banking functions completely to IBI. In 1955, after the declaration of first-

five year plan, Imperial Bank of India was subsequently transformed into State Bank of

India (SBI).

Following this, occurred the nationalization of major banks in India on 19 July 1969. The

Government of India issued an ordinance and nationalized the 14 largest commercial

banks of India, including Punjab National Bank (PNB), Allahabad Bank, Canara Bank,

Central Bank of India, etc. Thus, public sector banks revived to take up leading role in

the banking structure. In 1980, the GOI nationalized 6 more commercial banks, with

control over 91% of banking business of India.

In 1994, the Reserve Bank Of India issued a policy of liberalization to license limited

number of private banks, which came to be known as New Generation tech-savvy banks.

Global Trust Bank was, thus, the first private bank after liberalization; it was later

amalgamated with Oriental Bank of Commerce (OBC). Then Housing Development

Finance Corporation Limited (HDFC) became the first (still existing) to receive an 'in

principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private

sector. The first Private Bank in India to receive an in principle approval from the

Reserve Bank of India was Housing Development Finance Corporation Limited, to set up

a bank in the private sector banks in India as part of the RBI's liberalization of the Indian

Banking Industry. It was incorporated in August 1994 as HDFC Bank Limited with

registered office in Mumbai and commenced operations as Scheduled Commercial Bank

in January 1995. ING Vaysya, yet another Private Bank of India was incorporated in the

year 1930. Bangalore has a pride of place for having the first branch inception in the year

1934. With successive years of patronage and constantly setting new standards in

banking, ING Vaysya Bank has many credits to its account.

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3) Foreign Sector Banks

Foreign Banks in India always brought an explanation about the prompt services to

customers. After the set up foreign banks in India, the banking sector in India also

become competitive and accurative.

New rules announced by the Reserve Bank of India for the foreign banks in India in this

budget has put up great hopes among foreign banks which allows them to grow

unfettered. Now foreign banks in India are permitted to set up local subsidiaries. The

policy conveys that forign banks in India may not acquire Indian ones (except for weak

banks identified by the RBI, on its terms) and their Indian subsidiaries will not be able to

open branches freely.

1.1.15 Co-operative Banks:

The Co-operative bank has a history of almost 100 years. The Co-operative banks are an

important constituent of the Indian Financial System, judging by the role assigned to

them, the expectations they are supposed to fulfill, their number, and the number of

offices they operate. The co-operative movement originated in the West, but the

importance that such banks have assumed in India is rarely paralleled anywhere else in

the world. Their role in rural financing continues to be important even today, and their

business in the urban areas also has increased phenomenally in recent years mainly due to

the sharp increase in the number of cooperative banks.

While the co-operative banks in rural areas mainly finance agricultural based activities

including farming, cattle, milk, hatchery, personal finance etc. 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, home finance, consumer finance, personal finance, etc. Some of the co-

operative banks are quite forward looking and have developed sufficient core

competencies to challenge state and private sector banks.

According to NAFCUB the total deposits & lendings of Co-operative Banks is much

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

exponential growth of Co-operative Banks is attributed mainly to their much better local

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

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clientele. Though registered under the Co-operative Societies Act of the Respective States

(where formed originally) the banking related activities of the co-operative banks are also

regulated by the Reserve Bank of India. They are governed by the Banking Regulations

Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.

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

1.1.16 Features of Cooperative Banks

Co-operative Banks are organized and managed on the principal of co-operation, self-

help, and mutual help. They function with the rule of “one member, one vote”. Function

on “no profit, no loss” basis. Co-operative banks, as a principle, do not pursue the goal of

profit maximization. Co-operative bank performs all the main banking functions of

deposit mobilization, supply of credit and provision of remittance facilities. Co-operative

Banks provide limited banking products and are functionally specialists in agriculture

related products. However, co-operative banks now provide housing loans also.

UCBs provide working capital loans and term loan as well. The State Co-operative Banks

(SCBs), Central Co-operative Banks (CCBs) and Urban Cooperative Banks (UCBs) can

normally extend housing loans upto Rs 1 lakh to an individual. The scheduled UCBs,

however, can lend upto Rs 3 lakh for housing purposes.

The UCBs can provide advances against shares and debentures also. Co-operative bank

do banking business mainly in the agriculture and rural sector. However, UCBs, SCBs,

and CCBs operate in semi urban, urban, and metropolitan areas also.

The urban and non-agricultural business of these banks has grown over the years. The co-

operative banks demonstrate a shift from rural to urban, while the commercial banks,

from urban to rural. Co-operative banks are perhaps the first government sponsored,

government-supported, and government-subsidized financial agency in India. They get

financial and other help from the Reserve Bank of India NABARD, central government

19

and state governments. They constitute the “most favoured” banking sector with risk of

nationalization. For commercial banks, the Reserve Bank of India is lender of last resort,

but co-operative banks it is the lender of first resort which provides financial resources in

the form of contribution to the initial capital (through state government), working capital,

refinance.

Co-operative Banks belong to the money market as well as to the capital market. Primary

agricultural credit societies provide short term and medium term loans. Land

Development Banks (LDBs) provide long-term loans. SCBs and CCBs also provide both

short term and term loans. Co-operative banks are financial intermediaries only partially.

The sources of their funds (resources) are (a) central and state government, (b) the

Reserve Bank of India and NABARD, (c) other co-operative institutions, (d) ownership

funds and, (e) deposits or debenture issues. It is interesting to note that intra-sectoral

flows of funds are much greater in co-operative banking than in commercial banking.

Inter-bank deposits, borrowings, and credit from a significant part of assets and liabilities

of co-operative banks. This means that intra-sectoral competition is absent and intra-

sectoral integration is high for co-operative bank.

Some co-operative banks are scheduled banks, while others are non-scheduled banks. For

instance, SCBs and some UCBs are scheduled banks but other co-operative bank are non-

scheduled banks. At present, 28 SCBs and 11 UCBs with Demand and Time Liabilities

over Rs 50 crore each included in the Second Schedule of the Reserve Bank of India Act.

Co-operative Banks are subject to CRR and liquidity requirements as other scheduled and

nonscheduled banks are. However, their requirements are less than commercial banks.

Since 1966 the lending and deposit rate of commercial banks have been directly regulated

by the Reserve Bank of India.

Although the Reserve Bank of India had power to regulate the rate co-operative bank but

this have been exercised only after 1979 in respect of non-agricultural advances they

were free to charge any rates at their discretion. Although the main aim of the co-

operative bank is to provide cheaper credit to their members and not to maximize profits,

they may access the money market to improve their income so as to remain viable.

20

1.1.17 Common Products and Services provided by the bank

Banking covers so many services that it is difficult to define it. However, these basic

services have always been recognized as the hallmark of the genuine banker. These are

The receipt of the customer’s deposits

The collection of his cheques drawn on other banks

The payment of the customer’s cheques drawn on himself

There are other various types of banking services like:

1) Loans and Advances – Overdraft, Cash Credit, etc.

2) Deposits – Saving Account, Current Account, etc.

3) Financial Services – Bill discounting etc.

4) Foreign Services – Providing foreign currency, travelers cheques, etc.

5) Savings – Fixed deposits, etc.

6) Money Transfer

1) Loans and Advances

Banks in India with the way of development have become easy to apply in loan market.

The following loans are given by almost all the banks in the country:

Personal Loan

Car Loan or Auto Loan

Loan against Shares

Home Loan

Education Loan or Student Loan

In Personal Loan, one can get a sanctioned loan amount between Rs 25,000 to 10,00,000

depending upon the profile of person applying for the loan. SBI, ICICI, HDFC, HSBC

are some of the leading banks which deals in Personal Loan.

Almost all the banks have jumped into the market of car loan which is also sometimes

termed as auto loan. It is one of the fast moving financial product of banks. Car loan /

auto loan are sanctioned to the extent of 85% upon the ex-showroom price of the car with

some simple paper works and a small amount of processing fee.

Loan against shares is very easy to get because liquid guarantee is involved in it. Home

loan is the latest craze in the banking sector with the development of the infrastructure.

21

Now people are moving to township outside the city. More number of townships are

coming up to meet the demand of 'house for all'. The RBI has also liberalised the interest

rates of home loan inorder to match the repayment capability of even middle class

people. Almost all banks are dealing in home loan. Again SBI, ICICI, HDFC, HSBC are

leading.

The educational loan, rather to be termed as student loan, is a good banking product for

the mass. Students with certain academic brilliance, studying at recognised

colleges/universities in India and abroad are generally given education loan / student loan

so as to meet the expenses on tuition fee/ maintenance cost/books and other equipment.

2) Advances

Overdraft:- Banks allow selected customers to write cheques in excess of the

balance in their current account, ie, to overdraw. Overdrafts are arranged up to

limits which depend on the customer's credit standing and the bank manager's

humour. The arrangements allow flexibility in the amount spent and, equally,

allow flexibility in repayments (although technically a bank can demand

repayment of an overdraft within 24 hours). In that respect overdrafts are unlike

personal loans, which are structured with regular repayments. Interest on

overdrafts is charged on the fluctuating daily balance.

Cash Credit:- This facility is given by the banker to the customer by way of a

certain amount of credit facility. Its limit is fixed on the basis of security of the

company`s current assets. A major part of working capital requirement of any unit

would consist of maintenance of inventory of raw materials, semi finished goods,

finished goods, stores and spares etc. In trading concern the requirement of funds

will be to maintain adequate stocks in trade. Finance against such inventories by

banks is generally granted in the shape of cash credit facility where drawings will

be permitted against stocks of goods. It is a running account facility where

deposits and withdrawals are permitted.

22

3) Deposits

Banks are also called custodians of public money. Basically, the money is accepted as

deposit for safe keeping. But since the Banks use this money to earn interest from people

who need money, Banks share a part of this interest with the depositors. The quantum of

interest depends upon the tenor - length of time for which the depositor wishes to keep

the money with the Bank - and the ease of withdrawal. The thumb rule is, longer the

tenor, higher the rate of interest and lesser the restrictions on withdrawal, lesser the

interest. Exceptions, however, exist. Deposits are accepted from both resident (domestic)

or non-resident Indian customers.

Saving Account : Savings Bank Accounts are meant to promote the habit of

saving among the citizens while allowing them to use their funds when required.

The main advantage of Savings Bank Account is its high liquidity and safety. On

top of that Savings Bank Account earn moderate interest too. The rate of interest

is decided and periodically reviewed by the Government of India

Current Account : It is basically used for business purposes. It doesn’t give any

interest on deposits. It can be held in the name of firms (include partnership firm,

pvt. Ltd. Co., ltd. Co., trust, association), person. Its prime purpose is to serve

the customers for their daily business transactions. A customer having current

account can withdraw money in the form of cash or cheque in a infinite number

of times and so is unrestricted.Current Account is primarily meant for

businessmen, firms, companies, public enterprises etc. that have numerous daily

banking transactions

4) Financial Services

Bills Discounting:-This is the most important form in which a bank lends without

any collateral security. The seller draws bills of exchange on the buyer of goods

on credit. Such a bill may either be a clean bill or documentary bill which is

accompanied by documents of title to goods,viz railway receipts. The bank

purchase bills payable on demand and credit the customer`s account with the

23

amount of bills less the discount. On maturity of the bills, the bank present them

to its acceptor for payment. In case the discounted bill is dishonored by the

nonpayment, the bank can recovers the full amount from the customer along with

the expense in that connection.

5) Foreign Services

Traveler’s Cheque: A traveler's cheque is a preprinted, fixed-amount cheque

designed to allow the person signing it to make an unconditional payment to

someone else as a result of having paid the issuer for that privilege. As a traveler's

cheque can usually be replaced if lost or stolen (if the owner still has the note

issued with the purchase of the cheque), they are often used by people on vacation

in place of cash. The use of credit cards has, however, rendered them less

important than they previously were. Traveler's cheques are available in several

currencies such as U.S. dollars, Canadian dollars, pounds sterling, Japanese yen,

and euro. Upon obtaining custody of a purchased supply of traveler's cheques, the

purchaser should immediately write his or her signature once upon each cheque,

usually on the cheque's upper portion. The purchaser will also have received a

receipt and some other documentation that should be kept in a safe place other

than where he or she carries the cheques. When wanting to cash a traveler's

cheque while making a purchase, the purchaser should, in the presence of the

payee, date and countersign the cheque in the indicated space, usually on the

cheque's lower portion

Money Transfer: Beside lending and depositing money, banks also carry money

from one corner of the globe to another. This act of banks is known as transfer of

money. This activity is termed as remittance business. Banks generally issue

Demand Drafts, Banker's Cheques, Money Orders or other such instruments for

transferring the money. This is a type of Telegraphic Transfer.

With the use of high technology and varieties of product it seems that "Free"

money transfers will become commonplace. We will see more bundling of

24

tailored money services by banks and non-traditional entrants that will include

"free" money transfers. Many banks will even use money transfer services as loss-

leaders inorder to generate account openings and cross-sell opportunities. The

price evolution of money transfer products for banks will be similar to that of

consumer bill pay-the product is worth giving away as an account acquisition tool

to win overall market share and establish banking relationships.

ATM money transfer card products have had terrible bank adoption rates since

being introduced in the last three to four years. Remittees who are highly educated

and have been already been exposed to ATM technology in receiving countries

tend to have an interest in this product. Money transfer to India is one of the most

important part played by the banks. This service provide peace of mind to either

the NRIs or to the visitors to India. Many Indian banks have ATM'S (automatic

teller machine), enable to draw foreign currency in India.

6) Modern Banking Services :

Credit Cards: Credit Card is “post paid” or “pay later” card that draws from a

creditline-money made available by the card issuer (bank) and gives one a grace

period to pay. If the amount is not paid full by the end of the period, one is

charged interest. A credit card is nothing but a very small card containing a means

of identification, such as a signature and a small photo. It authorizes the holder to

change goods or services to his account, on which he is billed. The bank receives

the bills from the merchants and pays on behalf of the card holder. These bills are

assembled in the bank and the amount is paid to the bank by the card holder

totally or by installments. The bank charges the customer a small amount for these

services. The card holder need not have to carry money/cash with him when he

travels or goes for purchasing. Credit cards have found wide spread acceptance in

the ‘metros’ and big cities. Credit cards are joining popularity for online

payments. The major players in the Credit Card market are the foreign banks and

some big public sector banks like SBI and Bank of Baroda. India at present has

about 3 million credit cards in circulation.

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Debit Cards: Debit Card is a “prepaid” or “pay now” card with some stored

value. Debit Cards quickly debit or subtract money from one’s savings account, or

if one were taking out cash.Every time a person uses the card, the merchant who

in turn can get the money transferred to his account from the bank of the buyers,

by debiting an exact amount of purchase from the card. To get a debit card along

with a Personal Identification Number (PIN). When he makes a purchase, he

enters this number on the shop’s PIN pad. When the card is swiped through the

electronic terminal, it dials the acquiring bank system – either Master Card or

Visa that validates the PIN and finds out from the issuing bank whether to accept

or decline the transaction. The customer never overspread because the amount

spent is debited immediately from the customers account. So, for the debit card to

work, one must already have the money in the account to cover the transaction.

There is no grace period for a debit card purchase. Some debit cards have monthly

or per transaction fees.Debit Card holder need not carry a bulky checkbook or

large sums of cash when he/she goes at for shopping. This is a fast and easy way

of payment one can get debit card facility as debit cards use one’s own money at

the time of sale, so they are often easier than credit cards to obtain. The major

limitation of Debit Card is that currently only some 3000-4000 shops country

wide accepts it. Also, a person can’t operate it in case the telephone lines are

down.

Automatic Teller Machine: The introduction of ATM’s has given the customers

the facility of round the clock banking. The ATM’s are used by banks for making

the customers dealing easier. ATM card is a device that allows customer who has

an ATM card to perform routine banking transaction at any time without

interacting with human teller. It provides exchange services. This service helps the

customer to withdraw money even when the banks ate closed. This can be done

by inserting the card in the ATM and entering the Personal Identification Number

and secret Password. ATM’s are currently becoming popular in India that enables

the customer to withdraw their money 24 hours a day and 365 days. It provides

the customers with the ability to withdraw or deposit funds, check account

balances, transfer funds and check statement information. The advantages of

26

ATM’s are many. It increases existing business and generates new business. It

allows the customers.

o To transfer money to and from accounts.

o To view account information.

o To order cash

o To receive cash.

The ATM services provided first by the foreign banks like Citibank, Grind lays bank and

now by many private and public sector banks in India like ICICI Bank, HDFC Bank, SBI,

UTI Bank etc. The ICICI has launched ATM Services to its customers in all the

Metropolitan Cities in India. By the end of 1990 Indian Private Banks and public sector

banks have come up with their own ATM Network in the form of “SWADHAN”. Over

the past year upto 44 banks in Mumbai, Vashi and Thane, have became a part of

“SWADHAN” a system of shared payments networks, introduced by the Indian Bank

Association (IBA).

E-Cheques: The e-cheques consists five primary facts. They are the consumers,

the merchant, consumer’s bank the merchant’s bank and the e-mint and the

clearing process. This chequring system uses the network services to issue and

process payment that emulates real world chequing. The payer issue a digital

cheques to the payee ant the entire transactions are done through internet.

Electronic version of cheaques are issued, received and processed. The e-

chequing is a great boon to big corporate as well as small retailers. Mostmajor

banks accept e-cheques. Thus this system offers secure means of collecting

payments, transferring value and managing cash flows.

Electronic Fund Transfer (EFT): Many modern banks have computerised their

cheque handling process with computer networks and other electronic

equipments. These banks are dispensing with the use of paper cheques. The

system called electronic fund transfer (EFT) automatically transfers money from

one account to another. This system facilitates speedier transfer of funds

electronically from any branch to any other branch. In this system the sender and

the receiver of funds may be located in different cities and may even bank with

27

different banks. Funds transfer within the same city is also permitted. The scheme

has been in operation since February 7, 1996, in India. The other important type

of facility in the EFT system is automated clearing houses. These are the

computer centers that handle the bills meant for deposits and the bills meant for

payment. In big companies pay is not disbursed by issued cheques or issuing cash.

The payment office directs the computer to credit an employee’s account with the

person’s pay.

Telebanking: Telebanking refers to banking on phone services.. a customer can

access information about his/her account through a telephone call and by giving

the coded Personal Identification Number (PIN) to the bank. Telebanking is

extensively user friendly and effective in nature.

o To get a particular work done through the bank, the users may leave his

instructions in the form of message with bank.

o Facility to stop payment on request. One can easily know about the cheque

status.

o Information on the current interest rates.

o Information with regard to foreign exchange rates.

Mobile Banking: A new revolution in the realm of e-banking is the emergence of

mobile banking. On-line banking is now moving to the mobile world, giving

everybody with a mobile phone access to real-time banking services, regardless of

their location. But there is much more to mobile banking from just on-lie banking.

It provides a new way to pick up information and interact with the banks to carry

out the relevant banking business. The potential of mobile banking is limitless and

is expected to be a big success. Booking and paying for travel and even tickets is

also expected to be a growth area. According to this system, customer can access

account details on mobile using the Short Messaging System (SMS) technology6

where select data is pushed to the mobile device. The wireless application

protocol (WAP) technology, which will allow user to surf the net on their mobiles

to access anything and everything. This is a very flexible way of transacting

banking business. Already ICICI and HDFC banks have tied up cellular service

28

provides such as Airtel, Orange, Sky Cell, etc. in Delhi and Mumbai to offer these

mobile banking services to their customers.

Demat Account : Demat refers to a dematerialised account. Demat account is just

like a bank account where actual money is replaced by shares. Just as a bank

account is required if we want to save money or make cheque payments, we need

to open a demat account in order to buy or sell shares. A Demat Account holds

portfolio of shares in electronic form and obviates the need to hold shares in

physical form. The account offers a secure and convenient way to keep track of

shares and investments without the hassle of handling physical documents that get

mutilated or lost in transit. The Securities and Exchange Board of India (SEBI)

mandates a demat account for share trading involving more than 500 shares.

1.2 REVIEW OF LITERATURE

Arun K. Jain, Christian Pinson, Naresh K. Malhotra (1987)1 analyzed that the

usefulness of loyalty as a construct for understanding and analysing the market for

banking services is here discussed. Using empirical data, the socio-demographic,

attitudinal and behavioural characteristics of loyal versus non-loyal bank patrons are

described. Bank loyalty can be measured and is useful in explaining differences in

banking skills, expected benefits and attitudes towards banks and level of utilisation of

banking services.

1 Arun K. Jain, Christian Pinson, Naresh K. Malhotra (1987), “Customer Loyalty as a Construct in the Marketing of Banking Services”, International Journal of Bank Marketing, Volume: 5, Issue: 3, Page: 49 – 72, Publisher: MCB UP Ltd

29

Peter Kangis, Vassilis Voukelatos (1997)2 concluded in his study that quality

expectations and evaluation of services received were marginally higher in the private

than in the public sector in most of the dimensions measured; the relative importance

attached to each quality attribute was, however, of a similar profile for the two sectors.

The perception of the profile of services received was, however, different between

sectors, thus suggesting that they did deliver a different quality of service. Discusses the

implications for strategy since sectoral differentiation in banking is becoming blurred as a

result of increasing overlap between services and competition from related and substitute

industries. Identifies the distinctiveness of what is perceived as a service on offer as

essential ingredient to competitive positioning in financial services.

Naser K.; Jamal A.; Al-Khatib K.(1999)3 concluded in his research study that the

Islamic banking system is gaining momentum. Many international conventional banks

have started to open branches which operate in accordance with the Islamic Shariah

principles in some Islamic countries. The Islamic banking system is expected to face

strong competition not only from the Islamic banks but also from well-established

conventional banks offering Islamic products and services. In this study, an attempt is

made to assess the degree of customer awareness and satisfaction towards an Islamic bank

in Jordan. A sample 206 respondents took part in this study. The analysis of their

responses revealed a certain degree of satisfaction of many of the Islamic banks facilities

and products. The respondents expressed their dissatisfaction with some of the Islamic

banks services. Although the respondents indicated that they are aware of a number of

specific Islamic financial products like Murabaha Musharaka and Mudaraba, they show

that they do not deal with them.

2 Peter Kangis, Vassilis Voukelatos (1997), “Private and public banks: a comparison of customer

expectations and perceptions”, Journal: International Journal of Bank Marketing, 1997, Vol. 15, Issue: 7, Page: 279 – 287, published by MCB UP Ltd.

3 Naser K.; Jamal A.; Al-Khatib K.(1999), “Islamic banking: a study of customer satisfaction and preferences in Jordan” . The International Journal of Bank Marketing, Vol. 17, No. 3, 1999, pp. 135-151 published by Emerald Group Publishing Limited

30

Luiz Moutinho, Anne Smith (2000)4 introduces a model which posits a crucial role for

the evaluation of bank customers’ attitudes towards both human tellers and automated

banking in mediating the ease of banking factor/perceived satisfaction linkage. The

model’s explicit consideration of the effects of bank customer attitudes towards human

tellers and automation provides additional explanatory power regarding how the

perceived trend towards ease of banking influences bank customer overall satisfaction,

switching and loyalty behaviour. A linear structural relations methodological approach is

used for the modelling process.

Faye X. Zhu, Walter Wymer, Injazz Chen (2002)5 explored the impact of information

technology (IT) on service quality in the consumer-banking sector. It proposes a service

quality model that links customer perceived IT-based service options to traditional

service dimensions as measured by SERVQUAL in the context of customer perceived

service quality and customer satisfaction. The model also incorporates several variables

affecting customers’ perceptions of IT-based services, and was tested by a structural

equation modeling approach using sample data collected from retail bank customers. The

results indicate that IT-based services have a direct impact on the SERVQUAL

dimensions and an indirect impact on customer perceived service quality and customer

satisfaction. The analyses also show that customers’ evaluations of IT-based services are

affected by their preference towards traditional services, experiences in using IT-based

services, and perceived IT policies.

Morna S.Y. Lee, Peter J. McGoldrick, Kathleen A. Keeling, Joanne Doherty (2003)6

reviewed that the telecommunications companies world-wide are developing 3G mobile

4 Luiz Moutinho, Anne Smith (2000), “Modelling bank customer satisfaction through mediation of attitudes towards human and automated banking”, Journal: International Journal of Bank Marketing, Year: 2000, Vol. 18, Issue: 3, Page: 124 – 134, published by MCB UP Ltd.

5 Faye X. Zhu, Walter Wymer, Injazz Chen (2002), “IT-based services and service quality in consumer banking”, International Journal of Service Industry Management, Volume: 13, Issue: 1, Page: 69 – 90, MCB UP Ltd

6 Morna S.Y. Lee, Peter J. McGoldrick, Kathleen A. Keeling, Joanne Doherty (2003), “Using ZMET to explore barriers to the adoption of 3G mobile banking services”, International Journal of Retail & Distribution Management, Volume: 31, Issue: 6, Page: 340 – 348, MCB UP Ltd

31

phones and applications. In the UK, mobile banking is considered to be one of the most

value-added and important mobile services available. However, the adoption rate of using

3G mobile phones for financial services is yet to be determined. The current research

examined both innovative attributes and customers’ perceived risk in order to understand

customers’ behaviour and motivation toward this innovation. It has advanced the

theoretical frameworks of innovation and customers’ risk perception as new attributes

and risk dimensions were identified. The findings provide banking executives with a

better understanding of what are the perceived advantages and disadvantages of 3G

mobile banking services, helping them to plan marketing strategies and promotion

approaches for 3G mobile banking services in the future.

Ahmad Jamal, Kamal Naser (2003)7 reviewed in his study that customer satisfaction is

a significant issue for most marketers. Previous research has identified various factors

that determine customer satisfaction in retail banking sector in Western countries. The

current paper reports findings from a survey, which looked into determinants of customer

satisfaction in the retail banking in Pakistan. A total of 300 questionnaires were randomly

distributed to customers of a specific bank in Pakistan. Results indicate that there was a

strong relationship between service quality and customer satisfaction. There was,

however, no relationship between customer satisfaction and tangible aspects of the

service environment. The paper discusses implications for bank management.

Rahman, Zillur (2006)8 reviewed in his study that loyal customers are considered to be

the key to survival and success in many service businesses, in particular in the hospitality,

insurance and financial sectors. The assumption is that with customer satisfaction;

loyalty, retention and profitability will automatically follow. The current thinking is that

the relationship between satisfaction and loyalty is more complex then was originally

proposed, however. As commoditisation of many service offerings continues, new

sources of competitive differentiation/advantage will come from focusing on the

7 Ahmad Jamal, Kamal Naser (2003), “Factors Influencing Customer Satisfaction in the Retail Banking Sector in Pakistan” Journal: International Journal of Commerce and Management, Vol. 13, Issue: 2, Pg. 29 – 53, published by: MCB UP Ltd

8

32

management of customer experiences. Because loyalty is so very important to the

survival and profitable growth of a company, measuring it becomes all the more

important. Existing approaches to the measurement of loyalty have not proved to be very

effective in this task. This study explores and tests the relationship between experience

and loyalty. For this purpose, a modified `loyalty acid test' is used. The study concludes

that, on average, a majority of customers are satisfied with the present functioning of the

bank but would definitely be delighted if the bank changed its interface with the

customers to become more cognitive (intelligent), emotional, physically pleasing and

well connected.

David J. Urban, Michael D. Pratt (2000)9 presented the results of a telephone survey of

801 consumers concerning the relationship between bank mergers and service quality

perceptions. The setting of the study is a US state which has seen much merger activity.

The survey results provide evidence of a significant relationship between bank mergers

and service quality perceptions that differs based on the demographic characteristics of

the respondents. Among these demographic characteristics are gender, ethnicity,

education, and income. In addition to the survey results, the article also contains several

managerial implications, including a need for complementarity of marketing strategies

for both acquired and non-acquired banks.

Jaume Llorens Monzonis (2006)10 analysed the dimensionality of the concept of

perceived value in the banking sector, adapting the GLOVAL scale of measurement of

perceived value to the banking services sector. Design/methodology/approach – A total

of 200 customers of financial entities were surveyed, and structural equations models

were used to verify the reliability and validity of the scale of perceived value.

Findings – Perceived value is found to be a multidimensional construct composed of six

dimensions: functional value of the establishment, functional value of the personnel;

9 David J. Urban, Michael D. Pratt (2000), “Perceptions of banking services in the wake of bank mergers: an empirical study”, Journal of Services Marketing, Volume: 14, Issue: 2 Page: 118 – 131, MCB UP Ltd

10 Juan Carlos Fandos Roig, Javier Sanchez Garcia, Miguel Angel Moliner Tena, Jaume Llorens Monzonis (2006), “Customer perceived value in banking services”, International Journal of Bank Marketing, Volume: 24, Issue: 5, Page: 266 – 283, Emerald Group Publishing Limited

33

functional value of the service; functional value price; emotional value; and social value.

A scale of overall perceived value in financial services was obtained, composed of six

dimensions and represented by 22 items that are significant for their measurement.

Research limitations/implications – In future studies it would be interesting to include

items to measure non-monetary sacrifices, such as waiting times, queues, etc.

Practical implications – A tool for measuring the value of financial entities as perceived

by the customer is presented; with it the value perceived by customers can be quantified,

evaluated and monitored.

Originality/value – This study proposes a scale of measurement of the value perceived by

consumers in the banking sector which incorporates valuations of functional aspects and

of affective aspects, thus obtaining an overall quantification of the value perceived by the

customer of the purchase made.

Arturo Molina, David Martín-Consuegra, Águeda Esteban (2007)11 investigated the

impact of relational benefits on customer satisfaction in retail banking. This paper

presents a causal model that identifies a connection between the relational benefits

achieved through a stable and long-term relationship with a given bank and customer

satisfaction with retail banking. The results show that confidence benefits have a direct,

positive effect on the satisfaction of customers with their bank. However, special

treatment benefits and social benefits did not have any significant effects on satisfaction

in a retail banking environment. This study was conducted in a retail banking setting, and

may not be generalized in other service sectors. It has also focused on the relationship

between relational benefits and satisfaction, while other factors that may have an

influence on consumer satisfaction have not been considered. Practical implications –

The findings suggest that banks can create customer satisfaction through relational

strategies that focus on building customer confidence. Therefore, frontline employees

should be committed to establishing and maintaining confidence benefits for customers.

11 Arturo Molina, David Martín-Consuegra, Águeda Esteban (2007), “Relational benefits and customer satisfaction in retail banking”, Journal: International Journal of Bank Marketing, Year: 2007, Vol.: 25, Issue: 4, Page: 253 – 271, published by Emerald Group Publishing Limited

34

Al-Hawari, Mohammad; Ward, Tony; Newby, Leonce (2009)12 highlighted the

significance of service quality factors on customer retention within the Australian

traditional and automated banking contexts. Design/methodology/approach - The relative

importance of traditional and automated service quality factors on customer retention was

examined with the intention of determining which indicator factors are likely to have a

significant impact on customer retention. The paper then proposes a conceptual model of

the relationship between service quality factors within the two contexts and customer

retention. AMOS 5 was used to test for the hypothesized relationships. Findings - All of

the traditional service quality factors have positively influenced customer retention.

Conversely, this paper finds that automated service quality in general has no positive

significant influence on customer retention. Research limitations/implications- This

research was applied to the financial institutions in Queensland, Australia. Further testing

of the proposed conceptual model across different industries and countries is needed to

determine the generalisability and consistency of this study's findings. Practical

implications - The proposed model of retention prediction has the potential to help

Australian bank managers to strengthen the customer-bank relationship and, ultimately,

to enhance customer retention ratios. Originality/value - The key contribution of this

paper is a conceptualisation of customer retention predictors that takes into account both

traditional and automated service customer interactions with banks.

12 Al-Hawari, Mohammad; Ward, Tony; Newby, Leonce (2009), “The relationship between service quality and retention within the automated and traditional contexts of retail banking”, Journal of Service Management, Volume 20, Number 4, 2009 , pp. 455-472(18), Emerald Group Publishing Limited

35

CHAPTER-II

INTRODUCTION TO THE ORGANIZATION

2.1 PROFILE OF THE BANK

Cooperative institutions are intended for the welfare of the common man particularly the

poor section and have continues to play a vital role in the economic and social upliftment

of the masses.

The Citizens Urban Cooperative Bank Ltd., Jalandhar  was started in 1989 with a meagre

capital, few members and small operational limits of Jalandhar and Jalandhar

Cantonment has become a leading Urban Cooperative Bank in Northern India in a short

span  with total business mounting to about Rs. 330 crores and ten branches spread over

in the area of operation of the bank.  The Bank has brought a revolution in Banking

segment in its area of operation and is contributing to the needs of the localities by

providing attractive saving schemes and need based credit.  The Bank is pioneer in

introducing cooperative movement for urbanities and providing them an opportunity to

become a partner in banking industry and avail triple benefits as an investor, depositor

and borrower.  The Bank is in profit since its inception and is sharing the same with its

members. 

 The Bank has made tremendous progress across the border since its inception.  The

membership of the Bank has risen from 62 members  to more than 7000 and paid up

Capital from 10500.00 to Rs.6.22crores.  As on 31.12-2008,  the Bank’s Own funds have

grown to Rs. 28.26crores and working capital to Rs. 272.95crores which is a

manifestation of peoples confidence in the area of operation of the Bank. The deposits of

the Bank have grown to Rs. 229.44 crores and advances have increased to

Rs. 120.30crores.  All the branches of the Bank are in profits and for the financial year 

2007-08,  the bank has shown a net profit of Rs. 129 lacs.   The Bank is accredited with

highest Audit Classification ‘A’  by Registrar Cooperative Societies, Punjab since its

inception.   The Bank has created a niche in its area of operation. The Bank is providing

credit for all viable economic activities in its area of operation and catering to all

segments of society.  The Bank has taken initiative in promoting and providing financial

assistance to small scale industry, traders, shop keepers, unemployed youth and Weaker

36

Sections. The inbuilt feature is to deploy funds in its area of operation only, thus

contribute and serve as an ideal banking vehicle for economic development of these

Districts. The Credit Deposit (CD) ratio of the Bank is  53% as against 31% in its area of

operation.

2.1.1 Addresses and Phone No's of the Branches

Branches Phone No.s

Main Branch, Opp. Circuit House, Jalandhar 222007, 224712, 235364

Partap Bagh, Mandi Fenton Ganj, Jalandhar 241006, 223382

Banga Road, Nawanshahar 20837, 24467

Mithapur Road, Ravinder Nagar, Jalandhar 273170, 462170

Kishanpura Chowk, Ind. Area Road, Jalandhar 294011, 297085

New Sabzi Mandi, G.T. Road, Jalandhar 204056

G.T. Road Banga 61084, 63012

G.T. Road, Opp. GNA, Goraya 63763

Mandi Road, Nurmahal 42994

2.1.2 Management :-

 The Citizens Urban Coop Bank Ltd., Jalandhar is a body corporate registered under the

Punjab Cooperative Societies Act 1961 and the rules framed there under. The Bank

functions according to the Bye-Laws framed by it and registered by the Registrar,

Cooperative Societies, Punjab. The Bank is governed under the democratically elected

Board of Directors who are well reputed persons of the area. The term of the board is 5

years. The Board has employed a Chief Executive Officer and further staff to run day to

day working of the Bank. The Board of Directors under the chairmanship of Sh. K.K.

Sharma have drawn up ambitious futuristic plans to compete with other banking

institutions in the region. The Board is well diversified and is being represented by

various sections of the society including bankers, educationists, cooperators, industrialists

37

and traders. The Board is further assisted by experienced professionals like Financial

Consultants, Legal Advisors, internal and external auditors.

2.1.3 Recovery Management

 The Bank has also constituted a separate Recovery Cell, directly under the Chief

Executive Officer, headed by experienced banking professional which is responsible for

liquidating stressed accounts and supporting the branches in recovering overdues which

are not possible through ordinary ways.  With consistent efforts, the NPAs of the Bank

have considerably reduced and are heading for major decline in future.  Efforts are made

that there are no overdues exceeding 60 days in current borrowal accounts.

2.1.4Human Resource Development

The Urban Cooperative Bank has always considered human resources as its most

important critical success factor. The bank gives utmost priority to career planning and

development of its workforce to enrich and enhance their skills. The involvement of the

staff at all levels has been one of the factors for result achieved by the bank

The changes in present banking are witnessed very often. to develop schemes and

knowledge of all categories of employees ,training progrmmes are designed at various

institutions Human Resource development always find a high priority on the Bank's

agenda in the past and in the financial year 2007-08 too, number of measures will be

taken to upgrade and fine tuning the knowledge of it's officers and other sub-ordinate

staff including sending them to training in various institutes including Agriculture, Co-

op. Staff Training Institute, Jalandhar an undertaking of Punjab State Co-op. Bank Ltd.

and Vai-Kunth Mehta Insitute of Co-op. Management, Pune. Besides that Executives &

Directors will be send to attend various seminars and workshops which will be conducted

by NAFSCOB, New Delhi to educate them about the Banking regulation act and co-

operative societies act. Policy decision is the major role of board of directors.To update

their banking related knowledge training programmes by various agencies were was also

arranged for the directors and directors were sent to participate.

38

2.1.5 Information Technology

With globalization and opening up of economy, the banking sector has become very

competitive and the cooperative banks have to upgrade them at par with nationalized

banks, foreign banks and private banks. This bank has also taken a big leap forward by

computerizing and automating all its branches with plush interiors. In the present bank

scenario ,technology upgradation has become a buzzword and therefore, to offer value

added services, core banking solution is accepted. In the near future all the branches will

be interconnected. Cash counting machines have also been provided in all the branches

which would help in saving valuable time of the customers.

2.1.6 Audit and Control

With a view to detect and rectify the deficiencies in day to day's working as early as

possible, the system of concurrent audit of each branch and head office is continued

during the year under review. This system help to maintain transparency and accuracy in

bank's working to improve the qualitative work, inspection cell is also functioning

the accounts of the bank are audited by the statutory authority, the chief auditor,

cooperative societies Punjab. All this is possible due to cooperation of the auditors in

completing the audit in time and for the suggestions in improving the working of the

bank. Further to have the system full proof, the inspection is also conducted by the

reserve bank of India with regular intervals.

In view of banks satisfactory performance on all fronts, bank has been placed under audit

classification 'A'.for the year 2007-08.this bank has always been classified 'A' since its

inspection.

2.1.7 Meeting Social Obligations

39

The bank has fully shouldered its responsibility towards meeting its social obligations

and has participated in socio economic activities which directly resulted in betterment of

financial status of down-troddens. The bank has participated in various socio -economy

activities and sponsored various sports tournaments, medical camps and cultural

programs during the financial year 2007-08.

2.1.8 Financial Inclusion

In response to the government concerns on the large sections of population being

financially exclude despite being strong presence of the commercial banks, the

government and reserve bank of India is continuing to push the banks to open "NO

FRILL ACCOUNT" of people and made some simplifications with "KYC"norms .In this

respect ,the bank has started the "JANTA BACHAT KHATA" scheme to meet the

requirement of poor people who are unable to open the account with handsome amount.

This scheme is getting popularity among the needy and deserving memebers of the

society and more and more members of the public are coming under the banking fold.

The bank endeavour for 100% financial inclusion at all its centers

2.1.9 Cash Reserve Ratio and Statutory Liquidity Ratio

As every cooperative bank is required to maintain 3% cash reserve ratio and 25%

statutory liquidity ratio of the time and demand liabilities as per R.B.I guidelines and on

the basis of the same, the urban cooperative bank is continuously maintaining CRR and

SLR much above the prescribed stipulation of R.B.I

Required as on 31.03.2008 Maintained

Cash Reserve Ratio Rs. 6.73 crores Rs. 9.11 crores

Statutory Liquidity Ratio Rs 56.13 crores Rs. 62.38 crores

2.1.10 Construction of Corporate and Head office at model town road Jalandhar

40

during a span of more than 20 yeras ,the bank has achieved substancial growth and

expanded its business tremendously.The present space for the head office located in a

rented bulilding has fallen short due to increaese in size of bank.The bank has aquired its

own land measuring 11000sqft in 1987 at the most prestigious location at model town

road ,new jawahar nagar jalandhar.Construction of the corporate and head office of the

bank about 5500 sqft is in full swing which is undertaken by MARKFED the bank has

already set a side Rs 5.79 crore out of profit for the construction of the new building. The

beautiful bulilding of new corporate and head office will add tremendous value with

regard to profitability ,business and credibility of the bank.

The bank has shifted its head office on july 10 ,2009.the new head officer has complete

set up comprising of offices top management ,board room.conference hall,credit

departmant,finance department,establishment,IT etc.The new head office branch has an

area of 5500 sqft which is fully automated and computerized. It has extended business

hours from 8.00 am to 8.00pm in the new branch to provide exclusive facilities to the

customers.It operate on single window service and would have all types of deposit,loans

and insurance products.further there is no branch of any commercial bank within a radius

of 1.5 KMS from the centre.

This area is thickly populated and has commercial and residential buliding.the new

branch will get tremendous response due to this huge potential. The new branxch would

have an on site ATM and would be connected to all branches.The new branch will act as

a nodal branch for all inter branch,intra bank transactions and main centralized activities

of the bank will be conducted in new branch.

2.2 HISTORY OF THE BANK

The Citizens Urban Co-op. Bank Ltd., Jalandhar which has emerged as a leading Urban

Co-op. Bank of Northern India was infact conceived in the late 80's and started

functioning on 17/11/1989 after receiving final nod from the Reserve Bank of India with

62 members and share capital of Rs. 10,500/- within operational limits of Jalandhar and

Jalandhar Cantonment.

41

Since then, Citizens Bank has made a tremendous progress in all the Areas of Banking

Sphere. Only recently, In the financial year 1999-2000, Citizens Bank has set up a mile-

stone in the Urban Co-op. Banking by achieving a 100 crores Deposit target within 10

years of it's working, thereby becoming the only Urban Co-operative Bank of Northern

India who has met the 1st condition of the R.B.I. for getting schedule Bank status.

Marching ahead, Bank's Deposits now stands at 117.42 crores which is in itself a

manifestation of people's confidence residing in the area of operation of the Bank.

Citizens Bank which has nine Branches made consistent profit gain right from it's

inception and has also earned a net profit of Rs.3.64 crores during the last financial year

2000-01. Bank has achieved this profit growth despite the fact that rate of interest was

reduced from 0.5%-1% during the last financial year. The most satisfying aspect for the

Bank management is that, all the nine branches have recorded profit in the financial year

2000-01. Bank has also taken initiative in the loan sector & advanced Rs. 88 crores to

weaker sections of the society, small-scale industries, housing, traders, shopkeepers and

unemployed youths in the financial year 2000-01. This advancement has registered an

increase of Rs.7 crore from the financial year 99-2000. Further Bank has distributed 17%

Dividend to it's members for the year 99-2000. The present membership of the Bank now

stands at 6566 and share capital has increased to Rs. 4.09 Crores. Whereas Bank's own

funds and working capital has touched to Rs. 12.19 crores and Rs. 137.52 crores

respectively in the financial year 2000-01.

Infact, Bank has achieved it's objective to a great extent by helping the people of weaker

sections, financing S.S.I.'s and developing infrastructure in the area of operation of the

Bank.

All the nine branches of the Bank has been approved from R.B.I to open N.R.I. & N.R.E.

Accounts.

2.3 ACHIEVEMENTS AND MILESTONES

42

In order to encourage the best and honest employees of the bank and to create a

competition amongst the staff members to achieve their targets and to improve

their service ,the bank has started to honour the best worker of every branch.18

staff members were honored and awarded by the hon’ble Sh. Manoranjan Kalia,

cabinet minister, local bodies and industries, Punjab in the special general body

meeting of the bank held on 16.06.2007.

In the memory of founder chairman of the bank sh. Vijay sethi ,the bank started

giving 'Vijay Sethi award' to best cooperative officer of the department and best

cooperator state every year.for the year 2007, the bank honured Miss kusumjit

Sidhu, IAS, financial commissioner ,cooperation, punjab as best cooperative

officer and Sh .Sukhdeep Singh as best cooperator of the state.

43

To encourage the staff , the bank management honoured the staff members whose

working during the year found outstanding.

Further keeping in view the competition of the banking industry and attractive

packages given to the staff by the private as well as foreign banks, the bank has

introduced incentive scheme for the staff in which incentive to the staff will be

given on achieving the yearly target. With the implementation of this scheme, the

staff will be benefited financially, the staff will be motivated, and their morale

will be boosted up.

2.4 SERVICES PROVIDED BY THE BANK

The citizen urban cooperative bank-a leader in the urban cooperative banking sector in

northern India, realizing the need of the hour, has already initiated steps to prepare itself

to face the new challenges and to win the confidence of the public by providing a

customer friendly attitude and atmosphere.

With a view to having a very clear and focused approach strategies, bank has

computerized, air-conditioned and automated all its branches. New departments such as

retail banking, npa management and recovery ,distribution of third party product such as

life insurance were formed with a view to adopt a more focused approach. The

modernization of the service and improvement in the infrastructure of the bank has given

big boost in the working of the bank. Bank has continued to provide customer friendly

with precision ,regularity and efficiency. Similarly anti-money laundering standards have

been set up in the bank as per R.B.I guidelines.

Customer care is always the first and foremost duty of the Citizens Bank. Keeping this

aspect in mind, Bank is planning to introduce evening service at one of it's Branch.

Besides that, for saving the valuable time of it's esteemed customers and to provide better

and quick service, currency counting machines would be installed in the remaining seven

branches. This facility has already been provided in the Head Office and it's Mithapur

Branch.

44

Deposits

Deposits are the prime source of funds for the banks. The enormity of deposits replicates

the amount of profit that a bank can make. This is so because large chunk of deposits are

given away as loans which renders higher interest rate than that given on deposits. So, it

is customary to encourage large number of huge deposits. This can be done by providing

different types of deposits according to the needs of varied customers.

Thee deposits as offered by Urban cooperative bank are explained below

A. Current

B. Savings

C. Special savings

D. Loan Compulsory

E. Nominal Compulsory

F. Fixed

G. Recurring

45

CURRENT ACCOUNT

It is basically used for business purposes. It doesn’t give any interest on deposits. It can

be held in the name of firms (include partnership firm, pvt. Ltd. Co., ltd. Co., trust,

association), person. Its prime purpose is to serve the customers for their daily business

transactions. A customer having current account can withdraw money in the form of

cash or cheque in a infinite number of times and so is unrestricted.Current Account is

primarily meant for businessmen, firms, companies, public enterprises etc. that have

numerous daily banking transactions. Current Accounts are cheque operated accounts

meant neither for the purpose of earning interest nor for the purpose of savings but only

for convenience of business hence they are non-interest bearing accounts. In a Current

Account, a customer can deposit any amount of money any number of times. He can also

withdraw any amount as many times as he wants, as long as he has funds to his credit.

Generally, a higher minimum balance as compared to Savings Account is required to be

maintained in Current account.

As per RBI directive banks are not allowed to pay any interest on the balances

maintained in Current accounts. However, in case of death of the account holder his legal

heirs are paid interest at the rates applicable to Savings bank deposit from the date of

death till the date of settlement. Because of the large number of transactions in the

account and volatile nature of balances maintained, banks usually levy certain service

charges for operating a Current account.

Current Account can be opened by: An individual who has attained majority. Sole

proprietorship concerns, Partnership concerns, Hindu Undivided Family (HUF), Limited

Companies. Clubs, Societies, Trusts, Executors and Administrators. Others - Govt. and

semi Govt. bodies, local authorities etc.

Documents Required for Opening a Current Account

Following documents are required in case of individuals Two passport size

photographs ,Proof of residence i.e. Passport/driving license/Gas / Telephone / Electricity

Bill/ Ration card/voters identity card ,An introduction of the person from an existing

account holder., PAN number / Declaration in form no.60 or 61 as per the Income Tax

46

Act 1961 Different set of documents are required as per bank's norms if the account is

opened by partnership firms, private and public limited companies, HUFs / specified

associates, societies, trusts etc.

SAVING ACCOUNT

Savings Bank Accounts are meant to promote the habit of saving among the citizens

while allowing them to use their funds when required. The main advantage of Savings

Bank Account is its high liquidity and safety. On top of that Savings Bank Account earn

moderate interest too. The rate of interest is decided and periodically reviewed by the

Government of India. Presently, the rate of interest is 3.5% compounded half yearly.

Savings Bank Account can be opened in the name of an individual or in joint names of

the depositors. Savings Bank Accounts can also be opened and operated by the minors

provided they have completed ten years of age. Accounts by Hindu Undivided Families

(HUF) not engaged in any trading or business activity, can be opened in the name of the

Karta of the HUF.

The minimum balance to be maintained in an ordinary savings bank account varies from

bank to bank. It is less in case of public sector banks and comparatively higher in case of

private banks. In most of the public sector banks, minimum balance to be maintained is

Rs. 100. In accounts where cheque books are issued, a minimum balance of Rs. 500/- has

to be maintained. For Pension Savings Accounts, minimum balance to be maintained is

Rs. 5/- without cheque facility and Rs. 250/- with cheque facility.

Things to Consider While Opening a Savings Account

It is advisable to seek the following information from bank before opening the account:

Minimum balance requirements.

Penal provisions in case the balance falls below the minimum stipulated amount

Penalty in case of return of cheques issued or instruments sent on collection.

Collection facilities etc. offered and charges applicable.

47

Details of charges, if any for issue of cheque books and limits fixed on number of

withdrawals, cash drawings, etc.

Document Required For Opening a Savings Account

Two passport size photographs ,Proof of residence i.e. Passport/driving license/Gas /

Telephone / Electricity Bill/ Ration card/voters identity card, An introduction of the

person from an existing account holder,PAN number / Declaration in form no.60 or 61 as

per the Income Tax Act 1961.

SPECIAL SAVINGS

This concept and deposit was prevalent earlier, but now it is not in use. In this deposit a

customer can withdraw the money only3 times (less than savings ie 5 times). However,

this deposits gives an interest at the rate which is higher than the savings account.

Earlier, when it was in use these deposits gave a return of 0.5% higher than that of

savings deposits

LOAN COMPULSORY

These deposits are made compulsory for a customer who wants to take a loan from JCC.

For this customer it is required to keep 2.5% of the loan amount in these deposits. It

gives the same interest rate as saving deposits.

NOMINAL COMPULSORY

It is similar to loan compulsory deposits in most ways. However, the difference is that

these deposits are held by customers having less loan amount. These deposits are there to

help small loan takers, so that these people don’t need to keep 2.5% of their loan amount

as deposits. It gives the same interest rate as saving deposits.

48

FIXED DEPOSITS

Bank Fixed Deposits are also known as Term Deposits. In a Fixed Deposit Account, a

certain sum of money is deposited in the bank for a specified time period with a fixed rate

of interest. The rate of interest for Bank Fixed Deposits depends on the maturity period. It

is higher in case of longer maturity period. There is great flexibility in maturity period

and it ranges from 15days to 5 years. The interest can be compounded quaterly, half-

yearly or annually and varies from bank to bank. Minimum deposit amount is Rs 1000/-

and there is no upper limit. Loan / overdraft facility is available against bank fixed

deposits. Premature withdrawal is permissible but it involves loss of interest.

in the meeting of the board of directors held on 29.06.2009 the rate of interest on

domestic term deposits have been revised w.e.f 01.07.2009 and the new rate of interest on

domestic term deposits are as under

Rate of Interest on Domestic Term Deposits :

46 days to 90 days 5.00%

91 days to180days 6.25%

181 days to less than one year 7.25%

One years to Two years 8.00%

Above Two years to Five years 8.10%

Above Five years to Ten years 8.25%

1/2% more interest on domestic term deposits above 180 days will be given to pensioners

,senior citizens. chartiable trusts and institutions, urban cooperative societies, freedom

fighters, widows and female divorcees.

Things to Remember Before Opening a FD Account

Before opening a fixed deposit account, check the financial position of the bank. Also, try

to check the rates of interest for different banks for different periods. Instead of putting a

big amount in one fixed deposit, keep the amount in five or ten small deposits. This way,

49

in case of any premature withdrawal of partial amount, then only one or two deposits may

need to be prematurely encashed. Thus, the loss of interest will be less than if a single big

deposit were to be encashed. Check deposit receipts carefully to ensure that all details

have been properly and accurately filled in. Do not leave the renewal column unfilled.

Otherwise, on maturity the fixed deposit amount will go back into an FD. Before

investing in a FD it is important to consider the rate of interest and the inflation rate. A

high inflation rate can eat into your real returns. So, it is vital to have a look at the

inflation rate before arriving at the real rate of interest. If the deposit is withdrawn

prematurely, then a penal interest rate is charged as follows. Penal interest rate for FD

Time from subscription Less than 1 year is 1% 1 to 3 years is 2% More than 3 years is

3%.Note that no penal interest is charged to the heirs of FD holder who has died in the

duration of the maturity of FD.

Advantages of Fixed Deposit

Fixed deposits with the banks are nearly 100% safe as all the banks operating in

the country, irrespective of whether they are nationalised, private, or foreign, are

governed by the RBI's rules and regulations, and give due weightage to the

interest of the investor. Till recently, all bank deposits were insured under the

Deposit Insurance & Credit Guarantee Scheme of India, which has now been

made optional. Nonetheless, bank deposits are among the safest modes of

investment.

One can get loans up to 75- 90% of the deposit amount from banks against fixed

deposit receipts. Though the interest charged will be slightly more than the

interest earned by the deposit.

Tax Implications

The amount invested in fixed deposits with a maturity period of 5 years in a

Scheduled bank is eligible for tax deduction under section 80C. However, the

interest earned on the deposit is taxable.

50

Tax will be deducted at the source, if the interest income on a fixed deposit per

annum exceeds Rs.10000.

At fixed deposits counter, depositor comes for three things as stated below-

1. Depositing new FDs

2. Renewal of matured FDs

3. Cash withdrawal from FDs

Now, the procedure followed by the banker at Urban citizen cooperative bank when the

depositor comes for the above stated three services is as follows

1. Depositing new FDs - Here the depositor can give cash, cheque of the same bank

(UCB) , cheque of other bank. The pre requisites for this are FD form (given in

Appendix 4), Photo proof, PAN card . The depositor also mentions the time

period for which he wants to deposit the amount. After completing the formalities

on the depositor side the procedure followed by banker is He follows the path:

Fixed master transaction create new which is applicable to UCB only. Here he

creates new account where the account number is automatically given by the

system. In the new account the banker enters the period for which the deposit is to

be kept and rate of interest for that particular time period. The print of the receipt

created is taken and is given to the customer.

2. Renewal of matured FDs -Here depositor comes for renewal of his FDs. He

follows the following procedure.

a. He should have brought the earlier receipt of his FD.

b. He should mention the time for which the FD should be renewed.

c. After this banks fill up a slip containing FD a/c number, name, matured

amount, date (all this data from earlier receipt)

d. After this the officer debits the current receipt . Here a/c number, receipt

number is entered and then the receipt is debited.

e. Then credit to other receipt is done .Here the banker enters the details of new

receipt such as date for renewal, period for which FD should be renewed and

amount

f. Thereafter print of the new receipt is taken which is given to the client.

51

3. Cash withdrawal for FDs - Here depositor withdraws cash and first and fourth

step of the above procedure is followed. That is only the receipt is debited. After

this for the customer to withdraw the cash, the amount is credited to savings a/c

(If he is having the a/c in the UCB) or he is given pay slip (if he is not having a/c

in UCB).

RECURRING DEPOSIT

Under a Recurring Deposit account (RD account), a specific amount is invested in bank

on monthly basis for a fixed rate of return. The deposit has a fixed tenure, at the end of

which the principal sum as well as the interest earned during that period is returned to the

investor. Recurring Bank Account provides the element of compulsion to save at high

rates of interest applicable to Term Deposits along with liquidity to access those savings

any time. Since a recurring deposit offers a fixed rate of return, it does not provide

protection against inflation.

There is great flexibility in period of deposit with maturity ranging from 6 months to 120

months. The minimum monthly deposit varies from bank to bank. In most of the public

sector banks, one can start a Recurring Deposit Account with a monthly installment of

Rs. 100/- only. There is no upper limit on investing. The rate of interest varies between 7

and 11 percent depending on the maturity period. Loan/overdraft facility is also available

against Recurring Bank Deposits.

The deposit for RD account is paid in monthly installments and each subsequent monthly

installment has to be made before the end of the calendar month and is equal to the first

deposit. In case of default in payment, penalty is levied for delayed deposit at the rate of

Rs. 1.50/- for every Rs. 100/- per month for deposits up to 5 years and Rs. 2/- per Rs.

100/- in case of longer maturities.

In case of Recurring Deposit being closed before completing the original term of the

deposit, interest will be paid at the rate applicable on the date of deposit, for the period

for which the deposit has remained with the Bank. Premature withdrawal is also

permissible but penalty is levied. TDS is not applicable on Recurring Deposits.

52

How to open a RD Account

A Recurring Bank Deposit account can be opened at any bank that offers this facility.

However, some banks insist that you open a savings bank account with them to operate a

Recurring Deposit account.

Total deposits of the bank as on March 31,2008 were 240.23 as against Rs 205.02

crores as on March 31,2007 registering an increase of 22.46%. The deposit portfolio of

bank is diverged with large number of small depositors comprising of pensioners and

senior citizens,which enables the bank to mitigate against any unforeseen risks.The

growth in deposits is primarily attributed to the personalized service approach of the bank

and relationship with the local community .As matter of cooperative philosphy and social

measure ,the bank is giving higher rate of interest ie 0.5% above the scheduled rates on

deposits from senior citizens ,pensioners ,charitable trusts and cooperative societies. The

bank pays 8.5 % per annum to senior citizens and pensioners.

Being member of the Deposit Insurance and Credit Guarantee Corporation

(DICGC),under whom,the money of the depositors is insured and its premium upto

March,2009 has already been paid to the said institution by the bank. As advised by the

reserve bank of india, "Know Your Customer"(KYC) policy is under strict

implementation.

Loans and Advances

LOANS

One of the reasons for boom in Indian economy is that now a days loans are easily

available and the rate of interests at which they are available are very reasonable. Urban

citizen cooperative bank is giving loan for and loan against any and every thing.

Government too is encouraging people to take loans for certain purposes. For example,

government is encouraging people to take housing loans by giving tax concessions

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.Following are the some types of loans provided by urban citizen cooperative bank-

Personal loan/Consumer loan - Personal loan is a lump sum amount that a person take

from a bank . Such loans help to take care of your immediate requirements without much

of a hassle. In fact, personal loan is one of the quickest ways of borrowing money. Also,

no questions regarding the end use of the loan are asked. You can use the loan amount for

any purpose such as home renovation, marriage expenses, medical expenses, holidays,

consumer durables, higher education etc. While applying for the loan, the lender usually

conducts a credit worthiness check, before giving the loan. Personal loans are repayable

in equal monthly installments (EMIs) and the loan tenure varies from 1 to 5 years.

The maximum amount of personal loan for which you are eligible depends upon your

take-home salary. The exact loan amount depends on your eligibility and takes into

account many other things as well, like your credit rating, job security, residential

location and the ability to repay the loan amount in time.

You can also apply jointly with a co-applicant, say your spouse for personal loan. This

allows you to increase your loan eligibility, as the income of your spouse is also added to

your income, for the purpose of calculating the total loan amount. The loan range in case

of personal loan is Rs. 50,000 to Rs. 20, 00,000.

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As personal loans are given without any security and involve a high risk, the interest

charged is usually more as compared to other loans, usually varying from 12 to

24%.Urban citizen cooperative bank is providing personal loan @14.00% with effect

from 1 July, 2009. Apart from this, interest processing fee is also charged from the

borrowers. Processing fee is payable at the time of processing of loan application. A pre-

payment fee is payable in case you decide to pre-close your loan account. Both

processing fee and pre-payment fee are in the range of 2-3%. You can get the benefits of

preferred interest rates, priority processing and simpler documentation, if you are an

existing customer with the bank. Generally, personal loans are sanctioned within 72

hours.

Types of Personal Loans

A secured loan is one in which you need to attach a guarantee against the sum of

money borrowed. This can either be in the form of your property or any

fixed/movable asset. Upon default, there is a risk of the asset being taken over by

the bank and sold off.

An unsecured loan is one in which no security needs to given for the money

borrowed. However, in this case, the lender would be charging a higher rate of

interest, taking into account the high risk involved in lending the sum. In case the

recipient fails to repay the loan, the lender can seek legal help to make up for the

loss incurred.

Eligibility Criteria for Personal Loans

Salaried Individuals

Minimum Age of the Applicant - 21 years

Maximum Age of Applicant at Loan Maturity - 58 years

Minimum Employment Period - 2 years in total and 1 year at present organization

Minimum Income - Rs. 8000 per month

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Self Employed Professionals & Businessman

Minimum Age of the Applicant - 25 years

Maximum age of Applicant at Loan Maturity - 65 years

Minimum Business Period - Minimum 3 years in current business and 5 years

total experience

Minimum Annual Income - Rs.60,000

Documents Required for Personal Loan

Bank Statement for last three months (where salary/income is credited)

Salary Slips for last three months (if salaried) or ITR for the last two years (if self

employed)

Proof of Continuity in Current Job - Form 16 / Company Appointment Letter (if

salaried)

Proof of Identity (Copy Of Passport / Driving License / Voters ID / PAN Card /

Photo Credit Card / Employee ID Card)

Proof of Residence (Copy Of Ration Card / Utility Bill / LIC Policy Receipt)

Proof of Qualification Highest Degree (for Professionals / Govt employees)

For Professionals - proof of qualification, say degree, registration with

professional council, etc.

Two passport size photographs

Auto loan

With a plethora of auto loan opportunities available in India these days, it is now possible

for you to buy your dream car within a matter of days. No need to save up money for

making complete down payment at the time of buying. Urban citizen cooperative bank

offer an easy auto loan service to provide its constomer satisfactory service. Just gather

enough amount for the initial payment and pay the rest in easy installments, by taking up

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a loan. The best part about auto financing is that, apart from the new cars, loans are

available for old cars as well. After you have decided to take an auto loan, check out the

various schemes available in the bank. After undertaking a thorough research of each

and every scheme, you will need to pick the one that suits you the most, in terms of

interest rate, monthly installments, duration, and so on. The size of the loan will depend

upon the cost of the vehicle and its type (standard or premium), along with the percentage

financing you want or are being offered.

Type of vehicle Rate of Interest

Three Wheelers/Scooter/Motor Cycle /Light Vehicle 11.25%

Car loans Upto Rs 4.00 lacs 11.25%

Car loans Above Rs 4.00 lacs 11.50%

Trucks and other Heavy Vehicles 13.50%

There is no necessity for any collateral to get a car loan from urban citizen cooperative

bank Usually, the bank hypothecates the car in its name. The endorsement for

hypothecation is made in the Registration Certificate (RC) book of the vehicle, which

gets cancelled after the loan is repaid. Usually the tenure of auto loan varies from 1 to 5

years. However, Urban cizen cooperative bank has a schemes that offer loans for 7 years

as well.

General Features

In case of a new car, loan amount is up to 90% of cost of the car.

In case of used car, loan amount is up to 80% of the car.

The maximum loan amount is up to 3 times the annual salary (for salaried

professionals) or 6 times the annual income (for self employed professionals).

Urban citizen cooperative Bank generally offer a preferential treatment to their

existing customers. If you have savings or current account with a bank, it is easier

to get the loan and you might also get preference in terms of rate of interest.

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Loan is given for a period of 1 to 5 years.

If you want to go for an early settlement of the loan amount, certain charges are

taken as a penalty.

For the purpose of auto loan, the interest is calculated on compound basis.

In case you have been declared bankrupt, applied for bankruptcy, defaulted in

some loan in the past or a court case pending against you, it will be very difficult

for you to get an auto loan.

The rate of interest for an auto loan is 11.25% percent.

Eligibility Criteria

Minimum Age of Applicant While Applying For Loan: 21 years

Maximum Age of Applicant at Loan Maturity: 58 years

Minimum Employment: 1 year in current employment and minimum 2 years of

employment in general

Minimum Annual Income: Rs 100,000 (net)

Telephone: Must at Residence

Documents Required

Proof of Identity (Copy of Passport, PAN Card, Voters ID Card or Driving

License)

Income Proof (Latest salary slip with form 16 - for salaried individuals or IT

returns for the last two financial years - for self employed individuals and

professionals)

Address Proof (Copy of Ration Card/Driving License/Voters Card/Passport

/Telephone Bill/ Electricity Bill/Life Insurance Policy/ Pan Card)

Bank Statement (For the last 6 months)

Two passport size photographs

Real estate is currently one of the fastest growing sectors in India. Banking sector is also

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registering profitable business since the last few decades, with the growth of real estate.

Majority of the banks are also offering easy home loans at attractive rates to their

customers. Now that getting a home loan is so easy, it seems everyone can fulfill his / her

long cherished dreams of purchasing lands, building their houses and expanding their

homes. Different types of home loans are tailored to suit the heterogeneous requirements

of the customers. The description of some of the most common types of home loans is

given below.

Types Of Home Loans

Home Purchase Loans: This is the basic home loan for the purchase of a new

home.

Home Improvement Loans: These loans are given for implementing repair

works and renovations in a home that has already been purchased by you.

Home Construction Loan: This loan is available for the construction of a new

home.

Home Extension Loan: This is given for expanding or extending an existing

home. For instance, you may apply for a loan for the addition of an extra room in

your home and for similar cases.

Home Conversion Loan: This is available for those who have financed the

present home with a home loan and wish to purchase and move to another home

for which some extra funds are required. Through home conversion loan, the

existing loan is transferred to the new home including the extra amount required,

eliminating the need of pre-payment of the previous loan.

Land Purchase Loans: This loan is available for purchase of land for both

construction and investment purposes.

Stamp Duty Loans: This loan is sanctioned to pay the stamp duty amount that

needs to be paid on the purchase of property

Type of Loan Rate of Interest

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House and Building (Owned )

Upto to Rs 5.00 Lacs 10.25%

Above Rs 5.00 Lacs to 20.00 Lacs 10.80%

Above Rs 20.00 Lacs to Rs 25.00 lacs(Maximum) 11.25%

House and Buliding(Trust and Edu. Society) 13.00%

General Information

The loan amount is based on the repayment capacity of the customer. However, it

cannot be more than 85% of the cost of the property (including the cost of the

land).

The minimum term of home loan is 5 years, while the maximum duration for the

loan is 20 years, subject to the retirement age of the applicant.

Home Loans can be applied either individually or jointly, with spouse, children

(son or daughter) and even earning parents (father or mother), but if staying with

the applicant and having regular income.

Home loan eligibility can be enhanced by repaying the outstanding loans,

clubbing the income, increasing the home loan tenure and opting for a step-up

loan.

The amount of loan sanctioned varies from bank to bank. Generally, the

maximum loan amount granted for the applicant would be 80% to 85% of the cost

of the home.

The eligibility for the applicant depends upon his/her capacity of repayment. It

stiffens with the increase in home loan rates.

Processing charge, pre-payment penalties, commitment fees and miscellaneous

costs accompany a home loan, in many of the cases.

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Eligibility Criteria

The minimum age limit for the person applying for loan is 21 years.

For Government employees and those working at public limited companies, the

maximum age limit for applying for home loan is 60 years, while for salaried

individuals, it is 58 years.. For self employed people, the maximum age limit is 65

years.

The applicant should be graduate.

The applicant should have a stable source of income, at the time of availing the

loan and should have a saving history as well.

Documents Required

Salaried Customers Self Employed Professionals Self Employed Businessman

Application form with photograph

Application form with photograph

Application form with photograph

Identity and Residence Proof Identity and Residence Proof Identity and Residence Proof

Latest Salary-slipEducation Qualifications Certificate and Proof of

business existence

Education Qualifications Certificate and Proof of

business existence

Form 16Last 3 years Income Tax

returns (self and business)Business profile

Last 6 months bank statementsLast 3 years Profit /Loss and

Balance Sheet

Last 3 years Income Tax returns (self and business) & Last 3 years Profit /Loss and

Balance Sheet

Education Loan

Education is the essence of life. To ensure that no deserving student is denied education

for want of funds, the government is promoting education loans in a big way. The basic

aim or idea behind education loan is to bring education within the reach of students and

help them improve their prospects in life. Any student who has secured admission in an

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institute of repute, whose degree/diploma is recognized by University/Institute affiliated

to any Central/State Statutory Body or recognized by AICTE (All India Council of

Technical Education) and other institutes of repute, is eligible for educational loan.

Education loans cover cost of the school/college fee, hostel expenses, and cost of books

and stationery. Apart from this, any other expense required to complete the course can

also be considered. The maximum amount of education loan is up to Rs. 7.50 lakh in case

of studies in India and Rs 15 lakhs for studying abroad. The sum of money offered is

against a third-party guarantee. The third-party guarantee can come from an uncle,

neighbor or friend standing guarantee for the full amount of the loan.

On an average, an education loan has to be repaid over a period of 5 to 7 years, with the

provision of a grace period of one year after completion of studies. The loan money has

to be repaid within 84 months in equated monthly installments (EMIs), commencing 12

months after course completion or 6 months after getting the job, whichever is earlier. In

case of overseas study loan of 7 lakhs or above, the sum of money is usually given

against fixed deposits, NSC certificates and property worth the loan amount.

General Information for taking education loan from urban citizen cooperative bank

is:

The exact rate of interest for education loan differs from one bank to the other.

However, it usually varies from 10 to 15 percent.

Apart from the fee of the course, a list of other expenses is also covered by

education loans. However, the list depends upon the bank from which you are

taking the loan.

Education loan can be offered at fixed as well as floating interest rate. The

interest is usually charged on a daily or monthly reducing balance.

Generally, nationalized banks have been seen to offer variable interest rates,

while private and foreign banks charged fixed interest rates on education loans.

While applying for education loan, you will have to pay a percentage of the loan

amount, as processing fee.

In most of the cases, the entire fee for a course is not financed by the bank. A

certain proportion, called margin, has to be paid by the applicant. The margin

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requirements on education loans are not very rigid, with the average being 5

percent for studying in India and 15 per cent for abroad.

The Urban citizen cooperative bank ltd is providing higher education loan at the rate of

12.50%.

Marriage Loan

Marriage is one of the most important events in a person's life. You want to make sure

that all the arrangements are perfect and match the occasion. Marriage loans ensure that

money is not a hindrance in marriage preparations. Several Indian banks offer loans for

marriage. The loan is available for meeting the expenses of marriage of your own self as

well as that of your daughter, son dependent sister and dependent brother.

The marriage loan amount that can be sanctioned varies from bank to bank and from

customer to customer, depending on a number of factors, such as, security/collateral

offered by the customer, repayment capacity of the borrower, age of the borrower.

Generally, it is twice the net annual income of the applicant. There is no fixed interest

rate for marriage loans in India.

For the loan to be disbursed, the bride and the groom should not be less than 18 years and

21 years of age respectively. Anyone can apply for the loan. He/she has to fill a form at

bank outlet. The bank charges processing fees, at the time of submission of the form,

which varies from one bank to the other. The repayment of the loan can be done either

through monthly/quarterly/half yearly installments or under Equated Monthly

Installmentsscheme. The eligibility criteria to take marriage loan from Urban citizen

cooperative bank is

Minimum Age for loan: 21 years (groom)/ 18 years (bride)

Maximum Age of Applicant at the Time of Loan Maturity: 60 years

Net Annual Income: Rs. 1,44,000 pa

Years in Current Job / Profession: 1 year

Years in Current Residence: 1 year

Business Loan

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Business loans are available to self employed professionals, firms and corporations, to

meet their operating expenses, finance capital expenditure (or acquisition of fixed assets)

towards starting or expanding a business. Even industrial units are given business loans,

to swap existing high-cost debt from other bank / financial institution. Apart from

providing funding, bank can also issue letters of credit or give a guarantee, on behalf of

the customer, to the suppliers and even government departments, for the procurement of

goods and services on credit.

The maximum amount of business loan that can be sanctioned varies from bank to bank.

However, the minimum loan amount is Rs. 25000 and maximum loan tenure is 5 years.

Generally, no security is required for business credit up to a certain limit. For business

loans above the limit, banks usually require a collateral security or a percentage of

business loans as margin, in the form of fixed deposit with the bank. Business loans are

similar to an overdraft and are available like a limit on current account. In this case, the

interest is charged only on the actual amount utilized, rather the entire amount of loan.

Types of Business Loans

Professional Loans

Professional loans, as their very name suggests, are provided to self employed

professionals like Doctor, Chartered Accountant, Interior Decorator, Architect, Company

Secretary, etc. Unsecured in nature, this type of loan is not given to manufacturing,

trading or processing units. The amount of loan varies between Rs. 25000 to Rs. 25 lakh,

considering the age of the applicant, his financial standing, his repayment capacity,

tenure of the loan (maximum 5 years), etc. The urban citizen cooperative bank

provides loans to professionals including doctors,chartered accountants,company

secretaries,architects,engineers at the rate of 12.25%.

In case of professional loans, the rate of interest depends upon the prime lending rate, is

calculated on diminishing balance and can be on the fixed as well as fluctuating basis. In

many cases, it depends upon the customer's profile and his financial capacity. The

payment is made through EMIs and in only a few cases, tangible collateral security is

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required. Most of the finance companies also charge a process fee, usually 1% of the loan

amount.

Trade Loans

Trade loans are provided to traders/ businessmen, so as to help them either open a new

business or operate/expand an existing one. The amount of loan varies between Rs.

25000 to Rs. 100 lakh, considering the age of the customer, his financial standing, his

repayment capacity, tenure of the loan, etc. The maximum duration for which the loan is

given is 5 years and it has to be repaid through Equated Monthly Installments or EMI.

The rate of interest depends upon the prime lending rate and can be offered on the fixed

as well as fluctuating basis. There are many banks that require customers to furnish

collateral security for the loan, in the form of mortgage of land (not agricultural land) and

building. Apart from that, National Savings Certificates, Government Bonds, Bank's

Term Deposits, Assignment of Life Insurance Policies, Approved Shares & Bonds (in the

name of borrower/proprietor/partner/director) are also acceptable.

Loan against home

Loan against home connotes a loan that is given or disbursed against the mortgage of

home, as a certain percentage of market value of the property. Generally, the loan amount

that is sanctioned ranges from 40% to 70% of the market value, with a minimum

threshold limit of Rs 2 lakh. A loan against home works out to be much cheaper than

personal loan. The rate is lower because the lending entity has a security in the form of

the housing mortgage vis-à-vis a personal loan that is given without any security.

The tenure for repaying loan against home has an upper limit of 10 years. The loan can be

taken for any purpose and the customer is not required to disclose the motive behind the

loan, to the lending authority. The criteria for loan against home are same as that of a

home loan. Part prepayment as well as full prepayment of the loan is generally allowed

by most lending institutions, though with a charge. Loan against property is available in

case of both residential and commercial property. Many housing finance companies allow

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individuals to take loan against home even if they have taken a housing loan from them.

Amount of Loan Depends Upon

Your income, savings, debt obligations

Cost/value of the property mortgaged

Your repayment track record for other loans, credit cards, etc

Number of years in service/ business

The Urban citizen cooperative bank ltd is providing loan against home in following

manner:

Loan against home Rate of interest

a)Business purpose(upto 60.00 lacs) 13.75%

b)General purpose(upto rs 60.00 lacs) 14.00%

Generally, loan processing charge of 2% is levied. Pre-payment is allowed after 6

months. Generally, prepayment charge equivalent to 4% of the outstanding principal

is levied. In most of the cases, the minimum amount of loan against property is Rs

25,000 and the maximum amount is Rs 60.00 Lacs. The charges that might apply in

case of loan against property are processing fee, pre-payment fee, charges for

changing from fixed to floating rate of interest and charges for changing from

floating to fixed rate of interest.

Advances

Advances of the bank registered a phenomial increase during the year under review .Total

advances of the bank increased from Rs. 10344 lacs as on march 31,2007 to Rs. 13189

lacs as on march 31,2008 registring an increase of 27.50%.The bank is concentrating on

retail advance mainly for small business,traders,small scale industries.The bank has well

defined creditr policy which takes due care of concentration of advances in particular

segment.As against the myth of charging higher rates by cooperative banks , the lending

rates of the bank are competitive or lower in comparison with lending rates of other

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public and private sector banks following the philosphy of mutual benefit of

cooperation .The bank is adhering to all sensitive norms like capital adequecy,asset

classifications and provisioning.

Advances to Priority Sector

Priority sector constitutes small scale industry,self employement scheme,housing and

infrastructure finance and weaker section of the society.The reserve bank of india has set

up statutory requirements for the banks to lend atleast 60% of the total advances to

priority sector .The bank has met this obligation by lending 65.69% of the total advances

to priority sector upto the year 2007-08.

Internet Banking:

Internet banking involves use of internet for delivery of banking products and services.

With internet banking is now no longer confirmed to the branches where one has to

approach the branch in person, to withdraw cash or deposits a cheque or request a

statement of accounts. In internet banking, any inquiry or transaction is processed online

without any reference to the branch (anywhere banking) at any time. The Internet

Banking now is more of a normal rather than an exception due to the fact that it is the

cheapest way of providing banking services.

Benefits of Internet Banking: •

Reduce the transaction costs of offering several banking services and diminishes

the need for longer numbers of expensive brick and mortar branches and staff.

Increase convenience for customers, since they can conduct many banking

transaction 24 hours a day.

Increase customer loyalty.

Improve customer access. Attract new customers.

Easy online application for all accounts, including personal loans and mortgages

Financial Transaction on the Internet:

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Electronic Cash: Companies are developing electronic replicas of all existing

payment system: cash, cheque, credit cards and coins.

Automatic Payments: Utility companies, loans payments, and other businesses

use on automatic payment system with bills paid through direct withdrawal from a

bank account.

Direct Deposits: Earnings (or Government payments) automatically deposited into

bank accounts, saving time, effort and money.

Stored Value Cards: Prepaid cards for telephone service, transit fares, highway

tolls, laundry service, library fees and school lunches.

Point of Sale transactions: Acceptance of ATM/Cheque at retail stores and

restaurants for payment of goods and services. This system has made functioning

of the stock Market very smooth and efficient. BANKING SERVICES IN INDIA

Cyber Banking: It refers to banking through online services. Banks with web site

“Cyber” branches allowed customers to check balances, pay bills, transfer funds,

and apply for loans on the Internet.

Automatic Teller Machine:

The introduction of ATM’s has given the customers the facility of round the clock

banking. The ATM’s are used by banks for making the customers dealing easier. ATM

card is a device that allows customer who has an ATM card to perform routine banking

transaction at any time without interacting with human teller. It provides exchange

services. This service helps the customer to withdraw money even when the banks ate

closed. This can be done by inserting the card in the ATM and entering the Personal

Identification Number and secret Password.

ATM’s are currently becoming popular in India that enables the customer to withdraw

their money 24 hours a day and 365 days. It provides the customers with the ability to

withdraw or deposit funds, check account balances, transfer funds and check statement

information. The advantages of ATM’s are many. It increases existing business and

generates new business. It allows the customers.

To transfer money to and from accounts.

To view account information.

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To order cash

To receive cash.

2.5 PERFORMANCE OF THE BANK

Although the bank is facing stiff competition from the public sector and new generation

private sector banks with the enhanced technological advancement in banking operations,

but due to focused personalized service approach to the members nad small

depositors,the bank has shown tremendous growth in all areas of its operations and attain

new heights of progress during the financial year 2007-08 as under. The financial

performance of the bank for the year ended March 31,2008 at a glance is as under

Mar-07 Mar-08

Gross income 2582.08 1807.24

Profit before depreciation ,tax and provisions 471.55 279.72

Depreciation on fixed assets 34.85 30.86

Profit before provisions and contingencies 436.7 248.86

Provisions and contingencies 198.57 119.83

Profit after tax 238.13 129.03

Working funds 28048 24003

Paid up capital 662 577

Reserves and surplus 2247 2095

Net worth 3037 2674

Gross income increased to Rs 2582.08 lacs as against rs. 1807.24 lacs in the

previous year registering a growth of 42.87%

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Bank has earned the interest of rs 2516.14 lacs during the financial year ended

march 31,2008as against rs 1731.72 lacs in the previous year depicting a growth

of 45.30%

The operating profit increased from rs 248.86 lacs to 436.70 lacsduring the year

registering a 75.48%increase in operating profits

The profit after tax has increased to 238 lacs as against 129 lacs registering a

growth of 84.50%

Fixed assets of the bank has increased from rs 189.16 lacs to rs 461.60 lacs

Net worth of the bank has increased to rs 3037 lacs as against rs 2674 lacs due to

increase in profitability

Reserves and surplus as on march 2008 increased to rs 2247 lacs from rs 2095

lacs as on march 2007

2.5.1 Working capital

The working capital during the financial year 2006-2007 has shown significant growth as

it has gone to rs 280.48 crores as on march 31,2008 as against rs 240.03 crores a son

31.03.2007

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2.5.2 Share capital

The membership of citizen urban cooperative bank ltd jalandhar continued to grow

during the year 2007-08 ,the paid up share capital of the bank has increased from rs. 5.77

crores as on march 31,2007 to rs 6.62 crores as on march 31,2008.

2.5.3 Reserves and other funds

The strength of any economic organization can be gauged from its own funds which

plays a crucial role in enhancing members faith and confidence in ht eorganization.the

bank has accumulated the reserves and other funds to rs 22.47 crores as on 31.03.2008

2.5.4 Investment

The bank investment portfolio as on 31 st march ,2008 stood at rs 57 crores comprising

of government securities .the bank has also classified its investment into ‘held to

maturity’, ‘available for sale’ ‘held to maturity’ categories as per R.B.I guidelines.

Further the bank is in process of introducing asset liabilities management guidelines.

2.5.5 Profitability

Although the bank is facing stiff competition from the public sector and new generation

private sector banks with the enhanced technological advancement in banking operations,

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but due to focused personalized service approach to the members and small

depositors,the bank has been able to achieve fabulous profitability during the year. Net

profit of the bank after tax increased to rs 238 lacs as against rs 129 lacs in the previous

year showing a growth of 84.50%.during the year the bank has written off rs 84.79 lacs as

bad debts and provided for 100% NPAs of merged kurali branch

2.5.6 Dividend

Urban citizen cooperative bank constantly endeavours to share the growth of the bank

with the share holders in the form of dividend distribution and higher capital appreciation

by retaining adequate quantum of profits to meet future plans.the bank has given 12%

dividend for the year march 31,2008 amounting to rs 75.02 lacs to the valued share

holders of the bank.

Citizens Bank which has nine Branches made consistent profit gain right from it's

inception and has also earned a profit after tax of Rs 238.13lakhs during the last

financial year 2007-08. Bank has achieved this profit growth despite the fact that rate of

interest was reduced from 0.5%-1% during the last financial year. The most satisfying

aspect for the Bank management is that, all the nine branches have recorded profit in the

financial year 2007-08. Bank has also taken initiative in the loan sector & advanced Rs.

13189 Lacs to weaker sections of the society, small-scale industries, housing, traders,

shopkeepers and unemployed youths in the financial year 2008. This advancement has

registered an increase of 27.50% from the financial year 2007. Further Bank has

distributed 12% Dividend to it's members for the year 2007-08. The present membership

of the Bank continue to grow during 2007-08, the paid up share capital of the bank has

increased from Rs 5.77 crores as on March 31 2007 to Rs 6.62 crore as on March31 2008.

Whereas Bank's working capital has touched to Rs. 28048 Lacs in 2008 from 24003 lacs

in year 2007.

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2.6 FUTURE PROSPECTS/ PLANS

The citizens urban co-op. Bank, Ltd. Jalandhar is a fast growing institution which has

made an indelible mark in the history of urban banking in Northern India. The Board of

Directors under the chairmanship of Sh. K.K. Sharma have drawn up ambitious futuristic

plans to compete with other Banking institutions in the region..

New Branches : The citizens bank which has now nine branches is planning to

setup three more branches during the financial year 2001-02, thereby increase the

total number of branches to 12. The proposed places for the setting-up of new

branches are :

Kapurthala

Bhogpur

J.P. Nagar, Jalandhar

The above branches are proposed to setup during the year subject to the approval by the

RBI. For the early issuance of licenses, necessary correspondence is being made with the

RBI. Besides that, to have it's own premises is the priority of every organisation. Keeping

this priority in mind, citizens bank has decided to get the bank building constructed by

the engineering cell of Punjab Markfed on it's 53 marla plot adjoining, Hotal Shangrila,

Jalandhar and architectural assignment has already been assigned.

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CHAPTER-III

OBJECTIVES OF THE STUDY & RESEARCH METHODOLOGY

3.1 OBJECTIVES

This study has been conducted with a variety of important objectives in mind. The

following provides us with the chief objectives that have tried to achieve through the

study. The extent to which these objectives have been met could be judged from the

conclusions and suggestions, which appear in the later of this study.

To study the services provided by Citizens Urban Co-Op. Bank Ltd.

To study the satisfaction level of the customers with Citizens Urban Co-Op. Bank

Ltd.

To get information regarding different conditions to be fulfilled for opening an

account in the bank.

To know the type of services provided by Citizens Urban Co-Op. Bank Ltd. in

deposits accounts.

To know the staff attitude towards bank’s customers.

2.4 RESEARCH METHODOLOGY

Research means a search for knowledge or gain some new knowledge and methodology

can properly refer to the theoretical analysis of the methods appropriate to a field of study

or to the body of methods and principles particular to a branch of knowledge. A

Research methodology has a specified framework for collecting the data in an effective

manner. Research methodology means a "defining a problem, defining the research

objectives, developing the research plan, collecting the information, analyzing the

information and presentation of findings." Such framework is called "Research Design".

The research process that was followed by me consisting following steps;

A) Defining the problem

B) Developing the research plan

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C) Collection of Data

D) Analysis and Interpretation of Data

E) Presentation of findings

 A) Defining the problem and research objectives

My research problem is to know services provided by Citizens Urban Co-Op.

Bank Ltd.

B)  Developing the Research Plan

The development of research plan has following steps:

1.        Data source

2.        Research approach

3. Type of Research Design

4. Research instrument

5.         Sampling plan

i)     Sample unit

ii)    Sample size

iii) Contact methods

6. Questionnaire Design

1. Data Source: The researcher can get two types of data:

a)     Primary Data

b)    Secondary Data

a)    Primary Data

Primary data is a data which did not exist earlier and is being collected by the researcher

first time for its specific objectives. In other words, direct collection of data from the

source of information, technology including personal interview, observation,

Questionnaire and through schedules.

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b)    Secondary data

Any data which have been collected earlier for some purpose are the secondary data.

Indirect collection of data from sources containing past or recent past information like

bank's brochures, annual publication, books etc. Secondary sources used are:

Text books

Internet sites

Newspaper articles

Broachers

2. Research Approach

Survey is best suited for descriptive and analytical research. Survey are undertaken to

learn about people's knowledge, beliefs, preferences, satisfaction and so on and to

measure these magnitudes in the general public. Therefore, I have done this survey for

Descriptive and analytical research process.

Descriptive research includes surveys and fact finding enquiries of different kinds. The

main purpose is description of the state of affairs is noted down and analytical research

used to analyze the material and facts.

3. Research instrument

Questionnaire: Questionnaire (also known as self-administered survey) is a type of

statistical survey handed out in paper form usually to a specific demographic to gather

information in order to provider better service or goods. A document that contains a set of

questions that has been specially formulated as a means of collecting information and

surveying opinions, etc on a specified subject or theme, etc .

A questionnaire was constructed for my survey.

4.Sampling plan

Sample is a group of few items which represents the population or universe from where it

has been taken. The sampling plan calls for three decisions;

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a) Sample unit

b) Sample size

c) Contact methods

a) Sample unit – who is to be surveyed?

The target population must be defined that has to be sampled. It is necessary so as to

develop a sample frame so that everyone in the target population has an equal chance of

being sampled. I have completed my survey in Jalandhar .

b) Sample size - how many people have to be surveyed?

Generally, large sample size gives more reliable results than small samples. The sample

consisted of 100 respondents. The sample was drawn from people having different

educational qualification, age group, occupation. The selection of the respondents was

done on the basis of Simple Random Sampling.

Simple random sampling is the technique in which every item in the universe and

population has an equal chance of being selected in the sample. Researcher has no role to

play or he cannot influence the selection process there is no possibility of biasness. It can

easily assess the accuracy of estimate.

c) Contact methods

Once the sampling plan has been determined the Questionnaire is how the subject should

be contacted i.e. by telephone interview, personal interview, mail etc. Here, in my survey,

I have contacted the respondents through personal interviews.

5. Questionnaire Design :

There are 13 questions in my questionnaire and I asked all these questions from 100

respondents in Jalandhar City.

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C) Collecting the information

After this, I have collected the information from the respondents with the help of

Questionnaire.

D) Data Analysis and Interpretation

The next step is to extract the pertinent findings from the collected data. I have tabulated

the collected data and developed frequency distributions. Thus, the whole data was

grouped aspect wise and was presented in tabular form. Thus, frequencies and

percentages were prepared to render impact of study.

E) Presentations of findings

This was the last step of survey.

3.3 LIMITATIONS OF THE STUDY

Due to constraints of time and resources, the study is likely to suffer from certain

limitations. Some of these are mentioned here under so that the findings of the study may

be understood in a proper perspective.

The limitations of the study are:

Some of the respondents of the survey were unwilling to share information.

The research was carried out on in-house customers. i.e. within the branch in the

small city of Punjab viz. Jalandhar so the response may vary by including the

respondents from other branches in other areas as well.

The research was carried out in a short period of 6 weeks as a part of summer

training. Therefore the sample size and other parameters were selected

accordingly so as to finish the work within the given time frame.

The information given by the respondents might be biased because some of them

might not be interested to give correct information.

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CHAPTER-IV

DATA PRESENTATION, ANALYSIS AND INTERPRETATION

Q1. Do you have account in Citizens Urban Co-Op. Bank Ltd. ?

Table 4.1 : Account in Citizens Urban Co-Op. Bank Ltd.

Response No. of

Respondents

%age of Respondents

Yes 100 100%

No 0 0%

Total 100 100%

100%

0%

Yes No

Graph 4.1 : Account in Citizens Urban Co-Op. Bank Ltd.

Interpretation :

The study is limited to only those 100 respondents who have account in Citizens Urban

Co-Op. Bank Ltd. From the above graph it is clear that all the 100% respondents have

their account in Citizen Urban Co-op. Bank.

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Q2.Are you aware of banking services provided by Citizens Urban Co-Op. Bank Ltd.?

Table 4.2 : Awareness of banking services

Particulars No. of Respondents

%age of Respondents

Saving A/c 56 56%

Current A/c 20 20%

Fixed Deposits 10 10%

NRI A/c 4 4%

Loans 10 10%

Total 100 100%

Graph 4.2 : Awareness of banking services

Interpretation:

The study shows that maximum numbers of people are aware of saving account of

Citizens Urban Co-Op. Bank Ltd. From the above graph it is clear that 56% of the

respondents are aware of Saving account, 20% current account, 10% loans and fixed

deposits and remaining 4% are aware of NRI A/c.

56%

20%

10%

4%10%

Saving A/c Current A/c Fixed Deposits NRI A/c Loans

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3. How do you come to know about these services of Citizens Urban Co-Op.

Bank Ltd.?

Table 4.3: Source of information regarding services of the bank

Particulars No. of Respondents %age of RespondentsTV 10 10%Friends 30 30%Hoarding /Banner 10 10%Newspaper 35 35%Pamphlets 15 15%Total 100 100%

10%

30%

10%

35%

15%

TV Friends Hoarding /Banner Newspaper Pamphlets

Graph 4.3: Source of information regarding services of the bank

Interpretation :

From the above graph it is clear that majority of the respondents have come to know

about the services of Citizens Urban Co-Op. Bank Ltd. through newspaper. 30%

respondents have come to know about the product & services of Citizens Urban Co-Op.

Bank Ltd. through friends, 15% through pamphlets and 10% through hoarding, banner &

television.

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4. From how long the you are dealing with Citizens Urban Co-Op. Bank Ltd. ?

Table 4.4 : Period of dealing with the bank

Duration No. of respondents %age of respondents

1 Year 10 10%

2-3 Years 20 20%

3-5 Years 44 44%

More than 5 years 26 26%

Total 100 100%

10%

20%

44%

26%

1 Year 2-3 Years 3-5 Years More than 5 years

Graph 4.4 : Period of dealing with the bank

Interpretation :

From the above graph it is clear that 44% of customers are dealing with Citizens Urban

Co-Op. Bank Ltd. from last 3-5 years, 26% of customers are dealing with Bank from last

more than 5 years, 20% of customers are dealing with Bank from last 2-3 years and 10%

of them are dealing with Bank from last one year.

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5. Why do you have opened account with Citizens Urban Co-Op. Bank Ltd. ?

Table 4.5 : Reasons to open an account in Citizen Urban Co-op. Bank

Responses No. of Respondents %age of Respondents

Network 24 24%

Quick Services 52 52%

Brand Name 14 14%

One stop bank 10 10%

Total 100 100%

24%

52%

14%

10%

Network Quick Services Brand Name One stop bank

Graph 4.5 : Reasons to open an account in Citizen Urban Co-op. Bank

INTERPRETATION:

The table shows 24% customers have opened their account in Citizens Urban Co-Op.

Bank Ltd. due to good network of branches. 52% customers have opened their account

due to quality of services provided by the Citizens Urban Co-Op. Bank Ltd. Only 14%

customers have opened their account due to brand name. Other 10% customer’s response

to one stop bank reason. Citizens Urban Co-Op. Bank Ltd. is a one stop bank because it

provides all modern banking services and products to customers under one roof.

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6. How much time you spent for any transaction in Citizens Urban Co-Op. Bank

Ltd. ?

Table 4.6 : Average time for any transaction

Time Spent No. of Respondents %age respondents

5 to 10 minutes 60 60%

15 to 20 minutes 30 30%

More than 20 minutes 10 10%

Total 100 100%

60%

30%

10%

5 to 10 minutes 15 to 20 minutes More than 20 minutes

Graph 4.6 : Average time for any transaction

INTERPRETATION :

The above graph shows 60% customers spent only 5 to 10 minutes to perform only

transaction in the Bank. 30% customers spent 5 to 10 minutes and only 10% customers

spent more than that in Citizens Urban Co-Op. Bank Ltd.

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7.Are you satisfied with the time taken by bank for opening of an account ?

Table 4.7 : Satisfaction with the time taken by bank for opening a/c

Level of satisfaction No. of Respondents %age of respondents

Highly satisfactory 48 48%

Satisfactory 50 50%

Not satisfactory 2 2%

Total 100 100%

48%

50%

2%

Highly satisfactory Satisfactory Not satisfactory

Graph 4.7 : Satisfaction with the time taken by bank for opening a/c

Interpretation :

The pie diagram shows the percentage of satisfaction level of customer for opening of

A/c 50% of the customers is satisfied with the time taken by bank for opening of an A/c,

48% of the customers are highly satisfied with the time taken by bank for opening of an

A/c & 2% of the customers are not satisfied with the time taken by bank for opening of

an A/c. Therefore, it has been analyzed that most of the customers of the bank are

satisfied with the time taken by bank for opening of A/c in the bank

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8. Are you satisfied with the services provided by Citizens Urban Co-Op.

Bank Ltd.?

Table 4.8 : Satisfaction with the services of the bank

Satisfaction Level No. of Respondents %age of Respondents

Highly Satisfied 24 24%

Satisfied 32 32%

Average Satisfied 38 38%

Not Satisfied 6 6%

Total 100 100%

24%

32%

38%

6%

Highly Satisfied Satisfied Average Satisfied Not Satisfied

Graph 4.8 : Satisfaction with the services of the bank

Interpretation:

From the above graph it is clear that majority of the respondents are average satisfied

with services provided by Citizens Urban Co-Op. Bank Ltd. whereas 32% of the

respondents are satisfied & 24% are highly satisfied with Citizens Urban Co-Op. Bank

Ltd. The remaining 6% respondents are not satisfied with the services provided by bank.

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9. Are you satisfied with the time taken by bank for clearing of cheques:

Table 4.9 : Satisfaction level with the time taken by bank for clearing cheques

Level of satisfaction No. of Respondents %age of respondents

Highly satisfactory 4 4%

Satisfactory 72 72%

Not satisfactory 24 24%

Total 100 100%

4%

72%

24%

Highly satisfactory Satisfactory Not satisfactory

Graph 4.9 : Satisfaction level with the time taken by bank for clearing cheques

Interpretation :

The pie diagram shows the percentage of satisfaction level of customer regarding time

taken by bank for clearing of cheques.72% of the customers are satisfied with the time

taken by bank for clearing of cheques, 4% of the customers are highly satisfied with the

time taken by bank for clearing of cheques, 24% of the customers are not satisfied with

the bank for clearing of cheques. It has been observed that the most of the customers are

satisfied with the time taken by bank for clearing of cheques but still there are many

people who are not satisfied with the time taken by bank for clearing of cheques i.e. still

24% of the customers are not satisfied so, bank staff should be more efficient.

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10. How many times do you visit Citizens Urban Co-Op. Bank Ltd. in a month?

Table 4.10 : No. of visits at Citizen Urban Co-op. Bank Ltd.

No. of Visits No. of Respondents %age of Respondents

1-4 Times 70 70%

5-10 times 20 20%

11-15 times 10 10%

Never 0 0%

Total 100 100%

70%

20%

10%

1-4 Times 5-10 times 11-15 times

Graph 4.10 : No. of visits at Citizen Urban Co-op. Bank Ltd.

Interpretation :

From the above graph it is clear that majority (70%) of the respondents visit the Citizens

Urban Co-Op. Bank Ltd. 1-4 times in a month, 20% respondents visit 5-10 times and

remaining 10% respondents visit the Bank 11-15 times in a month.

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11. Would you like to recommend the name of Citizens Urban Co-Op. Bank Ltd.

to your known person ?

Table 4.11: Recommending the name of bank

Response No. of Respondents %age of Respondents

Yes 86 86%

No 4 4%

Can’t Say 10 10%

Total 100 100%

86%

4%10%

Yes No Can’t Say

Graph 4.11: Recommending the name of bank

Interpretation :

From the graph it is clear that 86% customers would like to recommend the name of

Citizens Urban Co-Op. Bank Ltd. to other persons. Only 4% customers would not like to

recommend the name of Citizens Urban Co-Op. Bank Ltd. and 10% customers are

confused to give response.

89

12 How do you rate the attitude of staff of Citizens Urban Co-Op. Bank Ltd. towards customers ?

Table 4.12 : Rating the attitude of attitude of bank staff

Response No. of Respondents %age of Respondents

Highly Satisfied 14 14%

Satisfied 60 60%

Dissatisfied 20 20%

Highly Dissatisfied 4 4%

Total 100 100%

14%

62%

20%

4%

Highly Satisfied Satisfied Dissatisfied Highly Dissatisfied

Graph 4.12 : Rating the attitude of attitude of bank staff

Interpretation :

From the above graph it is clear that 14% respondents are highly satisfied with the staff

behaviour of Citizens Urban Co-Op. Bank Ltd. while 60% respondents are satisfied with

the staff behaviour. 20% of the respondents are not satisfied with the staff behaviour of

Citizens Urban Co-Op. Bank Ltd. and 4% are highly dissatisfied with staff behaviour.

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13. Are you satisfied with overall performance of Citizens Urban Co-Op. Bank Ltd.?

Table 4.13 : Satisfaction with the overall performance of the bank

Satisfaction Level No. of

Respondents

%age of Respondents

Highly Satisfied 16 16%

Satisfied 34 34%

Average Satisfied 46 46%

Not Satisfied 4 4%

Total 100 100%

16%

34%

46%

4%

Highly Satisfied Satisfied Average Satisfied Not Satisfied

Graph 4.13 : Satisfaction with the overall performance of the bank

Interpretation:

From the above graph it is clear that majority (46%) of the respondents are average

satisfied with the overall performance of Citizens Urban Co-Op. Bank Ltd. where

they are operating their account. 34% of the respondents are satisfied, 16% are

highly satisfied and remaining 4% respondents are not satisfied with the performance

of Citizens Urban Co-Op. Bank Ltd.

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CHAPTER - V

SUMMARY, CONCLUSIONS & RECOMMENDATIONS

5.1 FINDINGS OF THE STUDY

The study is limited to only those 100 respondents who have account in Citizens

Urban Co-Op. Bank Ltd.

The study shows that maximum numbers of people are aware of saving account of

Citizens Urban Co-Op. Bank Ltd.

It is revealed from the research study that majority of the respondents have come

to know about the services of Citizens Urban Co-Op. Bank Ltd. through

newspaper followed by other sources i.e. friends, pamphlets, TV, Banners etc.

It is depicted from the study that 44% of customers are dealing with Citizens

Urban Co-Op. Bank Ltd. from last 3-5 years, 26% of customers are dealing with

Bank from last more than 5 years, 20% of customers are dealing with Bank from

last 2-3 years and 10% of them are dealing with Bank from last one year.

Citizens Urban Co-Op. Bank Ltd. is a one stop bank because it provides all

modern banking services and products to customers under one roof.

It can be analyzed from the research study that 60% customers spent only 5 to 10

minutes to perform only transaction in the Bank. 30% customers spent 5 to 10

minutes and only 10% customers spent more than that in Citizens Urban Co-Op.

Bank Ltd.

It has been analyzed that most of the customers of the bank are satisfied with the

time taken by bank for opening of A/c in the bank

It is clear that majority of the respondents are average satisfied with services

provided by Citizens Urban Co-Op. Bank Ltd.

It has been observed that the most of the customers are satisfied with the time

taken by bank for clearing of cheques but still there are many people who are not

satisfied with the time taken by bank for clearing of cheques i.e. still 24% of the

customers are not satisfied so, bank staff should be more efficient.

92

From the study it is clear that majority (70%) of the respondents visit the Citizens

Urban Co-Op. Bank Ltd. 1-4 times in a month, 20% respondents visit 5-10 times

and remaining 10% respondents visit the Bank 11-15 times in a month.

It is revealed that 86% customers would like to recommend the name of Citizens

Urban Co-Op. Bank Ltd. to other persons. Only 4% customers would not like to

recommend the name of Citizens Urban Co-Op. Bank Ltd. and 10% customers are

confused to give response.

The study shows that 14% respondents are highly satisfied with the staff

behaviour of Citizens Urban Co-Op. Bank Ltd. while 60% respondents are

satisfied with the staff behaviour. 20% of the respondents are not satisfied with

the staff behaviour of Citizens Urban Co-Op. Bank Ltd. and 4% are highly

dissatisfied with staff behaviour.

Majority (46%) of the respondents are average satisfied with the overall

performance of Citizens Urban Co-Op. Bank Ltd. where they are operating their

account. 34% of the respondents are satisfied, 16% are highly satisfied and

remaining 4% respondents are not satisfied with the performance of Citizens

Urban Co-Op. Bank Ltd.

5.2 CONCLUSION

The customer satisfaction is very important for success of Bank. Only those Banks will

be at the top which satisfied their customer. If the employees are performing their Job

efficiently it will improve the customer relations.

The face of Indian banking is changing rapidly. The competition and challenges in Indian

banking sector is increasing day by day. I made this project on the topic entitled

“Services provided by Citizens Urban Co-Op. Bank Ltd.”. From the above study I

concluded that the account holders of Citizens Urban Co-Op. Bank Ltd. are satisfied with

the bank. The banking is providing all modern banking products & services like Saving

A/c, Current A/c, Fixed Deposits, NRI A/c, Loans etc. to customers of Citizens Urban

Co-Op. Bank Ltd.

Citizens Urban Co-Op. Bank Ltd. is one of the fastest growing co-operative bank in

Jalandhar. The bank has to take necessary initiatives in order to increase customer base.

93

The bank should increase number of branches and install ATMs at the prime locations of

Jalandhar. The bank can also introduce gifts and prizes from time to time. The interest for

different deposits account should be increased.

From the above study, I can conclude that Citizens Urban Co-Op. Bank Ltd. has

maintained excellent position in the market and the customers are satisfied with the

overall performance of Citizens Urban Co-Op. Bank Ltd. So, we can say that Citizens

Urban Co-Op. Bank Ltd. is well known for understanding the customer needs in the

modern era of banking.

5.3 RECOMMENDATIONS

Citizens Urban Co-Op. Bank Ltd. should increase the number of branches in the

city.

The bank should bring out new products and schemes at time-to-time so that more

people can be attracted.

Even some gifts and prizes may be offered to the customers for their retention.

Citizens Urban Co-Op. Bank Ltd. should install ATMs in the prime locations of

Jalandhar City.

Customer feedback should be taken at regular intervals, so as to keep track of the

changing requirements of the customers.

The bank should increase rate of interest of deposit accounts.

The need of the customer should properly be understood so that customer feels

satisfied.

24 hours banking should be induced so as to facilitate the customers who may not

have a free time in the daytime. It will help in facing the competition more

effectively.

Employees’ behavior should be so nice so that customer don’t feel any hesitation

in asking his doubts.

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BIBLIOGRAPHY

Books :

Khan Masood Ahmed (1992), “Banking in India”, Anmol publications, 3rd Edition,

New Delhi.

Kotahri C.R. (2005)- “Research Methodology” Tata Mcgraw Hill, New Delhi.

Seethapathi K., Sivaram Y G and Rama T S, (2003) “Indian Banking System – The

Changing Scene”, ICFAI University Press

P. N. Varshney (1999) - “Indian Financial System And Commercial Banking”,

Sultan Chand & Sons Publication.

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95

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ase=1&pageSize=20&index=3

www.emeraldinsight.com/10.1108/09564230910978539

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97

QUESTIONNAIRE

Q1. Do you have account in Citizens Urban Co-Op. Bank Ltd. ?

Yes No

2. Are you aware of banking products provided by Citizens Urban Co-Op. Bank

Ltd.?

Saving A/c Current A/c

Fixed Deposits NRI A/c

Loans

3. How do you come to know about these services of Citizens Urban

Co-Op. Bank Ltd. ?

TV Friends

Hoarding /Banner Newspaper

Pamphlets

4. From how long the you are dealing with Citizens Urban Co-Op. Bank Ltd. ?

1 Year 2-3 Years

3-5 Years More than 5 years

5. Why do you have opened account with Citizens Urban Co-Op. Bank Ltd. ?

Network Quick Services

Brand Name One stop bank

6. How much time you spent for any transaction in Citizens Urban Co-Op. Bank Ltd.?

5 to 10 minutes 15 to 20 minutes

More than 20 minutes

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7. Are you satisfied with the time taken by bank for opening of an account ?

Highly satisfactory Satisfactory

Not satisfactory

8. Are you satisfied with the services provided by Citizens Urban Co-Op. Bank

Ltd.?

Highly Satisfied Satisfied

Average Satisfied Not Satisfied

9. Are you satisfied with the time taken by bank for clearing of cheques:

Highly satisfactory Satisfactory

Not satisfactory

10. How many times do you visit Citizens Urban Co-Op. Bank Ltd. in a month?

1-4 Times 5-10 times

11-15 times Never

11. Would you like to recommend the name of Citizens Urban Co-Op. Bank Ltd.

to your known person ?

Yes No Can’t Say

12 How do you rate the attitude of staff of Citizens Urban Co-Op. Bank Ltd.

towards customers ?

Highly Satisfied Satisfied

Dissatisfied Highly Dissatisfied

13. Are you satisfied with overall performance of Citizens Urban Co-Op. Bank Ltd.?

Highly Satisfied Satisfied

Average Satisfied Not Satisfied

Thanks for participating in the Survey.

99