"Analyzing Deposits and Loans: Insights into Cooperative Bank Dynamics"

CHAPTER NO 1
INTRODUCTION
1.1 INTRODUCTION TO THE CENTRAL COOPERATIVE BANK

The Central Cooperative Bank (CCB) is a financial institution that plays a pivotal role in
the cooperative banking system, primarily serving the needs of cooperative societies and
their members.

A co-operative bank is a small-sized, financial entity, where its members are the owners and
customers of the Bank. They are regulated by the Reserve Bank of India (RBI) and are
registered under the States Cooperative Societies Act.

The cooperative banks, differ from joint stock banks in the following manner:

(i) Cooperative banks issue shares of unlimited liability, while the joint stock banks
issue shares of limited liability.

(ii) In a cooperative bank, one shareholder has one vote whatever the number of shares
he may hold. In a joint stock bank, the voting right of a shareholder is determined by
the number of shares he possesses.

(iii) Cooperative banks are generally concerned with the rural credit and provide
financial assistance for agricultural and rural activities. Joint stock companies are
primarily concerned with the credit requirements of trade and industry.

(iv) Cooperative banking in India is federal in structure. Primary credit societies are at
the lowest rung. Then, there are central cooperative banks at the district level and state
cooperative banks at the state level. Joint stock banks do not have such a federal
structure.

(v) Cooperative credit societies are located in the villages spread over entire country.
Joint stock banks and their branches mainly concentrate in the urban areas, particularly
in the big cities

1.2 DEFINITION

A Central Cooperative Bank (CCB) is a financial institution that acts as an apex body for
cooperative societies, particularly those involved in banking activities .
or
A co-operative bank is a financial entity which belongs to its members, who are
at thes a m e t i m e t h e o w n e r s a n d t h e c u s t o m e r s o f t h e i r b a n k . C o -
o p e r a t i v e b a n k s a r e o f t e n created by persons belonging to the same local or
professional community or sharing acommon interest. Co-operative banks generally
provide their members with a wide rangeof banking and financial services.

 Initiatives towards development of co-operative banks

 Reorganisation of PACS’s (a scheme by NABARD)

 Licensing of new USB’s liberalised.6

 National Co-operative Bank of India (NCBI) was registered in 1993.

(Multi-stateco-operative society)-it has no regulatory functions

 Co-operative development bank (set up by NABARD).

 Lending and borrowing rates of all co-operative

h a v e b e e n m o r e o r l e s s completely freed or deregulated.

 Allowing all PCB’s to undertake equipment leas ing and hire-purchase

financing.

 Establishments:

 Cooperative bank performs all the main banking func

t i o n s o f d e p o s i t mobilisation, supply of credit and provision of remittance
facilities.

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

 Cooperative Banks provide limited banking products and are fun

c t i o n a l l y specialists in agriculture related products. However, co-
operative banks now provide housing loans also.

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

 Co-operative Banking in India

The Co-operative Banks in India are governed as per the Banking Regulations Act 1949
and Banking Laws (Co-operative Societies) Act, 1955.

These Banks have been opened with the motto of ‘no-profit-no-loss’ and thus, do not seek
for profitable ventures and customers only. As the name suggests, the main objective of Co-
operative Banks is mutual help.

Given below are a few important features of Co-operative Banking in India:

  They work on the principle of ‘one person, one vote’. Since these banks are owned
by the members, a Board of Directors is chosen democratically and then they are
responsible for controlling the Organisation
 Farmers can avail agricultural loans on minimum interest rates from the Co-
operative Banks
 Providing easy and accessible loans and credit benefits in the rural areas with scarce
banking facilities
 The annual profit earned is spent on financial reserves and required resources and a
part of it is distributed among the Co-operative members, as per the prescribed
limitations
These institutions play a critical role in last-mile credit delivery and in extending financial
services across the length and breadth of the country through their geographic and
demographic outreach.

1.3 HISTORY -

Cooperative movement in India was started primarily for dealing with the problem of
rural credit. The history of Indian cooperative banking started with the passing of
Cooperative Societies Act in 1904. The objective of this Act was to establish
cooperative credit societies “to encourage thrift, self-help and cooperation among
agriculturists, artisans and persons of limited means.”

Many cooperative credit societies were set up under this Act. The Cooperative
Societies Act, 1912 recognised the need for establishing new organisations for
supervision, auditing and supply of cooperative credit. These organisations were-

 A union, consisting of primary societies

 the central banks; and
 provincial banks.

Although beginning has been made in the direction of establishing cooperative societies
and extending cooperative credit, but the progress remained unsatisfactory in the pre-
independence period. Even after being in operation for half a century, the cooperative
credit formed only 3.1 per cent of the total rural credit in 1951-52.
1.4 STRUCTURE

 Urban Cooperative Banks (UCBs)

 They operate in urban and semi-urban areas.

 They mainly lend to small borrowers and businesses.
 Based on their regulation regime, they are categorized into two types –
Scheduled Banks and Non-Scheduled Banks.

 Rural cooperative Banks (RCBs)

 They focus on serving the financial needs of people in rural areas.

 Depending on the type of lending, they are divided into 2 sub-categories – Short-
Term Structures, and Long-Term Structures

 Short – Term structures

 They lend upto 1 year for purposes such as cultivation activities, buying seeds
and fertilizers etc.
  They have a 3-tier setup.

 State Cooperative Banks

 Each state has its own State Cooperative Bank, which is the apex body for
cooperative banks in that particular state.
 They operate at the state level.
 It acts as the mediator between RBI and NABARD on the one side and Central or
District Cooperative Bank and Primary Agricultural Credit Societies on the other
side.

District Cooperative Central Banks (DCCBs)

 They operate at the District level.

 They get loans from the State Cooperative Bank and grant loans to Primary
Agricultural Credit Societies and individuals.

 Primary Agricultural Credit Societies (PACS)

 Primary Agricultural Credit Society (PACS) is a basic unit and smallest

cooperative credit institution in India.
 They operate at the Gram Panchayat and village level.
 They provide short-term loans (1 year to 3 years) to its members for agricultural
purposes.

 Long-Term Structures

 They lend to meet medium and long-term fund requirements (1.5 years – 25
years) for purposes such as land development, purchase of pumps, etc.
 They have a 2-tier set up:

 State Cooperative Agricultural and Rural Development Banks (SCARDBs)

State Cooperative Agriculture and Rural Development Banks (SCARDBs) focus on

providing long-term credit for agricultural and rural development purposes.
  Primary Cooperative Agricultural and Rural Development Banks (PCARDBs)

Primary Cooperative Agricultural and Rural Development Banks (PCARDBs) are aimed
at providing financial services to rural areas, especially to small and marginal farmers,
agricultural laborers, and rural artisans.

1.5 Function of cooperative bank

1. Financial Intermediation

 Accepting Deposits

Cooperative banks mobilize savings from their members and the public by offering
various deposit schemes such as savings accounts, fixed deposits, and recurring
deposits.

 Providing Loans and Advances

They extend credit facilities to members for various purposes, including personal
loans, business loans, agricultural loans, and housing loans. These loans often come
with favorable terms and lower interest rates compared to commercial banks.

2. Promoting Savings and Investment

 Encouraging Savings:

By offering attractive interest rates and a safe place to keep money, cooperative
banks encourage members to save regularly.

 Facilitating Investments:

They provide avenues for investment through fixed deposits, recurring deposits, and
other saving schemes, helping members earn returns on their savings.

3. Supporting Agriculture and Rural Development

 Agricultural Credit:

Cooperative banks provide short-term, medium-term, and long-term loans to farmers

for purchasing seeds, fertilizers, equipment, and for other agricultural needs.

 Rural Infrastructure Development:

 They finance projects aimed at improving rural infrastructure such as irrigation,
road construction, and rural electrification.

4. Providing Financial Services

 Payment and Settlement Services:

Cooperative banks offer facilities for money transfers, bill payments, and other
payment services.

 Insurance Services:

Many cooperative banks provide insurance products, including crop insurance,

health insurance, and life insurance, tailored to the needs of their members.

 Financial Advisory services :

They offer advisory services to members on financial planning, investment, and

credit management.

5. Enhancing Financial Inclusion

 Serving the Underserved:

Cooperative banks often operate in areas where commercial banks have limited
presence, thus providing essential banking services to underserved and unbanked
populations.

 Empowering Marginalized Communities :

By offering microfinance and credit facilities to small entrepreneurs, women, and

low-income groups, cooperative banks help in economic empowerment and poverty
alleviation.

6. Community Development and Welfare

 Educational and Training Programs:

Cooperative banks conduct training and educational programs to enhance the

financial literacy and skills of their members.

 Community Initiatives:

They support various social and community initiatives, such as health camps,
education scholarships, and community development projects.
 1.6 Role of cooperative bank

Cooperative banks play a vital role in the financial system, especially in developing
economies. Here are some key importance of cooperative banks:

 Financial Inclusion: Cooperative banks cater to the banking needs of rural and
semi-urban areas where traditional banks may not have a significant presence. They
provide banking services to small farmers, artisans, small-scale industries, and other
underprivileged sections of society, thus promoting financial inclusion.
 Credit to Agriculture and Rural Development: Cooperative banks often focus on
providing credit to agriculture and rural sectors. They offer loans at reasonable
interest rates to farmers for purchasing agricultural inputs, equipment, and for other
farming activities. This facilitates agricultural development and boosts rural
economies.
 Local Development: Cooperative banks are deeply rooted in their local
communities. They understand the local needs and challenges better than larger
commercial banks. By channeling funds into local businesses and development
projects, they contribute to the overall economic growth and development of their
regions.
 Support for Small-Scale Industries: Small and medium-sized enterprises (SMEs)
play a crucial role in economic development. Cooperative banks provide financial
assistance to these enterprises, helping them grow, create employment opportunities,
and stimulate economic progress.
 Customer-Oriented Approach: Cooperative banks typically have a more
customer-friendly approach compared to larger banks. They often offer personalized
services and maintain closer relationships with their customers, which fosters trust
and loyalty.
 Democratic Control and Governance: Cooperative banks operate on the principle
of democratic control, where each member has an equal say in the bank's decision-
making process, regardless of the amount of their deposits or shares. This
participatory governance model ensures transparency and accountability.
 Financial Stability: Cooperative banks contribute to financial stability by
diversifying the banking sector. They provide an alternative to traditional
commercial banks, reducing systemic risk and enhancing overall financial resilience.
 Promotion of Savings Culture: Cooperative banks encourage a culture of saving
among their members by offering various savings products and services. By
promoting thrift and financial discipline, they help individuals and families build
financial security for the future.
 Social Responsibility: Cooperative banks often engage in social welfare activities
and community development initiatives. They support education, healthcare,
environmental conservation, and other social causes, contributing to the overall
well-being of society.
1.7 Conclusion

In conclusion, the introduction of cooperative banks has been instrumental in

addressing the financial needs of underserved communities, promoting economic
development, and fostering a culture of financial inclusion. These banks play a pivotal
role in providing credit to agriculture, supporting rural development, and empowering
small-scale industries. Their customer-oriented approach, democratic governance
structure, and focus on social responsibility contribute to financial stability and
community welfare. As vital components of the banking sector, cooperative banks
continue to play a significant role in driving inclusive growth and ensuring equitable
access to financial services for all segments of society.
 THE CENTRAL CO-OPERATIVE BANK LIMITED

The Gurdaspur Central Cooperative Bank is a prominent financial institution located in

Gurdaspur, a city in the state of Punjab, India. Established to serve the banking needs of the
local populace, the bank operates under the cooperative banking model, which emphasizes
collective ownership and democratic control by its members. Since its inception, the
Gurdaspur Central Cooperative Bank has been dedicated to fostering financial inclusion and
socioeconomic development in the region. It offers a wide range of banking services
including savings and current accounts, loans, fixed deposits, and various other financial
products tailored to the requirements of its diverse customer base. As a vital part of the local
economy, the bank plays a crucial role in providing credit facilities to farmers, small
businesses, and individuals, thus contributing significantly to agricultural and rural
development. It is committed to promoting thrift, self-help, and cooperative principles,
thereby empowering its members and fostering community prosperity. With a focus on
transparency, accountability, and customer service excellence, the Gurdaspur Central
Cooperative Bank continues to uphold its mission of serving the financial needs of its
members while striving for the overall welfare and growth of communication. The bank was
founded on the principles of cooperation, self-reliance, and mutual assistance. These
principles were central to the cooperative movement in India, which sought to empower
rural populations by pooling their resources and working together to achieve common
economic goals.

2.1 PROFILE

The Gurdaspur Central Cooperative Bank Ltd., Gurdaspur registered on 25.10.1909 having
44 Branches in the district, 24 at focal points and 20at other places. The District had three
Tehsils I.e. Batala, Gurdaspur and Pathankot. But 2 years ago the Pathankot Tehsil was
declared as a District. This Bank is spread over 13 Blocks in both District i.e. Gurdaspur
and Pathankot Districts.
2.2 VISION

The vision of the Central Cooperative Bank Gurdaspur is to be a leading cooperative bank
in the region, dedicated to promoting sustainable development and financial inclusion. The
bank aims to empower the rural community by providing comprehensive financial services
that foster economic growth and improve the quality of life for its members and customers.

2.3 MISSION

The mission of the Central Cooperative Bank Gurdaspur encompasses the following key
objectives:

Financial Inclusion:

To ensure that financial services are accessible to all segments of the rural population,
including farmers, small business owners, and low-income families.

To promote savings habits and provide affordable credit to support the financial needs of
the rural community.

Agricultural Development:

To support agricultural activities by offering tailored financial products such as crop

loans, equipment financing, and dairy loans.

To enhance the productivity and income of farmers through timely and adequate
financial assistance.

Rural Upliftment:

To contribute to the socio-economic development of rural areas by financing

infrastructure projects, small enterprises, and self-help groups.

To provide financial literacy and education programs to empower rural populations with
the knowledge to manage their finances effectively.

Member-Centric Approach:

To operate on cooperative principles, ensuring that the interests and needs of its members
are at the forefront of all its activities.

To offer personalized and efficient banking services that cater to the unique requirements
of its customers.

Sustainable Growth:
 To achieve sustainable financial growth by maintaining a strong and stable financial
positio

Community Engagement:

To actively engage with the community through various outreach programs and
initiatives that promote economic and social well-being.

2.4 Achievements

 Technological Advancements: Adoption of new banking technologies to improve

service delivery and customer satisfaction.
 Growth in Membership: Significant increase in the number of members and account
holders over the years.
 Loan Disbursement: Successful disbursement of loans aimed at improving agricultural
productivity and rural development.

2.5 Branch Network

 The Central Cooperative Bank Gurdaspur has a network of branches spread across the
Gurdaspur district. These branches are strategically located to ensure accessibility for
rural customers.

 and provide them with easier access to financial services.

2.6- Growth and Expansion

 Early Growth: In its early years, the bank focused on building its membership base and
establishing trust within the rural community. It provided essential financial services
such as savings accounts, loans, and credit facilities to farmers and rural businesses.

 Branch Network Expansion: Over time, the bank expanded its branch network to
cover more areas within the Gurdaspur district. This expansion allowed it to reach a
larger number of rural customers

2.7 Role in Rural Development

 Supporting Small Businesses: Providing financial assistance to small and medium-

sized enterprises (SMEs) in rural areas.
 Promoting Financial Inclusion: Ensuring that even the most remote rural populations
have access to banking services.
 Providing Agricultural Credit: Offering loans for crop production, dairy farming, and
other agricultural activities.
2.8 Recent Developments

 Digital Banking Initiatives: The bank has embraced digital banking technologies,
offering services such as internet banking, mobile banking, and digital payment options
to its customers.
 Financial Literacy Programs: It has launched various programs to educate farmers and
rural entrepreneurs about the benefits of banking, savings, and credit management.

2.9 Operational Structure

 Branches: The bank has a network of branches across the Gurdaspur district, ensuring
accessibility to its services in rural and semi-urban areas.
 Member Societies: It operates through a network of primary agricultural credit societies
(PACS), which are its members and form the backbone of its cooperative structure.
 Governance: The bank is governed by a board of directors elected from among the
members. This board oversees the strategic direction and operational efficiency of the
bank.

2.10 Objectives

 Support for Agriculture: Providing timely and adequate credit to farmers to

enhance agricultural productivity.
 Rural Development: Promoting sustainable development in rural areas through
financial assistance and various developmental programs.
 Financial Empowerment: Ensuring financial inclusion by offering affordable
banking services to the underserved sections of society.

 Conclusion

The Central Cooperative Bank Gurdaspur plays a crucial role in the economic development
of the Gurdaspur district by providing essential financial services and support to the
agricultural and rural sectors. With its focus on cooperative principles and community
development, the bank continues to be a vital institution for fostering economic growth and
improving the quality of life for its members.
 CHAPTER-3

RESEARCH METHODOLOGY

3.1 INTRODUCTION

Research methodology is a way to systematically solve

ther e s e a r c h p r o b l e m . T h e r e s e a r c h m e t h o d o l o g y i n c l u d e s t h e v a r
i o u s m e t h o d s a n d techniques for conducting a research. Marketing res
earch is a systematic design,collection, analysis and reporting of data
a n d f i n d i n g r e l e v a n t s o l u t i o n t o a s p e c i f i c marketing situation or problem. or
The study aims to analyze the deposits and loans at the Central
Cooperative Bank, Gurdaspur. This involves understanding deposit
patterns, loan distribution, performance metrics, and the overall financial
health of the bank.

3.2 Research Design

 Type of study
 Descriptive
 Analytical

 Research Approach:
 Quantitative
 Qualitative

 Data Sources:
 Primary
 Secondary

3.3 Data Collection Methods

a. Data Sources

 Primary Data:
 Surveys and Questionnaires: Structured questions targeting customers and bank
employees.
 Interviews: Semi-structured interviews with key stakeholders such as bank managers,
employees, and customers.

 Secondary Data:
 Bank Records: Annual reports, financial statements, and performance reports of
cooperative banks.
 Published Literature: Journals, articles, and research papers on cooperative banking.
 Government and Regulatory Reports: Data from central banks and financial
regulatory authorities.

 Sampling Techniques

 Sampling Method: Stratified Random Sampling

 Sample Size: Determine based on the bank’s customer base and the desired
confidence level and margin of error.

5. Data Analysis

1. Qualitative Methods

Qualitative research methods are used to gain an understanding of underlying reasons,

opinions, and motivations. They provide insights into the problem or help to develop ideas
or hypotheses for potential quantitative research. Here are the main qualitative methods:

 Interviews:
o Structure: Can be structured, semi-structured, or unstructured.
o Purpose: Gather in-depth information from individuals.
o Method: One-on-one interaction, often face-to-face but can also be conducted via
phone or online.

 Focus Groups:
o Structure: Group discussion led by a moderator.
o Purpose: Collect diverse perspectives on a specific topic.
o Method: Interactive discussion, usually with 6-12 participants.

 Observation:
o Structure: Can be participant observation (researcher is involved in the activity)
or non-participant observation (researcher observes without involvement).
o Purpose: Gather data on naturally occurring behaviors in their usual contexts.
o Method: Field notes, video recordings.

 Content Analysis: Systematically categorizing textual information to identify

patterns, themes, or biases.
 Thematic Analysis: Identifying and analyzing patterns or themes within qualitative
data.
 Narrative Analysis: Examining the stories and personal accounts of participants to
understand their experiences and perspectives.
 Grounded Theory: Developing theories based on data collected during the research
process.
 .

2. Quantitative Methods

Quantitative research methods emphasize objective measurements and statistical analysis of

data collected through polls, questionnaires, and surveys, or by manipulating pre-existing
statistical data using computational techniques. Here are the main quantitative methods:

 Surveys:
 Structure: Structured instruments with closed-ended questions.
 Purpose: Collect data from a large number of respondents.
 Method: Questionnaires, online surveys, telephone surveys.

 Descriptive Statistics: Used to describe the basic features of the data. Examples
include:

 Measures of central tendency (mean, median, mode)

 Measures of dispersion (range, variance, standard deviation)
 Frequency distributions

 Inferential Statistics: Used to make inferences about the population based on sample
data. Examples include:

 Hypothesis testing (t-tests, chi-square tests)

 Analysis of variance (ANOVA)

 Nature of Data:
o Qualitative: Non-numerical data (text, video, audio).
o Quantitative: Numerical data.

 Approach:
o Qualitative: Exploratory, seeks to understand meanings and
experiences.
o Quantitative: Confirmatory, seeks to test hypotheses and
measure variables.

 Data Collection:
o Qualitative: Open-ended methods (interviews, focus groups).
o Quantitative: Structured methods (surveys, experiments).

 Data Analysis:
o Qualitative: Thematic analysis, content analysis.
o Quantitative: Statistical analysis, mathematical models.

 Outcome:
o Qualitative: Descriptive and thematic findings.
 o Quantitative: Statistical and generalizable findings.

 Deposits:
o Total deposit growth rate
o Average account balance
o Customer demographics and segmentation
o Types of deposit accounts (savings, fixed, recurring, etc.)
 Loans:
o Total loan growth rate
o Loan disbursement by sector (agriculture, SME, personal, etc.)
o Non-performing assets (NPAs) ratio
o Loan recovery rate

7. Ethical Considerations

 Confidentiality: Ensure the privacy of all participants by anonymizing data.

 Informed Consent: Obtain informed consent from all interview and survey
participants.
 Transparency: Clearly explain the purpose of the study and how the data will be
used.

8. Limitations of the Study

 Data Accessibility: Potential challenges in accessing complete and accurate bank

records.
 Response Bias: Possible biases in survey responses and interviews.
 Time Constraints: Limited time frame for data collection and analysis may affect
the depth of the study.

9. Expected Outcomes

 Detailed insights into the deposit and loan patterns at the Central Cooperative Bank,
Gurdaspur.
 Identification of key factors influencing customer satisfaction and bank
performance.
 Recommendations for improving deposit growth and loan management.

Conclusion

This research methodology provides a comprehensive framework to study the deposits and
loans at the Central Cooperative Bank, Gurdaspur. By combining quantitative and
qualitative approaches, the study aims to offer valuable insights and actionable
recommendations for the bank's strategic planning and operational improvements.