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Even after 60 years of independence, a large section of Indian population still remains
unbanked. This malaise has led generation of financial instability and pauperism among the
lower income group who do not have access to financial products and services. However, in
the recent years the government and Reserve Bank of India has been pushing the concept and
idea of Financial Inclusion. Financial inclusion is new paradigm of economic growth which
plays a major role in driving away the poverty. Lack of access to financial services in most of
rural areas due to high informative barriers and low awareness, poor functioning and financial
history of financial institutions, near absence of insurance and pension service create the need
and scope of financial inclusion. Fruits of development have hardly reached to nearly half of
Indian population because no access to loan and insurance and this raises most pertinent issue
of financial inclusion. Financial inclusion is integral to the inclusive growth process and
sustainable development of the country. It is a policy of involving a wider section of
population deposit mobilization and credit intermediation.
The Banking strategies operative in India since Nationalization of major commercial banks in
1969 have played an important role in activating and accelerating the Financial Inclusion,
though the terminology of Financial Inclusion was never used until recently. However
commercial banks are essentially urban in their orientation and have to cater to needs of large
and medium commercial and industrial sector also. Credit gaps still exist in rural areas. It is
therefore felt that commercial banks cannot improve credit delivery into far flung rural areas
beyond a point, due to their inherent limitations. Cooperative Banks were having rural
experience and very good network in rural areas and are also having rural orientation.
Therefore these are in a better position to facilitate Financial Inclusion in the rural areas
where exclusion is widespread. However they lack professionalism in management. Thus it is
pertinent to examine the role of cooperative banks for facilitating Financial Inclusion and to
identify thrust areas.
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of self responsibility and self administration which resulted in giving birth of co-operative.
The origin on co-operative movement was one such event-arising out of a situation of crisis,
exploitation and sufferings. Co-operative banks in India came into existence with the
enactment of the Agricultural Credit Co-operative Societies Act in 1904. Co-operative bank
form an integral part of banking system in India. Under the act of 1904, a number of co-
operative credit societies were started. Owing to the increasing demand of co-operative
credit, anew act was passed in 1912, which was provided for establishment of co-operative
central banks by a union of primary credit societies and individuals. Co-operative Banks in
India are registered under the Co-operative Societies Act. The cooperative bank is also
regulated by the RBI. They are governed by the Banking Regulations Act 1949 and Banking
Laws (Cooperative Societies) Act, 1965. The origins of the cooperative banking movement in
India can be traced to the close of nineteenth century when, inspired by the success of the
experiments related to the cooperative movement in Britain and the cooperative credit
movement in Germany, such societies were set up in India. Now, Co-operative movement is
quite well established in India. The first legislation on co-operation was passed in 1904. In
1914 the Maclagen committee envisaged a three tier structure for co-operative banking viz.
Primary Agricultural Credit Societies (PACs) at the grass root level, Central Co-operative
Banks at the district level and State Co-operative Banks at state level or Apex Level.In the
beginning of 20th century, availability of credit in India, more Particularly in rural areas, was
almost absent. Agricultural and related activities were starved of organised, institutional
credit. The rural folk had to depend entirely on the money lenders, who lent often at usurious
rates of interest.
The co-operative banks arrived in India in the beginning of 20th Century as an official effort
to create a new type of institution based on the principles of co-operative organisation and
management, suitable for problems peculiar to Indian conditions. These banks were
conceived as
Substitutes for money lenders, to provide timely and adequate short-term and long-term
institutional credit at reasonable rates of interest. The Anyonya Co-operative Bank in India is
considered to have been the first co-operative bank in Asia which was formed nearly 100
years back in Baroda. It was established in 1889 with the name Anyonya Sahayakari
Mandali Co-operative Bank Limited, with a primary objective of providing an alternative
to exploitation by moneylenders for Baroda's residents. In the the formative stage Co-
operative Banks were Urban Co-operative Societies run on community basis and their
lending activities were restricted to meeting the credit requirements of their members. The
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concept of Urban Co-operative Bank was first spelt out by Mehta Bhansali Committee in
1939 which defined on Urban Co-operative Bank . Provisions of Section 5 (CCV) of Banking
Regulation Act, 1949 (as applicable to Co-operative Societies) defined an Urban Co-
operative Bank as a Primary Co-operative Bank other than Primary Co-operative Society
were made applicable in 1966.With gradual growth and also given philip with the economic
boom, urban banking sector received tremendous boost and started diversifying its credit
portfolio. Besides giving traditional lending activity meeting the credit requirements of their
customers they started catering to various sorts of customers viz.self-employed, small
businessmen / industries, house finance, consumer finance, personal finance etc.
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Aiming at high rates on deposits and low rates on lending.
Limitation of dividends out of profits and bonus to depositors and borrowers or grants
to cultural or co-operative Endeavour. These banks are constituted of voluntary
association, self-help and mutual aid, one share one vote and non-discrimination and
equality of members. The co-operative banks are the organizations of and for the
people.
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Consumer Finance
Personal Finance
Some of the forward looking Co-operative banks have developed sufficient core
competencies to such an extent that they are able to challenge state and private sector banks.
The exponential growth of Co-operative banks is attributed mainly to their much better
contacts with the local people, personal interaction with customers, and their ability to catch
the nerve of the local clientele. The total deposits and lending of Co-operative banks are
much more than the Old Private Sector Banks and the New Private Sector Banks.
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consequently release of the entire financial assistance could be completed even within
a year.
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breaking the monopoly of moneylenders in providing credit to agriculturists. Co-operative
bank has also been an important instrument for various development schemes, particularly
subsidy-based programmes for the poor. Co-operative banks operate for non-agricultural
sector also but their role is small. Though much smaller as compared to scheduled
commercial banks, co-operative banks constitute an important segment of the Indian banking
system. They have extensive branch network and reach out to people in remote areas. They
have traditionally played an important role in creating banking habits among the lower and
middle income groups and in strengthening the rural credit delivery system.
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Other Co-Operative Institutions,
Ownership Funds
7. Some co-operative bank is scheduled banks, while others are nonscheduled banks.
Co-operative Banks are subject to CRR and liquidity requirements as other scheduled
and non-scheduled banks are. However, their requirements are less than commercial
banks.
8. As said earlier, co-operative banks accept current, saving, and fixed or time deposits
from individuals and institutions including banks.
9. In the recent past, the RBI has introduced changes in interest rates of cooperative
banks also, along with changes in interest rates of commercial banks. The interest
rates structure of co-operative banks is quite complex. The rates charged by them
depend upon the type of bank, the type of loans and vary from state to state.
10. 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 cooperative 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.
11. Co-operative banks (COBs), in short, have played a pivotal role in the development
of short-term and long-term rural credit structure in India over the years. The co-
operative credit effort is said to be the first ever attempt at micro-credit dispensation
in India.
The Government, while understanding the importance of co-operatives has introduced several
schemes for promoting the spirit of co-operation. Both the Indian Government as well as the
Government of the State of Maharashtra has introduced several schemes for the co-
operatives. A few of them are listed here. Take benefit of them.
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SCHEME 1:
Share Capital Contribution to Credit Institutions under LTO Fund (State Level Scheme) The
Government sanctions share capital contribution to District Central Co-operative Banks. This
contribution is given out of the LTO Fund of the NABARD. The provision is made every
year to repay this loan.
SCHEME 2:
Loans to Co-operative Credit Institutions for conversion of short term loans into medium
term loans
SCHEME 3:
National Agricultural Credit Stabilization Fund (Centrally Sponsored Scheme) In drought
conditions the members of Agricultural Credit Societies may not be able to repay the crop
loans .This scheme helps to convert their short-term loans into medium term loans and fresh
crop loans are made available to the members.
SCHEME 4:
In the industrial co-operative societies of weaker sections of the societies, the Government
has several schemes.1) The Government sanctions share capital in the ratio 1:3, to enable the
societies to borrow funds from the financial institutions.2) Financial Assistance for Tools and
Equipment's.3) Interest Subsidy for Working capital: The government gives an interest
subsidy up to 3.5% to 4.5% on the amount borrowed by the co-operative. This scheme helps
to reduce the burden of interest on the co-operative society which is to be paid to financial
agencies.
SCHEME 5:
Central Sector Scheme for Development of Women Co-operatives Under this scheme
financial assistance would be provided by the Central Government on 100 % basis to the
newly formed co-operative societies by the women as well as existing womens co-operatives
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TYPES OF CO-OPERATIVE BANKS:
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CLASSIFICATION OF CO-PERATIVE BANKS:
The Co-operative banking structure in India comprises of:
1. Urban Co-operative Banks
2. Rural Co-operatives
Some co-operative banks are scheduled banks, while others are nonscheduled banks. For
instance, State Co-operative banks and some Urban Co-operative banks are scheduled banks
but other co-operative banks are non-scheduled banks. Scheduled banks are those banks
which have been included in the second schedule of the Reserve bank of India act of 1934.
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respective state Governments. Prior to 1966, Urban Co-operative banks were exclusively
under the purview of State Government. From March 1, 1966 certain provisions of Banking
Regulation Act have been made applicable to these banks. Consequently, the RBI became the
regulatory an supervisory authority of Urban Co-operative Banks for their related operations.
Managerial aspects of such banks continue to remain with State Governments under the
respective Cooperative Societies Act. These banks with multi-presence are regulated by the
Central Governments and registered under Multi-State Co-operative Societies Act. The RBI
extends refinance to Urban Co-operative Banks at bank ate against their advances to tiny and
cottage industrial units. These banks grants sizeable loans and advances under priority sector
for lending to small business enterprises, retail trade, road and water transport operators and
professional and self-employed persons. Urban Co-operative banks are mostly located in
towns and cities and cater to the credit requirement of the
urban clientele.
AREA OF OPERATION:
The area of operation of these banks is usually restricted by its byelaws to a municipal area or
a town. In some occasions it exceeds this limit. The study group on Credit Co-operatives in
Non-Agricultural Sectors has recommended that normally, it would be advisable for an urban
cooperative bank to restrict its area of operation to the municipality or the taluka town where
it operates.
2. RURAL CO-OPERATIVES:
Rural Cooperative Banking plays an important role in meeting the growing credit needs of
rural population of India. It provides institutional credit to the agricultural and rural sector.
The inadequacy of rural credit engaged the attention of RBI and Government throughout the
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1950s and 1960s. One important feature of providing agriculture credit in India has been the
existence of a widespread network of rural financial institutions. The rural credit structure
consists of many types of financial institutions as large scale branch expansion was
undertaken to create a strong institution based in rural area. It has served as an important
instrument of credit delivery in rural and agricultural areas. The separate structure of rural
Cooperative sector for long-term and short-term loans has enabled these institutions to
develop a specialized institution for rural credit delivery. The volume of credit flowing
through these institution has increased. The Rural Co-operative structure has traditionally
been bifurcated into two parallel wings, i.e.
SHORT-TERM RURAL CO-OPERATIVES,
LONG-TERM RURAL CO-OPERATIVES.
There is a larger network of co-operative banks in the rural sector, consisting of 29 State Co-
operative Banks and 367 District Central Cooperative Banks, with 13,025 branches. In
addition, there are 92,000 Primary Agricultural Co-operative Credit Societies, 19 State Land
Development Banks and 745 Primary Land Development Banks, along with
1,847branches,which are not strictly banks as they are not covered under the Banking
Regulation Act, 1949. The RBI Governor's proposals should, therefore, encompass the entire
Co-operative banking system.
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deemed to be registered. The State Co-operative Banks receive current and fixed deposits
from its constituent banks as well as savings,
current and fixed deposits from the general public and from local boards, other local
authorities, etc. Further, they receive loans from the RBI and NABARD. NABARD is
the supervisory authority for State Co-operative Banks. The state government contributes
the certain portion of their working capital. The principal function of State Co-operative
Banks is to assist the Central Co-operative Banks and to balance excesses and
deficiencies in the resources of Central Co-operative Banks. It also act as the balancing
centre for Central Co-operative Banks in the sense that surplus fund of some of these
banks are made available to other needy banks. It also serves the link between RBI and
the Central Co-operative Banks and Primary Agriculture Credit Societies. But the
connection between the State Cooperative Banks and Primary Co-operative Societies is
not direct. The Central Co-operative Banks are acting as intermediaries between the State
Co-operative Banks and Primary societies.
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goods, collection of bills, cheques, etc., safe custody of valuables and agency services.
They are expected to attract deposits from the general public. They also act as balancing
centers, making available access funds of one primary to another which is in need of
them. The central co-operative banks are located at the district headquarters or some
prominent town of the district. These banks have a few private Nindividuals also who
provide both finance and management. The central cooperative banks have three sources
of funds,
Their own share capital and reserves
Deposits from the public and
Loans from the state co-operative banks
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II. LONG-TERM RURAL CO-OPERATIVES:
The long-term rural co-operative provide typically medium and long-term loans for making
investments in agriculture, rural industries and, in the recent period, housing. Generally, these
co-operatives have two tiers, i.e. State Co-operative Agriculture and Development Banks
(SCARBDs) at the state level and Primary Co-operative Agriculture and Rural Development
Banks (PCARDBs) at the taluka or tehsil level. However, some States have a unitary
structure with the state level banks operating through their own branches.
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2. PRIMARY CO-OPERATIVE AGRICULTURE AND RURAL
DEVELOPMENT BANKS (PCARDBS):
Primary Co-operative Agriculture and Rural Development Banks are the lowest layer of
long term credit co-operatives. It is primarily dependent on the borrowings for their
lending business. They provide credit for developmental purposes like minor irrigation,
cultivation of plantation crops and for diversified purposes like poultry, dairying and
sericulture on schematic basis. They get requisite financial assistance from the
Cooperative State Agriculture and Rural DevelopmentBank. In order to widen their
scope of lending to compete with other financial agencies, the primary cooperative
agriculture and rural development banks have been permitted to finance artisans, craft
men and small scale entrepreneurs. They have also been permitted to issue loans to small
road transport operators in rural areas for purchase of goods carriers and passenger
vehicles. As a result, during 2007-08, the Primary Cooperative Agriculture and Rural
Development Banks have again started lending for the Non-Farm Sector including Jewel
Loans.
Co-operative banks play a very significant role in rural banking. Because they
have rural touch, local feel, attitudinal identification with rural economy.
The cost of operation of co-operative bank is relatively low.
Co-operative banking has strengthened the characteristic of the agricultural
borrowers.
The co-operative banking in rural areas has considerably reduced the hold of
village money lenders over rural masses.
The principle of one man, one vote, enshrined in co-operative banking, provides
a training ground to rural masses to learn& practice democracy at all walks of
managing various types of business enterprises in the interests of the society at
large.
Co-operative banking is the means of eradicating poverty and raising the standard
of living of rural masses.
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The main weaknesses of co-operative banks are as follows:
1. The vital link in the co-operative credit system namely, the Primary Agricultural Co-
operative Societies, themselves remain very weak. They are too small in size to be
economical and viable; besides too many of them are dormant, existing only on
paper.
2. With the expanding credit needs of the rural sector, the commercial banks have come
in actively to meet the credit requirements of this sector, and this has aggravated the
difficulties of co-operative banks. The theory that co-operative banks would be
buoyed up by the competition from other financial institutions does not appear to
have worked.
3. Co-operative banks are not doing well in all the states; only a few account for a
major part of their business. For example, 75 per cent of total deposits mobilized by
State C-operative Banks was from only seven states in 1987- Andhra Pradesh,
Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Tamil Nadu, and Uttar Pradesh.
4. These banks still rely very heavily on refinancing facilities from the government, the
RBI, and NABARD. They have yet not been able to become self-reliant in respect of
resources through deposit mobilization.
5. They suffer from dangerously low or weak quality of loan assets, and from highly
unsatisfactory recovery of loans. They suffer from infrastructural weaknesses and
structural flaws. They do not look like banks and do not inspire confidence in the
potential members, depositors and borrowers.
6. Poor resource base is main constraint of these banks. Relatively low per capita base
and less equity base due to non-participations of the members in the financial
activities and limited area of operation is becoming a permanent obstacle in the
progress of this sector.
7. Poor profit position and burden of huge accumulated losses of several cooperative
banks has threatened the very survival of these banks. The amount of cost of
management of this sector has adversely affected its profitability.
8. Most of the Co-operative banks are suffering from the lack of professional
management. In the deregulated environment and stiff competition in the banking
sector, do to lack of the professionalism in carrying out banking activities, the
weakness of these banks has become more prominent.
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9. Many co-operative banks even now continue to follow age-old system and
procedures, which are not conductive in the present technologically driven banking
environment. Except some Co-operative banks, technological development in
Information Technology or computerized data management is conspicuously absent.
10. There is a lack of proper governance. Corporate Governance has great relevance in
the present environment. As there is no formal system of corporate governance in co-
operative banks, many banks have become the hot bed of political patronage,
unscrupulous financial practice and gross mismanagement.
11. Another problem arises out of the duality of control over them i.e. these banks are
organized under dual control of RBI and as well as respective state government.
Apart from the intervention of the apex bodies, the Government is also found to
exercise control in various ways on these banks. Government intervention in the
management, administration and business operation of co-operative banks has made
the institution lose his own distinct character.
12. They suffer from too much officialisation and politicisation. Undue governmental
interventions have prevented them from developing steadily as a self-reliant and
resilient credit system. Most of them are headed by politicians.
13. They unduly depend on government capital rather than member capital. There is no
active participation of their members in their working, which can come about if they
work with members' money rather than government largesse.
It seems that cooperative banks are playing a vital role in the progress of the rural
areas. Besides that they have to face number of problems. In other words the suggestions of
Khusro Committee that cooperative banks should work as a total system and develop self
reliance. The higher authorities of the banking should help the lower authorities in the way of
mother institutions. They should provide authority, leadership, guidance, supervision and
control. There should be mutual support, help, accountability and responsibility in the system
so that there should be a good and effective relationship between there tiers. The deposit
mobilization profit and reserves should be commonly shared. In fact the self reliance is the
main theme of progress of cooperatives deposit mobilization. The mobilization of small
savings from large number of peoples as possible is the desired strategy for deposit
mobilization which is the key of success for cooperative banks. The modern practices should
be co aided with some institutions for remained alive in the modern era.The computerization
and improper leadership should be eliminated. They should improve themselves through the
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principles of cooperation.
20
Poor human capital leading
Generally ageing staff profile characterised by inadequate qualification and training.
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CHALLENGES
The Co-operative Banks are now in the midst of challenges, which have not been faced
by them so operative Credit Institutions in the State. The training programme of the
Institute are reviewed every year in the light of client feedback and their specific
demands, changes in policy environment and the training contents and design are suitably
modified. Sincere efforts are made to upgrade and update the training inputs on an
ongoing basis. It is the ACSTI's ethos to stay in touch with the field realities and provide
solutions to operational problems faced by the co-operative banks through training. In the
wake of structural changes in the Banking field, the Co-operative banks are required to be
professional to remain competitive without losing their market share.
FINANCIAL INCLUSION
In the Indian context, Rangarajan Committee (Report of the Committee on Financial
Inclusion in India (2008)) defines it as: "Financial inclusion is defined as the process
of ensuring access to financial services and timely and adequate credit where needed
by vulnerable groups such as weaker sections and low income groups at an
affordable cost."
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CO-OPERATIVE BANK
A co-operative bank is a financial entity which belongs to its members, who are at
the same time the owners and the customers of their bank. Co-operative banks are
often created by persons belonging to the same local or professional community or
sharing a common interest.
RURAL BANKING
Rural banking is a common practice in places where banking institutions are few and
far between and people who need to carry out banking transactions may have
difficulty finding a way to do so. With modern technology, more and more people
have access to online systems that allow them to conduct certain types of banking
without a nearby branch, but this technology is not available for everyone, and
demand for rural banking is still high in some areas.
CURRENT SCENARIO:
Cooperative Banks in India have become an integral part of the success of Indian
Financial inclusionstory. They have achieved many landmarks since their creation
and have helped a normal rural Indian to feel empowered and secure. The story has
not been smooth and has its share of procedural glitches and woes placed at
various pockets.
The industry is currently in a transition phase. On the one hand, the PSBs, which are the
mainstay of the Indian Banking system are in the process of shedding their flab in terms of
excessive manpower, excessive non Performing Assets (Npas) and excessive governmental
equity, while on the other hand the private sector banks are consolidating themselves through
mergers and acquisitions.
The co-operative credit structure in India can broadly be divided into two segments viz. rural
and urban. The Urban co-operative structure comprises of Urban (Primary) Co-operative
Banks numbering 1618 with 8235 branches spread over 328 districts in the country as at the
end March 2012. The rural co-operative structure in India, on the other hand, comprises about
94531 co-operatives categorized into short term and long term. The short-term rural co-
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operative credit structure (STCCS) comprises State Co-operative Bank at the apex (State)
level, Central Co-operative Banks at the intermediate (district) level and Primary Agricultural
Credit Societies at the ground (village) level. The long term co-operative credit structure
(LTCCS) comprises State Co-operative Agriculture and Rural Development Banks
(SCARDBs) and Primary Co-operative Agriculture and Rural Development Banks
(PCARDBs). The latter structure does not come under the regulatory jurisdiction of Reserve
Bank as it is not covered under the Banking Regulation Act, 1949 (AACS).
Over the years, there has been a growing dominance of short-term credit co-operatives in the
rural co-operative credit structure.
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OBJECTIVE OF THE STUDY
The main objective is to study the extent of financial inclusion in Belman area.
To find the satisfaction level of the rural people towards co-operative bank services.
To assess the performance of the Belman co-operative bank this is working in these
areas.
Banking business has done wonders for the world economy. The simple looking method of
accepting money deposits from savers and then lending the same money to borrowers,
banking activity encourages the flow of money to productive use and investments. The
government of India started the cooperative movement of India in 1904. Then the
government therefore decided to develop the cooperatives as the institutional agency to tackle
the problem of usury and rural indebtedness. At present there are several cooperative banks
which are performing multipurpose functions of financial, administrative, supervisory and
development in nature of expansion and development of cooperative credit system. To know
the share of financial inclusion of credit cooperative bank in Belman and various awareness
of financial inclusion measures about the banking services that are available in the rural areas
this research work was undertaken.
RESEARCH METHODOLOGY:
This is chapter explain various methods & techniques used in this research study with their
suitability.
SAMPLING FRAME:
The sampling frame used to conduct research was the belman area.
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SAMPLING METHOD:
Here the proportionate RANDOM SAMPLING was used to select the respondent from the
entire population.
SAMPLE SIZE:
SOURCES OF DATA:
Data Collection
The primary data refers to the data collected from direct questioning and which has not been
collected or gathered earlier by any other research study. The data for this study was collected
by structured questionnaire prepared by researcher keeping the objectives of the studies and
distributed to 50 respondents.
Internal and external secondary data is collected for the purpose of this study. Internal
secondary data is collected within the Bank. This data includes Bank records, annual reports
and other relevant information.
External secondary data is generated from outside. This data includes publications, records
and Internet etc.
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STATISTICAL ANALYSIS:
Data analysis and interpretation are necessary ingredients to make the primary data obtained
useful for tacking effective strategic moves. The primary data, which has been collected by
survey using a structural questionnaire, has been systematically organized, tabulated and
edited, so as to properly analyze and achieve the objectives.
Usual statistical tools such as Tables, Percentages, Bar Charts, have used for analyzing the
data.
CHI-SQUARE
Chi-square test is one of the significant test and most widely used non-parametric test in
statistical work. Chi-square test was first introduced by Karl Pearson in 1900. It is a measure
which evaluates the extent to which a set of observed frequency of the samples deviates from
the corresponding set of expectd frequencies.
This research tries to give an insight into the financial inclusion measures that is adopted by
the Belman Co-operative Bank and various awareness of financial inclusion measures about
the banking services that are available in the rural areas and thereby helping the banking
industry in their smooth functioning of the business. The sample covered for the purpose of
the study is only 50 respondents. Further the study was restricted to belman area that is
cooperative bank only.
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LIMITATIONS OF THE STUDY:
The data collected was during the working hours; employees were busy in their
routine work so they were less responsive.
As per the population of the study , a sample size of 50 sample respondents is only
covered and the responses may not 100% true which they given.
Study is restricted to Belman area.
As per the time restriction it was not possible to conduct a highly in-depth and
detailed study, which in turn might affect the findings.
As the sample size is small, compared to the total population, the outcome cannot be
generalized.
LITERATURE REVIEW
The All India Rural Credit Review Committee (1969) observed that commercial banks
have generally been more successful than co-operative institutions in mobilizing deposits in
the semi-urban areas. This may be partly on account of superior customer services and partly
because of a more sustained drive for deposits. The committee further pointed out that an
important implication of the challenge which awaits banks generally and co-operative banks
in particular is that they can win the confidence and patronage of the prospective depositor,
urban or rural, only if they can provide him with banking services attuned to his needs,
preferences and ' convenience. What is more important, in providing these services the banks
have to display a degree of enterprise and spirit of innovation. The innovation may have to
vary from area to area and can only come up from experience depending on the local
circumstances and preferences.
Banks would have to evolve specific strategies to expand the outreach of their services in
order to promote financial inclusion. One of the ways in which this can be achieved in a cost-
effective manner is through forging linkages with micro finance institutions and local
communities. Banks should give wide publicity of no frills account. Banks need to redesign
their business strategies to incorporate specific plans to promote financial inclusion of low
income group treating it both a business opportunity as well as a corporate social
responsibility (V. Leeladhar, 2005).
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Pal and Sura (2006) concluded that the overall position of RRBs in India is not quite
encouraging. The poor credit-deposit ratio is still making dent on the desired functioning of
RRBs. Since the RRB is supposed to be a bank for poor people, government should spread
the branches of RRBs at grass root level to provide such banking service to the really needy
rural people and to take corrective measures to raise the credit deposit ratio of the bank that
would make RRBs relevant in the rural India
Martin Cihik and Heiko Hesse (2007) stated in their article that cooperative banks are an
important, and growing, part of many financial systems. This paper empirically analyzes the
role of cooperative banks in financial stability. Contrary to some suggestions in the literature,
they find that cooperative banks are more stable than commercial banks. This finding is due
to the lower volatility of the cooperative banks' returns, which has lower profitability and
capitalization.
Ghosh (2007) suggests that the Post Office Saving Bank (POSB) can be used to cater the
financial need of rural India where Microfinance Institutions (MFIs) have very little presence
in total demand of finance. To boost micro financing initiatives and financial inclusion
program banks are deploying Biometric ATM solutions to its rural customers helping
illiterate or barely literate folks to become part of the banking user community (Biswas,
2010).
Dutta and Basak (2008) suggested that Co-operative banks should improve their recovery
performance, adopt new system of computerized monitoring of loans, implement proper
prudential norms and organize regular workshops to sustain in the competitive banking
environment.
In the paper by Laveesh Bhandari and Sumitha Kale (2008) titled Digital Payments and
Financial Inclusion enough emphasis has been given to the present scenario and the paper
has brought out the importance of embracing technology as a cost effective measure to
improve financial inclusion. Payments through mobile phones have been suggested as the
most appropriate measure.
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Rangarajan Committee (2008) on financial inclusion stated that: Financial inclusion may
be defined as the process of ensuring access to financial services and timely and adequate
credit where needed by vulnerable groups such as weaker sections and low income groups at
an affordable cost. The financial services include the entire gamut of savings, loans,
insurance, credit, payments, etc. The financial system is expected to provide its function of
transferring resources from surplus to deficit units, but both deficit and surplus units are those
with low incomes, poor background, etc. By providing these services, the aim is to help them
come out of poverty.
Cole et al. (2009) concluded that financial literacy program has no effect on the likelihood of
opening a bank savings account, but do find modest effects for uneducated and financially
illiterate households. In contrast, small subsidy payments have a large effect on the likelihood
of opening a savings account. These payments are more than two times more cost-effective
than the financial literacy training. Increasing proliferation of mobile services and ATMs in
rural areas of India has created a new opportunity to attain financial inclusion and thus an
effective tool to provide financial services to the un-banked areas with reduced overheads
with providing access to banking services in remote rural destinations of India (Gupta and
Gupta, 2008).
Narayana Nagesh, 2009 focuses that RBI has forced more to IT firms to be involved in
cause of financial inclusion which is a major challenge before the nation. RBI need the
involvement of big IT companies to reduce their transaction cost. And also to make a
biometric cards for unbanked people. In India about 60% of population doesnt have access
to banking services. What they are looking is technology and to increase standard of living of
people by providing marketing services and many more.
According to Ravichandran and Alkhathlan (2009), very few people have access to
banking services. There are number of factors affecting access to financial services by weaker
section of society in India. The lack of awareness, low incomes and assets, social exclusion,
illiteracy are the barriers from demand side. The distance from bank branch, branch timings,
cumbersome banking procedure, over requirement of documents for opening bank accounts,
unsuitable banking products/schemes, language, high transaction costs and attitudes of bank
officials are the barriers from supply side. Bank-SHG, bank-MFI, MFI-NBFC and bank- post
office linkage models were discussed and new models like rural students banking model,
RBI-Education institute linkage models were proposed.
30
Reddy (2010) suggested a new approach to banks to reach wider population in rural areas by
establishing mobile-banks/representatives/agents who operate on commercial basis rather
than just by self-help groups. These agents/representatives work on commission basis and
hence self-motivated and cost effective in assisting banks in service provision/deposit
mobilization.
31
HISTORY
In the year 1910, Co-operative Bank Belman was established by the people from the belman,
in the name of The Belman Seva Sahakari Sangha Niyamitha. Solicitor Ref F Peeter and
25 other members were the motivating force behind the establishment of this bank. The Bank
was established with an intention to promote social justice and welfare and to take banking to
the masses especially middle class and low-income group of people to support their standard
of living. In the later stages, the Bank has changed its object and decided to cater to the needs
of common people from all sectors of the society. The Bank has made appreciable progress in
the last decade of its banking operations in terms of opening of branches, mobilization of
deposits, deployment of resources and profitability. The shareholders have also benefited due
to attractive dividends. It is working for more than 100 years. The audit has given the B
classification.
It was initially started in the year 4-9-1976. Their main branch is in belman. The other
branches are in Suda , Nandalike and Kalya. Presently the members are 4003.
MISSION STATEMENT
The mission is to remain as the strong, sound and leading organization in the cooperative
credit structure and to be the backbone for the rural financial sector of belman. Through
the efficient management of the organization, it would aspire to function as a
professional, profitable and socially responsible organization ensuring the best service to
its stakeholders and customers by providing good value for their money and thereby
ensure accelerated development of the rural population.
32
P People friendly product and activities.
E Ethics and justices to customers.
R Responsibility towards down prodded.
A Acceptance and accommodation of haves and have nots.
T Technological up gradation and advancement.
I - Innovation and excellence.
V Vibrant and proactive banking institution.
E Empower the masseur and enrich for the society.
VISION
Capital Structure:
BOARD OF DIRECTORS:
President - Devendra Nayak
Vice President - Gerald Dsouza
Manager - B. Shashikanth Bhatt
Director - B.M Govind Rao
K Sanjeev Shetty
Guruva Bangera
33
Nithyananda Shetty
Umesh Nayak
Kushalaxi Bangera
Supervisor - Jayanth Kumar
34
DEPOSIT MOBILISATION:
YEARS DEPOSITS
2009-10 60778599
2010-11 71197620
(17.14%)
2011-12 93823088
(31.78%)
2012-13 125374303
(33.63%)
2013-14 155736406
(24.22%)
The total Deposit of the bank increased from Rs. 60778599 to Rs.155736406 in the year 13-
14. Similarly the annual growth in Deposits in 2012-13 is increased by 33.63% percent
compare to the deposits of during 10-11(17.14%). Every there was an increase to a certain
extent.
35
2011-12 24460730 16894812 16894812 18115736
(61.09%) (14.37%) (62.32%) (19.17%)
Loan plays an import part in the economics of a nation and both individuals and banks to take
the advantage of the advance payment of money for the development of their positions at
various levels. The loans and advances given by the bank to agricultural sector in the year
2009-10 was 113859928 which was increased to 34947576 in the year 2013-14. In case of the
gold it was 11406720 in the year 2009-10 which was increased to the 27973306 in the year
2013-14. But in case of housing sector it was increasing till 2011-12, in the year it showed
negative growth rate(-79.52%) it was because of loss of recovery.
NET PROFITABILITY:
Table No 3.4 shows the Net profit of the Belman cooperative Bank
2009-10 9,63,807
(33.43%)
2010-11 730911
(-24.16%)
2011-12 838420
(14.71%)
2012-13 582104
(-30.5%)
2013-14 645853
(10.94%)
36
Although the primary objective of the cooperative bank is service and the profit motive is
incidental, there is a ceiling on the return on capital, i.e., dividend, so that the bulk of the
profit is used for strengthening the owned resources. There is decline in net profit in the year
10-11 as compared to the year 09-10. Again it increased in the year 11-12. There was an
increase in net profit in the year 2013-14 as compared to the year 12-13..
2009-10 7%
2010-11 7%
2011-12 7%
2012-13 5%
2013-14 7%
Chart No 3.5 Showing the Dividend History of The Belman Cooperative Bank
DIVIDEND PERCENTAGE
8%
7% 7% 7% 7%
6%
5% 5%
4%
7%
3%
2%
1%
0%
2010-11 2011-12 2012-13 2013-14
37
The goodwill of the company, investors preference, future expansion programmes etc.,
depend to a great extent on the volume of the profit of the company. In the case of a bank the
profit and in turn, the dividend distributed to the share holders reflects the success level. In
this regard, the dividend payout ratio of Belman co-operative Bank indicates the soundness of
its financial position. It can be observed from the above table that the bank has paid the
highest rate of dividend of 7% in the year 2009-10, 10-11, 11-12 and 13-1 4and in the year
2012 and 13 bank had paid 5% of dividend.
2009-10 3483
2010-11 3635
2011-12 3747
2012-13 3878
2013-14 4003
38
MEMBERS
4100
4000
3900
3800
3483
3700
3600
3500
3400
2010-11 2011-12 2012-13 2013-14
In 2009-10 members of the belman co-operative bank consisted of 3483, which has been
increased to 4003 in the 2013-14. It has been showing the increasing trend.
39
Table No 4 .1. Age wise classification of respondents
BELOW 20 5 10
20-30 6 36
30-40 17 34
Above40 22 44
TOTAL 50 100
AGE GROUP
10%
12%
44%
BELOW 20
20-30
30-40
34%
Above40
Above diagram consist of four classes of different age groups. Here 44% respondents
belongs to above 40 age groups, 12% respondents fall in the age group of 20-30 years. Other
34 respondents comes are in the class 30-40 years. The age group of below 20 consists only
10% of respondents. Here majority of customer belong to the group of above 40 years.
40
Table No 4.2.Gender wise classification of respondents
MALE 25 50
FEMALE 25 50
TOTAL 50 100
25
20
15 50% 50%
10
0
MALE FEMALE
From the above table it was found that proportion of male is equal compare to female i.e.
50% of male and 50% of female.
41
Table No 4.3.Occupation wise classification of respondents.
SALARIED 13 26
BUSINESS 8 16
HOUSE WIFE 20 40
STUDENT 2 4
PROFESSIONAL 1 2
RETIRED 2 4
OTHER 4 8
Total 50 100
OCCUPATION
4%
2% 16
4% 26% SALARIED
BUSINESS
HOUSE WIFE
STUDENT
16%
40% PROFESSIONAL
RETIRED
OTHER
The above graph shows that 26% of the respondents are salaried peoples ,16% of the
respondents were Business peoples, 40% of the respondents are house wives , 2% of the
respondent were Professional ,2% of the respondents are retired people ,2% of the
respondents are students and rest were comes under other occupations. Here the majority of
the respondents are the house wives.
42
Table 4.4 Montly Income wise classification of customers.
MONTLY INCOME
12 22%
20% 20%
10
8 12% 12%
6 10%
4 4%
2
0
From the above graph it is clear that majority of the respondents that is about 22% falls under
the montly income of 8000-10000, about 20% of respondents falls under 5000-7000 income
level, about 12% of respondents falls under more than 10000 montly income and only 10% of
respondents falls under 7000-8000 of the montly income.
43
Table No 4.6.Family size classification of respondents
LESS THAN 4 23 46
TOTAL 50 100
NO OF DEPENDENTS
30
25
20
15
46% 52%
10
5
0
2%
LESS THAN 4
MORE THAN 4-
LESS THAN 08 MORE THAN 8-
LESS THAN 12
According to survey, 52% of respondents belong to family size 4-8, 46% of respondents
belong to the family size less than 4 and only 2% respondents belong to family size of 8-12
category. Majority of respondents belongs to the family size of 4-8.
44
Table No 4.7.Education level wise classification of respondents
UNDER GRADUATE 35 70
GRADUATE 13 26
POST GRADUATE 1 2
OTHER 1 2
TOTAL 50 100
EDUCATION LEVEL
2% 2%
35%
UNDER GRADUATE
GRADUATE
Above graph represents educational levels of the respondents. Majority of respondents that is,
70% are under graduates, only 26% of the respondents are graduates, 2% of the respondents
are post graduates as well as under other education.
45
Table No 4.8. the Number Of Respondent Who Is Having The Bank Account
YES 50 100
NO 0 0
TOTAL 50 100
Chart No 4.8. The Number Of Respondent Who Is Having The Bank Account
50
45
40
35
30 100%
25
20
15
10
5 0%
0
YES NO
From the above table we can understand that 100% respondents are having the bank account.
46
Table No 4.9. The Number Of The Respondents Who Are Aware Of Belman Co-
Operative Bank .
YES 50 100
NO 0 0
TOTAL 50 100
Chart No 4.9. the Number Of The Respondents Who Are Aware Of Belman Co-
Operative Bank
50
45
40
35
30
100% Series 1
25
20
15
10
5
0%
0
YES NO
This table shows that 100% of the respondents are aware and are having bank account in the
Belman Co-operative bank.
47
Table No 4.10.Table representing How Long The Respondents Are Have Been The
Customer Of Belman Co-Operative Bank.
Table No 4.10.Chart representing How Long The Respondents Are Have Been The
Customer Of Belman Co-Operative Bank.
10%
1-3 YEAR
40% 20% 3-5 YEAR
5-7 YEAR
7-9 YEAR
MORE THAN 9 YEARS
10%
10%
From the above graph it is clear that about 40% of customers have been the customers of the
bellman cooperative bank for more than 9 years, about 20% of respondents for 3-5 years and
about 10 % of respondents for 1-3, 5-7 and 7-9 years have been the customers of this bank
48
Table No 4.11. Showing Awareness Of The Various Schemes Of Belman Bank
SCHEMES RANKING
FIXED DEPOSIT 1
PIGMY 2
AGRICULTURAL LOAN 3
VEHICLE LOAN 4
GOLD LOAN 5
HOUSING LOAN 6
SHORT TERM LOAN 7
MEDIUM TERM LOAN 8
LONG TERM LOAN 9
SSGH LOAN 10
SSY LOAN 11
Chart No 4.11 Showing Awareness Of The Various Schemes Of Belman Cooperative
Bank
RANKING
11
12 10
9
10 8
7
8 6
5
6 4
3
4 2
1
2
0
The above graph shows that Of the various schemes provided by Belman co-operative Bank ,fixed
deposits was ranked first , This appears to be due to the popularity of the scheme among the rural
mass since it is considered as a safe investment. Pigmy ranked second, agricultural loan third ,vehicle
loan forth ,gold loan fifth,Housing loan sixth, short term loan seventh ,medium term loan eighth ,long
term loan ninth, SSGH loan tenth , and SSY loan was ranked eleventh.
49
Table No 4.12.Table representing No Of Respondents Availed Of Various Schemes
YES 40 80
NO 10 20
TOTAL 50 100
RESPONDENTS
45
40
35
30
25 80%
20
15
10
20%
5
0
YES NO
Among 50 respondents 80% availed the schemes of Belman co-operative bank and 20%
respondents not availed the schemes of co-operative Bank.
50
Table No 4.13.Table representing Various Schemes Availed By The Respondents
SCHEMES NO OF RESPONDENTS
FIXED DEPOSIT 13
PIGMY 8
SHORT TERM LOAN 3
MEDIUM TERM LOAN 1
LONG TERM LOAN 4
SSY LOAN 1
VEHICLE LOAN 9
SSGH LOAN 9
AGRICULTURE LOAN 4
GOLD LOAN 8
HOUSING LOAN 7
Chart No 4.13.Chart representing Showing Various Schemes Availed By Repondents
SCHEMES
FIXED DEPOSIT
PIGMY
7
13 SHORT TERM LOAN
4 8 SSY LOAN
VEHICLE LOAN
3 SSGH LOAN
9 1
4 AGRICULTURE LOAN
9 1
GOLD LOAN
HOUSING LOAN
Present study reveals that majority of respondents (13 respondents) have availed fixed deposit
and 9 respondents have availed vehicle loan and SSGH Loan from the cooperative bank and
less respondents prefer SSY loan ,agricultural loan and medium term loans.
51
Table No. 4.14. The Ease Of The Facilities Availing From Belman Cooperative Bank.
YES 50 100
NO 0 0
TOTAL 50 100
Chart No 4.14. The Ease Of The Facilities Availing From Belman Cooperative Bank
Series 1
50
45
40
35
30 100% Series 1
25
20
15
10
5 0%
0
YES NO
From the above graph we can infer that 100% of the respondents are agreed that it is easy for
them to avail the facilities from Belman co-operative Bank.
52
Table No 4.15. How the Respondents Come To Know Of Belman Cooperative Bank.
ADVERTISEMENT 1 2
FAMILY MEMBERS 22 44
WORDS OF MOUTH 15 30
FRIENDS 12 24
TOTAL 50 100
RESPONDENTS
2%
24%
44% ADVERTISEMENT
From the above, 44% respondents come to know about the Belman co-operative bank
through family members,30% respondents from words of mouth,24% respondents through
friends and rest 2% by advertisements.
53
Table No 4.16 Whether The Schemes Of Belman Cooperative Bank Will Enhance The
Standards Of Living Of The Respondents.
YES 50 100
NO 0 0
TOTAL 50 100
Table No 4.16. Whether The Schemes Of Belman Co-Operative Bank Will Enhance
The Standards Of Living Of The Respondents.
RESPONDENTS
50
45
40
35
30 100%
25
20
15
10
5 0%
0
YES NO
From the above table we come to know that 100% respondents are agreed that the schemes of
Belman co-operative bank enhance the standard of living
54
Table No 4.17The Various Credit Schemes Of Belman Co-Operative Bank Which the
Respondents Plan To Opt.
Chart No 4.17 The Various Credit Schemes Of Belman Co-Operative Bank Which The
Respondents Plan To Opt
FIXED DEPOSIT
6%
14% 10% PIGMY
8% SHORT TERM LOAN
20% 2%
MEDIUM TERM LOAN
10%
LONG TERM LOAN
10%
14% SSY LOAN
2% VEHICLE LOAN
4%
SSGH LOAN
Present study reveals that majority of the respondents want to take gold loan , housing loan
and less prefer short term loan, agricultural loan and vehicle loans from this cooperative bank
in coming days. 20% of respondents are plan to opt gold load , 10% of the respondents are
plan to opt fixed deposits , agricultural loan as well as long term loan,6% of respondents opt
pigmy,6% of the respondents opt for short term loans,2% of respondent opt medium term
loan , 2% respondents opt for SSY loan ,14% respondents opt for SSGH loan and 4%of the
Respondents opt vehicle loan
55
Table No 4.18. Belman Cooperative Bank Charges Reasonable Interest Rates And
Other Charges For Credit Facilities.
Yes 50 100
No 0 0
Total 50 100
Chart No 4.18. Belman cooperative bank charges reasonable interest rates and other
charges for credit facilities.
RESPONDENTS
50
45
40
35
30 100% Series 1
25
20
15
10
5 0%
0
Yes No
The above graph shows that 100% respondents are agreed that Belman co-operative bank
charges reasonable interest rates and other charges for credit facilities availed to them.
56
Table No 4.19. How Often Respondents Do Transaction With Belman Co-Operative
Bank .
EVERY DAY 0 0
ONCE A WEEK 31 62
ONCE A MONTH 15 30
TOTAL 50 100
RESPONDENTS
0%
8%
30%
EVERY DAY
FEW TIMES A WEEK
ONCE A WEEK
ONCE A MONTH
62%
Study shows that about 62% of respondents transact once a week , 30% transact once a
month , about 8 % of respondents transact few times a week and none of the respondents
transact every day with bellman cooperative bank.
57
Table No 4.20 Respondents Opinion Regarding Whether Co-Operative Banks Are
Better Than Commercial Banks In Helping The Poor People
YES 48 96
NO 2 4
TOTAL 50 100
RESPONDENTS
50
45
40
35
30 Series 1
96%
25
20
15
10
5 4%
0
YES NO
96% of the respondent feels that cooperative banks are better than commercial banks. This
shows that cooperatives banks have helped large numbers of poor people in the rural area.
58
APPLICATION OF CHI SQUARE
6-1*3-1= 5*2= 10
59
CALCULATION OF EXPECTED VALUES:
60
CALCULATION OF CHI-SQUARE
61
FINDINGS:
From the survey it was found that 44% of respondents that is mainly the age group of
above 40 significantly dealt with the bank .
In case of gender wise classification of respondents it was found that proportionate
no. of male as well as the female significantly dealt with the bank
Around 40%of people are house wifes, 26% of people are salaried, 16% are of
business people, 4% are of students as well as the retired people, 2% are of
professional people, and rest 8% are from other occupations.
The majority of respondents that is about 22% falls under the monthly income of
8000-10000, 20% of respondents falls under 5000-7000 of income level, about 12%
of respondents falls under more than 10000 monthly income and only 10% of
respondents falls under 7000-8000 of the monthly income.
100% of respondents agreed that bank charges reasonable interest rates and other
charges for credit facilities that are availed by them.
100% of respondents agreed that schemes of the bellman co-operative banks enhance
their standard of living.
According to survey, 52% of respondents belong to family size 4-8, 46% of
respondents belong to the family size less than 4 and only 2% respondents belong to
family size of 8-12 category.
100% of respondents are aware of the bellman co-operative bank.
96% of the respondent feels that cooperative banks are better than commercial banks.
This shows that cooperatives banks have helped large numbers of poor people in the
rural area.
Study shows that about majority that is about 62% of respondents transact once a
week .
Present study reveals that majority of respondents (13 respondents) have availed fixed
deposit and 9 respondents have availed vehicle loan and SSGH Loan from the
cooperative bank and less respondents prefer SSY loan ,agricultural loan and medium
term loans.
Present study reveals that majority of the respondents plan to opt gold loan and less
prefer short term loan, agricultural loan and vehicle loans from this cooperative bank
in coming days.
62
Most of the respondents felt that the banks procedure for obtaining loan was simple.
100% of the respondents agreed that it is easy for them to avail the facilities from
Belman co-operative Bank.
100% of respondents agreed that the popularity of bellman co-operative bank is not
because of the advertisement but mainly through family members as well as through
words of mouth.
Study reveals that about majority of respondents that is about 40% are being the
customer of bellman co-operative bank for more than 9 years.
Based on the study it is clear that easy repayment and less formalities are the main
factors that made customers borrow loans from the bank.
100% of respondents felt that quality of services provided by the staff is satisfactory.
This is because bank is catering to a small segment only and the customers are
properly dealt with.
Study reveals that 80% of respondents availed the schemes of Belman co-operative
bank and 20% respondents not availed the schemes of co-operative Bank.
Fixed deposits have been ranked first. This appears to be due to the popularity of the
scheme among the rural mass since it is considered as a safe investment. Pigmy
scheme ranked second as it is popular among middle and low income group due to the
small savings.
63
SUGGESTIONS
The bank should plan for expansion of its branches.
The bank should opt the modern methods of banking like credit cards, ATM
etc.,.
It should focus on the advertising so as attract more number of customers.
The banks should improve the customer services of the bank to a better extent.
The banks should plan to introduce new schemes like education loan for
attracting new customers and satisfying the present ones.
Focusing on core banking.
Working capital has to be increased.
Assets fund has to be increased.
64
CONCLUSION:
Over the years co-operative banks have also performed better in terms of providing loans to
small and retail traders and petty non-farm rural activities. In recent years, they have taken a
leading role in financing Self-Help Groups (SHGs) and other micro-credit institutions and
linking such groups with the formal credit sector. Rural Cooperative banks should really be
strengthened and provided with more resources with which they can undertake more of these
important activities. And most certainly they should be kept apart from a profit-oriented
corporate motivation that would reduce their capacity to provide much needed financial
services to the rural areas, including agriculture. Only then will the cooperative banks fulfill
the promise that is so essential for rural development.
65
66