Profitability of Co-Operative Banks, Regional

Rural Banks and Commercial banks

 Phases in Indian Banking System
• Phase-1
• GENERAL BANK OF INDIA 1786(FIRST BANK)
• RESERVE BANK OF INDIA 1935
• SLOW GROWTH AND PERIODIC FAILURE
• THE BANKING COMPANY ACT 1949
• PEOPLE SAVED MOSTLY IN POSTAL DEPOSITS
 Phases in Indian Banking System
• Phase-2
• Nationalization of imperial bank of India and
• formation of sate bank of India(1955)
• Nationalization of SBI and Subsidiaries(1960)
• Nationalization of 14 Banks
• Insurance cover extended to deposits
• Creation of regional rural banks
 Phases in Indian Banking System
• Phase-3

• Entry of Foreign Banks

• Phone Banking and Net-Banking
• System become more convenient and swift
 Indian banking system

Banks in
India

Scheduled commercial banks Scheduled co-operative banks

Private Urban co State co

Nationalized Foreign Regional
sector operative operative
banks (PSU) banks rural bank
banks banks banks
 Reserve Bank of India
• Central bank of India
• Monetary policy Framing
• Currency issuing
• Bankers Bank
 Co-operative banks
• One of the most important constituent of
financial system
• Strong hold in rural India
• Started functioning in India almost 100 years
back
• Giving tough competition to Commercial
banks by providing all the facilities
• Modernization
• Many co-operative banks joining BANCS
 SWOT Analysis
Strengths Weakness

Rural India Facilities

Less documentation Small network

Local reach and personal Interaction Lack of trust

Less profitability

Opportunities Threats

Mergers with established banks Competition from commercial and private

sector banks
High scope in urban areas
Acquisitions
 Profitability
• The average growth of profits is 10 % per year
• The co-operative banks managed to reduce
the operating cost on an average by 15%.
• Reduction in NPA’s
• Good debt and Interest recovery in recent
years
Example: Sham Rao Bank
 Private Sector Banks
• Liberalization in 1994
• Modernization
• Information Technology in Banking