COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

CHAPTER 1
INTRODUCTION TO CO-OPERATIVE BANK

Cooperative banking institutions takes DEPOSITS and LEND

MONEY in most parts of the world.
It differs from STOCKHOLDERS BANK.
Follows all PRUDENTIAL banking regulation.
It provides FINANCIAL ASSISTANCES to the people with small
means to protect them from the debt trap of the money lenders.
Its a financial entity which belongs to its members, who are at

the

same time the OWNERS and the MEMEBERS of the bank.

Its often created by person belonging to the same local or personal
community or sharing a common interest.
Wide range of banking and financial services
banking accounts etc)

( loans, deposits, and

COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

CHAPTER 2
CO-OPERATIVE 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.
Co-operative banks generally provide their members with a wide range
of banking and financial services (loans, deposits, banking accounts etc.).
Co-operative banks differ from stockholder banks by their organization,
their goals, their values and their governance.
In most countries, they are supervised and controlled by banking
authorities and have to respect prudential banking regulations, which put
them at a level playing field with stockholder bank.
Depending on countries, this control and supervision can be implemented
directly by state entities or delegated to a co-operative federation or
central body.
Co-operative banking is retail and commercial banking organized on a
co-operative basis.
Co-operative banking institutions take deposits and lend money in most
parts of the world.
Co-operative banking, includes retail banking, as carried out by credit
unions, mutual savings and loan associations, building societies and cooperatives, as well as commercial banking services provided by manual
oganizations (such as co-operative federations) to co-operative
businesses.
The structure of commercial banking is of branch-banking type; while the cooperative banking structure is a three tier federal one.
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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

- A State Co-operative Bank works at the apex level (ie. works at state level).
- The Central Co-operative Bank works at the Intermediate Level.
(ie. District Co-operative Banks ltd. works at district level)
- Primary co-operative credit societies at base level (At village level)

COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

DEFINATION

A co-operative bank is a financial entity which belongs to its members, who

areat 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. Co-operative banks
generally provide their members with a wide range of banking and financial
services (loans, deposits, banking accounts) A co-operative bank is a
financial entity which belongs to its members, who areat 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. Co-operative banks generally provide their members
with a wide range of banking and financial services (loans, deposits, banking
accounts).

COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

CHAPTER 3
HISTORY OF CO-OPERATIVE BANK IN INDIA
For the co-operative banks in India, co-operatives are organized groups of
people and jointly managed and democratically controlled enterprises. They
exist to serve their members and depositors and produce better benefits and
services for them.
Professionalism in co-operative banks reflects the co-existence of high level of
skills and standards in performing, duties entrusted to an individual.
Co-operative bank needs current and future development in information
technology. It is indeed necessary for cooperative banks to devote adequate
attention for maximizing their returns on every unit of
resources through effective services. Co-operative banks have completed 100
years of existence in India. They play a very important role in the financial
system. The cooperative banks in India form an integral part of our money
market today. Therefore, a brief resume of their development should be taken
into account. The history of cooperative banks goes back to the year 1904. In
1904, the co-operative credit society act
was enacted to encourage co-operative movement in India. But the development
of cooperative banks from 1904 to 1951 was the most disappointing one.The
first phase of co-operative bank development was the formation and regulation
of cooperative society.
The constitutional reforms which led to the passing of the Government of India
Act in 1919 transferred the subject of Cooperation from Government of India
to the Provincial Governments. The Government of Bombay passed the first
State Cooperative Societies Act in 1925 which not only gave the movement, its
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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

size and shape but was a pace setter of co-operative activities and stressed the
basic concept of thrift, self help and mutual aid. This marked the beginning of
the second phase in the history of Co-operative Credit Institutions.
There was the general realization that urban banks have an important role to
play in economic construction. This was asserted by a host of committees. The
Indian Central Banking Enquiry Committee (1931) felt that urban banks have a
duty to help the small business and middle class people. The Mehta-Bhansali
Committee (1939) recommended that those societies which had fulfilled the
criteria of banking should be allowed to work as banks and recommended an
Association for these banks. The Co-operative Planning Committee (1946) went
on record to say that urban banks have been the best agencies for small people
in whom Joint stock banks are not generally interested. The Rural Banking
Enquiry Committee (1950), impressed by the low cost of establishment and
operations recommended the establishment of such banks even in places smaller
than taluka towns. The real development of co-operative banks took place only
after the recommendations of All India Rural Credit Survey Committee
(AIRCSC), which were made with the view
to fasten the growth of co-operative banks. The co-operative banks are expected
to perform some duties, namely, extend all types of credit facilities to customers
in cash and kind, advance consumption loans, extend banking facilities in rural
areas, mobilize deposits, supervise the use of loans etc. The needs of cooperative bank are different. They have faced a lot of problems, which has
affected the development of co-operative banks. Therefore it was necessary to
study this matter.
The first study of Urban Co-operative Banks was taken up by RBI in the year
1958-59. The Report published in 1961 acknowledged the widespread and
financially sound framework of urban co-operative banks; emphasized the need
to establish primary urban co-operative banks in new centers and suggested that
State Governments lend active support to their development.
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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

In 1963, Varde Committee recommended that such banks

should be organised at all Urban Centers with a population of 1 lakh or more
and not by any single community or caste. The committee introduced the
concept of minimum capital requirement and the criteria of population for
defining the urban centre where UCBs were incorporated.

COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

CHAPTER 4
FEATURES
Even if co-operative banks organizational rules can vary according to their
respective national legislations, co-operative banks share common features as
follows:
Customer-owned entities:
In a co-operative bank, the needs of the customers meet the needs of the
owners, as co-operative bank members are both. As a consequence, the
first aim of a co-operative bank is not to

maximize profit but to

provide the best possible products and services to its members.

Some

co-operative banks only operate with their members but most of them
also admit non-member clients to benefit from their banking and financial
services.
Democratic member control:
Co-operative banks are owned and controlled by their members, who
democratically elect the board of directors. Members usually have equal
voting rights, according to the co-operative principle of one person, one
vote.
Profit allocation:
In a co-operative bank, a significant part of the yearly profit, benefits or
surplus is usually allocated to constitute reserves.
A part of this profit can also be distributed to the co-operative members,
with legal or statutory limitations in most cases.
Profit is usually allocated to members either through a patronage
dividend, which is related to the use of the co-operatives products and
services by each member, or through an interest or a dividend, which is
8

COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

related to the number of shares subscribed by each member.Co-operative

banks are deeply rooted inside local areas and communities.They are
involved in local development and contribute to the sustainable
development of their communities, as their members and management
board usually belong to the communities in which they exercise their
activities.

By increasing banking access in areas or markets where other banks are less
present, farmers in rural areas, middle or low income households in urban areas
- co-operative banks reduce banking exclusion and foster the economic ability
of millions of people. They play an influential role on the economic growth in
the countries in which they work in and increase the efficiency of the
international financial system. Their specific form of enterprise, relying on the
above38mentioned principles of organization, has proven successful both in
developed and developing countries.

COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

CHAPTER 5
FUNCTIONS OF CO-OPERATIVE BANK

Co-operative Banks are organised and managed on the principal of cooperation, self-help, and mutual help. They work on the basis of no
profit no loss. Profit maximization is not their goal.
Co-operative bank do banking business mainly in the agriculture and
rural sector. However, UCBs, SCBs, and CCBs operate in sub-urban,
urban, and metropolitan areas also.
Co-operative banks also perform the basic banking functions of banking but
they differ from commercial banks in the following respects
Commercial banks are joint-stock companies under the companies act of
1956, or public sector bank under a separate act of a parliament whereas
co-operative banks were established under the co-operative societys acts
of different states.
Commercial bank structure is branch banking structure whereas co0operative Banks have a three tier setup, with state co-operative bank at
apex level, central /district co-operative bank at district level, and primary
co-operative societies at rural level.
Only some of the sections of banking regulation act of 1949 (fully applicable to
commercial banks), are applicable to co-operative banks, resulting only in
partial control by RBI of co-operative banks and Co-operative banks function
on the principle of cooperation and not entirely on commercial parameters.

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

TYPES OF CO-OPERATIVE BANK

The co-operative banks are small-sized units which operate both in urban and
non-urban centers. They finance small borrowers in industrial and trade sectors
besides professional and salary classes. Regulated by the Reserve Bank of India,
they are governed by the Banking Regulations Act 1949 and banking laws (cooperative societies) act, 1965. The co-operative banking structure in India is
divided into following 5 components:

Primary Co-operative Credit Society

The primary co-operative credit society is an association of borrowers and nonborrowers residing in a particular locality. The funds of the society are derived
from the share capital and deposits of members and loans from central cooperative banks. The borrowing powers of the members as well as of the society
are fixed. The loans are given to members for the purchase of cattle, fodder,
fertilizers, pesticides, etc.
Central co-operative banks
These are the federations of primary credit societies in a district and are of two
typesthose having a membership of primary societies only and those having a
membership of societies as well as individuals. The funds of the bank consist of
share capital, deposits, loans and overdrafts from state co-operative banks and
joint stocks. These banks provide finance to member societies within the limits
of the borrowing capacity of societies. They also conduct all the business of a
joint stock bank.

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

State co-operative banks

The state co-operative bank is a federation of central co-operative bank and acts
as a watchdog of the co-operative banking structure in the state. Its funds are
obtained from share capital, deposits, loans and overdrafts from the Reserve
Bank of India. The state cooperative banks lend money to central co-operative
banks and primary societies and not directly to the farmers.
Land development banks
The Land development banks are organized in 3 tiers namely; state, central, and
primary level and they meet the long term credit requirements of the farmers for
developmental purposes. The state land development banks oversee, the primary
land development banks situated in the districts and tehsil areas in the state.
They are governed both by the state government and Reserve Bank of India.
Recently, the supervision of land development banks has been assumed by
National Bank for Agriculture and Rural development (NABARD). The sources
of funds for these banks are the debentures subscribed by both central and state
government. These banks do not accept deposits from the general public.
Urban Co-operative Banks
The term Urban Co-operative Banks (UCBs), though not formally defined,
refers to primary co-operative banks located in urban and semi-urban areas.
These banks, till 1996, were allowed to lend money only for non-agricultural
purposes. This distinction does not hold today. These banks were traditionally
centered on communities, localities, work place groups. They essentially lend to
small borrowers and businesses. Today, their scope of operations has widened
considerably. The origins of the urban co-operative banking movement in India
can be traced to the close of nineteenth century. Inspired by the success of the
experiments related to the cooperative movement in Britain and the co-operative
credit movement in Germany, such societies were set up in India. Co-operative
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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

societies are based on the principles of cooperation, mutual help, democratic

decision making, and open membership. Cooperatives represented a new and
alternative approach to organization as against proprietary firms, partnership
firms, and joint stock companies which represent the dominant form of
commercial organization. They mainly rely upon deposits from members and
non-members and in case of need, they get finance from either the district
central co-operative bank to which they are affiliated or from the apex cooperative bank if they work in big cities where the apex bank has its Head
Office. They provide credit to small scale industrialists, salaried employees, and
other urban and semi-urban residents.

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

ADVANTAGES OF CO-OPERATIVE BANK

1. Easy to form:
The formation of a cooperative society is very simple as compared to the
formation of any other form of business organisations. Any ten adults can join
together and form a cooperative society. The procedure involves in the
registration of a cooperative society is very simple and easy. No legal
formalities are required for the formation of cooperative society.
2. No obstruction for membership:
Unless and otherwise specifically debarred, the membership of cooperative
society is open to everybody. Nobody is obstructed to join on the basis of
religion, caste, creed, sex and colour etc. A person can become a member of a
society at any time he likes and can leave the society when he does not like to
continue as ; member.
3. Limited liability:
In most cases, the liabilities of the members of the society is limited to the
extent of capital contributed by them. Hence, they are relieved from the fear of
attachment of their private property, in case of the society suffers financial
losses.
4. Service motive:
In Cooperative society members are provided with better good and services at
reasonable prices. The society also provides financial help to its members < the
concessional rates. It assists in setting up production units and marketing of
produces c small business houses so also small farmers for their agricultural
products.

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

5. Democratic management:
The cooperative society is managed by the elected members from and among
themselves. Every member has equal rights through its single vote but can take
active part in' the formulation of the policies of the society. Thus all member are
equally important for the society.
6. Stability and continuity:
A cooperative society cannot be dissolved by the death insolvency, lunacy,
permanent incapability of the members. Therefore, it has stable life are
continues to exist for a longer period. It has got separate legal existence. New
members m< join and old members may quit the society but society continues
to function unless are otherwise all members unanimously decided to close the
same.
7. Economic operations:
The operation carried on by the cooperative society economical due to the
eliminations of middlemen. The services of middlemen are provided by the
members of the society with the minimum cost. In the case of cooperative
society, the recurring and non-recurring expenses are very less. Further, the
economies of scale-ma production or purchase, automatically reduces the
procurement price of the goods, thereby minimises the selling price.
8. Surplus shared by the members:
The society sells goods to its members on a nominal profit. In some cases, the
society sells goods to outsiders. This profit is utilised for meeting the day-to-day
administration cost of the society. The procedure for distribution of profit that
some portion of the surplus is spent for the welfare of the members, some
portion kept reserve whereas the balance shared among the members as
dividend on the basis of this purchases.

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

9. State patronage:
Government provides special assistance to the societies to enable them to
achieve their objectives successfully. Therefore, the societies are given financial
loan at lower rates. Government also extends many type of subsidies to
cooperative societies strengthening their financial stability and sustainable
growth in future.

DISADVANTAGES OF CO-OPERATIVE BANK

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

Despite many an advantages, the cooperative society suffer from certain

limitations c drawbacks. Some of these limitations, which a cooperative form of
business has are as follows:
1. Limited resources:
Cooperative societies financial strength depend on the cap contributed by its
members and loan raising capacity from state cooperative banks. The
membership fee is limited for which they are unable to raise large amount of
resources as their members belong to the lower and middle class. Thus,
cooperative^ are not suitable for the large scale business which require huge
capital.
2. Inefficient management:
A cooperative society is managed by the members only. They do not possess
any managerial and special skills. This is considered as major drawback of this
sector. Inefficiency of management may not bring success to the societies.
3. Lack of secrecy:
The cooperative society does not maintain any secrecy in business because the
affairs of the society is openly discussed in the meetings. But secrecy is very
important for the success of a business organisation. This paved the way for
competitors to compete in more better manner.
4. Cash trading:
The cooperative societies sell their products to outsiders only in cash. But, they
are usually from the poor sections. These persons require to avail credit
facilities which is not possible in the case of cooperatives. Hence, marketing is a
shortcoming for the cooperatives.

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

5. Excessive Government interference:

Government put their nominee in the Board of management of cooperative
society. They influence the decision of the Board which may or may not be
favourable for the interest of the society. Excessive state regulation, interference
with the flexibility of its operation affects adversely the efficiency of the
management of the society.
6. Absence of motivation:
The members may not feel enthusiastic because the law governing the
cooperatives put some restriction on the rate of return. Absence of relationship
between work and reward discourage the members to put their maximum effort
in the society.
7. Disputes and differences:
The management of the society constitutes the various types of personnel from
different social, economical and academic background. Many a times they
strongly differs from each other on many important issues. This becomes
detrimental to the interest of the society. The different opinions and disputes
may paralyses the effectiveness of the management.

CHAPTER 6
COMPANY PROFILE
SARASAWAT BANK

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

Saraswat Bank pronunciation (helpinfo) is an urban co-operative banking

institution based in Maharashtra, India and operating as a co-operative bank
since 1918.[2]
In 1988, the Bank was conferred with "Scheduled" status by Reserve Bank of
India. The Bank is the first co-operative bank to provide Merchant Banking
services. The Bank got a permanent license to deal in foreign exchange in 1978.
Presently the Bank is having correspondent relationship in 45 countries
covering 9 currencies with over 125 banks. In 1992, the Bank completed 75
years. Platinum Jubilee Celebrations were inaugurated on 14 September 1992
and the Bank also crossed the business level of Rs. 700 Crores. It has 267
branches nationwide.
The beginning of the 21st century has been a giant leap forward for the Bank.
The Bank chose a path of organic/inorganic growth and its pace of growth
accelerated .The Bank's total business which was around Rs.4000 Crore in 2000
almost tripled to Rs.15295 Crore in 2007.
In the year 2008, the Bank launched a Branding Initiative . The purpose of such
an exercise was to reconfirm the thrust of the Bank on its core values, which can
be summed up as a "Sense of Belonging".
In the last two decades the Bank has witnessed a steady growth in business and
also taken several Strategic Business Initiatives such as undertaking Business
Process Reengineering initiative, merging seven Cooperative Banks and then
consciously nurturing them. The Bank tied up with VISA International for
issuance of Debit Cards. The Bank has also successfully launched RuPay EMV
Debit Card during the year 2013-14. The Bank was the first to achieve this mile
stone in respect of RuPay EMV Card along with Bank of Baroda.

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

In 2011, the Bank was granted permission for All India Area of Operation by
Reserve Bank of India. The Bank has an ambitious business expansion plan in
place to have a presence in all major cities of the country, and to reach a
business levels of Rs. 50,000 Crores by 2016 and Rs. 1,00,000 Crores by 2018
respectively.
The Bank has a network of 267 fully computerized branches as on 31 March
2014 covering six states viz. Maharashtra, Gujarat, Madhya Pradesh, Karnataka,
Goa and Delhi. The Bank provides 24-hour service through ATMs at 205
locations.
As on 31 March 2014 the Bank's business had surpassed Rs. 39,000 Crores. The
Bank has retained its coveted position as ZERO NET NPA Bank for the tenth
successive year.

ABOUT US

The Bank has a very humble but a very inspiring beginning. On 14th
September 1918, "The Saraswat Co-operative Banking Society" was founded.
Mr. J.K. Parulkar became its first Chairman, Mr. N.B. Thakur, the first Vice20

COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

Chairman, Mr. P.N. Warde, the first Secretary and Mr. Shivram Gopal
Rajadhyaksha, the first Treasurer. These were people with deep and abiding
ideals, faith, vision, optimism and entrepreneurial skills. These dedicated men
in charge of the Society had a commendable sense of service and duty imbibed
in them. Even today, our honorable founders inspire a sense of awe and respect
in the Bank and amongst the shareholders.
The Society was initially set up to help families in distress. Its objective was to
provide temporary accommodation to its members in eventualities such as
weddings of dependent members of the family, repayment of debt and
expenses of medical treatment etc. The Society was converted into a fullfledged Urban Co-operative Bank in the year 1933.
The Bank has the unique distinction of being a witness to history. The Bank,
which was originally founded in 1918, i.e. close on the heels of the Russian
Revolution, also witnessed as a Society and as Bank - the First World War, the
Second World War, India's freedom Movement and the glorious chapter of
post-independence India. During this cataclysmic cavalcade of history, the
Bank as a financial institution and its members could not of course remain
unaffected by the economic consequences of the major events. The two wars in
particular brought in their wake, paucities of all kinds and realities and stand
by its members in distress as a solid bulwark of strength. The Founder
Members and the later-day managements of the Bank continued to demonstrate
their unwavering faith in the destiny of the common man and the co-operative
movement and they encouraged the shareholders to save despite all odds.
Thanks to these sustained and assiduous efforts over 25 years after its
inception, the Bank had gained a strong foundation in terms of its membership,
resources, assets and profits. By 1942, the Bank was fulfilling all the banking
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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

needs of its customers.

During the late fifties, the Bank grew from strength to strength. The Bank had
established five branches within the city of Mumbai and one each at Pune and
Belgaum. In its 50th year, the Bank chose a bee motif to symbolise the Bank's
emblem - a fitting and appropriate characteristic of a Bank that believed in
hard work, a search for all that is good, a team spirit to achieve its objectives
and selfless service to its members and customers. The Bank had grown in
stature, progressed in its social and economic objectives and produced an
image of what an ideal bank should be. Resultantly, in the year 1977-78, the
Bank's gross income crossed the Rs.3.00 crore mark for the first time.
In 1988, the Bank was conferred with "Scheduled" status by Reserve Bank of
India. The Bank is the first co-operative bank to provide Merchant Banking
services. The Bank got a permanent license to deal in foreign exchange in
1978. Presently the Bank is having correspondent relationship in 45 countries
covering 9 currencies with over 125 banks. In 1992, the Bank completed 75
years. Platinum Jubilee Celebrations were inaugurated on 14th September,
1992 and the Bank also crossed the business level of Rs. 700 Crores.
The beginning of the 21st century has been a giant leap forward for the Bank.
The Bank chose a path of organic/inorganic growth and our pace of growth
accelerated .The Bank's total business which was around Rs.4000 Crore in
2000 almost tripled to Rs.15295 Crore in 2007.
In the year 2008, the Bank launched a Branding Initiative . The purpose of
such an exercise was to reconfirm the thrust of the Bank on its core values,
which can be summed up as a "Sense of Belonging". The name of the Bank
should always inspire a Sense of Belonging in all its stakeholders and the Bank
continues to fulfill the changing needs and expectations of the customer with
22

COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

unflinching gusto and aplomb.

MISSION STATEMENT
"To emerge as one of the premier and most preferred banks in the country by
adopting the highest standards of professionalism and excellence in all the
areas of working"
MILESTONES
In the last two decades the Bank has witnessed a steady growth in business and
also taken several Strategic Business Initiatives such as undertaking Business
Process Reengineering initiative, merging seven Cooperative Banks and then
consciously nurturing them.

The Bank tied up with VISA International for

issuance of Debit Cards.

In 2011, the Bank was granted permission for All India Area of Operation by
Reserve Bank Of India.The Bank has an ambitious business expansion plan in
place to have a presence in all major cities of the country, reach a business
level of Rs.50000 Crores by 2016 and Rs.100000 crores by 2021.
The Bank has a network of 267 fully computerized branches as on 31st
March, 2015 covering six states viz. Maharashtra, Gujarat, Madhya Pradesh,
Karnataka, Goa and Delhi. The Bank is providing 24-hour service through
ATMs at 219 locations. As on 31st March, 2015 the Bank's business had
surpassed Rs. 44000 Crores.
It is a matter of immense pride for the Bank that its new Corporate Office at
Prabhadevi,Mumbai has become operational. The office establishes our strong
presence in the financial capital of the country. The massive edifice in crystal
glass in the heart of Mumbai gently reminds everyone of the NumeroUno position which the Bank holds in the Cooperative Sector. The usage of
23

COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

state of art technology coupled with personal ambience to make everybody

comfortable once again reiterates the Bank's adherence to "Think Global, Act
Local". The address of our new Corporate Office is as under:

PROFILE
"Service to the Common Man" has been the motto of Saraswat Bank for the
last 96 years. Bank in spite of its growth in size has been able to offer to the
customers the dual advantage of "Ability of Big Banks and Agility of Small
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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

Banks"
The Bank still continues to function with the glorious tradition in public
services Besides being the largest Urban Co-operative Bank in India, Saraswat
Bank has now become the largest in Asia. Saraswat Bank has now 267 fully
computerized branches as of 31st March 2015, 4 Zonal Offices and departments
located across 6 States viz. Maharashtra, Goa, Gujarat, Madhya Pradesh,
Karnataka and Delhi.
Saraswat Bank attributes this success to its undying spirit to serve the common
man and to the sharpening of its competitive edge by constantly upgrading
technology to match international standards. The Bank is fully computerised
and offers convenient working hours.
Saraswat Bank has introduced a wide range of credit schemes at attractive
interest rates, which has become very popular, especially among the middleclass in view of the easy repayment plans. Bank offers attractive interest rates
on deposits and also various add on features at very market competitive rates.

CHAPTER 7
TYPES OF DEPOSITS OFFERED BY SARASWAT
BANK
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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

SAVING DEPOSIT
A Savings Account for everyone to inculcate the habit of saving and avoid thrift.
Bank offers you a host of convenient features and banking channels to transact
through. Personalized service coupled with technology enabled products is the
hallmark of our service.
Types of saving deposits are:o Regular Savings Account

o Akshay Salary Account

o CUBS Account for Kids

o Suvidha Savings Account

o My Money Savings Account

o Janhit Account

o CAMPUS Account for College

o Pradhan Mantri Jan Dhan

students

Yojana

Elite Savings Account

Elite Silver Savings Account
Elite Gold Savings Account
CURRENT DEPOSIT

Fasten your pace with a current account which offers you out of the world
service experience by combining personalized service with many appropriately
priced features. Our customer friendly staff will not leave any stone unturned to

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

make your experience a memorable one. Internet Banking, SMS Banking all
will allow you to Bank from the comfortable confines of your home and office.

Types of current deposit: Elite Current Account

Premium Current Account
Platinum Current Account

FIXED DEPOSIT
Lumpsum amount is deposited at one time for specific period. Higher rate of
interest is paid, which varies with the group of deposit. Withdrawals are not
allowed before the expiry of the period. Those who have surplus funds go for
fixed deposits.
RECURRING DEPOSIT
You can invest in small amounts every month and see the drop become an
ocean. Through this account you can invest small amounts of money every
month and end up with a large kitty on maturity. Bank also allows you facility
to give standing instructions by which the amount is debited from your account
every month.

LOANS
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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

It is normally for short term say a period of one year or medium term say a
period of five years. Nowadays, banks do lend money for longer term.
repayment of money can be in the form of installments spread over a period of
time or in a lumpsum amount. interest is charged on actual amount sanctioned,
whether withdrawn or not. The rate of interest may be slightly lower than what
is charged on overdraft and cash credits. Loans are normally secured against
tangible assets of the company.

TYPES OF LOANS OFFERED BY SARSWAT BANK

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

PERSONAL LOANS
These are given to individual customers for meeting their personal
requirements. These loans are repayable in monthly installments. Saraswat cooperative bank offers various loans to its customers. Bank takes care of its
customers by offering comprehensive loan packages at extremely competitive
rates, without any hidden cost. Our personalized service coupled with state of
the art technology at absolutely market competitive rates shall make your
banking experience truly memorable one. The types of personal loans are as
follows:
Privilege loan: privilege loan is for personal expenses and only
individuals employed with reputed public limited companies and
repayment can be done maximum in 60 months
Samruddhi scheme: samruddhi scheme is to meet urgent financial needs
of individuals and overdraft facility is subject to renewal every year.
Multi-purpose loan: multi-purpose loan is for purchase of consumer
durables, computer, two wheelers, house repairs, medical/ travels/
education/ other expenses. maximum loan amount is Rs 2 lakhs
EDUCATION LOAN
The purpose of this loan is for studies in India or abroad. The applicant of
this loan is the parent of the student. student will be the co-applicant. The
amount of loan for education in India is maximum Rs 10 lakhs and
maximum amount is Rs 20 lakhs for education abroad. the period for
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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

repayment of such loan is maximum 144 months inclusive of moratorium

period of maximum 36 months. The rate of interest charged on such loan is
14.5% p.a. Atleast two guarantures are required for application of loan up to
Rs 2 lakhs. The security of Rs 2 lakhs and two gurantures for the application
of loan above Rs 2 lakhs and upto Rs 5 lakhs for application of loan above
Rs 5 lakhs and upto Rs 20 lakhs securities required are Tangible security like lic, nsc, kbp, gold, rbi bonds or fd's with the
bank .
Mortgage of un encumberad .
one or more personal gurantes depending on the merits of the proposal.
0.5% of the loan amount is charged as processing fees for studies in
abroad.
documents required for application of education loan are
duly filed application form
admission related documents such as.
offer letter from universities/ college/ institue stating details of
course and admission procedure
in case of students going to usa than admission letter is required
passport copy ( in case of education abroad) or identify proof.
latest academic marksheet.
work experince proof if any.

loan related documents such as

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

KYC documents of applicants and guranters such as pancard ,

address proof, photograph
for salaried persons copies of salaries slip for last three months,
bank account statement for last six months, itr in form 16 for
last three years.
for businessman/ professionals copies of last three years audited
profit and loss and balance sheet, itr with computation for last
three years.
bank account statement for last 6 months.

VEHICLE LOAN
The purpose of this type of loan is for purchase of new cars .The eligibility
for such type of loan is
salaried person with one year confirmed sevice.
Businessman, professionals and commerical organisation.
The repayment for salaried class for this loan is maximum up to 84 months
and the repayment for business class is maximum up to 60 months.
The security for this loan is hypothecation of vehicle and gurantor depending
on merits of the proposal.
The processing fees for this loan is 0.5% of the loan amount.

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

CHAPTER 8

COMPANY PROFILE
ABHUDAYA BANK

Abhyudaya Co-op. Bank Ltd., one of the leading Urban Co-operative Banks
in India, in its outlook and approach, has the objective of progress and
prosperity of all. From a humble beginning in January 1964 as a Cooperative Credit society with a share capital of a merely Rs.5,000/- held by
83 members, today Abhyudaya Co-op bank has become one of the large
Urban Co-operative Banks with a "Scheduled Bank" status. The bank has
been converted into a Multi-State Scheduled Urban Co-op. Bank w.e.f.
11th January, 2007. The area of operation which was restricted to the State of
Maharashtra has now been extended to Karnataka State. Currently, the
capital base of the bank stands at Rs. 45.78 crores and Reserves and
surpluses at Rs.671.95 crores as on 31.03.2009. The bank has 1, 23,011
members and more than 12 lakhs depositors. The Bank has seen a
tremendous growth in deposits. The deposits of the bank are over Rs.
3174.81 crores as on 31.03.2009, which were Rs. 2625.51 crores as at the
end of the financial year 2008. The loans and advances stood at Rs. 1856.39
crores as on 31.03.2009. The bank had posted a net income of Rs. 92.36
crores as on 31.03.2009. The growth rate of the bank compares well with
that of others in the sector. The Bank has maintained a steady growth. The
bank has been paying dividend @ 15% to its members which is maximum
permissible as per the MCS Act.
The Bank has launched different loan schemes tailor-made to suit the needs
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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

of various customers. The schemes aim at providing loans for purchase or

construction of residential premises, repair/renovation of house property,
purchase of car, seeking higher education and for purchase of household
consumer durable. One of the loan schemes, viz. "Udyog Vikas Yojana" is
specially designed for the benefit of small entrepreneurs and businessmen.
The procedure for sanctioning of loans under the schemes has been
simplified and relaxed with a view to attract new customers and facilitating
speedy sanction of loans. The Bank has total 75 branches including a Mobile
Bank at Navi Mumbai. Bank is committed to spread network of branches
throughout the State and provide much needed banking services to the
population, which has been deprived of the banking facilities.
Innovative Banking is another area of operation that Abhyudaya is currently
focusing on for a sustainable long term growth. The Bank has always
endeavored for providing satisfactory customer service with the help of the
latest technology. The Bank has provided fully computerised services to its
valued clients. Bank is offering 11 Hours fully computerised services at 15
branches and 24 hours ATM service at 42 branches.

Milestones:
1964- Established as Co-operative Credit Society.
1965- Converted into a Bank with one Branch at Abhyudaya Nagar.
1985-Inauguration of Banks own Building, Staff Training College and
Auditorium at
Vashi, RBI Permitted the Bank to open and maintain NRI Accounts.
1986 - Instituted Educational Prizes to the children of Members and Employees.
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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

Became 3rd Biggest Urban Co-op. Bank in India.

1988 - Became Scheduled Bank.
1990 - Inauguration of Banks own Building at New Panvel.
1995- Decision to set up Development Reserve Fund to undertake special
schemes.
1997- All Branches fully computerized.
1999- Eleven Hours & Sunday Banking started in 16 Branches.
2000- ATM installed at 3 branches.
2003- Opened 40th Branch with ATM Facility & 11 hours and Sunday banking
At Lokmanya Nagar (Thane).
2004- Started RTGS and NDS Facilities.
2006- Merger of Citizen Co-operative Bank Ltd., with 13 branches.
2007- Registration of the Bank under Multi-State Co-Op Societies Act on
11th Jan., 2007.
2008- Merger of Shri Krishna Co-operative Bank Ltd, Vadodara
- Merger of Janata Sahakari Bank, Udupi
- Foreign Exchange Department we inaugurated
2009 - Opened Bhayander branch And Dahisar branch
Opened recovery call centre at Parel

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

CHAPTER 9

SERVICES PROVIDED BY ABHYUDAYA BANK

Deposit:Domestic Deposit:Saving Deposit
Current Deposit
Term Deposit
Abhyudaya Banks other Saving Bank account Products:1.Abhyudaya Zero Balance Saving Bank Account for Salaried Person
(SBZROBAL):
An individual working in Govt. Org., Semi Govt. Org., Agents of Life &
General Insurance, employees of Educational Institutions & Public ltd.
Companies. Accounts can also be opened of the employees of Business
Concerns/ Private/ Industrial units (Min 20 Employees) & whose company
accounts are with our bank branches.
2. Abhyudaya SB Youth Accounts :
for School /College going Students.
3.Basic Saving Bank Accounts (BSB). :
No introduction required & zero minimum balance.

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

4.Abhyudaya Small Saving Accounts (SSB): suitable for people of low

means. Zero minimum Balance.
5.Savings Bank Account with Zero Balance to MID/QID Deposit
Holders:
MID/QID depositors having minimum Term Deposit of Rs.10,000/- will be
allowed to open Savings Bank Account with Zero balance

Types of Loans and Credit Facilities Given by Banks

The entire operations of the banking industry revolve around obtaining deposits
and granting loans and different credit facilities to its customers for viable
projects.
The different types of loans and credit facilities given by the banks can be
broadly classified into two types.
Retail Lending
Commercial lending
Retail Lending:
Retail finance has become the preferred business of banks because of its higher
spreads and low risk of delinquency. The Indian consumer is fast changing his
habits, borrowing money to buy the product he wants, not content with buying
what he can afford. The resultant consumer boom is what market strategists
explain as the key to the access of the Indian retail finance market. Retail
finance today is a win-win system in which everyone stands to gain. For the
Indian consumer, it is an opportunity to upgrade his standard of living right now
instead of waiting for years for his savings to accumulate. For manufacturers, it
stimulates demand and lowers inventory. For middlemen, its a sales boosting

36

COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

device. For players of consumer finance i.e. banks and lending institutions, its a
means of profit generation.
There are a number of retails loans given by banks to its customers, which
would suite their requirements. They are stated as under:
Housing Loan
Education loan
Mortgage loan
Personal loan
Senior citizen pension scheme
Rent scheme
Consumer durables loan
Auto finance loan
Trade finance loan
Loan against National savings certificate (NSC)
Loan against Kisan Vikas patra (KVP)
Loan against fixed deposit receipt (FDR)
Loan against RBI bonds
Loan against LIC
Loan against FCNR
Overdraft against FD/NSC/KVP

Commercial Lending:
The entire commercial lending can be broadly classified as fund based
commercial credit facility and non-fund based commercial credit facility.

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

Fund Based Bank Facilities:

Term Loans:
Term loan is an installment credit repayable over a period of time in
monthly/quarterly/half yearly / yearly installments. Term loan is generally
granted for creation of fixed assets required for long-term use by the unit. Term
loans are further classified in three categories depending upon the period of
repayment as under:

Short term repayable in less than 3 years.

Medium term loans repayable in a period ranging from 3 years to 7 years.
Long-term loans repayable in a period over 7 years.

Cash Credit Facility:

A major part of working capital requirement of any unit would consist of
maintenance of inventory of raw materials, semi finished goods, finished good,
stores and spares etc. In trading concern the requirement of funds will be to
maintain adequate stocks in trade. Finance against such inventories by banks is
generally granted in the shape of cash credit facility where drawing will be
permitted against stocks of goods. It is a running account facility where deposits
and withdrawals are permitted. Cash credit facility is of two types (depending
upon the type of charge on goods taken as security by bank)
(i)

Cash credit pledge:

When the possession of the goods is with the bank and drawings in the

account are linked with actual movement of goods from / to the possession of
the bank. The bank exercises the physical control of the goods.
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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

(ii) Cash credit hypothecation:

When the possession of the goods remains with the borrower and a
floating charge over the stocks is created in favour of the bank. The borrower
has complete control over the goods and the drawings in the account are
permitted on the basis of stock statements submitted by the borrower.

Overdraft Facility:
Overdrawing permitted by the bank is current account is termed as an
overdraft facility. Overdraft may be permitted without any security as clean
overdraft for temporary periods to enable the borrower to tide over some
emergent financial difficulty. Secured overdraft facility is against fixed
deposits, NSC, and other securities.

Bill Finance:
This facility is against bills of sales raised or book debts.
Export Finance / Packing Credit:
Bank grants export credit on very liberal terms to meet all the financial
requirements of exporters. The bank credit for exports can broadly be divided in
two groups as under:

Pre Shipment advances / packing credit advances:

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

Financial assistance sanctioned to exporters to enable them to

manufacture / procure goods meant for export and arrange for their eventual
shipment to foreign countries is termed as per shipment credit.

Post shipment credit:

The bills purchase / discount facility granted to exporters is grouped as
post shipment advance.

Non Fund Based Bank Facilities:

Credit facilities, which do not involve actual deployment of funds by banks
but help the obligations to obtain certain facilities from third parties, are termed
as non-fund based facilities. These facilities include issuance of letter of credit,
issuance of guarantees, which can be performance guarantee / financial
guarantee.

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

LETTER OF CREDIT (LC)

A LC represents a commitment of a bank to pay the seller of goods or
services a certain amount provided he resents stipulated documents evidencing
the shipment of goods or the performance of services within a prescribed period
of time. LC can be of two types:

Inland
Foreign
In other words LC is the undertaking of a bank to make payment on behalf of a
person to a third party with a conditional undertaking. There are four principle
parties to the LC. They are stated as under.

Applicant (opener): He is the buyer of the goods. LC is opened at

the request of the buyer, as per his instructions.

Issuing Bank (opening bank): The bank (buyers bank) that issues
the LC and undertakes conditional payment, at the request of the
opener / buyer / importer customer.

Beneficiary: He is the seller of the goods. LC is issued in his

favour enabling him to obtain payment on submission of stipulated
documents / compliance with the terms and conditions of LC.

Advisory bank: This is the bank which a normally located in the

country of the seller that advises the credit to the beneficiary,
establishes the genuineness of the credit.

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

COMPARISON OF FINANCIAL RATIO

CAPITAL
BANKS IN RS.
(BILLION)

2015

2014

% change

SARASWAT BANK

1676877980

1269092940

132.13

ABHYUDAYA BANK

1014453000

886129000

114.48

BANKS IN RS. (CRORE) 2015

2014

% change

SARASWAT BANK

2393951034
43

2114433164
05

113.21

ABHYUDAYA BANK

9330896800

8036398900

116.10

BANKS IN RS. (CRORE) 2015

2014

% change

SARASWAT BANK

1547005019
78

1502341505
95

102.97

ABHYUDAYA BANK

5700471200

5108885500

111.57

DEPOSITS

ADVANCES

INVESTMENT
BANKS IN RS. (CRORE) 2015

2014

% change

SARASWAT BANK

7804742067
5

6443998335
3

121.11

ABHYUDAYA BANK

3696828722

3150096700

117.35

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

CHAPTER 10
RBI POLICIES FOR CO-OPERATIVE BANK
The RBI appointed a high power committee in May 1999 under the
chairmanship of Shri . K. Madhava Rao, Ex-Chief Secretary, Government of
Andhra Pradesh to review the performance of Urban Co-operative Banks
(UCBs) and to suggest necessary measures to strengthen this sector. With
reference to the terms given to the committee, the committee identified five
broad objectives:

To preserve the co-operative character of UCBs

To protect the depositors interest
To reduce financial risk
To put in place strong regulatory norms at the entry level to sustain the
operational efficiency of UCBs in a competitive environment and evolve
measures to strengthen the existing UCB structure particularly in the

context of ever increasing number of weak banks

To align urban banking sector with the other segments of banking sector
in the context of application or prudential norms in to and removing the
irritants of dual control regime
RBI has extended the Off-Site Surveillance System (OSS) to all nonscheduled urban co-operative banks (UCBs) having deposit size of Rs.
100 Crores and above.

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

PROBLEMS OF CO-OPERATIVE BANK

Duality of control system of co-operative banks
However, concerns regarding the professionalism of urban co-operative banks
gave rise to the view that they should be better regulated. Large co-operative
banks with paid-up share capital and reserves of Rs.1 lakh were brought under
the purview of the Banking Regulation Act 1949 with effect from 1st March,
1966 and within the ambit of the Reserve Banks supervision. This marked the
beginning of an era of duality of control over these banks. Banking related
functions (viz. licensing, area of operations, interest rates etc.) were to be
governed by RBI and registration, management, audit and liquidation, etc.
governed by State Governments as per the provisions of respective State Acts.
In 1968, UCBs were extended the benefits of deposit insurance. Towards the
late 1960s there was debate regarding the promotion of the small scale
industries. UCBs came to be seen as important players in this context. The
working group on industrial financing through Co-operative Banks, (1968
known as Damry Group) attempted to broaden the scope of activities of urban
co-operative banks by recommending these banks should finance the small and
cottage industries. This was reiterated by the Banking Commission in 1969.
The Madhavdas Committee (1979) evaluated the role played by urban cooperative banks in greater details and drew a roadmap for their future role
recommending support from RBI and Government in the establishment of such
banks in backward areas and prescribing viability standards. The Hate Working
Group (1981) desired better utilization of banks surplus funds and that the
percentage of the Cash Reserve Ratio (CRR) & the Statutory Liquidity Ratio
(SLR) of these banks should be brought at par with commercial banks, in a
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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

phased manner. While the Marathe Committee (1992) redefined the viability
norms and ushered in the era of liberalization, the Madhava Rao Committee
(1999) focused on consolidation,
control of sickness, better professional standards in urban co-operative banks
and sought to align the urban banking movement with commercial banks. A
feature of the urban banking movement has been its heterogeneous character
and its uneven geographical spread with most banks concentrated in the states
of Gujarat, Karnataka, Maharashtra, and Tamil Nadu. While most banks are unit
banks without any branch network, some of the large banks have established
their presence in many states when at their behest multi-state banking was
allowed in 1985. Some of these banks are also Authorized Dealers in Foreign
Exchange.

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

CHAPTER 11

CONCLUSION
Almost all the Banks offer similar features and facilities with their Savings
accounts. There are certain reasons for existing customers of Saving Account
of any Bank to shift to another Bank.
The level of service in terms of delivering whatever is promised, fast
response in case of problems, is the most important benefit that the
customers seek, from the Bank they have a Saving Account with.
1. Network reach and visibility of a Bank is a very important criterion for
the customer while opening a Saving Account. We can also conclude
from our analysis that network reach in terms of Branches and ATMs is
directly proportional to the market share in case of Private Players.
2. In case of a new customer, if a bank approaches it first for opening a
Saving Account with them, then there is a good chance for the bank of
getting many future businesses and cross sales from the deal.
3. Aggressive Marketing is the key to increasing the market share in this
area, since the market has a lot of potential both in terms of untapped
market .

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COMPARITIVE STUDY BETWEEN TWO CO-OPERATIVE BANKS

CHAPTER 12

WEBILOGRAPHY

www.moneycontrol.com
www.saraswatbank.com
www.abhyudayabank.com
www.rbi.org.in

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