CHAPTER 1

INTRODUCTION
Sr. No. Description Page No.

1.1 Introduction 1.2

1.2 Historical Sketch of Co-operative Movement 1.3

1.2.1 Indian Perspective 1.5

1.3 Purpose of the Research 1.5

1.4 Statement of the Problem 1.8

1.5 Definition of key Terms 1.9

1.5.1 Importance of Co-operative Banks 1.11

1.5.2 Distinction between Primary Credit Societies & State Co- 1.12
operative Banks.

1.5.3 Distinction between State Co-operative Banks & Urban 1.13

Co-operative Banks.

1.6 Relevance of the Study 1.13

1.7 Objectives of the Study 1.14
1.8 Hypotheses of the Study 1.16

1.9 Research Design & Methodology 1.17

1.10 Universe & Sample 1.20
1.11 Sample Description 1.20
1.12 Period of Study 1.21
1.13 Sources of Data Collection 1.22

1.14 Tools of Research 1.23

1.15 Selection/Justification of Area of Study 1.23
1.16 Pilot Study 1.23
1.17 Limitation of Research Design 1.24

1.18 Conclusion 1.24

References 1.25

I.I
1.1 INTRODUCTION
Common be your prayer; Common be your end.
Common be your purpose; Common be your deliberations,
Common be your desires; Unified be your hearts,
United be your intentions; perfect be the Union amongst You.
(Rig Veda)

Co-operation as an economic miracle is as old as Vedas and Upanishads which

has now reached a stage where it is an important factor in socio- political and
economic development of our country. Etymologically, the word 'Co-operation' is a
derivative of the Latin term "Co-operari" where Co means with and Operari means to
work^ Co-operation is a voluntary and democratic association of human beings based
on equality (of control and opportunity) and equity (of distribution) and mutuality for
the promotion of their common interests as producers or consumers. Solidarity,
democratic control, mutuality or self help through mutual help, voluntarism, equality
and service motive are its characteristic features.

In his address to the constitutional assembly Dr.B.R Ambedkar^ had

emphasized about basic values and equality which should be based on liberty, justice
and fraternity. He was not a co-operator in any formal sense of the term and yet it is
obvious that there is a kinship between Dr. Ambedkar's philosophy and principles of
co-operation. Dr. Ambedkar's concept of fraternity is reflected in the co-operative
philosophy of self help and mutual help.
Eleanor Roosevelt has said about cooperation, "The motivating force of the
theory of a democratic way of life is still a belief that as individuals we live co-
operatively, and, to the best of our ability, serve the community in which we live, and
that our own success, to be real, must contribute towards that end".
Smt.Indira Gandhi very rightly opined about the co-operative movement," I
know no other instrument so potentially powerful and full of social purpose as co-
operative movement."
According to Rabindranath Tagore"' for the fullest development of co-
operation certain basic values are required. These values are 1) unity 2) work for the

1.2
good of all 3) No charity 4) pool earning capacity 5) latent wealth in each 6) love for
co-operation 7) No barest minimum.
Values are also stressed by Lars Marcus President ICA^ by identifying following
values as having important bearing on co-operative development now as well as in
the future:
a) Self Help values
b) Mutual help values
c) Non-profit interest values
d) Democratic values.
e) Voluntary effort values
f) Universality values
g) Educative values
h) Purposive values.

There is an old saying that goes as follows: 'If you want to be incrementally
better, be competitive. If you want to be exponentially better, be co-operative." The
objectives of co-operation have been superbly manifested in the flag of the
international co-operative alliance adopted in 1925, which symbolizes harmony
among diverse interests and promises universal peace .

1.2 HISTORICAL SKETCH OF CO-OPERATIVE MOVEMENT

The co-operative movement was started initially stages in the European countries
during the late 18* century. The journey was initiated by the weavers for overcoming
the economic distress of the small artisans of Germany in the middle of 19' century.
Table: 1.1
Year Europe
1844 Weavers Society known as Rochdale Pioneers
1849 Urban Credit Societies by Harman Schultz
1866 BANCA POPULARIE OR PEOPLES BANKS
(Source: Researcher's own contribution)

1.3
Table: 1.2
Year India
1889 Annoyonya Sahakari Mandali, Baroda
1892 Nidhi Societies in Madras
1899 Sir Frederic Nicholson Report
1904 Co-operative Credit Societies Act
1904 Urban Credit Society ,Kanjeevaram
1904 Belegiri Co-operative Credit Society, Dharwar
1905 Bangalore City Co-operative Credit Society, Mysore.
1912 Co-operative Societies Act
1925 Bombay Co-operative Societies Act
1960 Maharashtra Co-operative Societies Act
(Source: Researcher's own contribution)
Table 1.1 traces the historical sequence of the co-operative movements in
the world which is now more than 150 years. The birth place of urban co-operative
credit movement is Germany where this movement was pioneered by Mr. Hermann
Schtuize the mayor of Delitzch in Germany. The genesis of the movement can be
traced to the economic distress of the poor middle class artisans of Germany in the
middle of 19"^ century. The absence of an institution to provide the small artisans,
some advances dragged them into the clutches of money lenders, who used to charge
exorbitant rates of interest. This abysmal poverty and helplessness of his country men
moved Mr. Schtuize and he realized that no one could help them except themselves
on the basis of self help through mutual help. Therefore he established the first loan
society in 1850 to provide cheaper credit and inculcate the habit of thrift among the
small artisans. Thus the first urban credit society came into existence. The success of
this movement in Germany resulted in Prof.Luigi Luzzatti of Italy establishing
BANCA POPULARIE which means 'Peoples Banks' in Milan in 1866. This proved
to be very much successful in improving the economic conditions of the urban people
too; thereafter the concept started getting worldwide reputation*.

1.4
 1.2.1 THE INDIAN PERSPECTIVE

Table 1.2 indicates the progress of co-operative movement for the past 100
years. In India during the second half of 19* century a few middle class
Maharashtrian families settled in the erstwhile Baroda state started a mutual aid
society. It was named 'Annoyonya Sahakari Mandali and under the guidance of Sri.
Vithal Laxman alias Bahusaheb Kavthekar started on 5'*^ February 1889. The society
was started with 23 members with a small amount of Rs.90 as compulsory savings of
their founder members and no share capital. Initially most of the urban banks in India
were organized as credit societies and later converted to urban banks. When the Co-
operative Credit Societies Act of 1904 conferred legal status on credit societies, the
first Urban Co-operative Credit Society was registered in October 1904 at
Kanjeevaram in Madras district. Subsequently the Belegiri Co-operative Credit
Society in Dharwar district in the undivided Bombay Province and the Bangalore City
Co-operative Credit Society in the erstwhile Mysore state was registered in October
1905 & December 1905 respectively'.

1.3 PURPOSE OF THE RESEARCH:-

There are a number of urban co-operative banks functioning in Maharashtra.
The city of Navi Mumbai has got all tactical and strategically location advantages of
Mumbai and the city can be the potential future capital of India. The well planned city
is fast growing with all modern infrastructure civic amenities, eco friendly atmosphere
and info-tech centers of international standards. The major population from Mumbai
is shifting to different nodes of Navi-Mumbai. This foresaw an urgent need for banks
to shift their offices as well as opening new branches in Navi Mumbai. One more
reason which required the movement of banks to Navi Mumbai was shifting of offices
by many government as well as private institutions to this part of Mumbai.

All these developments prompted even the urban co-operative banks to open
shops in this planned city. The paucity of relevant research in the field of urban co-
operative banks in Navi Mumbai has initiated the researcher to conduct this study.
This research would therefore be pertinent to urban co-operative banks in Navi
Mumbai as it would provide relevant information on the performance of urban co-
operative banks in the light of changed financial environment.

1.5
 Similarly, any bank, since it belongs to service sector, requires highly
dedicated and sincere employees. Employees should maintain a good rapport with the
customers by establishing a cordial relationship with the customers. For achieving
this, every employee should be well trained and be professional. Conducting a study
on determining the level of satisfaction among employees is therefore very important
and contributes significantly in improving the efficiency and productivity of banks.

In the same way, progress of any bank largely depends on the customer base
and their satisfaction. The customer relationship marketing should be the aim of every
bank which becomes an important success factor in the service sector industry. The
researcher intends to provide an insight into the flaws and gaps existing in the work
environment as well as customer relations of these banks.

1.6
CHART 1.1 GENESIS OF CONCEPT FOR THIS STUDY

GENESIS OF CONCEPT FOR THIS STUDY

CONCEPT Study of Performance of Urban Co-

DEVELOPMENT c> operative banks in Navi Mumbai

V V
REVIEW OF Previous Study by Experts, Reports of RBI,
LITERATURE o Circulars of Urban Banking Division, RBI

n
V V
CONCEPT
Need to study the factors influencing the success or
FORMULATION => failure of urban co-operative banks.

V V
PROBLEM To determine the relationship between Customers,
IDENTIFICATION
c> Bank management and satisfaction of the
Employees of the bank.

V
V
PROBLEM To find out factors that determines the success of
DEFINITION :0 urban co-operative banks and innovative strategies to
be adopted by urban co-operative banks.

(Source: Researcher's own contribution)

1.7
1.4 STATEMENT OF THE PROBLEM

Urban co-operative banks have a long history of about 100 years and during
these years; they have helped in many ways the various sections of the society. Even
the banks could make a difference in the life of small and marginal farmers as well as
entrepreneurs. However the age of competition is coming up. The financial markets
are becoming extremely competitive and there is little or no scope for the inefficient
institutions to survive.

The role of urban co-operative bank has changed over a period of time, due to
liberalization, privatization and globalization, and these widened the range of needs
and requirements of customers. As a tool to face the challenges of liberalized
economy, ever increasing demands of the business and industry, in the 2 r ' century
additional research in this area is to be conducted. The factors, issues and challenges
that are viewed can account for positive or negative performance of the banks.

The intent of this study is to investigate the strategies and policies that urban
co-operative banks should adopt for making them successful among competitors so as
to concentrate on various potential market segments and attract large masses.

Similarly this study also makes an attempt on an in depth analysis of strengths

and weaknesses of urban co-operative banks in Navi Mumbai and innovative steps
that can be adopted for making them successful among competitors so as to
concentrate on various market segments. This being a pilot study it is concentrated on
a small geographic section of Navi Mumbai, where various urban co-operative banks
are operating on different scales. Hence the title, "An Evaluation of the performance
of Urban Co-operative Banks in Navi Mumbai".

1.8
1.5 DEFINITION OF KEY TERMS: —

1. Bank
Charles J.Woelfel has defined a bank as "any organization engaged in any or
all of the various functions of banking i.e. receiving, collecting, transferring, paying,
lending, investing, dealing, exchanging and servicing (safe deposit, custodianship,
agency, trusteeship) money and claims to many both domestically and
internationally". (Encyclopedia of Banking and Finance, lO"' edition, Irwin, Chicago
p.69)
Dr.H.L.Hart has defined a banker or bank as "a person or company carrying
on the business of receiving moneys and collecting drafts for customers subject to the
obligation of honoring cheques drawn upon them from time to time by the customers
to the extent of the amounts available on their current accounts.(Law of Banking, 4"^
edition., pi.)

2. Co-operative Bank
Devine defines Co-operative bank "a mutual society formed, composed and
governed by working people themselves for encouraging regular saving and grant
small loans on easy terms of interest and repayment".(B.N.Choubey, Principles and
Practices of Co-operative Banking in India, Asia Publishing House, p.2-3, 1968)

According to Henry Wolff, "Co-operative Banking has been defined'" "as an

agency which is in a position to deal with the small man on his own terms accepting
the security he has, without drawing on the protection of the rich".

3. Customer
A person becomes a customer" immediately when he opens an account; he
does not need to have habitual dealing with a banker in order to be ranked as
customer.

4. Officer
An officer is a person who is in charge of the day to day maintenance and
workins of the bank

1.9
5. Manager
Manager'^ is a person who deals with the managerial aspects of the bank.

6. Urban co-operative Banks

Urban co-operative banks have been defined as PRIMARY CO-OPERATIVE
BANKS in the Banking Regulation Act 1949 (As applicable to co-operative
societies). In terms of section 5 (CCV) of the said Act:—
A "primary co-operative bank means a co-operative society, other than
primary agricultural credit society,
(i) The primary object or principal business of which is the transaction of banking
business;
(ii) The paid up share capital and reserves of which are not less than one lakh rupees;
and
(iii) the bye laws of which do not permit admission of any other co-operative society
as a member provided that this sub clause shall not apply to the admission of a co-
operative bank as a member by reason of such co-operative bank subscribing to
the share capital of such co-operative society out of funds provided by the state
government for the purpose."
It therefore means that the byelaws of primary co-operative bank will
not debar admission of a co-operative bank as its member when such co-operative
bank will contribute to the share capital of the primary co-operative bank with the
help of funds provided by the state.
According to Henry Wolff co-operative banking is "an agency which is
not in a position to deal with the small man on his own terms accepting the
security he has and with out drawing on the charity or subsidizing the small man
out of the public funds; instead the material help must be backed by moral
improvement and strengthening the fibre".''*
Co-operative banks are thus voluntarily organized in democratic set up by
people having high moral values with the motto, - thrift and self help through mutual
help'.
The Mehta Bhansali Committee'^ 1939, in Bombay made an attempt to
define urban co-operative bank. It stated, "Urban credit societies having a share
capital of Rs. 20000 and above accepting deposits of money on current account or

1.10
otherwise withdrawable by cheque, draft or order, should be termed as urban co-
operative bank". According to Planning Committee 1946, "Urban Co-operative Banks
receiving deposits on current account should have (a) paid up capital of Rs.20000 and
above,
(b) should maintain fluid resources as per the scale prescribed by the Registrar and (c)
carry to its reserve ftind at least 1/3 rd of its net profits till it equalled with the paid up
share capital and IM'** thereafter."
According to the recommendations of V.P.Varde Committee, appointed by the
Government of India, in 1963, "Co-operative Credit Societies Act in urban and semi
urban areas, having minimum share capital of Rs. 50000 and providing banking
facilities could be termed as Urban Co-operative Banks."

1.5.1 IMPORTANCE OF CO-OPERATIVE BANKS

The Co-operative bank is an essential component of the Indian Financial

System, going by the role assigned, expectations to accomplish, their number, and the
number of offices they operate. Co-operative banks in India play a vital role in rural
and urban financing.
Indian banking structure is headed by RBI which is the central banking
institution followed by SBI and its associate banks. In that structure next position goes
to urban co-operative banks and development banks. Urban co-operative banks
usually cater to the credit needs of agriculturists and artisans. Co-operative banks are
formed under the Co-operative Societies Acts prevalent in different states. It has got
federal set up having three tier structure or two tier structure depending on the type of
banks. Each unit in the federal set up is autonomous having its own democratically
constituted Boards, whereas day to day affairs mostly by honorary persons. 'Service'
rather than profit is the motto of the co-operative banks.
Apart from both member and non member deposits, co-operative banks
mainly dependent on RBI and NABARD for their concessional finance in case of
emergencies. Only State Co-operative Banks are entitled to refinance facilities from
RBI or NABARD. Co-operative banks specialize in personal credit and cover the risk
by strictly lending for productive purposes and regular supervision through field staff
Customer relationship is personal as well as humane and recovery is affected in case

1.11
of default through persuasion and finally taking awards from the Registrars. Audit and
Inspection is undertaken by the Audit Department of the Registrar of Co-operative
Societies and inspected by RBI/NABARD/RCS.

1.5.2 DISTINCTION BETWEEN PRIMARY CREDIT SOCIETIES & STATE

CO-OPERATIVE BANKS.
Table 1.3
Primary Credit Societies State Co-operative Banks
Assessment of credit needs Serve as a balancing centre in the
respective state.
Disbursement of credit to members Organize provision of credit for
creditworthy customers.
Recovery of credit Carry out banking business
Promotion of economic interest of Leader of the co-operatives in the states
members concerned.
Working capita! is less Working capital is more.
Includes only non agricultural credit Agricultural and non agricultural credit
societies societies are covered
Members getfinancialassistance from stat Loans and advances are offered to urban
co-operative banks. co-operative banks.

(Source: Researcher's own contribution)

Table 1.3 shows the differences between primary credit societies and state co-
operative banks. Both are giving financial assistance but the State Co-operative banks
are supposed to be apex organization which does banking business as well as offers
loans and advances even to the urban co-operative banks and primary societies.

1.12
1.5.3 DISTINCTION BETWEEN STATE CO-OPERATIVE BANKS &
URBAN CO-OPERATIVE BANKS.
Table 1.4
State Co-operative Bank Urban Co-operative Bank
1 .Membership is received from urban co- Membership is received only from
operative banks, individuals and firms individuals and firms.
2. Allowed to extent loans to co-operative Not allowed to extend loans to co-
societies operative societies.
3. Surplus funds of members are Open account with state co-operative
compuJsorily received. bank along with deposits of surplus if
any.
4.Known as Primary Banks Known as Federal Co-operative Banks.
(Source: Researcher's Own contribution)

Table 1.4 shows the distinction between urban co-operative banks and state
co-operative banks as well as how state co-operative banks are working as apex
institution. Urban co-operative banks are supposed to keep their surpluses with the
state co-operative banks and in case of necessities they can approach the apex bank
for loans and advances.

1.6 RELEVANCE OF THE STUDY

The role of co-operation and co-operative banks in the development of a
nation is universally accepted. In India considering the social relevance and
contribution to the economy, there is a need to accord top priority to urban co-
operative banks. Past researches have dealt with various factors and variables causing
or affecting the performance of urban co-operative banks and management of urban
co-operative banks. But very little research has been conducted with respect of
performance of urban co-operative banks in Navi Mumbai and hence the present
study titled "An Evaluation of Performance of Urban Co-operative Banks in Navi
Mumbai" proceeded out of the dire requirement of the specific problems in question
and also with the fervor that such a study would yield results with far reaching impact
to various sections of the societ)'.

1.13
A. To the Bank Management:
The relevance of this study is very much related to the bank management.
They can understand the nature of existing financial market and can assess the impact
of present policy as well as future market. Banks can tap various market segments
which have high potentiality and they can also understand how to position their
products.
B. To the Academicians
This study is very much useful to the academicians to understand
and analyze the growth of banking. They can find out the various aspects of urban
banking. The analysis can be useful for finding out the various innovations and
changes in the business environment as well as in banking arena. It also helps to carry
out further research if they are interested.

C. To the General Public

This study is also beneficial to the general public to understand the
functions and scope of urban co-operative banks. They can also understand how far
co-operative banks are reliable. The public can find out the reasons for the failure of
urban co-operative banks as well as the precautions to be taken while opening
accounts in urban co-operative bank branches. In addition they can also carry out
further research if they are interested.

1.7 OBJECTIVES OF THE STUDY

The present study is conducted in Navi Mumbai in order to find out the
development of banking activities by urban co-operative banks. It also highlights the
contribution of urban co-operative banks towards the social and industrial
developments in this region. The development of urban co-operative banks in this
area is a boon to the banks when their reputation is affected due to loss of public
confidence. A study of strengths, weaknesses, opportunities and threats can help us to
understand the common traits of urban co-operative banks. It can also help us to
throw light on how to convert the threats into opportunities as well as how to tackle
weaknesses in terms of strength.
This study also wants to finalise with the political, economic, social and
technological reasons which can influence the performance of any bank. The

1.14
contribution of urban co-operative banks towards the economic development of India
and Maharashtra help us to concentrate on the development activities of these banks
in the case of Navi Mumbai.
Preparation of objectives is very important due to the fact that it can give rise
to various suggestions for the research problems. It helps us to examine the existing
situations and a comparative analysis of past with present. It can also suggest the
ways and means to overcome all related problems, deficiencies so as to improve
overall efficiency of urban co-operative banks .All these benefits had tempted the
researcher to form the following objectives which is divided into major and minor
objectives.
The major objectives of this study are:-
gs To study the performance appraisal of urban co-operative bank branches
for the period 1998-2007 because majority of the branches were
established from the year 1998 onwards.
gs To conduct the SWOT ANALYSIS and PEST ANALYSIS of urban co-
operative banks.
gs To study the views of customers, higher officials such as Chief Executive
Officers, Managers, Assistant General Managers, officials of Registrar of
Co-operative Societies regarding the importance of urban co-operative
banks in the development of Navi Mumbai.
The study also aims to fulfill certain minor objectives such as:
^ To study contribution of urban co-operative banks in India especially in
Maharashtra.
gi To study the role of co-operative banks in the progress of Navi Mumbai.
gi To study the role of urban co-operative banks in the infrastructural
developments viz; economic, social and physical infrastructure in Navi-
Mumbai.
gi To analyse the various problems faced by urban co-operative banks in the
competitive environment.
g<. To find out innovative banking methods adopted by the urban co-
operative banks and its branches.
g< To study the future prospects of these banks in Navi Mumbai.

1.15
1.8 HYPOTHESES OF THE STUDY
Investigating how liberalization, privatization and globalization can
have an impact on the performance and working of urban co-operative banks is the
main reason that this research is being conducted. As Navi Mumbai is regarded as the
city of 21^' century and therefore how far the urban co-operative bank branches are
successful in this commercial hub is also a matter of consideration. With the literature
reviewed the relationship between changing financial environment as well as
performance of urban co-operative banks are clearly evident.

Preparation of hypotheses is very important for connecting theory and

investigation. This can give result in discovery of some additional information. As
regards the hypotheses of the present study, it is assumed that performance of urban
co-operative banks is not up to the mark on account of multi dimensional problems.
The urban co-operative banks are working now in a changed financial environment
where they have to develop suitable policies and strategies which will help them to
meet the competition and adjust themselves. As a whole urban co-operative banks
have got both administrative as well as operational inefficiency due to problems
related to:-

a) Resource Mobilization
b) Organizational pattern
c) Credit dispensation and monitoring
d) Recovery procedures and over dues
e) Management of human resources
f) Customer care and servicing.
As regards hypothesis of the present study, it is assumed that the functioning of
co-operative banks is not up to the mark on account of several reasons. Inefficiency
resulting from various factors were analyzed and proved. Hence the following
hypotheses have been formulated based on the survey, data, charts, tables, and
diagrams.
I. It is believed that the urban co-operative banks are now working in a changed
financial environment due to which they have to develop suitable product
policy and strategies that shall help them to meet the competition and the
existing financial market has influenced the growth and prospects of urban co-

1.16
 operative banks in an adverse manner affecting their future prospects of
success.
2. In a liberal open financial market urban co-operative banks cannot enjoy a
special status. Therefore it is assumed that unless a strategic change is made in
their policies with appropriate modifications in goal and vision they cannot
survive.

The Government of India has accepted the LPG concept in the year 19991
which has made immense changes in the financial sector. The financial market has
been changed drastically due to which every organization started changing their
policies. The urban co-operative banks also started realizing it when the competition
became very intense and rigorous from old private sector banks, new private sector
banks and foreign banks. They even became a major threat in rural areas. This has
made an urgent need from the co-operative banks to adapt themselves as per the
changing financial environment.

The urban co-operative banks used to enjoy various concessions and privileges
from RBI based on various recommendations of different committees. Now all these
concessions were withdrawn and they are treated at par with other banks. Recently
our Finance Minister has removed the tax concessions enjoyed by these banks.
Therefore it is highly essential to these banks to beat the competition with the help of
innovative policies and programmes. It is assumed that a strategic change is required
in their policies and programmes with appropriate modifications in their mission and
vision statement. Thus the above hypotheses are being justified by the researcher on
this backdrop.

1.9 RESEARCH DESIGN AND METHODOLOGY

The major purpose of this study is to evaluate the performance of urban co-
operative banks working in Navi Mumbai. Financial analysis is also prepared after
taking into account various structural parameters such as asset classification norms,
provisioning norms, income recognition norms and Operational and efficiency
parameters.

1.17
 The study was conducted only in Navi Mumbai covering 11 branches of the
Abhyudaya Bank which was started here during 1980s.The only bank which was
originated here was Navi Mumbai Co-operative Bank at Vashi in the year 1998. A
survey design was used for data collection.
Research design refers to the exposition or plan and structure of the
investigation and has the objective of planning, structuring and executing the research
concerned in such a way that the validity of the findings are maximized in answering
specific research questions. In this study a research design is used which is
quantitative in nature as it enables a larger sample size.

Questionnaires are the descriptive survey tools used for investigating a present
status of factors. The questionnaires have the advantage of collecting of large quantity
of standardized original data. In terms of economy also it is very advantageous. This
method is also helpful in providing information on the characteristics of a particular
sample.
 CHART 1.2 METHODOLOGY FRAME WORK

Research Purpose To find out whether urban co-operative banks

working in Navi Mumbai are efficient or not.

V ^
Whether UCBs are efficient or not as well as factors
Research Question which leads to variations in branch performances,
Job satisfaction among employees.

1
Research Design
V.
Quantitative Research

V
1 240 customers, 33 employees, 10 officials from RBI,
Research Sample RCS, Federation and NAFSCOB, 7 from top
management.

V V
Data Gathering Questionnaires to customers, employees and official of
Regulatory bodies and top management.

V 1
Different marketing strategies which can be adopted by
Data Analysis management, changes in employee's attitude, customer
relationship management and changes in the policy of
regulatory bodies.

V \z
Conclusion Evaluation of findings.

1.19
1.10 UNIVERSE & SAMPLE

Sampling is a process by which a portion of the targeted population is

investigated for processing accurate generalization of results, which is unbiased. This
study was conducted in 12 banks in Navi Mumbai. There is only one urban co-
operative bank. The Navi Mumbai Co-operative Bank started in "Navi Mumbai. Many
banks with head offices at Mumbai have started their branches here. There are various
bank branches of urban co-operative bank working in 14 nodes of Navi Mumbai. The
Abhyudaya Co-operative Bank, a pioneering bank in Navi Mumbai has got the
maximum number of branches. This bank has got 11 branches here. Therefore it is
decided by the researcher to analyze only these two banks taking into account the
representation as well as contributions made by these banks in Navi Mumbai.
Incidentally the study encompasses within its fold one small bank, Navi
Mumbai Co-operative Bank and one big and strong bank viz the Abhyudaya co-
operative Bank Ltd which helped the researcher in taking a comparative view of
functioning both categories of banks in detail there by making this research study
much more meaningful and fully representative of the entire urban banking system.

1.11 SAMPLE DESCRIPTION

Tablel. 5
Particulars Customers Employees Top Officials of Regulatory
Management Bodies
Initial Targets 300 150 10 10
Actual 250 70 10 10
Collection
Final Sample 240 33 10 7
(Source: Researcher's own contribution)
Even though the initial target was taken as 300 customers the final sample
which was accepted and analysed was only 240. This is because of several reasons
such as questionnaire returned incomplete and some not having returned the
questionnaire etc. The employees' response was also not encouraging. Some of them
were hesitant to answer many of the questions. Some had given it with incomplete

1.20
answers. The total sample size was 70 and about fifty percent only received for final
analysis.

1.12 PERIOD OF STUDY

An attempt has been made in the present study to examine the performance of
urban co-operative banks in Maharashtra in general and Navi Mumbai Banks in
particular during the post reform period. The researcher has compared the
performance of 11 bank branches of one urban co-operative bank as well as one bank
without any branches.
The present study covers the time span often years from the co-operative year
1998-1999 to the co-operative year 2006-07. Such a longer duration is considered in
which the working of urban co-operative banks has been examined in general level in
India and at the state of Maharashtra in particular. The study concentrates more on the
second half of the post reform period from 1998-2007 because of the following
reasons:--
^ Many reforms which initiated by RBI in 1992 and 1993 started yielding
results only after 1996-97.
ei The second phase of liberalization of the banking sector started in 1997-
1998.

The parameters used in the study to evaluate the performance of banks are
capital adequacy, asset quality, efficiency and profitability and non performing assets
management.
But for the micro level study of the minutest financial operations and careful
scanning of diverse operations culminating in drawing conclusions there from, the
researcher has taken a period of six years from co operative year 2000-2001 to co-
operative year 2006-2007.

1.21
1.13 SOURCES OF DATA COLLECTION
Table!. 6
Primary Data Secondary Data
1. Customer Questionnaire Publications of RBI and IB A
2.Employee Questionnaire Publications of Federation of Urban Co-operative
banks
3.Top Management RBI -Portal
Questionnaire
4.Personal interview with Vaikuntha Mehta National Institute of Co-operative
training personnel Management, Pune.
S.Personai interview with top National Institute of Banking Management, Pune
management
6.1nformal discussions with Websites of banks under study as well as RBI, IBA.
executives
7. Telephonic Interview with Magazines such as Banking & Finance, ICFAI
Retired RBI and RCS Publications, Yochna, Kurukshetra etc. News papers
Personnel, NAFSCOB such as Indian Express, Business Standard,
Personnel. Economic times, DNA Money etc.
(Source: Researcher's own Contribution)

Table 1.6 gives information about the data collection through Primary and
secondary sources. Primary data was collected through various methods such as
preparation of questionnaires for different groups like customers, employees and top
management. The researcher had conducted interviews with executives and heads of
urban bank federations and retired RBI and RCS personnel. They all shared their
views with the researcher regarding the future prospects of co-operative banks.

Secondary data were collected through the publications of various regulatory

bodies such as RBI, NAFSCOB, and Federation of Urban Co-operative Banks. It was
very much possible for the researcher for easy availability of data because of the
websites created by all organizations.

1.22
 1.14 TOOLS OF RESEARCH
There are several techniques which can be used for analysis of financial data.
These techniques can be broadly classified into two categories:--
(A) Accounting techniques
(B) Statistical techniques.
For the purpose of appraisal, accounting techniques such as Ratio analysis.
Trend analysis etc is used and Statistical Techniques such as Measures of Central
Tendency, Correlation, etc are used. Various types of graphs, pie diagrams, charts are
prepared wherever required. The Student't' Test is applied where the data collected is
less than 30. The Chi Square test and ANOVA Table test is also applied where ever
possible. The related indices and detailed methodology adopted in analyzing
operational performance have been discussed at the relevant places in the study.

1.15 SELECTION/ JUSTIFICATION OF AREA OF STUDY

The researcher selected Navi Mumbai as the area of study because of the
following reasons:
•=> Navi Mumbai which is a potential commercial hub of the country started
developing in 1970s.
•=> It is the world's largest totally planned, well balanced modern city.
<=> The growing migrant population.
•=> The presence of large number of urban co-operative bank branches.

1.16 PILOT STUDY

The questionnaire designed by the researcher was initially given to five banks
for pilot study. The researcher has conducted personal interviews with the employees,
officials of the bank as well as customers. The researcher has requested them to give
all possible suggestions for any modifications required in the questionnaire.
The respondents provided the necessary feedback on ambiguous questions
which enabled the researcher to modify the questionnaires.

1.23
 1.17 LIMITATIONS OF RESEARCH DESIGN
1. The chief limitation is that it depends on the respondent's honest and accurate
response.
2. It may not be representative of the entire banking population.
3. Further a high non response rate on certain questions may cause discrepancies in
interpreting data.
4. Random error is inevitable while using sampling techniques.

1.18 CONCLUSION
Mumbai has no possibility of lateral growth and due to tremendous
population growth of greater Mumbai, there was a genuine need to create another new
township, adjacent to Mumbai, to attract people coming from all over the country to
the new township. The shifting of the market from Masjid Bunder to Sanpada, in Navi
Mumbai forced some of the offices also to shift from greater Bombay. This idea was
even capitalized by the banks by opening their branches or shifting their offices to
Navi Mumbai. There was a drastic change in the functioning of the co-operative
banks when the economy opened up for the first time in the year 1991.This study
helps to understand the contribution of urban co-operative banks in the economic
development of Navi Mumbai. The present study concentrates on the impact of banks
in the development of Navi Mumbai as well as how the policies of the banks to be
changed in order to survive under the new economic policy.

.24
REFERENCES
1. Dr.C.B. Mamoria: Agricultural Co-operative Structure in India , Kitab
Mahal, Allahabad, 1983.p3
2. Co-operator Vol.XXXII No.7 January 1995.
^<^lndian Express October 19, 2005- A Special Report on Co-Operative
Banks.
4. Urban Creditl987 -Dec -1994.
5. The Co-operator VoLXXXII No, 2 August 1994.
6/Dr.Partho Pratim Roy, Management of Urban Co-operative Banks,
Himalaya Publishing House, Mumbai p.lO.
7. Ibid p. 11
8. Jack Bailey, The British Co-operative Movement, Hutchison & Co. Ltd,
London 1960, p.9.
9^RBI: Report of the committee on Urban Co-operative Banks (1979),RBI,
Bombay,p.7
10. Quoted by B.N. Chaubey: Principles and Practices of Co-operative
Banking in India, Asia Publishing House Bombay,1968,p.3
11, 12, 13 Researchers own contribution
14. Dr.B.N.Chaubey: Principles and Practices of Co-operative Banking in
India, Asia Publishing House Bombay, 1968, p.3
J ^ S h r i D.S.Lokande «& Shri B.M Deshpande: evolution of Urban C-
operative Banks in Maharashtra, Yashwant Rao, Chavan Prathisthan,
Mumbai, p.lO

1.25