STUDY OF INTERNAL BANK

BACHLOR OF MANAGEMENT STUDIES

SEMESTER V

(2017-2018)

SUBMITED BY

PRASHANT HANMANT PAWAR

EXAM SEAT NO. : 2045176

Changu Kana Thakur Arts, Commerce and Science College,

New Panvel
Plot No. 1, Sector – 11, Khanda Colony, New Panvel (w), Dist. – Raigad,
Maharashtra, India – 410206
 STUDY OF INTERNAL BANK

BACHLOR OF MANAGEMENT STUDIES

SEMESTER V

In Partial Fulfilment of the requirements

For the Award of Degree of

Bachelor of Management Studies

By

PRASHANT HANMANT PAWAR

EXAM SEAT NO. : 2045176

Changu Kana Thakur Arts, Commerce and Science College,

New Panvel
Plot No. 1, Sector – 11, Khanda Colony, New Panvel (w), Dist. – Raigad,
Maharashtra, India – 410206
 DECLARATION

I, Prashant Hanamant Pawar the student of T.Y.B.M.S. Semester V (2017-

2018) hereby declare that I have completed the project on Study of Internal
Bank.

The information submitted is true and original to the best of my knowledge.

_____________________
(Signature of Student)

Prashant Hanamant Pawar

Exam Seat No. : 2045176

Changu Kana Thakur Arts, Commerce and Science College,

New Panvel
Plot No. 1, Sector – 11, Khanda Colony, New Panvel (w),
Dist. – Raigad, Maharashtra, India – 410206
 CERTIFICATE

This is to certify that Mr Prashant Hanmant Pawar, Roll no: 2045176 of

Third Year B.M.S., Semester V (2016- 2017) has successfully completed the
project on Study Of Internal Bank under the guidance of Prof. Shakti
Chavan.

Course Coordinator Principal

Prof. Trupti Joshi Dr. S. T. Gadade

Project Guide/ Internal Examiner

Prof. Shakti Chavan

External Examiner
 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the
depth is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me

chance to do this project.

I would like to thank my Principal Dr. S. T. Gadade for providing the

necessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator Prof. Trupti Joshi, for her
moral support and guidance.

I would also like to express my sincere gratitude towards my Project guide

Prof. Shakti Chavan whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various

reference books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly
helped me in the completion of the project especially my Parents and Peers
who supported me throughout my project.
Table of Contents
 EXECUTIVE SUMMARY

In India, there prevailed a system of indigenous banking from very early times,

though it was not similar to banking of modern times. „The Bank of Hindustan‟

was the first bank in India, established in 1770. Since, According to Indian

Banking Regulation Act, 1949 “Banking” is defined as accepting, for the purpose

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

demand or otherwise and withdraw able by cheque, draft, order or otherwise.

An explorative and descriptive study was adopted to achieve the objective of

the study and the study was conducted in KNSB in New Panvel. The general

objective of study is analyse the banking service. The aim of the project is study

of core banking and role of the bank in different sector.

The data of the project is collected through primary data i.e. survey through

questionnaire in New Panvel and through secondary data i.e. internet and

reference book.
 AIM:

The main purpose of doing this project is to know about the core banking and

its function. These help to know about the work of co-operative bank in India.

The study of the project help to understand what is the bank role in the

economy. These help to develop the knowledge of banking environment.

OBJECTIVE OF STUDY:

 The Objective of the study of Co-operative Banking is to know the origin

of Co-operative Banks in India.

 To know the role of Co-operative banks in India.

 To know the importance of Co-operative Banks in India.

 To know the types of Co-operative Banks.

 To know the Development of Co-operative Banks in India.

 RESEARCH METHODOLOGY

Collection of data:

Primary Data:

a. Observation Method

b. Interview Method

c. Structured Questionnaire

Secondary Data:

a. Internet

b. Books

c. Articles and Research Papers

Sampling Method:

100 Respondent

Tools and Techniques:

a. Pie charts

b. Tables

c. Bar Charts
 SCOPE OF THE STUDY:

These project is to study the development of organization and its structure in

order to achieve the prime objective of the organization. Also the project intents

to make a detail study of the different departments and working and finding the

problem areas to give a proposal of solution.

LIMITATION OF THE STUDY:

 Various department and their function are explain briefly.

 Primary data is collected as per knowledge and information given by the

executive of the company.

 Karnala bank has produced more than 400 products and various services

are explained.

 Some financial information is kept confidential by finance department of

Karnala bank.

 The study is based on the data of past two or three years only.

 The data for study mainly based on a single bank.

 As majority of the customers are employees of the bank, they might be

biased in giving the information

 The time period of the research was limited.

 INTRODUCTION TO BANK:

 A bank is an institution which accept deposits from the public and in turn

advances loans by creating credit.

 It is different from other financial institution. Banks are such institution

who has sole authority in creating credit by accepting deposits and

making advances.

 The Banks are the main participants of the financial system in India. The

Banking sector offers several facilities and opportunities to their

customers.

 All the banks safeguard the money and valuables and provide loans,

credit, and payment services, such as checking accounts, money orders,

and cashier’s cheques.

 The banks also offer investment and insurance products. The organized

banking sector works within the financial system to provide loans, accept

deposit and provide other services to their customers.

What is Bank?

A bank is a financial institution to receive deposit and make loans. Banks may

also provide financial services, such as wealth management, currency exchange

and safe deposit boxes. There are two types of banks: commercial/retail banks
and investment banks. In most countries, bank are regulated by the national

government or central bank.

IMPORATANCE OF BANK:

 To provide the security to the savings of customer’s.

 To manage the supply of money and credit.

 To increase saving speedily and efficiently, so as to encourage public

confidence in the working of the financial system.

 To evade focus of financial powers in the hands of a few individuals and

institutions.

 To set equal norms and conditions (i.e. rate of interest, period of lending

etc.) to all types of CUSTOMERS.

GOALS OF BANK:

Increase number of corporate accounts to by the end of the year.

Increase total value of commercial loans to by the end of the quarter.

Increase number of consumer deposit accounts and consumer mortgages by %

by the end of the year.

Reduce employee turnover by % by offering a career development and training

program by June.

Improve community awareness of the bank's services by launching a branch

marketing program by the end of the fiscal year.

By the end of the quarter decrease number of customer complaints to per month

by instituting a quality control process for customer data management.

Improve customer service scores % in every branch by year-end

Reduce customer wait time in line to minutes by ensuring adequate staffing

during peak periods. The new staffing plan should be completed within weeks.

OBJECTIVE OF BANK:

 To promote and develop in India sound and progressive banking

principles, practices and conventions and to contribute to the

developments of creative banking.

 To render assistance and to provide various common services to Members

and to the banking industry.

 To initiate advance planning for introduction of new systems or services

in the banking industry.

 To collect, classify and circulate statistical and other information on the

structure and working of the banking system.

 To act as a clearing house for dissemination and exchange of statistical

data, information, views and opinions on the systems, procedures and

practices, and organization and methods of banks and on the structure,

working and operations of the banking system.

 To explore, plan, co-ordinate and organize detailed surveys on banking,

business, resources, personnel and management development

programmes of banks and the banking industry.

 To organize exchange of credit information and opinions, export

information or information and views on any other aspects of interest to

banks or the banking industry.

 To promote education and knowledge of the law and practice of banking.

 To project a good public image of banking as a service industry and

develop good public relations.

 HISTORY OF INDIAN BANKING SECTOR:

1786: The first bank – The General Bank of India

1809: The Bank of Bengal/Calcutta.

1840: Bank of Bombay

1843: Bank of Madras

1865: Allahabad Bank.

1870: Bank of Hindustan.

1894: Punjab National Bank.

Between 1906 and 1913; Bank of India, Central Bank of India, Bank of

Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up.

1921: All presidency banks were amalgamated to from the Imperial Bank

of India which was run by European Shareholders.

1935: Reserve Bank of India.

1949: Enactment of Banking Regulation Act.

1955: Nationalization of State Bank of India.

1959: Nationalisation of SBI subsidiaries.

1961: Insurance cover extended to deposits.

1969: Nationalisation of 14 major Banks.

1971: Creation of credit guarantee corporation.

1975: Creation of regional rural banks.

1980: Nationalisation of seven banks with deposits over 200 Crores.

 FUNCTIONS OF BANK:

Functions of Bank

Primary Secondary
Function Function

Accepting Granting Agency Utility

Deposits Loans and Function Function
Advances

 Saving Deposit  Cash Credit  Fund Transfer

 Fixed Deposit  Bank Overdraft  Cheque Collection
 Current  Loans  Periodic
Deposit  Discounting Bills Payments/Collection
 Recurring  Portfolio Management
Deposit  Other Function

 Issue of Drafts, Letter of

Credits, etc.
 Locker Facility
 Underwriting of Shares
 Dealing in Foreign Exchange
 Project Reports
 Social Welfare Programmes
 Other Utility Function
A] Primary Function:

1] Accepting Deposits:

Most important function of a bank is to mobilize public funds. Bank provides

safe custody as well as interest to the depositors.

1. Saving Deposit:

Saving deposits account meant for those people who wants to save for

future needs and uncertainties. There is no restriction on number and

amount of withdrawals. Bank provides cheque book, ATM cum debit

card and Internet banking facility. Depositors need to maintain minimum

balance which varies across different banks.

2. Fixed deposit or Term deposit:

In fixed deposits account, money is deposited for a fixed tenure. Banks

issues a deposit certificate which contains name, address, deposit amount,

withdrawal date, depositor signatures and other important information.

3. Current Account:

Current account are normally opened by businesses. Banks provide

overdraft facility for these accounts by which account by which account

holder can withdraw more money than available bank balance. This act as

a short-term loan to meet urgent needs. Bank charge high rate on interest

and charge for overdraft facility because bank need to maintain a reserve

for unknown demands for overdraft.

4. Recurring Deposit:

In this type of account depositor’s deposits certain sum of money at

regular period of time. Benefit of recurring account is that it provides

benefit of compounded rate of interest and enables depositors to collect

big sum of money.

2] Granting Loans and Advances:

1. Cash Credit:

It is a short-term loan facility under which banks allows its

customer to take loan up to a certain limit, normally bank grants

this loan against mortgage of certain property.

2. Bank Overdraft:

Bank provides this facility to current account holders. Account

holder can withdraw money anytime up to the provided limit. He

need to pay interest only on borrowed amount for the period for

which he took loan.

3. Loans:

Banks provide loans for various kinds of short term as well as long

term needs. Borrow pay back the loan in instalments.

4. Discounting Bills:
 In normal day business, seller sends bills to buyer whenever they

sell their products and it is mentioned in bill to make payment in

stipulated time. Let’s take it 30 days. In such situation bill

discounting acts, as short-term loan. In case the buyer or the drawer

defaults, bank send the bill back to seller to drawer so that he may

take legal action against drawee or buyer.

B] Secondary Function:

1] Agency Function:

Banks also perform certain agency functions for and on behalf of their

customers.

1. Banks collect and pay various credit instruments like cheques, bills of

exchange, promissory notes etc., on behalf of their customers.

2. Banks purchase and sell various securities like shares, stocks, bonds,

debentures on behalf of their customers.

3. Banks collect dividends and interest on shares and debentures of their

customers and credit them to their accounts.

 4. Letter of references: Banks give information about economic position

of their customers to domestic and foreign traders and likewise provide

information about economic position of domestic & foreign traders to

their customers.

5. Income-tax Consultancy: Banks may also employ income tax experts to

prepare income tax returns for their customers and to help them to get

refund of income tax.

6. Trustee and Executor: Banks also act as trustees and executors of the

property of their customers on their advice.

2] Utility Function:

1. Locker Facility:

Bank provides locker facility to their customers. The customers can keep

their valuables, such as gold and silver ornaments, important documents for

ex shares and debentures in these lockers for safe custody.

2. Issue of draft, letter of credit etc.

Letter of credit acts as an assurance that in case the borrower defaults in

making the payment, bank will make the payment up to the amount

mentioned in letter of credit

3. Traveller’s Cheques:
 Banks issue traveller’s cheques to help their customers to travel without

the fear of theft or loss of money. With this facility, the customers need not

take the risk of carrying cash with them during their travels.

4. Letter of Credit:

Letters of credit are issued by the banks to their customers certifying their

credit worthiness. Letters of credit are very useful in foreign trade.

5. Collection of Statistics:

Banks collect statistics giving important information relating to trade,

commerce, industries, money and banking. They also publish valuable

journals and bulletins containing articles on economic and financial matters.

6. Underwriting Securities:

Banks underwrite the shares and debentures issued by the Government,

public or private companies. Underwriting means the banks purchase

themselves fully or partly the new shares of companies, if the share remains

unsold or unsubscribed in the stock market.

7. Gift Cheques:

Some banks issue cheques of various denominations to be used on

auspicious occasions.

8. Accepting Bills of Exchange on Behalf of Customers:

Sometimes, banks accept bills of exchange, internal as well as foreign, on

behalf of their customers. It enables customers to import goods.

 COMPANY PROFILE:

KARNAL NAGRI SAHAKARI BANK LTD.

 The Karnala Nagari Sahakari Bank Ltd offers quick, efficient and

personalized service to people of all communities. Visit

http://karnalanagaribank.com/

 The Karnala Nagari Sahakari Bank Ltd (KNSB) was established in 1996

under the Co. Operative Bank Act after receipt of license from Reserve

Bank of India by M.L.A Shri Vivekanand Patil dedicated to public cause

in Raigad District.

 KNSB offers quick, efficient and personalized service to people of all

communities.

 The KNSB has grown steadily since 1996. KNSB has now 5 branches in

Raigad District and has as of 31/3/2013 Deposits Rs.9879 lacs and

Advances of Rs.2997 lakhs. Bank has around 7463 shareholders.

 Bank is committed to serve community in general and to protect

depositors and stake holder’s interest by transparent operations,

professional and personal approach.

Product & Services Offered By (Karnala Nagari Sahakari

Bank Ltd.)

 Personal Banking: Savings, personal salary account

 Loan: Home, Personal, Car, Gold, Agri Business, Loan Against FD, Loan

Against Shares, Loan on Securities.

 Demate Account: IPO smart

 NRI: Yes

 Investment Banking: On Property, Gold Mohurs, Silver Mohurs

 Mutual funds: Yes

 Locker facility

 Pension Disbursements: Atal Pension Yojana

 Credit card facility Services

 Services: Wire Transfer, SMS Banking, E-Statement, Mobile Banking,

Phone Banking, Internet Banking, NEFT, Mutual Funds Payment,

Insurance Premium Payments, Money Transfer Between Accounts, Mini

Statement, Pin Change, Balance Enquiry, Request for Cheque Book.

Mission and Goals:

Karnala Nagari Sahakari Bank Ltd is a socially focused Bank, committed

towards growth of community in general by providing Customer centric

banking through state of art technology and continuous improvement of

services.
 CO-OPERATIVE BANK:

Introduction to Co-Operative Bank:

Co-operative bank, in a nutshell, provides financial assistance to the people with

small means to protect them from the debt trap of the moneylenders. It is a part

of vast and powerful structure of co-operative institutions which are engaged in

tasks of production, processing, marketing, distribution, servicing and banking

in India. 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. These banks generally

provide their members with a wide range of banking and financial services

(loans, deposits, banking accounts…). Co-operative banks differ from

stockholder banks by their organization, their goals, their Values and their

governance.

The Co-operative Banking System in India is characterized by a relatively

comprehensive network to the grass root level. This sector mainly focuses on

the local population and micro- banking among middle and low-income strata

of the society. These banks operate mainly for the benefit of rural areas,

particularly the agricultural sector.

Definition:

“A Co-operative bank, as its name indicates is an institution consisting of a

number of individuals who join to pool their surplus savings for the purpose of

eliminating the profits of the bankers or money lenders with a view to

distributing the same amongst the depositors and borrowers.”

The Co-operative Banks Act, of 2007 (the Act) defines a co-operative bank

as a co-operative registered as a co-operative bank in terms of the Act whose

members –

1. Are of similar occupation or profession or who are employed by a common

employer or who are employed within the same business district; or

2. Have common membership in an association or organisation, including a

business, religious, social, co-operative, labour or educational group; or

3. Have common membership in an association or organisation, including a

business, religious, social, co-operative, labour or educational group.

 OBJECTIVE OF CO-OPERATIVE BANK:

 The Objective of the study of Co-operative Banking is to know the origin

of Co-operative Banks in India.

 To know the role of Co-operative banks in India.

 To know the importance of Co-operative Banks in India.

 To know the types of Co-operative Banks.

 To know the Development of Co-operative Banks in India.

ORIGIN AND OPERATION OF CO-OPERATIVE

BANK:

1. Origin of Co-operative Bank:

The beginning co-operative banking in India dates back to about 1904,

when official efforts were made to create a new type of institution based

on principles of co-operative organization & management, which were

considered to be suitable for solving the problems peculiar to Indian

conditions.

The philosophy of equality, equity and self-help gave way to the thoughts

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 forms 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.

2. Operation of Co-operative Bank:

 Establishment:

 Co-operative bank performs all the main banking functions

of deposit mobilisation, supply of credit and provision of

remittance facilities.
  Co-operative Banks belong to the money market as well as

to the capital market.

 Co-operative Banks provide limited banking products and

are functionally specialists in agriculture related products.

However, cooperative banks now provide housing loans

also.

 UCBs provide working capital loans and term loan as well.

 The Chief Functions of Co-operative Bank:

 To attract deposit from non-agriculturist,

 To use excess funds of some societies temporarily to make

up for shortage in another,

 To supervise and guide affiliated societies.

 The Basic Principles on Which Co-operative Bank Works are:

 A co-operative character of activities and trait of mutual aid

of credit granted.

 Catering for collective organizations and their members.

 Restriction on the number of individual votes.

 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.

 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.
 ROLE OF CO-OPERATIVE BANK:

Co-operative Banks are much more important in India than anywhere else in

the world. The distinctive character of this bank is service at a lower cost and

service without exploitation. It has gained its importance by the role assigned to

them, the expectations they are supposed to fulfil, their number, and the number

of offices they operate. Co-operative banks role in rural financing continues to

be important day by day, and their business in the urban areas also has increased

phenomenally in recent years mainly due to the sharp increase in the number of

primary co-operative banks. In rural areas, as far as the agricultural and related

activities are concerned, the supply of credit was inadequate, and money lenders

would exploit the poor people in rural areas providing them loans at higher

rates. So, Co-operative banks mobilize deposits and purvey agricultural and

rural credit with a wider outreach and provide institutional credit to the farmers.

Co-operative bank has also been an important instrument for various

development schemes, particularly subsidy-based programmes for poor.

The Co-operative banks in rural areas mainly finance agricultural based

activities like:

• Farming

• Cattle
• Milk

• Hatchery

• Personal finance

The Co-operative banks in urban areas finance in activities like:

• Self-employment

• Industries

• Small scale units

• Home finance

• 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’s of Co-operative banks are much more than the Old Private Sector

Banks and the New Private Sector Banks.

 IMPORTANCE OF CO-OPERATIVE BANK:

Co-operative bank forms an integral part of banking system in India. This

bank operates mainly for the benefit of rural area, particularly the agricultural

sector. Co-operative bank mobilizes deposits and supply agricultural and rural

credit with the wider outreach. They are the main source for the institutional

credit to farmers. They are chiefly responsible for 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.

 FEATURES OF CO-OPERATIVE BANK:

1. Co-operative Banks are organized and managed on the principal of

cooperation, 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.

2. Co-operative bank performs all the main banking functions of deposit

mobilisation, supply of credit and provision of remittance facilities.

3. Co-operative Banks provide limited banking products and are functionally

specialists in agriculture related products. However, co-operative banks now

provide housing loans also.

4. 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.

5. 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.

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

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.

7. As said earlier, co-operative banks accept current, saving, and fixed or time

deposits from individuals and institutions including banks.

 TYPES OF CO-OPERATIVE BANK:

Types of Co-operative Bank

CO-OPERATIVE BANK

Rural Co-operatives Urban Co-operative Banks

Short-term Rural Long-term Rural

Co-operatives Co-operatives

State Co- Central Co- Primary

operative operative Agriculture
Bank Bank Credit Soc.

State Co-operative
Primary Co-operative
Agriculture and
Agriculture and Rural
Rural Development
Development Banks
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 non-

scheduled 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.

The banks included in this schedule list should fulfil two conditions.

1. The paid capital and collected funds of bank should not be less

than Rs. 5 lac.

2. Any activity of the bank will not adversely affect the interests of

depositors.

Every Scheduled bank enjoys the following facilities.

1. Such bank becomes eligible for debts/loans on bank rate from the

RBI.

2. Such bank automatically acquires the membership of clearing house.

1] Urban Co-operative Banks:

Urban Co-operative Banks is also referred as Primary Co-operative banks

by the Reserve Bank of India. Among the non-agricultural credit societies

urban co-operative banks occupy an important place. This bank is started in

India with the object of catering to the banking and credit requirements of

the urban middle classes.

The RBI defines Urban Co-operative banks as “small sized cooperatively

organized banking units which operate in metropolitan, urban and semi-

urban centres to cater mainly to the needs of small borrowers, viz. owners of

small scale industrial units, retail traders, and professional and salaries

classes.”

The objectives and functions of the Urban Co-operative banks:

 Primarily, to raise funds for lending money to its members.

 To attract deposits from members as well as non-members.

 To encourage thrift, self-help ad mutual aid among members.

 To draw, make, accept, discount, buy, sell, collect and deal in bills of

exchange, drafts, certificates and other securities.

 To provide safe-deposit vaults.

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 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 institutions has increased. The Rural

Co-operative structure has traditionally been bifurcated into two parallel wings,

i.e.

A. Short-term Rural Co-operatives,

B. 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 1,847 branches, 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.

A] Short-term Rural Co-operatives:

The short-term rural co-operatives provide crop and other working capital

loans to farmers and rural artisans primarily for short-term purpose. These

institutions have federal three-tier structure.

At the Apex of the system is a State Co-operative bank in each state.

At the middle (or district) level, there are Central Co-operative Banks also

known as District Co-operative banks.

At the lowest (or village) level, are the Primary Agricultural Credit Societies?

I. State Co-operative Banks:

State Co-operative Banks are the apex of the three-tier Co-operative

structure dispensing mainly short/medium term credit. It is the principal society

in a State which is registered or deemed to be registered under the Government

Societies Act, 1912, or any other law for the time being in force in India relating

to co-operative societies and the primary object of which is the financing of the

other societies in the State which are registered or 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.

II. Central Co-operative Banks:

Central Co-operative Banks form the middle tier of Cooperative credit

institutions. These are the independent units in as much as the State Co-

operative Banks have control to control or supervise their affairs. They are of

two kinds i.e. ‘pure’ and ‘mixed’. Those banks are the membership of which is

confined to co-operative organizations only are included in ‘pure’ type, while

those banks the membership of which is open to co-operative organizations as

well as to the individuals are included in ‘mixed’ type. The pure type of Central

Banks can be seen in Kerala, Bombay, Orissa, etc., while the mixed type can be

seen in Andhra Pradesh, Assam, Tamil Nadu, etc. The pure type of banks is

based on strict cooperative principles. However, the mixed type has an

advantage over the pure type in so far as they can draw their funds from the

non-agricultural sector too.

The Central Co-operative Banks draw their funds from share capital,

deposits, loans from the State C-operative Banks and where State Banks do not

exist from the RBI, NABARD and commercial banks. NABARD is the

supervisory authority for Central Co-operative Banks. Deposits constitute the

major component of sources of funds, followed by borrowings. The main

function of Central Co-operative Banks is to finance the primary credit

societies. In addition they carry on Commercial banking activities like

acceptance of deposits, granting of loans and advances on the security of first

class guilt-edged securities, fixed deposit receipts, gold, bullion, goods and

documents of title to goods, collection of bills, cheques, etc.

III. Primary Agriculture Credit Societies:

Primary Agricultural Credit Societies is the foundation of the co-operative

credit system on which the superstructure of the short-term co-operative credit

system rests. It deals directly with individual farmers, provide short and

medium-term credit, supply agricultural inputs, distribute consume articles and

also arrange for the marketing of products of its members through a c-operative

marketing society. These societies form the basic unit of co-operative credit

system in India. These voluntary societies based on principle of one man one

vote has posed challenge to exploitative practices of the village moneylenders.

The farmers and other small-time borrowers come in direct contact with these

societies. The success of the co-operative credit movement depends largely on

the strength of these village level societies.

B] 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.

i. State Co-operative Agriculture and Development Banks (SCARBDs):

State Co-operative Agriculture and Development Banks constitute the upper-

tier of long term co-operative credit structure. Though long-term credit co-

operatives have been allowed to access public deposits under certain conditions,

such deposits constitute a relatively small proportion of their total liabilities.

They are mostly dependent on borrowings for on-lending.

ii. 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 Development Bank.

 WEAKNESS OF CO-OPERATIVE BANKS:

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 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 accounts

for a major part of their business. For example, 75 per cent of total deposits

mobilised by State C-operative Banks was from only seven states in

1987Andhra 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 mobilisation.

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, due to lack of the professionalism in carrying out banking

activities, the weakness of these banks has become more prominent.

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.

Some facts about Cooperative banks in India:

 Some cooperative banks in India are more forward than many of the state

and private sector banks.

 The total deposits & lending of Cooperative Banks in India is much more

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

 This exponential growth of Co-operative Banks in India is attributed

mainly to their much better local reach, personal interaction with

customers, and their ability to catch the nerve of the local clientele.
REGULATORY BODIES OF CO-OPERATIVE BANKS:

CO-OPERATIVE BANKS AND NABARD:

As an apex bank involved in refinancing credit needs of major financial

institutions in the country engaged in offering financial assistance to agriculture

and rural development operations and programmes, NABARD has been sharing

with the Reserve Bank of India certain supervisory functions in respect of co-

operative banks and Regional Rural Banks (RRBs).

As part of these functions, it

 Undertakes inspection of Regional Rural Banks (RRBs) and cooperative

banks (other than urban/primary co-operative banks) under the provisions

of Banking Regulation Act, 1949.

 Undertakes inspection of State Co-operative Agriculture and Rural

Development Banks (SCARDBs) and apex non-credit co-operative

societies on a voluntary basis

 Undertakes portfolio inspections, systems study, besides off-site

surveillance of co-operative banks.

 Provides recommendations to Reserve Bank of India on opening of new

branches by State Co-operative Banks.

  Administering the Credit Monitoring Arrangements in Co-operative

banks.

Core Functions of NABARD for Co-operative Banks:

NABARD has been entrusted with the statutory responsibility of conducting

inspections of State Co-operative Banks (SCBs), District Central Co-operative

Banks (DCCBs) and Regional Rural Banks (RRBs) under the provision of the

Banking Regulation Act, 1949. In addition, NABARD has also been conducting

periodic inspections of state level co-operative institutions such as State Co-

operative Agriculture and Rural Development Banks (SCARDBs), on a

voluntary basis.

REFORMS IN BANKING REGULATION ACT, 1949

Amendments to the BR Act would cover the following:

i. All cooperative banks would be on par with the commercial banks as far as

regulatory norms are concerned.

ii. RBI will prescribe fit and proper criteria for election to Boards of cooperative

banks. Such criteria would however not be at variance with the nature of

membership of primary cooperatives which constitute the membership of the

District/ Central Co-operative Banks and State Cooperative Banks.

iii. However, as financial institutions, these Boards would need minimum

support at the Board level. Thus, the RBI will prescribe certain criteria for
professionals to be on the Boards of cooperative banks. In case members with

such professional qualifications or experience do not get elected in the normal

electoral process, then the Board will be required to appoint such professionals

in the Board and they would have full voting rights.

iv. The CEOs of the cooperative banks would be appointed by the respective

banks themselves and not by the state. However, as these are banking

institutions, RBI will prescribe the minimum qualifications of the CEO to be

appointed and the names proposed by the cooperative banks for the position of

CEO would have to be approved by RBI.

v. Cooperatives other than cooperative banks as approved by the RBI would not

accept non-voting member deposits. Such cooperatives would also not

Use words like “bank”, “banking”, “banker” or any other derivative of the word

“bank” in their registered name.

If a State Government and the CCS units in that state are enthusiastic in

implementing the package, fulfilment of all the above conditionality’s and

consequently release of the entire financial assistance could be completed even

within a year.
 DATA ANALYSIS AND INTERPRETATION
QUESTIONNAIRE:
1) What kind of account do you maintain in this bank?

a) Current Account

b) Saving Account

c) Loan Account

d) Credit Card Account

Credit Card, 10, CUSTOMER ACCOUNT

10%

Current, 25, 25%

Loan, 20, 20%

Current
Saving
Loan
Credit Card

Saving, 45, 45%

Interpretation:

Above diagram show the no. of customer are using various types of account. In

that 45% customer are using saving bank account, 25% customer are using

current account, 20% customer are using loan account, 10% customer are using

credit card account.

 2) Does your bank conduct any recreation facilities for the customer?

a) Yes

b) No

c) Don’t Know

Customer Feedback

78%

16%
6%

YES NO DON’T KNOW

Customer

Interpretation:

Above data show the customer feedback about the bank recreation facilities. In

that 78% customer are said yes bank conduct recreation facilities, 6% customer

are said no and 16% customer are don’t know about these facility.
 3) Do they charge unnecessarily for not maintain minimum balance in your

Account?

a) Yes

b) No

c) Don’t know

Customer Feedback

65%

20%
15%

YES NO DON’T KNOW

Customer

Interpretation:

Frome the data customer giving feedback when them ask question 20%

customer are said yes they charge, 65% customer said no and 15% customer are

unaware about these.

 4) Do you think your bank offers competitive interest rate?

a) Yes

b) No

Customer Feedback

60%

40%

YES NO

Customer

Interpretation:

In that 60% customer are said yes bank offer competitive interest rate and 40%

customer said no because minimum customer don’t know about competitive

interest rate.
 5) What do you feel about overall service quality of your bank?

a) Excellent

b) Very Good

c) Good

d) Average

CUSTOMER FEEDBACK
Average
5% Excellent
32%
Good
37%

Excellent
Very Good
Good
Average

Very Good
26%

Interpretation:

From the data when asked questions to customer about overall service quality of

your bank 32% customer are said excellent service quality of bank, 26% said is

very good, 37% said is good and 5% customer said is average.

 6) When do you think of your bank what comes first in your mind.

a) Personalised Service

b) Wide Branch Network

c) Customer Service

d) Computerised

e) Core Banking

CUSTOMER FEEDBACK
Personalised
Core Banking Service
20% 10% Wide Branch
Network
20%

Personalised Service
Wide Branch Network
Customer Service
Computerised
Core Banking

Computerised
25%
Customer Service
25%

Interpretation:

Above the data what customer think about their bank. In that 10% customer are

think personalised service bank, 20% customer think wide branch network, 25%

customer think customer service bank, 25% customer think computerised bank

and 20% think its core banking.

 7) Are you satisfied with the service provided by the bank?

a) Yes

b) No

Customer Feedback

70%

30%

YES NO

Customer

Interpretation:

In that case 70% customer are satisfied with bank service and 30% customer are

not satisfied with bank service they have to more service in the bank.
 8) Do you use the service of alternative bank?

a) Yes

b) No

Customer Feedback

75%

25%

YES NO

Customer

Interpretation:

In that case 75% customer those who are use alternative bank service and 25%

customer are only using KNSB service.

 9) What you prefer for investment?

a) Insurance

b) Fixed deposit

c) Shares

d) Others

CUSTOMER FEEDBACK
Others Insurance
25% 15%

Share
10% Insurance
Fixed deposit
Share
Others

Fixed deposit
50%

Interpretation:

Above the data 15% customer are prefer for investment in insurance, 50%

customer are prefer for investment in fixed deposit, 10% customer are prefer for

investment in company share and 25% customer are prefer for other investment.
 10) Which banking facility you are using?

a) Online banking

b) Mobile banking

c) ATM

d) Credit card

CUSTOMER FEEDBACK
Credit Card
15% Online Banking
20%

Online Banking
Mobile Banking
ATM
Credit Card

ATM Mobile Banking

40% 25%

Interpretation:

Above the data 20% customer are using online banking and they satisfy with

this service, 25% customer are using mobile banking, 40% customer are using

ATM facilities and 15% customer are using credit card facilities.
 FINDINGS:

1. For the analysis of data, the survey is done in the New Panvel.

2. During the analysis it was found that most of the people are well

educated.

3. Most of the younger, mature people and senior citizen are invest in

the bank.

4. Most of the people invest in saving bank account and fixed deposit

account, because bank can give the good return on investment

compare to other bank.

5. Majority of the people were having a personal loan in these bank.

6. Most of the people prefer to take long term loan which is more than

3 years.

7. There is a simple procedure followed by bank for loan.

8. Easy repayment and less formalities are the main factor

determining customer selection of loan.

9. Customer are satisfied with banking services which bank provide.

 SUGGESTION:

1. The banks should adopt the modern methods of banking like internet

banking, mobile banking, credit cards, ATM, etc.

2. The banks should plan to introduce new schemes for attracting new

customers and satisfying the present ones.

3. The banks should plan for expansion of branches.

4. The banks should improve the customer services of the bank to a better

extent.

5. Proper guidelines and instruction should be given by the customer for

customer satisfaction.

6. Awareness should be created about the banks rules and regulation.

 CONCLUSION:

Now, it is very much clear that co-operative banks have very much

importance in national development. Without the help of co-operative banks,

millions of people in India would be lacking the much-needed financial support.

Co-operative banks take active part in local communities and local

development with a stronger commitment and social responsibilities. These

banks are best vehicles for taking banking to doorsteps of common men,

unbanked people in urban and rural areas. Their presence in the social,

economic and democratic structure of the country is essential to bring about

harmonious development and that perhaps is the best justification for nurturing

them and strengthening their base. These banks are sure to win in the race

because they are from the people, by the people and of the people.
 BIBLIOGRAPHY:

 en.wikipedia.org/wiki/Cooperative banking.

 www.banknetindia.com/banking/cintro.htm.

 www.knsb.com
 ANNEXTURE:

1. What kind of account do you maintain in this bank?

o Current Account
o Saving Account
o Loan Account
o Credit Card Account

2. Does your bank conduct any recreation facilities for the customer?
o Yes
o No
o Don’t Know

3. Do they charge unnecessarily for not maintain minimum balance in your

Account?
o Yes
o No
o Don’t know

4. Do you think your bank offers competitive interest rate?

o Yes
o No

5. What do you feel about overall service quality of your bank?

o Excellent
o Very Good
o Good
o Average

6. When do you think of your bank what comes first in your mind.
o Personalised Service
o Wide Branch Network
o Customer Service
o Computerised
o Core Banking
7. Are you satisfied with the service provided by the bank?
o Yes
o No

8. Do you use the service of alternative bank?

o Yes
o No

9. What you prefer for investment?

o Insurance
o Fixed deposit
o Shares
o Others

10.Which banking facility you are using?

o Online banking
o Mobile banking
o ATM
o Credit card