CHAPTER-I

INTRODUCTION TO SUBJECT

1.1 THEORETICAL FOUNDATION
1.1.1 Introduction Banking is the pivotal of Indian economy. Banking, if we equate it with money lending, it perhaps as old as civilization itself when ‘money’ in its modern form was not in existence, people in order to obtain the goods and services, offered other goods and services in return. This was - Barter an inconvenient system. Nevertheless people could lend and borrow in the form of any other mutually acceptance form. Banking institutions today form the heart of the financial structure of any country whether it is developed or developing. So, banks are like: “Oxygen for economy which is necessary for the generation & management of the blood i.e. the finance of the economy and circulates through the network of the bank i.e. “the Network of Branches”. Banks lending, investing and related activities facilitate the economic process of production, distribution and consumption. Banks encourage investments and thereby help in capital formation. 1.1.2 Definition of Banking: Acc. To Sec. 5 (b) “Banking is defined as accepting for the purpose of lending or investment of deposits of money from public, repayable on demand or otherwise and withdrawals by cheque, draft, order or otherwise.” “Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money. Banks are important players of the market and offer services as loans and funds”. Banking Regulation Act of India, 1949 defines Banking as “accepting, for the purpose of

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lending or of investment of deposits of money from the public, repayable on demand or otherwise or withdrawable by cheque, draft order or otherwise.” The Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949, govern the banking operations in India. 1.1.3 Evolution of Banking: Origin: Its origin in the simplest term, can be traced to the origin of authentic history soon after society recognized the benefits of using money as a medium of exchange, it recognized the need for a “safe place” to store it. This “safe place” ultimately evolved into financial institutions that “accept deposits and disburse loans” i.e. the modern commercial banks. Origin of the word “BANK”: On the other hand, even the origin of the word “BANK” is shrouded in mystery. According to one view point, the Italian business houses carrying a crude form of banking were called “Banchi Bancherii” According to another view point, the word “Bank” is derived from the German word “Bank” which means heap or wound. Subsequently, Italians started using the name “Banco” which means accumulation of money or of stock. Origin of Commercial Banking: The origin of commercial banking can be traceable in the early times of human history. In the ancient Rome & Greece, the practices of storing precious metals and coins at safe places and loaning out money for public and private purposes on interest was prevalent. In England, banking had its origin with the London Goldsmiths, who in the 7th century began to accept deposits from merchants and others for safe keeping of money and other valuables. As public enterprise, banking made its first appearance in Italy in 1157 when the Bank of Venice was founded.

1.1.4 History of Banking in India There are three different phases in the history of banking in India. 1) Pre-Nationalization Era. 2) Nationalization Stage. 3) Post Liberalization Era.

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1) Pre-Nationalization Era: In India the business of banking and credit was practices even in very early times. The remittance of money through Hundies, an indigenous credit instrument, was very popular. The hundies were issued by bankers known as Shroffs, Sahukars, Shahus or Mahajans in different parts of the country. The modern type of banking, however, was developed by the Agency Houses of Calcutta and Bombay after the establishment of Rule by the East India Company in 18th and 19th centuries. During the early part of the 19th Century, ht volume of foreign trade was relatively small. Later on as the trade expanded, the need for banks of the European type was felt and the government of the East India Company took interest in having its own bank. The government of Bengal took the initiative and the first presidency bank, the Bank of Calcutta (Bank of Bengal) was established in 180. In 1840, the Bank of Bombay and IN 1843, the Bank of Madras was also set up These three banks also known as “Presidency Bank”. The Presidency Banks had their branches in important trading centers but mostly lacked in uniformity in their operational policies. In 1899, the Government proposed to amalgamate these three banks in to one so that it could also function as a Central Bank, but the Presidency Banks did not favor the idea. However, the conditions obtaining during world war period (1914-1918) emphasized the need for a unified banking institution, as a result of which the Imperial Bank was set up in1921. The Imperial Bank of India acted like a Central bank and as a banker for other banks. The RBI (Reserve Bank of India) was established in 1935 as the Central Bank of the Country. In 1949, the Banking Regulation act was passed and the RBI was nationalized and acquired extensive regulatory powers over the commercial banks. In 1950, the Indian Banking system comprised of the RBI, the Imperial Bank of India, Cooperative banks, Exchange banks and Indian Joint Stock banks. 2) Nationalization Stage: After Independence, in 1951, the All India Rural Credit survey, committee of Direction

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with Shri. A. D. Gorwala as Chairman recommended amalgamation of the Imperial Bank of India and ten others banks into a newly established bank called the State Bank of India (SBI). The Government of India accepted the recommendations of the committee and introduced the State Bank of India bill in the Lok Sabha on 16th April 1955 and it was passed by Parliament and got the president’s assent on 8th May 1955. The Act came into force on 1st July 1955, and the Imperial Bank of India was nationalized in 1955 as the State Bank of India The main objective of establishing SBI by nationalizing the Imperial Bank of India was “to extend banking facilities on a large scale more particularly in the rural and semi-urban areas and to diverse other public purposes. In 1959, the SBI (Subsidiary Bank) act was proposed and the following eight stateassociated banks were taken over by the SBI as its subsidiaries. Name of the Bank 1. State Bank of Hyderabad 2. State Bank of Bikaner 3. State Bank of Jaipur 4. State Bank of Saurashtra 5 State Bank of Patiala 6. State Bank of Mysore 7. State Bank of Indore 8.State Bank of Travancore Subsidiary with effect from 1st October 1959 1st January 1960 1st January 1960 1st May 1960 1st April 1960 1st March 1960 1st January 1968 1st January 1960

With effect from 1st January 1963, the State Bank of Bikaner and State Bank of Jaipur with head office located at Jaipur. Thus, seven subsidiary banks State Bank of India formed the SBI Group. The SBI Group under statutory obligations was required to open new offices in rural and semi-urban areas and modern banking was taken to these unbanked remote areas. On 19th July 1969, then the Prime Minister, Mrs. Indira Gandhi announced the nationalization of 14 major scheduled Commercial Banks each having deposits worth Rs. 50 crore and above. This was a turning point in the history of commercial banking in

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India. Later the Government Nationalized six more commercial private sector banks with deposit liability of not less than Rs. 200 crores on 15th April 1980, viz. • • • • • • Andhra Bank. Corporation Bank. New Bank if India. Oriental Bank of Commerce. Punjab and Sind Bank. Vijaya Bank.

In 1969, the Lead Bank Scheme was introduced to extend banking facilities to every corner of the country. Later in 1975, Regional Rural Banks were set up to supplement the activities of the commercial banks and to especially meet the credit needs of the weaker sections of the rural society. Nationalization of banks paved way for retail banking and as a result there has been an alt round growth in the branch network, the deposit mobilization, credit disposals and of course employment. The first year after nationalization witnessed the total growth in the agricultural loans and the loans made to SSI by 87% and 48% respectively. The overall growth in the deposits and the advances indicates the improvement that has taken place in the banking habits of the people in the rural and semi-urban areas where the branch network has spread. Such credit expansion enabled the banks to achieve the goals of nationalization, it was however, achieved at the coast of profitability of the banks. Consequences of Nationalization:  The quality of credit assets fell because of liberal credit extension policy.  Political interference has been as additional malady.  Poor appraisal involved during the loan meals conducted for credit disbursals.  The credit facilities extended to the priority sector at concessional rates.  The high level of low yielding SLR investments adversely affected the profitability of the banks.  The rapid branch expansion has been the squeeze on profitability of banks emanating primarily due to the increase in the fixed costs.

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There was downward trend in the quality of services and efficiency of the banks.

3) Post-Liberalization Era Thrust on Quality and Profitability: By the beginning of 1990, the social banking goals set for the banking industry made most of the public sector resulted in the presumption that there was no need to look at the fundamental financial strength of this bank. Consequently they remained undercapitalized. Revamping this structure of the banking industry was of extreme importance, as the health of the financial sector in particular and the economy was a whole would be reflected by its performance. The need for restructuring the banking industry was felt greater with the initiation of the real sector reform process in 1992. the reforms have enhanced the opportunities and challenges for the real sector making them operate in a borderless global market place. However, to harness the benefits of globalization, there should be an efficient financial sector to support the structural reforms taking place in the real economy. Hence, along with the reforms of the real sector, the banking sector reformation was also addressed. The route causes for the lackluster performance of banks, formed the elements of the banking sector reforms. Some of the factors that led to the dismal performance of banks were. • • • • • • Regulated interest rate structure. Lack of focus on profitability. Lack of transparency in the bank’s balance sheet. Lack of competition. Excessive regulation on organization structure and managerial resource. Excessive support from government.

Against this background, the financial sector reforms were initiated to bring about a paradigm shift in the banking industry, by addressing the factors for its dismal performance. In this context, the recommendations made by a high level committee on financial sector, chaired by M. Narasimham, laid the foundation for the banking sector reforms. These reforms tried to enhance the viability and efficiency of the banking sector. The Narasimham Committee suggested that there should be functional autonomy, flexibility in operations, dilution of banking strangulations, reduction in reserve requirements and 6

adequate financial infrastructure in terms of supervision, audit and technology. The committee further advocated introduction of prudential forms, transparency in operations and improvement in productivity, only aimed at liberalizing the regulatory framework, but also to keep them in time with international standards. The emphasis shifted to efficient and prudential banking linked to better customer care and customer services. 1.1.5 Law of banking Banking law is based on a contractual analysis of the relationship between the bank (defined above) and the customer—defined as any entity for which the bank agrees to conduct an account. The law implies rights and obligations into this relationship as follows: 1. The bank account balance is the financial position between the bank and the customer: when the account is in credit, the bank owes the balance to the customer; when the account is overdrawn, the customer owes the balance to the bank. 2. The bank agrees to pay the customer's cheques up to the amount standing to the credit of the customer's account, plus any agreed overdraft limit. 3. The bank may not pay from the customer's account without a mandate from the customer, e.g. a cheque drawn by the customer. 4. The bank agrees to promptly collect the cheques deposited to the customer's account as the customer's agent, and to credit the proceeds to the customer's account. 5. The bank has a right to combine the customer's accounts, since each account is just an aspect of the same credit relationship. 6. The bank has a lien on cheques deposited to the customer's account, to the extent that the customer is indebted to the bank. 7. The bank must not disclose details of transactions through the customer's account —unless the customer consents, there is a public duty to disclose, the bank's interests require it, or the law demands it. 8. The bank must not close a customer's account without reasonable notice, since cheques are outstanding in the ordinary course of business for several days.

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These implied contractual terms may be modified by express agreement between the customer and the bank. The statutes and regulations in force within a particular jurisdiction may also modify the above terms and/or create new rights, obligations or limitations relevant to the bank-customer relationship. 1.1.6 Banking channels Banks offer many different channels to access their banking and other services:

A branch, banking centre or financial centre is a retail location where a bank or financial institution offers a wide array of face-to-face service to its customers. ATM is a computerised telecommunications device that provides a financial institution's customers a method of financial transactions in a public space without the need for a human clerk or bank teller. Most banks now have more ATMs than branches, and ATMs are providing a wider range of services to a wider range of users. For example in Hong Kong, most ATMs enable anyone to deposit cash to any customer of the bank's account by feeding in the notes and entering the account number to be credited. Also, most ATMs enable card holders from other banks to get their account balance and withdraw cash, even if the card is issued by a foreign bank.

Mail is part of the postal system which itself is a system wherein written documents typically enclosed in envelopes, and also small packages containing other matter, are delivered to destinations around the world. This can be used to deposit cheques and to send orders to the bank to pay money to third parties. Banks also normally use mail to deliver periodic account statements to customers.

Telephone banking is a service provided by a financial institution which allows its customers to perform transactions over the telephone. This normally includes bill payments for bills from major billers (e.g. for electricity).

Online banking is a term used for performing transactions, payments etc. over the Internet through a bank, credit union or building society's secure website. Mobile banking is a method of using one's mobile phone to conduct simple banking transactions by remotely linking into a banking network

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1.1.7 General Aspect of Bank’s Services According to Crowther, a bank “collects money from those who have it to spare or who are saving it out of their incomes, and it lends this money to those who require it.” The bank has the following features: 1) It deals with money; it accepts deposits and advances loans. 2) It also deals with credit; it has the ability to create credit.i.e. the ability to expand its liabilities as a multiple of its reserves. 3) It is commercial institution; it aims at earning profit. 4) It is a unique financial institution that creates demand deposits which serve as a medium of exchange and, as a result, the banks manage the payment system of the country. 1.1.8 Services of Commercial Banks or Modern Banks • Accepting Deposits: The first important function of a bank is to accept deposits from those who can save but cannot profitably utilize this saving themselves. To attract from all sorts of individuals, the banks maintain different types of accounts: • Fixed Deposit Account: Money in these accounts is deposited for fixed period of time (say one, two, or five years) and cannot be withdrawn before the expiry of that period. • Current Deposit Account: These accounts are generally maintained by the traders and businessman who has to make a number of payments every day and money can be withdrawn from these accounts in as many times. • Saving Deposit Account: The aim of these accounts is to encourage and mobilize small savings of the public. Certain restrictions are imposed on the depositors regarding the number of withdrawals and the amount to be with drawn in a given period. • • Recurring Deposit Account: the purpose of these accounts is to encourage regular savings by the public, particularly by the fixed income group. Home Safe Account: Under this scheme a safe is supplied to the depositor to keep it at home and to put his small savings in it.

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Advancing of Loans: The second important function of a bank is advancing of loans to the public. After keeping certain cash reserves, the banks lend their deposits to the needy borrowers. Various types of loans granted by the banks are:

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Money at call: Such loans are very short period loans and can be called by the bank at a very short notice of say one day to fourteen days. Cash Credit: It is a type of loan which is given to the borrower against his current assets, such as shares, stocks, bonds, etc. The bank opens the account in the name of the borrowers and allows him to withdraw borrowed money from time to time upto a certain limit as determined by the value of his current assets.

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Overdraft: Sometimes, the bank provides facilities to its customers though which they are allowed to withdraw more than their deposits. Discounting of Bills of Exchange: Through this method, a holder of a bill of exchange can get it discounted by the bank. Term Loans: The banks have also started advancing medium term and long term loans. The maturity period for such loans is more than one year. The interest is charged on the entire amount of the loan and the loan is repaid either on maturity or in installments.

Credit Creation: A unique function of the bank is to create credit. In fact, credit creation is the natural outcome of the process of advancing loans as adopted by the banks. When a bank advances loan to its customers, it does not lend cash but opens an account in the borrower’s name and credit the amount of loan to this account. Thus, whenever a bank grants loan, it creates an equal amount of bank deposits. Creation of such deposits is called credit creation.

Promoting Cheque System: banks also render a very useful medium of exchange in the form of cheques. Through a Cheque, the depositor directs the bankers to make payment to the payee. Cheque is the most developed credit instrument in the money market.

Agency Functions: Banks also perform certain agency functions for and on behalf of their customers: 10

o Remittance of Funds o Collection and Payment of credit instruments o Execution of Standing Orders o Purchasing and Sale of Securities o Collection of Dividends on Shares o Income Tax Consultancy o Acting as Trustee and Executor 1.1.9 Broad Classification of Banks in India: The RBI: The RBI is the supreme monetary and banking authority in the country and has the responsibility to control the banking system in the country. It keeps the reserves of all scheduled banks and hence is known as the “Reserve Bank”. Public Sector Banks: • State Bank of India and its Associates (8) • Nationalized Banks (19) • Regional Rural Banks Sponsored by Public Sector Banks (196) • Old Generation Private Banks (22) Private Sector Banks: • Foreign New Generation Private Banks (8) • Banks in India (40) Cooperative banks • State Co-operative Banks • Central Co-operative Banks • Primary Agricultural Credit Societies • Land Development Banks

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• State Land Development Development Banks: • Development Banks mostly provide long term finance for setting up industries. They also provide short-term finance (for export and import activities) • Industrial Finance Co-operation of India (IFCI) • Industrial Development of India (IDBI) • Industrial Investment Bank of India (IIBI) • Small Industries Development Bank of India (SIDBI) • National Bank for Agriculture and Rural Development (NABARD) • Export-Import Bank of India 1.1.10 Reserve Bank of India (RBI) The Reserve Bank of India (RBI) is the central bank of India, and was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. Since its inception, it has been headquartered in Mumbai. Though originally privately owned, RBI has been fully owned by the Government of India since nationalization in 1949. RBI is governed by a central board (headed by a Governor) appointed by the Central Government. The current governor of RBI is Dr.Y.Venugopal Reddy who succeeded Dr. Bimal Jalan on September 6, 2003). RBI has 22 regional offices across India.The Reserve Bank of India was set up on the recommendations of the Hilton Young Commission. The commission submitted its report in the year 1926, though the bank was not set up for nine years. Monetary Authority • • Formulates, implements and monitors the monetary policy. Objective: maintaining price stability and ensuring adequate flow of credit to productive sectors. Regulator and supervisor of the financial system • Prescribes broad parameters of banking operations within which the country’s 12

banking and financial system functions • Objective: maintain public confidence in the system, protect depositors’ interest and provide cost-effective banking services to the public. The Banking Ombudsman Scheme has been formulated by the Reserve Bank of India (RBI) for effective redressal of complaints by bank customers Manager of Exchange Control • • Manages the Foreign Exchange Management Act, 1999. Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India. Issuer of currency • • Issues and exchanges or destroys currency and coins not fit for circulation. Objective: to give the public adequate quantity of supplies of currency notes and coins and in good quality. Developmental role • Performs a wide range of promotional functions to support national objectives.

Related Functions • • • • Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker. Banker to banks: maintains banking accounts of all scheduled banks. Owner and operator of the depository (SGL) and exchange (NDS) for government bonds. There is now an international consensus about the need to focus the tasks of a central bank upon central banking. RBI is far out of touch with such a principle, owing to the sprawling mandate described above.

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1.1.11 Economic Functions The economic functions of banks include: 1. Issue of money, in the form of banknotes and current accounts subject to cheque or payment at the customer's order. These claims on banks can act as money because they are negotiable and/or repayable on demand, and hence valued at par. They are effectively transferable by mere delivery, in the case of banknotes, or by drawing a cheque that the payee may bank or cash. 2. Netting and settlement of payments – banks act as both collection and paying agents for customers, participating in interbank clearing and settlement systems to collect, present, be presented with, and pay payment instruments. This enables banks to economise on reserves held for settlement of payments, since inward and outward payments offset each other. It also enables the offsetting of payment flows between geographical areas, reducing the cost of settlement between them. 3. Credit intermediation – banks borrow and lend back-to-back on their own account as middle men 4. Credit quality improvement – banks lend money to ordinary commercial and personal borrowers (ordinary credit quality), but are high quality borrowers. The improvement comes from diversification of the bank's assets and capital which provides a buffer to absorb losses without defaulting on its obligations. However, banknotes and deposits are generally unsecured; if the bank gets into difficulty and pledges assets as security, to raise the funding it needs to continue to operate, this puts the note holders and depositors in an economically subordinated position. 5. Maturity Transformation – banks borrow more on demand debt and short term debt, but provide more long term loans. In other words, they borrow short and lend long. With a stronger credit quality than most other borrowers, banks can do this by aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g. withdrawals and redemptions of banknotes), maintaining reserves of cash, investing in marketable securities that can be readily converted to cash if needed, and raising replacement funding as needed from various sources (e.g. wholesale cash markets and securities markets).

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1.1.12 Supervisory Functions: In addition to its traditional central functions, the Reserve bank has certain nonmonetary functions of the nature of supervision of banks and promotion of sound banking in India. The Reserve Bank Act, 1934, and the Banking Regulation Act, 1949 have given the RBI wide powers of supervision and control over commercial and cooperative banks, relating to licensing and establishments, branch expansion, liquidity of their assets, management and methods of working, amalgamation, reconstruction and liquidation. The RBI is authorized to carry out periodical inspections of the banks and to call for returns and necessary information from them. The nationalization of 14 major Indian scheduled banks in July 1969 has imposed new responsibilities on the RBI for directing the growth of banking and credit policies towards more rapid development of the economy and realization of certain desired social objectives. The supervisory functions of the RBI have helped a great deal in improving the standard of banking in India to develop on sound lines and to improve the methods of their operation. 1.1.13 Promotional Functions: With economic growth assuming a new urgency since Independence, the range of the Reserve Bank’s functions have steadily widened. The Bank now performs a variety of developmental and promotional functions, which, at one time, were regarded as outside the normal scope of central banking. The Reserve Bank was asked to promote banking habit, extend banking facilities to rural and semi-urban areas, and establish and promote new specialized financing agencies. Accordingly, the Reserve bank has helped in the setting up of the IFCI and the SFC: it set up the Deposit Insurance Corporation of India in 1963 and the Industrial Reconstruction Corporation of India in 1972. These institutions were set up directly or indirectly by the Reserve Bank to promote saving habit and to mobilize savings, and to provide industrial finance as well as agricultural finance. As far back as 1935, the RBI set up the Agricultural Credit Department to provide agricultural credit. But only since 1951 the Bank’s role in this field has become extremely important. The Bank has developed the co-operative credit movement to encourage saving, to eliminate money-lenders from the villages and to route its short term credit to agriculture.

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1.1.14 Types of Banks in India 1) Public Sector Banks The public sector banks in India is formally owned and managed by the Government of India. The government owns these banks. In India 20 banks were nationalized in 1969 and 1980 respectively. Social welfare is there main objective. It basically constitutes of the following: • State Bank of India and its subsidiaries: State Bank of India and its associates are called State bank group. This group comprises of the State Bank of India (SBI) and its seven subsidiaries viz. State Bank of Patiala, State Bank of Hyderabad, State Bank of Travancore, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Saurashtra and State Bank of Indore. • Nationalized Banks : This group consists of private sector banks that were nationalized by the Government of India. On the 19th July 1969, fourteen major Indian bans having deposits of more than Rs. 50 crores were nationalized. The undertakings of these fourteen banks were taken over by and have vested in 14 new corporate bodies established under the baking companies (acquisition and transfer of undertaking) act, 1970. It has been amended by banking companies act 1994, according to which the share capital upto 49% of the nationalized banks can be held by the public and the cost of the share capital will be owned by the Government of India. These 14 banks are now manages by the Govt. of India through the board of directors appointed by it. On 15th April 1980, six more banks having deposits not less than Rs. 200 crores were also nationalized. The undertakings of these banks were taken over and vested in six corresponding new banks under the banking companies (acquisition and transfer of undertakings) act, 1980. • Rural Banks : These were established by the RBI in the year 1975 of Banking Commision. It was established to operate in rural areas to provide credit and other facilities to small and marginal farmers, agricultural laborers, artisians and small entrepreneurs.

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2) Private Sector Banks Initially all the banks in India were private banks, which were founded in the pre independence era to cater to the banking needs of the people. In 1921, three major banks i.e. Banks of Bengal, Bank of Bombay, and Bank of Madras, merged to form Imperial Bank of India. In 1935, the Reserve Bank of India (RBI) was established and it took over the central banking responsibilities from the Imperial Bank of India, transferring commercial banking functions completely to IBI. In 1955, after the declaration of firstfive year plan, Imperial Bank of India was subsequently transformed into State Bank of India (SBI). Following this, occurred the nationalization of major banks in India on 19 July 1969. The Government of India issued an ordinance and nationalized the 14 largest commercial banks of India, including Punjab National Bank (PNB), Allahabad Bank, Canara Bank, Central Bank of India, etc. Thus, public sector banks revived to take up leading role in the banking structure. In 1980, the GOI nationalized 6 more commercial banks, with control over 91% of banking business of India. In 1994, the Reserve Bank Of India issued a policy of liberalization to license limited number of private banks, which came to be known as New Generation tech-savvy banks. Global Trust Bank was, thus, the first private bank after liberalization; it was later amalgamated with Oriental Bank of Commerce (OBC). Then Housing Development Finance Corporation Limited (HDFC) became the first (still existing) to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. The first Private Bank in India to receive an in principle approval from the Reserve Bank of India was Housing Development Finance Corporation Limited, to set up a bank in the private sector banks in India as part of the RBI's liberalization of the Indian Banking Industry. It was incorporated in August 1994 as HDFC Bank Limited with registered office in Mumbai and commenced operations as Scheduled Commercial Bank in January 1995. ING Vaysya, yet another Private Bank of India was incorporated in the year 1930. Bangalore has a pride of place for having the first branch inception in the year 1934. With successive years of patronage and constantly setting new standards in banking, ING Vaysya Bank has many credits to its account.

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3) Foreign Sector Banks Foreign Banks in India always brought an explanation about the prompt services to customers. After the set up foreign banks in India, the banking sector in India also become competitive and accurative. New rules announced by the Reserve Bank of India for the foreign banks in India in this budget has put up great hopes among foreign banks which allows them to grow unfettered. Now foreign banks in India are permitted to set up local subsidiaries. The policy conveys that forign banks in India may not acquire Indian ones (except for weak banks identified by the RBI, on its terms) and their Indian subsidiaries will not be able to open branches freely. 1.1.15 Co-operative Banks: The Co-operative bank has a history of almost 100 years. The Co-operative banks are an important constituent of the Indian Financial System, judging by the role assigned to them, the expectations they are supposed to fulfill, their number, and the number of offices they operate. The co-operative movement originated in the West, but the importance that such banks have assumed in India is rarely paralleled anywhere else in the world. Their role in rural financing continues to be important even today, and their business in the urban areas also has increased phenomenally in recent years mainly due to the sharp increase in the number of cooperative banks. While the co-operative banks in rural areas mainly finance agricultural based activities including farming, cattle, milk, hatchery, personal finance etc. along with some small scale industries and self-employment driven activities, the co-operative banks in urban areas mainly finance various categories of people for self-employment, industries, small scale units, home finance, consumer finance, personal finance, etc. Some of the cooperative banks are quite forward looking and have developed sufficient core competencies to challenge state and private sector banks. According to NAFCUB the total deposits & lendings of Co-operative Banks is much more than Old Private Sector Banks & also the New Private Sector Banks. This exponential growth of Co-operative Banks is attributed mainly to their much better local reach, personal interaction with customers, their ability to catch the nerve of the local

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clientele. Though registered under the Co-operative Societies Act of the Respective States (where formed originally) the banking related activities of the co-operative banks are also regulated by the Reserve Bank of India. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965. There are two main categories of the co-operative banks. a) Short term lending oriented co-operative Banks – within this category there are three sub categories of banks viz state co-operative banks, District co-operative banks and Primary Agricultural co-operative societies. b) Long term lending oriented co-operative Banks – within the second category there are land development banks at three levels state level, district level and village level. 1.1.16 Features of Cooperative Banks Co-operative Banks are organized and managed on the principal of co-operation, selfhelp, and mutual help. They function with the rule of “one member, one vote”. Function on “no profit, no loss” basis. Co-operative banks, as a principle, do not pursue the goal of profit maximization. Co-operative bank performs all the main banking functions of deposit mobilization, supply of credit and provision of remittance facilities. Co-operative Banks provide limited banking products and are functionally specialists in agriculture related products. However, co-operative banks now provide housing loans also. UCBs provide working capital loans and term loan as well. The State Co-operative Banks (SCBs), Central Co-operative Banks (CCBs) and Urban Cooperative Banks (UCBs) can normally extend housing loans upto Rs 1 lakh to an individual. The scheduled UCBs, however, can lend upto Rs 3 lakh for housing purposes. The UCBs can provide advances against shares and debentures also. Co-operative bank do banking business mainly in the agriculture and rural sector. However, UCBs, SCBs, and CCBs operate in semi urban, urban, and metropolitan areas also. The urban and non-agricultural business of these banks has grown over the years. The cooperative banks demonstrate a shift from rural to urban, while the commercial banks, from urban to rural. Co-operative banks are perhaps the first government sponsored, government-supported, and government-subsidized financial agency in India. They get financial and other help from the Reserve Bank of India NABARD, central government

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and state governments. They constitute the “most favoured” banking sector with risk of nationalization. For commercial banks, the Reserve Bank of India is lender of last resort, but co-operative banks it is the lender of first resort which provides financial resources in the form of contribution to the initial capital (through state government), working capital, refinance. Co-operative Banks belong to the money market as well as to the capital market. Primary agricultural credit societies provide short term and medium term loans. Land Development Banks (LDBs) provide long-term loans. SCBs and CCBs also provide both short term and term loans. Co-operative banks are financial intermediaries only partially. The sources of their funds (resources) are (a) central and state government, (b) the Reserve Bank of India and NABARD, (c) other co-operative institutions, (d) ownership funds and, (e) deposits or debenture issues. It is interesting to note that intra-sectoral flows of funds are much greater in co-operative banking than in commercial banking. Inter-bank deposits, borrowings, and credit from a significant part of assets and liabilities of co-operative banks. This means that intra-sectoral competition is absent and intrasectoral integration is high for co-operative bank. Some co-operative banks are scheduled banks, while others are non-scheduled banks. For instance, SCBs and some UCBs are scheduled banks but other co-operative bank are nonscheduled banks. At present, 28 SCBs and 11 UCBs with Demand and Time Liabilities over Rs 50 crore each included in the Second Schedule of the Reserve Bank of India Act. Co-operative Banks are subject to CRR and liquidity requirements as other scheduled and nonscheduled banks are. However, their requirements are less than commercial banks. Since 1966 the lending and deposit rate of commercial banks have been directly regulated by the Reserve Bank of India. Although the Reserve Bank of India had power to regulate the rate co-operative bank but this have been exercised only after 1979 in respect of non-agricultural advances they were free to charge any rates at their discretion. Although the main aim of the cooperative bank is to provide cheaper credit to their members and not to maximize profits, they may access the money market to improve their income so as to remain viable.

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1.1.17 Common Products and Services provided by the bank Banking covers so many services that it is difficult to define it. However, these basic services have always been recognized as the hallmark of the genuine banker. These are • • • The receipt of the customer’s deposits The collection of his cheques drawn on other banks The payment of the customer’s cheques drawn on himself

There are other various types of banking services like: 1) Loans and Advances – Overdraft, Cash Credit, etc. 2) Deposits – Saving Account, Current Account, etc. 3) Financial Services – Bill discounting etc. 4) Foreign Services – Providing foreign currency, travelers cheques, etc. 5) Savings – Fixed deposits, etc. 6) Money Transfer 1) Loans and Advances Banks in India with the way of development have become easy to apply in loan market. The following loans are given by almost all the banks in the country:
• • • • •

Personal Loan Car Loan or Auto Loan Loan against Shares Home Loan Education Loan or Student Loan

In Personal Loan, one can get a sanctioned loan amount between Rs 25,000 to 10,00,000 depending upon the profile of person applying for the loan. SBI, ICICI, HDFC, HSBC are some of the leading banks which deals in Personal Loan. Almost all the banks have jumped into the market of car loan which is also sometimes termed as auto loan. It is one of the fast moving financial product of banks. Car loan / auto loan are sanctioned to the extent of 85% upon the ex-showroom price of the car with some simple paper works and a small amount of processing fee. Loan against shares is very easy to get because liquid guarantee is involved in it. Home loan is the latest craze in the banking sector with the development of the infrastructure.

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Now people are moving to township outside the city. More number of townships are coming up to meet the demand of 'house for all'. The RBI has also liberalised the interest rates of home loan inorder to match the repayment capability of even middle class people. Almost all banks are dealing in home loan. Again SBI, ICICI, HDFC, HSBC are leading. The educational loan, rather to be termed as student loan, is a good banking product for the mass. Students with certain academic brilliance, studying at recognised colleges/universities in India and abroad are generally given education loan / student loan so as to meet the expenses on tuition fee/ maintenance cost/books and other equipment. 2) Advances • Overdraft:- Banks allow selected customers to write cheques in excess of the balance in their current account, ie, to overdraw. Overdrafts are arranged up to limits which depend on the customer's credit standing and the bank manager's humour. The arrangements allow flexibility in the amount spent and, equally, allow flexibility in repayments (although technically a bank can demand repayment of an overdraft within 24 hours). In that respect overdrafts are unlike personal loans, which are structured with regular repayments. Interest on overdrafts is charged on the fluctuating daily balance. • Cash Credit:- This facility is given by the banker to the customer by way of a certain amount of credit facility. Its limit is fixed on the basis of security of the company`s current assets. A major part of working capital requirement of any unit would consist of maintenance of inventory of raw materials, semi finished goods, finished goods, 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 drawings will be permitted against stocks of goods. It is a running account facility where deposits and withdrawals are permitted.

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3) Deposits Banks are also called custodians of public money. Basically, the money is accepted as deposit for safe keeping. But since the Banks use this money to earn interest from people who need money, Banks share a part of this interest with the depositors. The quantum of interest depends upon the tenor - length of time for which the depositor wishes to keep the money with the Bank - and the ease of withdrawal. The thumb rule is, longer the tenor, higher the rate of interest and lesser the restrictions on withdrawal, lesser the interest. Exceptions, however, exist. Deposits are accepted from both resident (domestic) or non-resident Indian customers. • Saving Account : Savings Bank Accounts are meant to promote the habit of saving among the citizens while allowing them to use their funds when required. The main advantage of Savings Bank Account is its high liquidity and safety. On top of that Savings Bank Account earn moderate interest too. The rate of interest is decided and periodically reviewed by the Government of India • Current Account : It is basically used for business purposes. It doesn’t give any interest on deposits. It can be held in the name of firms (include partnership firm, pvt. Ltd. Co., ltd. Co., trust, association), person. Its prime purpose is to serve the customers for their daily business transactions. A customer having current account can withdraw money in the form of cash or cheque in a infinite number of times and so is unrestricted.Current Account is primarily meant for businessmen, firms, companies, public enterprises etc. that have numerous daily banking transactions 4) Financial Services • Bills Discounting:-This is the most important form in which a bank lends without any collateral security. The seller draws bills of exchange on the buyer of goods on credit. Such a bill may either be a clean bill or documentary bill which is accompanied by documents of title to goods,viz railway receipts. The bank purchase bills payable on demand and credit the customer`s account with the

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amount of bills less the discount. On maturity of the bills, the bank present them to its acceptor for payment. In case the discounted bill is dishonored by the nonpayment, the bank can recovers the full amount from the customer along with the expense in that connection.

5) Foreign Services • Traveler’s Cheque: A traveler's cheque is a preprinted, fixed-amount cheque designed to allow the person signing it to make an unconditional payment to someone else as a result of having paid the issuer for that privilege. As a traveler's cheque can usually be replaced if lost or stolen (if the owner still has the note issued with the purchase of the cheque), they are often used by people on vacation in place of cash. The use of credit cards has, however, rendered them less important than they previously were. Traveler's cheques are available in several currencies such as U.S. dollars, Canadian dollars, pounds sterling, Japanese yen, and euro. Upon obtaining custody of a purchased supply of traveler's cheques, the purchaser should immediately write his or her signature once upon each cheque, usually on the cheque's upper portion. The purchaser will also have received a receipt and some other documentation that should be kept in a safe place other than where he or she carries the cheques. When wanting to cash a traveler's cheque while making a purchase, the purchaser should, in the presence of the payee, date and countersign the cheque in the indicated space, usually on the cheque's lower portion • Money Transfer: Beside lending and depositing money, banks also carry money from one corner of the globe to another. This act of banks is known as transfer of money. This activity is termed as remittance business. Banks generally issue Demand Drafts, Banker's Cheques, Money Orders or other such instruments for transferring the money. This is a type of Telegraphic Transfer. With the use of high technology and varieties of product it seems that "Free" money transfers will become commonplace. We will see more bundling of

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tailored money services by banks and non-traditional entrants that will include "free" money transfers. Many banks will even use money transfer services as lossleaders inorder to generate account openings and cross-sell opportunities. The price evolution of money transfer products for banks will be similar to that of consumer bill pay-the product is worth giving away as an account acquisition tool to win overall market share and establish banking relationships. ATM money transfer card products have had terrible bank adoption rates since being introduced in the last three to four years. Remittees who are highly educated and have been already been exposed to ATM technology in receiving countries tend to have an interest in this product. Money transfer to India is one of the most important part played by the banks. This service provide peace of mind to either the NRIs or to the visitors to India. Many Indian banks have ATM'S (automatic teller machine), enable to draw foreign currency in India. 6) Modern Banking Services : • Credit Cards: Credit Card is “post paid” or “pay later” card that draws from a creditline-money made available by the card issuer (bank) and gives one a grace period to pay. If the amount is not paid full by the end of the period, one is charged interest. A credit card is nothing but a very small card containing a means of identification, such as a signature and a small photo. It authorizes the holder to change goods or services to his account, on which he is billed. The bank receives the bills from the merchants and pays on behalf of the card holder. These bills are assembled in the bank and the amount is paid to the bank by the card holder totally or by installments. The bank charges the customer a small amount for these services. The card holder need not have to carry money/cash with him when he travels or goes for purchasing. Credit cards have found wide spread acceptance in the ‘metros’ and big cities. Credit cards are joining popularity for online payments. The major players in the Credit Card market are the foreign banks and some big public sector banks like SBI and Bank of Baroda. India at present has about 3 million credit cards in circulation.

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Debit Cards: Debit Card is a “prepaid” or “pay now” card with some stored value. Debit Cards quickly debit or subtract money from one’s savings account, or if one were taking out cash.Every time a person uses the card, the merchant who in turn can get the money transferred to his account from the bank of the buyers, by debiting an exact amount of purchase from the card. To get a debit card along with a Personal Identification Number (PIN). When he makes a purchase, he enters this number on the shop’s PIN pad. When the card is swiped through the electronic terminal, it dials the acquiring bank system – either Master Card or Visa that validates the PIN and finds out from the issuing bank whether to accept or decline the transaction. The customer never overspread because the amount spent is debited immediately from the customers account. So, for the debit card to work, one must already have the money in the account to cover the transaction. There is no grace period for a debit card purchase. Some debit cards have monthly or per transaction fees.Debit Card holder need not carry a bulky checkbook or large sums of cash when he/she goes at for shopping. This is a fast and easy way of payment one can get debit card facility as debit cards use one’s own money at the time of sale, so they are often easier than credit cards to obtain. The major limitation of Debit Card is that currently only some 3000-4000 shops country wide accepts it. Also, a person can’t operate it in case the telephone lines are down.

Automatic Teller Machine: The introduction of ATM’s has given the customers the facility of round the clock banking. The ATM’s are used by banks for making the customers dealing easier. ATM card is a device that allows customer who has an ATM card to perform routine banking transaction at any time without interacting with human teller. It provides exchange services. This service helps the customer to withdraw money even when the banks ate closed. This can be done by inserting the card in the ATM and entering the Personal Identification Number and secret Password. ATM’s are currently becoming popular in India that enables the customer to withdraw their money 24 hours a day and 365 days. It provides the customers with the ability to withdraw or deposit funds, check account balances, transfer funds and check statement information. The advantages of

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ATM’s are many. It increases existing business and generates new business. It allows the customers. o To transfer money to and from accounts. o To view account information. o To order cash o To receive cash. The ATM services provided first by the foreign banks like Citibank, Grind lays bank and now by many private and public sector banks in India like ICICI Bank, HDFC Bank, SBI, UTI Bank etc. The ICICI has launched ATM Services to its customers in all the Metropolitan Cities in India. By the end of 1990 Indian Private Banks and public sector banks have come up with their own ATM Network in the form of “SWADHAN”. Over the past year upto 44 banks in Mumbai, Vashi and Thane, have became a part of “SWADHAN” a system of shared payments networks, introduced by the Indian Bank Association (IBA). • E-Cheques: The e-cheques consists five primary facts. They are the consumers, the merchant, consumer’s bank the merchant’s bank and the e-mint and the clearing process. This chequring system uses the network services to issue and process payment that emulates real world chequing. The payer issue a digital cheques to the payee ant the entire transactions are done through internet. Electronic version of cheaques are issued, received and processed. The echequing is a great boon to big corporate as well as small retailers. Mostmajor banks accept e-cheques. Thus this system offers secure means of collecting payments, transferring value and managing cash flows. • Electronic Fund Transfer (EFT): Many modern banks have computerised their cheque handling process with computer networks and other electronic equipments. These banks are dispensing with the use of paper cheques. The system called electronic fund transfer (EFT) automatically transfers money from one account to another. This system facilitates speedier transfer of funds electronically from any branch to any other branch. In this system the sender and the receiver of funds may be located in different cities and may even bank with 27

different banks. Funds transfer within the same city is also permitted. The scheme has been in operation since February 7, 1996, in India. The other important type of facility in the EFT system is automated clearing houses. These are the computer centers that handle the bills meant for deposits and the bills meant for payment. In big companies pay is not disbursed by issued cheques or issuing cash. The payment office directs the computer to credit an employee’s account with the person’s pay. • Telebanking: Telebanking refers to banking on phone services.. a customer can access information about his/her account through a telephone call and by giving the coded Personal Identification Number (PIN) to the bank. Telebanking is extensively user friendly and effective in nature. o To get a particular work done through the bank, the users may leave his instructions in the form of message with bank. o Facility to stop payment on request. One can easily know about the cheque status. o Information on the current interest rates. o Information with regard to foreign exchange rates. • Mobile Banking: A new revolution in the realm of e-banking is the emergence of mobile banking. On-line banking is now moving to the mobile world, giving everybody with a mobile phone access to real-time banking services, regardless of their location. But there is much more to mobile banking from just on-lie banking. It provides a new way to pick up information and interact with the banks to carry out the relevant banking business. The potential of mobile banking is limitless and is expected to be a big success. Booking and paying for travel and even tickets is also expected to be a growth area. According to this system, customer can access account details on mobile using the Short Messaging System (SMS) technology6 where select data is pushed to the mobile device. The wireless application protocol (WAP) technology, which will allow user to surf the net on their mobiles to access anything and everything. This is a very flexible way of transacting banking business. Already ICICI and HDFC banks have tied up cellular service 28

provides such as Airtel, Orange, Sky Cell, etc. in Delhi and Mumbai to offer these mobile banking services to their customers. • Demat Account : Demat refers to a dematerialised account. Demat account is just like a bank account where actual money is replaced by shares. Just as a bank account is required if we want to save money or make cheque payments, we need to open a demat account in order to buy or sell shares. A Demat Account holds portfolio of shares in electronic form and obviates the need to hold shares in physical form. The account offers a secure and convenient way to keep track of shares and investments without the hassle of handling physical documents that get mutilated or lost in transit. The Securities and Exchange Board of India (SEBI) mandates a demat account for share trading involving more than 500 shares.

1.2 REVIEW OF LITERATURE
Arun K. Jain, Christian Pinson, Naresh K. Malhotra (1987) 1 analyzed that the usefulness of loyalty as a construct for understanding and analysing the market for banking services is here discussed. Using empirical data, the socio-demographic, attitudinal and behavioural characteristics of loyal versus non-loyal bank patrons are described. Bank loyalty can be measured and is useful in explaining differences in banking skills, expected benefits and attitudes towards banks and level of utilisation of banking services.

1

Arun K. Jain, Christian Pinson, Naresh K. Malhotra (1987), “Customer Loyalty as a Construct in the Marketing of Banking Services”, International Journal of Bank Marketing, Volume: 5, Issue: 3, Page: 49 – 72, Publisher: MCB UP Ltd

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Peter Kangis, Vassilis Voukelatos (1997)2

concluded in his study that quality

expectations and evaluation of services received were marginally higher in the private than in the public sector in most of the dimensions measured; the relative importance attached to each quality attribute was, however, of a similar profile for the two sectors. The perception of the profile of services received was, however, different between sectors, thus suggesting that they did deliver a different quality of service. Discusses the implications for strategy since sectoral differentiation in banking is becoming blurred as a result of increasing overlap between services and competition from related and substitute industries. Identifies the distinctiveness of what is perceived as a service on offer as essential ingredient to competitive positioning in financial services. Naser K.; Jamal A.; Al-Khatib K.(1999)3 concluded in his research study that the Islamic banking system is gaining momentum. Many international conventional banks have started to open branches which operate in accordance with the Islamic Shariah principles in some Islamic countries. The Islamic banking system is expected to face strong competition not only from the Islamic banks but also from well-established conventional banks offering Islamic products and services. In this study, an attempt is made to assess the degree of customer awareness and satisfaction towards an Islamic bank in Jordan. A sample 206 respondents took part in this study. The analysis of their responses revealed a certain degree of satisfaction of many of the Islamic banks facilities and products. The respondents expressed their dissatisfaction with some of the Islamic banks services. Although the respondents indicated that they are aware of a number of specific Islamic financial products like Murabaha Musharaka and Mudaraba, they show that they do not deal with them.

2

Peter Kangis, Vassilis Voukelatos (1997), “Private and public banks: a comparison of customer expectations and perceptions”, Journal: International Journal of Bank Marketing, 1997, Vol. 15, Issue: 7, Page: 279 – 287, published by MCB UP Ltd.

3

Naser K.; Jamal A.; Al-Khatib K.(1999), “Islamic banking: a study of customer satisfaction and preferences in Jordan” . The International Journal of Bank Marketing, Vol. 17, No. 3, 1999, pp. 135-151 published by Emerald Group Publishing Limited

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Luiz Moutinho, Anne Smith (2000)4 introduces a model which posits a crucial role for the evaluation of bank customers’ attitudes towards both human tellers and automated banking in mediating the ease of banking factor/perceived satisfaction linkage. The model’s explicit consideration of the effects of bank customer attitudes towards human tellers and automation provides additional explanatory power regarding how the perceived trend towards ease of banking influences bank customer overall satisfaction, switching and loyalty behaviour. A linear structural relations methodological approach is used for the modelling process. Faye X. Zhu, Walter Wymer, Injazz Chen (2002)5 explored the impact of information technology (IT) on service quality in the consumer-banking sector. It proposes a service quality model that links customer perceived IT-based service options to traditional service dimensions as measured by SERVQUAL in the context of customer perceived service quality and customer satisfaction. The model also incorporates several variables affecting customers’ perceptions of IT-based services, and was tested by a structural equation modeling approach using sample data collected from retail bank customers. The results indicate that IT-based services have a direct impact on the SERVQUAL dimensions and an indirect impact on customer perceived service quality and customer satisfaction. The analyses also show that customers’ evaluations of IT-based services are affected by their preference towards traditional services, experiences in using IT-based services, and perceived IT policies. Morna S.Y. Lee, Peter J. McGoldrick, Kathleen A. Keeling, Joanne Doherty (2003)6 reviewed that the telecommunications companies world-wide are developing 3G mobile
4

Luiz Moutinho, Anne Smith (2000), “Modelling bank customer satisfaction through mediation of attitudes towards human and automated banking”, Journal: International Journal of Bank Marketing, Year: 2000, Vol. 18, Issue: 3, Page: 124 – 134, published by MCB UP Ltd.
5

Faye X. Zhu, Walter Wymer, Injazz Chen (2002), “IT-based services and service quality in consumer banking”, International Journal of Service Industry Management, Volume: 13, Issue: 1, Page: 69 – 90, MCB UP Ltd
6

Morna S.Y. Lee, Peter J. McGoldrick, Kathleen A. Keeling, Joanne Doherty (2003), “Using ZMET to explore barriers to the adoption of 3G mobile banking services”, International Journal of Retail & Distribution Management, Volume: 31, Issue: 6, Page: 340 – 348, MCB UP Ltd

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phones and applications. In the UK, mobile banking is considered to be one of the most value-added and important mobile services available. However, the adoption rate of using 3G mobile phones for financial services is yet to be determined. The current research examined both innovative attributes and customers’ perceived risk in order to understand customers’ behaviour and motivation toward this innovation. It has advanced the theoretical frameworks of innovation and customers’ risk perception as new attributes and risk dimensions were identified. The findings provide banking executives with a better understanding of what are the perceived advantages and disadvantages of 3G mobile banking services, helping them to plan marketing strategies and promotion approaches for 3G mobile banking services in the future. Ahmad Jamal, Kamal Naser (2003)7 reviewed in his study that customer satisfaction is a significant issue for most marketers. Previous research has identified various factors that determine customer satisfaction in retail banking sector in Western countries. The current paper reports findings from a survey, which looked into determinants of customer satisfaction in the retail banking in Pakistan. A total of 300 questionnaires were randomly distributed to customers of a specific bank in Pakistan. Results indicate that there was a strong relationship between service quality and customer satisfaction. There was, however, no relationship between customer satisfaction and tangible aspects of the service environment. The paper discusses implications for bank management. Rahman, Zillur (2006)8 reviewed in his study that loyal customers are considered to be the key to survival and success in many service businesses, in particular in the hospitality, insurance and financial sectors. The assumption is that with customer satisfaction; loyalty, retention and profitability will automatically follow. The current thinking is that the relationship between satisfaction and loyalty is more complex then was originally proposed, however. As commoditisation of many service offerings continues, new sources of competitive differentiation/advantage will come from focusing on the
7

Ahmad Jamal, Kamal Naser (2003), “Factors Influencing Customer Satisfaction in the Retail Banking Sector in Pakistan” Journal: International Journal of Commerce and Management, Vol. 13, Issue: 2, Pg. 29 – 53, published by: MCB UP Ltd
8

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management of customer experiences. Because loyalty is so very important to the survival and profitable growth of a company, measuring it becomes all the more important. Existing approaches to the measurement of loyalty have not proved to be very effective in this task. This study explores and tests the relationship between experience and loyalty. For this purpose, a modified `loyalty acid test' is used. The study concludes that, on average, a majority of customers are satisfied with the present functioning of the bank but would definitely be delighted if the bank changed its interface with the customers to become more cognitive (intelligent), emotional, physically pleasing and well connected. David J. Urban, Michael D. Pratt (2000)9 presented the results of a telephone survey of 801 consumers concerning the relationship between bank mergers and service quality perceptions. The setting of the study is a US state which has seen much merger activity. The survey results provide evidence of a significant relationship between bank mergers and service quality perceptions that differs based on the demographic characteristics of the respondents. Among these demographic characteristics are gender, ethnicity, education, and income. In addition to the survey results, the article also contains several managerial implications, including a need for complementarity of marketing strategies for both acquired and non-acquired banks. Jaume Llorens Monzonis (2006)10 analysed the dimensionality of the concept of perceived value in the banking sector, adapting the GLOVAL scale of measurement of perceived value to the banking services sector. Design/methodology/approach – A total of 200 customers of financial entities were surveyed, and structural equations models were used to verify the reliability and validity of the scale of perceived value. Findings – Perceived value is found to be a multidimensional construct composed of six dimensions: functional value of the establishment, functional value of the personnel;
9

David J. Urban, Michael D. Pratt (2000), “Perceptions of banking services in the wake of bank mergers: an empirical study”, Journal of Services Marketing, Volume: 14, Issue: 2 Page: 118 – 131, MCB UP Ltd
10

Juan Carlos Fandos Roig, Javier Sanchez Garcia, Miguel Angel Moliner Tena, Jaume Llorens Monzonis (2006), “Customer perceived value in banking services”, International Journal of Bank Marketing, Volume: 24, Issue: 5, Page: 266 – 283, Emerald Group Publishing Limited

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functional value of the service; functional value price; emotional value; and social value. A scale of overall perceived value in financial services was obtained, composed of six dimensions and represented by 22 items that are significant for their measurement. Research limitations/implications – In future studies it would be interesting to include items to measure non-monetary sacrifices, such as waiting times, queues, etc. Practical implications – A tool for measuring the value of financial entities as perceived by the customer is presented; with it the value perceived by customers can be quantified, evaluated and monitored. Originality/value – This study proposes a scale of measurement of the value perceived by consumers in the banking sector which incorporates valuations of functional aspects and of affective aspects, thus obtaining an overall quantification of the value perceived by the customer of the purchase made. Arturo Molina, David Martín-Consuegra, Águeda Esteban (2007)11 investigated the impact of relational benefits on customer satisfaction in retail banking. This paper presents a causal model that identifies a connection between the relational benefits achieved through a stable and long-term relationship with a given bank and customer satisfaction with retail banking. The results show that confidence benefits have a direct, positive effect on the satisfaction of customers with their bank. However, special treatment benefits and social benefits did not have any significant effects on satisfaction in a retail banking environment. This study was conducted in a retail banking setting, and may not be generalized in other service sectors. It has also focused on the relationship between relational benefits and satisfaction, while other factors that may have an influence on consumer satisfaction have not been considered. Practical implications – The findings suggest that banks can create customer satisfaction through relational strategies that focus on building customer confidence. Therefore, frontline employees should be committed to establishing and maintaining confidence benefits for customers.

11

Arturo Molina, David Martín-Consuegra, Águeda Esteban (2007), “Relational benefits and customer satisfaction in retail banking”, Journal: International Journal of Bank Marketing, Year: 2007, Vol.: 25, Issue: 4, Page: 253 – 271, published by Emerald Group Publishing Limited

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Al-Hawari, Mohammad; Ward, Tony; Newby, Leonce (2009)12 highlighted the significance of service quality factors on customer retention within the Australian traditional and automated banking contexts. Design/methodology/approach - The relative importance of traditional and automated service quality factors on customer retention was examined with the intention of determining which indicator factors are likely to have a significant impact on customer retention. The paper then proposes a conceptual model of the relationship between service quality factors within the two contexts and customer retention. AMOS 5 was used to test for the hypothesized relationships. Findings - All of the traditional service quality factors have positively influenced customer retention. Conversely, this paper finds that automated service quality in general has no positive significant influence on customer retention. Research limitations/implications- This research was applied to the financial institutions in Queensland, Australia. Further testing of the proposed conceptual model across different industries and countries is needed to determine the generalisability and consistency of this study's findings. Practical implications - The proposed model of retention prediction has the potential to help Australian bank managers to strengthen the customer-bank relationship and, ultimately, to enhance customer retention ratios. Originality/value - The key contribution of this paper is a conceptualisation of customer retention predictors that takes into account both traditional and automated service customer interactions with banks.

12

Al-Hawari, Mohammad; Ward, Tony; Newby, Leonce (2009), “The relationship between service quality and retention within the automated and traditional contexts of retail banking”, Journal of Service Management, Volume 20, Number 4, 2009 , pp. 455-472(18), Emerald Group Publishing Limited

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CHAPTER-II INTRODUCTION TO THE ORGANIZATION 2.1 PROFILE OF THE BANK Cooperative institutions are intended for the welfare of the common man particularly the poor section and have continues to play a vital role in the economic and social upliftment of the masses. The Citizens Urban Cooperative Bank Ltd., Jalandhar was started in 1989 with a meagre capital, few members and small operational limits of Jalandhar and Jalandhar Cantonment has become a leading Urban Cooperative Bank in Northern India in a short span with total business mounting to about Rs. 330 crores and ten branches spread over in the area of operation of the bank. The Bank has brought a revolution in Banking segment in its area of operation and is contributing to the needs of the localities by providing attractive saving schemes and need based credit. The Bank is pioneer in introducing cooperative movement for urbanities and providing them an opportunity to become a partner in banking industry and avail triple benefits as an investor, depositor and borrower. The Bank is in profit since its inception and is sharing the same with its members. The Bank has made tremendous progress across the border since its inception. The membership of the Bank has risen from 62 members to more than 7000 and paid up Capital from 10500.00 to Rs.6.22crores. As on 31.12-2008, the Bank’s Own funds have grown to Rs. 28.26crores and working capital to Rs. 272.95crores which is a manifestation of peoples confidence in the area of operation of the Bank. The deposits of the Bank have grown to Rs. 229.44 crores and advances have increased to Rs. 120.30crores. All the branches of the Bank are in profits and for the financial year 2007-08, the bank has shown a net profit of Rs. 129 lacs. The Bank is accredited with highest Audit Classification ‘A’ by Registrar Cooperative Societies, Punjab since its inception. The Bank has created a niche in its area of operation. The Bank is providing credit for all viable economic activities in its area of operation and catering to all segments of society. The Bank has taken initiative in promoting and providing financial assistance to small scale industry, traders, shop keepers, unemployed youth and Weaker

36

Sections. The inbuilt feature is to deploy funds in its area of operation only, thus contribute and serve as an ideal banking vehicle for economic development of these Districts. The Credit Deposit (CD) ratio of the Bank is 53% as against 31% in its area of operation. 2.1.1 Addresses and Phone No's of the Branches Branches Main Branch, Opp. Circuit House, Jalandhar Partap Bagh, Mandi Fenton Ganj, Jalandhar Banga Road, Nawanshahar Mithapur Road, Ravinder Nagar, Jalandhar Kishanpura Chowk, Ind. Area Road, Jalandhar New Sabzi Mandi, G.T. Road, Jalandhar G.T. Road Banga G.T. Road, Opp. GNA, Goraya Mandi Road, Nurmahal 2.1.2 Management :The Citizens Urban Coop Bank Ltd., Jalandhar is a body corporate registered under the Punjab Cooperative Societies Act 1961 and the rules framed there under. The Bank functions according to the Bye-Laws framed by it and registered by the Registrar, Cooperative Societies, Punjab. The Bank is governed under the democratically elected Board of Directors who are well reputed persons of the area. The term of the board is 5 years. The Board has employed a Chief Executive Officer and further staff to run day to day working of the Bank. The Board of Directors under the chairmanship of Sh. K.K. Sharma have drawn up ambitious futuristic plans to compete with other banking institutions in the region. The Board is well diversified and is being represented by various sections of the society including bankers, educationists, cooperators, industrialists and traders. The Board is further assisted by experienced professionals like Financial Consultants, Legal Advisors, internal and external auditors. 2.1.3 Recovery Management Phone No.s 222007, 224712, 235364 241006, 223382 20837, 24467 273170, 462170 294011, 297085 204056 61084, 63012 63763 42994

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The Bank has also constituted a separate Recovery Cell, directly under the Chief Executive Officer, headed by experienced banking professional which is responsible for liquidating stressed accounts and supporting the branches in recovering overdues which are not possible through ordinary ways. With consistent efforts, the NPAs of the Bank have considerably reduced and are heading for major decline in future. Efforts are made that there are no overdues exceeding 60 days in current borrowal accounts. 2.1.4Human Resource Development The Urban Cooperative Bank has always considered human resources as its most important critical success factor. The bank gives utmost priority to career planning and development of its workforce to enrich and enhance their skills. The involvement of the staff at all levels has been one of the factors for result achieved by the bank The changes in present banking are witnessed very often. to develop schemes and knowledge of all categories of employees ,training progrmmes are designed at various institutions Human Resource development always find a high priority on the Bank's agenda in the past and in the financial year 2007-08 too, number of measures will be taken to upgrade and fine tuning the knowledge of it's officers and other sub-ordinate staff including sending them to training in various institutes including Agriculture, Coop. Staff Training Institute, Jalandhar an undertaking of Punjab State Co-op. Bank Ltd. and Vai-Kunth Mehta Insitute of Co-op. Management, Pune. Besides that Executives & Directors will be send to attend various seminars and workshops which will be conducted by NAFSCOB, New Delhi to educate them about the Banking regulation act and cooperative societies act. Policy decision is the major role of board of directors.To update their banking related knowledge training programmes by various agencies were was also arranged for the directors and directors were sent to participate.

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2.1.5 Information Technology With globalization and opening up of economy, the banking sector has become very competitive and the cooperative banks have to upgrade them at par with nationalized banks, foreign banks and private banks. This bank has also taken a big leap forward by computerizing and automating all its branches with plush interiors. In the present bank scenario ,technology upgradation has become a buzzword and therefore, to offer value added services, core banking solution is accepted. In the near future all the branches will be interconnected. Cash counting machines have also been provided in all the branches which would help in saving valuable time of the customers.

2.1.6 Audit and Control With a view to detect and rectify the deficiencies in day to day's working as early as possible, the system of concurrent audit of each branch and head office is continued during the year under review. This system help to maintain transparency and accuracy in bank's working to improve the qualitative work, inspection cell is also functioning the accounts of the bank are audited by the statutory authority, the chief auditor, cooperative societies Punjab. All this is possible due to cooperation of the auditors in completing the audit in time and for the suggestions in improving the working of the bank. Further to have the system full proof, the inspection is also conducted by the reserve bank of India with regular intervals. In view of banks satisfactory performance on all fronts, bank has been placed under audit classification 'A'.for the year 2007-08.this bank has always been classified 'A' since its inspection.

2.1.7 Meeting Social Obligations

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The bank has fully shouldered its responsibility towards meeting its social obligations and has participated in socio economic activities which directly resulted in betterment of financial status of down-troddens. The bank has participated in various socio -economy activities and sponsored various sports tournaments, medical camps and cultural programs during the financial year 2007-08. 2.1.8 Financial Inclusion In response to the government concerns on the large sections of population being

financially exclude despite being strong presence of the commercial banks, the government and reserve bank of India is continuing to push the banks to open "NO FRILL ACCOUNT" of people and made some simplifications with "KYC"norms .In this respect ,the bank has started the "JANTA BACHAT KHATA" scheme to meet the requirement of poor people who are unable to open the account with handsome amount. This scheme is getting popularity among the needy and deserving memebers of the society and more and more members of the public are coming under the banking fold. The bank endeavour for 100% financial inclusion at all its centers

2.1.9 Cash Reserve Ratio and Statutory Liquidity Ratio As every cooperative bank is required to maintain 3% cash reserve ratio and 25% statutory liquidity ratio of the time and demand liabilities as per R.B.I guidelines and on the basis of the same, the urban cooperative bank is continuously maintaining CRR and SLR much above the prescribed stipulation of R.B.I Required as on 31.03.2008 Cash Reserve Ratio Rs. 6.73 crores Maintained Rs. 9.11 crores

Statutory Liquidity Ratio

Rs 56.13 crores

Rs. 62.38 crores

2.1.10 Construction of Corporate and Head office at model town road Jalandhar

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during a span of more than 20 yeras ,the bank has achieved substancial growth and expanded its business tremendously.The present space for the head office located in a rented bulilding has fallen short due to increaese in size of bank.The bank has aquired its own land measuring 11000sqft in 1987 at the most prestigious location at model town road ,new jawahar nagar jalandhar.Construction of the corporate and head office of the bank about 5500 sqft is in full swing which is undertaken by MARKFED the bank has already set a side Rs 5.79 crore out of profit for the construction of the new building. The beautiful bulilding of new corporate and head office will add tremendous value with regard to profitability ,business and credibility of the bank. The bank has shifted its head office on july 10 ,2009.the new head officer has complete set up comprising of offices top management ,board room.conference hall,credit departmant,finance department,establishment,IT etc.The new head office branch has an area of 5500 sqft which is fully automated and computerized. It has extended business hours from 8.00 am to 8.00pm in the new branch to provide exclusive facilities to the customers.It operate on single window service and would have all types of deposit,loans and insurance products.further there is no branch of any commercial bank within a radius of 1.5 KMS from the centre. This area is thickly populated and has commercial and residential buliding.the new branch will get tremendous response due to this huge potential. The new branxch would have an on site ATM and would be connected to all branches.The new branch will act as a nodal branch for all inter branch,intra bank transactions and main centralized activities of the bank will be conducted in new branch.

2.2 HISTORY OF THE BANK The Citizens Urban Co-op. Bank Ltd., Jalandhar which has emerged as a leading Urban Co-op. Bank of Northern India was infact conceived in the late 80's and started functioning on 17/11/1989 after receiving final nod from the Reserve Bank of India with 62 members and share capital of Rs. 10,500/- within operational limits of Jalandhar and Jalandhar Cantonment.

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Since then, Citizens Bank has made a tremendous progress in all the Areas of Banking Sphere. Only recently, In the financial year 1999-2000, Citizens Bank has set up a milestone in the Urban Co-op. Banking by achieving a 100 crores Deposit target within 10 years of it's working, thereby becoming the only Urban Co-operative Bank of Northern India who has met the 1st condition of the R.B.I. for getting schedule Bank status. Marching ahead, Bank's Deposits now stands at 117.42 crores which is in itself a manifestation of people's confidence residing in the area of operation of the Bank. Citizens Bank which has nine Branches made consistent profit gain right from it's inception and has also earned a net profit of Rs.3.64 crores during the last financial year 2000-01. Bank has achieved this profit growth despite the fact that rate of interest was reduced from 0.5%-1% during the last financial year. The most satisfying aspect for the Bank management is that, all the nine branches have recorded profit in the financial year 2000-01. Bank has also taken initiative in the loan sector & advanced Rs. 88 crores to weaker sections of the society, small-scale industries, housing, traders, shopkeepers and unemployed youths in the financial year 2000-01. This advancement has registered an increase of Rs.7 crore from the financial year 99-2000. Further Bank has distributed 17% Dividend to it's members for the year 99-2000. The present membership of the Bank now stands at 6566 and share capital has increased to Rs. 4.09 Crores. Whereas Bank's own funds and working capital has touched to Rs. 12.19 crores and Rs. 137.52 crores respectively in the financial year 2000-01. Infact, Bank has achieved it's objective to a great extent by helping the people of weaker sections, financing S.S.I.'s and developing infrastructure in the area of operation of the Bank. All the nine branches of the Bank has been approved from R.B.I to open N.R.I. & N.R.E. Accounts.

2.3 ACHIEVEMENTS AND MILESTONES

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In order to encourage the best and honest employees of the bank and to create a competition amongst the staff members to achieve their targets and to improve their service ,the bank has started to honour the best worker of every branch.18 staff members were honored and awarded by the hon’ble Sh. Manoranjan Kalia, cabinet minister, local bodies and industries, Punjab in the special general body meeting of the bank held on 16.06.2007.

In the memory of founder chairman of the bank sh. Vijay sethi ,the bank started giving 'Vijay Sethi award' to best cooperative officer of the department and best cooperator state every year.for the year 2007, the bank honured Miss kusumjit Sidhu, IAS, financial commissioner ,cooperation, punjab as best cooperative officer and Sh .Sukhdeep Singh as best cooperator of the state.

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To encourage the staff , the bank management honoured the staff members whose working during the year found outstanding.

Further keeping in view the competition of the banking industry and attractive packages given to the staff by the private as well as foreign banks, the bank has introduced incentive scheme for the staff in which incentive to the staff will be given on achieving the yearly target. With the implementation of this scheme, the staff will be benefited financially, the staff will be motivated, and their morale will be boosted up.

2.4 SERVICES PROVIDED BY THE BANK The citizen urban cooperative bank-a leader in the urban cooperative banking sector in northern India, realizing the need of the hour, has already initiated steps to prepare itself to face the new challenges and to win the confidence of the public by providing a customer friendly attitude and atmosphere. With a view to having a very clear and focused approach strategies, bank has computerized, air-conditioned and automated all its branches. New departments such as retail banking, npa management and recovery ,distribution of third party product such as life insurance were formed with a view to adopt a more focused approach. The modernization of the service and improvement in the infrastructure of the bank has given big boost in the working of the bank. Bank has continued to provide customer friendly with precision ,regularity and efficiency. Similarly anti-money laundering standards have been set up in the bank as per R.B.I guidelines. Customer care is always the first and foremost duty of the Citizens Bank. Keeping this aspect in mind, Bank is planning to introduce evening service at one of it's Branch. Besides that, for saving the valuable time of it's esteemed customers and to provide better and quick service, currency counting machines would be installed in the remaining seven branches. This facility has already been provided in the Head Office and it's Mithapur Branch.

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Deposits Deposits are the prime source of funds for the banks. The enormity of deposits replicates the amount of profit that a bank can make. This is so because large chunk of deposits are given away as loans which renders higher interest rate than that given on deposits. So, it is customary to encourage large number of huge deposits. This can be done by providing different types of deposits according to the needs of varied customers.

30000 25000 20000 15000 10000 5000 0 2004-05 2005-06 2006-07 2007-08 17077 18256 24023 20502

26205

DEPOSITS (IN LACS)

2008-09

Thee deposits as offered by Urban cooperative bank are explained below A. Current B. Savings C. Special savings D. Loan Compulsory E. Nominal Compulsory F. Fixed G. Recurring

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CURRENT ACCOUNT It is basically used for business purposes. It doesn’t give any interest on deposits. It can be held in the name of firms (include partnership firm, pvt. Ltd. Co., ltd. Co., trust, association), person. Its prime purpose is to serve the customers for their daily business transactions. A customer having current account can withdraw money in the form of cash or cheque in a infinite number of times and so is unrestricted.Current Account is primarily meant for businessmen, firms, companies, public enterprises etc. that have numerous daily banking transactions. Current Accounts are cheque operated accounts meant neither for the purpose of earning interest nor for the purpose of savings but only for convenience of business hence they are non-interest bearing accounts. In a Current Account, a customer can deposit any amount of money any number of times. He can also withdraw any amount as many times as he wants, as long as he has funds to his credit. Generally, a higher minimum balance as compared to Savings Account is required to be maintained in Current account. As per RBI directive banks are not allowed to pay any interest on the balances maintained in Current accounts. However, in case of death of the account holder his legal heirs are paid interest at the rates applicable to Savings bank deposit from the date of death till the date of settlement. Because of the large number of transactions in the account and volatile nature of balances maintained, banks usually levy certain service charges for operating a Current account. Current Account can be opened by: An individual who has attained majority. Sole proprietorship concerns, Partnership concerns, Hindu Undivided Family (HUF), Limited Companies. Clubs, Societies, Trusts, Executors and Administrators. Others - Govt. and semi Govt. bodies, local authorities etc.

Documents Required for Opening a Current Account Following documents are required in case of individuals Two passport size photographs ,Proof of residence i.e. Passport/driving license/Gas / Telephone / Electricity Bill/ Ration card/voters identity card ,An introduction of the person from an existing account holder., PAN number / Declaration in form no.60 or 61 as per the Income Tax 46

Act 1961 Different set of documents are required as per bank's norms if the account is opened by partnership firms, private and public limited companies, HUFs / specified associates, societies, trusts etc.

SAVING ACCOUNT Savings Bank Accounts are meant to promote the habit of saving among the citizens while allowing them to use their funds when required. The main advantage of Savings Bank Account is its high liquidity and safety. On top of that Savings Bank Account earn moderate interest too. The rate of interest is decided and periodically reviewed by the Government of India. Presently, the rate of interest is 3.5% compounded half yearly. Savings Bank Account can be opened in the name of an individual or in joint names of the depositors. Savings Bank Accounts can also be opened and operated by the minors provided they have completed ten years of age. Accounts by Hindu Undivided Families (HUF) not engaged in any trading or business activity, can be opened in the name of the Karta of the HUF. The minimum balance to be maintained in an ordinary savings bank account varies from bank to bank. It is less in case of public sector banks and comparatively higher in case of private banks. In most of the public sector banks, minimum balance to be maintained is Rs. 100. In accounts where cheque books are issued, a minimum balance of Rs. 500/- has to be maintained. For Pension Savings Accounts, minimum balance to be maintained is Rs. 5/- without cheque facility and Rs. 250/- with cheque facility.

Things to Consider While Opening a Savings Account It is advisable to seek the following information from bank before opening the account: • • • • Minimum balance requirements. Penal provisions in case the balance falls below the minimum stipulated amount Penalty in case of return of cheques issued or instruments sent on collection. Collection facilities etc. offered and charges applicable.

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Details of charges, if any for issue of cheque books and limits fixed on number of withdrawals, cash drawings, etc.

Document Required For Opening a Savings Account Two passport size photographs ,Proof of residence i.e. Passport/driving license/Gas / Telephone / Electricity Bill/ Ration card/voters identity card, An introduction of the person from an existing account holder,PAN number / Declaration in form no.60 or 61 as per the Income Tax Act 1961.

SPECIAL SAVINGS This concept and deposit was prevalent earlier, but now it is not in use. In this deposit a customer can withdraw the money only3 times (less than savings ie 5 times). However, this deposits gives an interest at the rate which is higher than the savings account. Earlier, when it was in use these deposits gave a return of 0.5% higher than that of savings deposits

LOAN COMPULSORY These deposits are made compulsory for a customer who wants to take a loan from JCC. For this customer it is required to keep 2.5% of the loan amount in these deposits. It gives the same interest rate as saving deposits.

NOMINAL COMPULSORY It is similar to loan compulsory deposits in most ways. However, the difference is that these deposits are held by customers having less loan amount. These deposits are there to help small loan takers, so that these people don’t need to keep 2.5% of their loan amount as deposits. It gives the same interest rate as saving deposits.

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FIXED DEPOSITS Bank Fixed Deposits are also known as Term Deposits. In a Fixed Deposit Account, a certain sum of money is deposited in the bank for a specified time period with a fixed rate of interest. The rate of interest for Bank Fixed Deposits depends on the maturity period. It is higher in case of longer maturity period. There is great flexibility in maturity period and it ranges from 15days to 5 years. The interest can be compounded quaterly, halfyearly or annually and varies from bank to bank. Minimum deposit amount is Rs 1000/and there is no upper limit. Loan / overdraft facility is available against bank fixed deposits. Premature withdrawal is permissible but it involves loss of interest. in the meeting of the board of directors held on 29.06.2009 the rate of interest on domestic term deposits have been revised w.e.f 01.07.2009 and the new rate of interest on domestic term deposits are as under

Rate of Interest on Domestic Term Deposits : 46 days to 90 days 91 days to180days 181 days to less than one year One years to Two years Above Two years to Five years Above Five years to Ten years 5.00% 6.25% 7.25% 8.00% 8.10% 8.25%

1/2% more interest on domestic term deposits above 180 days will be given to pensioners ,senior citizens. chartiable trusts and institutions, urban cooperative societies, freedom fighters, widows and female divorcees. Things to Remember Before Opening a FD Account Before opening a fixed deposit account, check the financial position of the bank. Also, try to check the rates of interest for different banks for different periods. Instead of putting a big amount in one fixed deposit, keep the amount in five or ten small deposits. This way,

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in case of any premature withdrawal of partial amount, then only one or two deposits may need to be prematurely encashed. Thus, the loss of interest will be less than if a single big deposit were to be encashed. Check deposit receipts carefully to ensure that all details have been properly and accurately filled in. Do not leave the renewal column unfilled. Otherwise, on maturity the fixed deposit amount will go back into an FD. Before investing in a FD it is important to consider the rate of interest and the inflation rate. A high inflation rate can eat into your real returns. So, it is vital to have a look at the inflation rate before arriving at the real rate of interest. If the deposit is withdrawn prematurely, then a penal interest rate is charged as follows. Penal interest rate for FD Time from subscription Less than 1 year is 1% 1 to 3 years is 2% More than 3 years is 3%.Note that no penal interest is charged to the heirs of FD holder who has died in the duration of the maturity of FD.

Advantages of Fixed Deposit • Fixed deposits with the banks are nearly 100% safe as all the banks operating in the country, irrespective of whether they are nationalised, private, or foreign, are governed by the RBI's rules and regulations, and give due weightage to the interest of the investor. Till recently, all bank deposits were insured under the Deposit Insurance & Credit Guarantee Scheme of India, which has now been made optional. Nonetheless, bank deposits are among the safest modes of investment. • One can get loans up to 75- 90% of the deposit amount from banks against fixed deposit receipts. Though the interest charged will be slightly more than the interest earned by the deposit.

Tax Implications • The amount invested in fixed deposits with a maturity period of 5 years in a Scheduled bank is eligible for tax deduction under section 80C. However, the interest earned on the deposit is taxable.

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Tax will be deducted at the source, if the interest income on a fixed deposit per annum exceeds Rs.10000.

At fixed deposits counter, depositor comes for three things as stated below1. Depositing new FDs 2. Renewal of matured FDs 3. Cash withdrawal from FDs Now, the procedure followed by the banker at Urban citizen cooperative bank when the depositor comes for the above stated three services is as follows 1. Depositing new FDs - Here the depositor can give cash, cheque of the same bank (UCB) , cheque of other bank. The pre requisites for this are FD form (given in Appendix 4), Photo proof, PAN card . The depositor also mentions the time period for which he wants to deposit the amount. After completing the formalities on the depositor side the procedure followed by banker is He follows the path: Fixed master transaction create new which is applicable to UCB only. Here he creates new account where the account number is automatically given by the system. In the new account the banker enters the period for which the deposit is to be kept and rate of interest for that particular time period. The print of the receipt created is taken and is given to the customer. 2. Renewal of matured FDs -Here depositor comes for renewal of his FDs. He follows the following procedure. a. He should have brought the earlier receipt of his FD. b. He should mention the time for which the FD should be renewed. c. After this banks fill up a slip containing FD a/c number, name, matured amount, date (all this data from earlier receipt) d. After this the officer debits the current receipt . Here a/c number, receipt number is entered and then the receipt is debited. e. Then credit to other receipt is done .Here the banker enters the details of new receipt such as date for renewal, period for which FD should be renewed and amount f. Thereafter print of the new receipt is taken which is given to the client. 51

3. Cash withdrawal for FDs - Here depositor withdraws cash and first and fourth step of the above procedure is followed. That is only the receipt is debited. After this for the customer to withdraw the cash, the amount is credited to savings a/c (If he is having the a/c in the UCB) or he is given pay slip (if he is not having a/c in UCB).

RECURRING DEPOSIT Under a Recurring Deposit account (RD account), a specific amount is invested in bank on monthly basis for a fixed rate of return. The deposit has a fixed tenure, at the end of which the principal sum as well as the interest earned during that period is returned to the investor. Recurring Bank Account provides the element of compulsion to save at high rates of interest applicable to Term Deposits along with liquidity to access those savings any time. Since a recurring deposit offers a fixed rate of return, it does not provide protection against inflation. There is great flexibility in period of deposit with maturity ranging from 6 months to 120 months. The minimum monthly deposit varies from bank to bank. In most of the public sector banks, one can start a Recurring Deposit Account with a monthly installment of Rs. 100/- only. There is no upper limit on investing. The rate of interest varies between 7 and 11 percent depending on the maturity period. Loan/overdraft facility is also available against Recurring Bank Deposits. The deposit for RD account is paid in monthly installments and each subsequent monthly installment has to be made before the end of the calendar month and is equal to the first deposit. In case of default in payment, penalty is levied for delayed deposit at the rate of Rs. 1.50/- for every Rs. 100/- per month for deposits up to 5 years and Rs. 2/- per Rs. 100/- in case of longer maturities. In case of Recurring Deposit being closed before completing the original term of the deposit, interest will be paid at the rate applicable on the date of deposit, for the period for which the deposit has remained with the Bank. Premature withdrawal is also permissible but penalty is levied. TDS is not applicable on Recurring Deposits.

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How to open a RD Account A Recurring Bank Deposit account can be opened at any bank that offers this facility. However, some banks insist that you open a savings bank account with them to operate a Recurring Deposit account.

Total deposits of the bank as on March 31,2008 were 240.23 as against Rs 205.02 crores as on March 31,2007 registering an increase of 22.46%. The deposit portfolio of bank is diverged with large number of small depositors comprising of pensioners and senior citizens,which enables the bank to mitigate against any unforeseen risks.The growth in deposits is primarily attributed to the personalized service approach of the bank and relationship with the local community .As matter of cooperative philosphy and social measure ,the bank is giving higher rate of interest ie 0.5% above the scheduled rates on deposits from senior citizens ,pensioners ,charitable trusts and cooperative societies. The bank pays 8.5 % per annum to senior citizens and pensioners. Being member of the Deposit Insurance and Credit Guarantee Corporation (DICGC),under whom,the money of the depositors is insured and its premium upto March,2009 has already been paid to the said institution by the bank. As advised by the reserve bank of india, "Know Your Customer"(KYC) policy is under strict implementation.

Loans and Advances

LOANS One of the reasons for boom in Indian economy is that now a days loans are easily available and the rate of interests at which they are available are very reasonable. Urban citizen cooperative bank is giving loan for and loan against any and every thing. Government too is encouraging people to take loans for certain purposes. For example, government is encouraging people to take housing loans by giving tax concessions

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14000 12000 10000 8000 6000 4000 2000 0 9567 10429 10344

13189

13980

LOANS AND ADVANCES(IN LACS)

2004-05 2005-06 2006-07 2007-08 2008-09

.Following are the some types of loans provided by urban citizen cooperative bank-

Personal loan/Consumer loan - Personal loan is a lump sum amount that a person take from a bank . Such loans help to take care of your immediate requirements without much of a hassle. In fact, personal loan is one of the quickest ways of borrowing money. Also, no questions regarding the end use of the loan are asked. You can use the loan amount for any purpose such as home renovation, marriage expenses, medical expenses, holidays, consumer durables, higher education etc. While applying for the loan, the lender usually conducts a credit worthiness check, before giving the loan. Personal loans are repayable in equal monthly installments (EMIs) and the loan tenure varies from 1 to 5 years. The maximum amount of personal loan for which you are eligible depends upon your take-home salary. The exact loan amount depends on your eligibility and takes into account many other things as well, like your credit rating, job security, residential location and the ability to repay the loan amount in time. You can also apply jointly with a co-applicant, say your spouse for personal loan. This allows you to increase your loan eligibility, as the income of your spouse is also added to your income, for the purpose of calculating the total loan amount. The loan range in case of personal loan is Rs. 50,000 to Rs. 20, 00,000.

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As personal loans are given without any security and involve a high risk, the interest charged is usually more as compared to other loans, usually varying from 12 to 24%.Urban citizen cooperative bank is providing personal loan @14.00% with effect from 1 July, 2009. Apart from this, interest processing fee is also charged from the borrowers. Processing fee is payable at the time of processing of loan application. A prepayment fee is payable in case you decide to pre-close your loan account. Both processing fee and pre-payment fee are in the range of 2-3%. You can get the benefits of preferred interest rates, priority processing and simpler documentation, if you are an existing customer with the bank. Generally, personal loans are sanctioned within 72 hours. Types of Personal Loans • A secured loan is one in which you need to attach a guarantee against the sum of money borrowed. This can either be in the form of your property or any fixed/movable asset. Upon default, there is a risk of the asset being taken over by the bank and sold off. • An unsecured loan is one in which no security needs to given for the money borrowed. However, in this case, the lender would be charging a higher rate of interest, taking into account the high risk involved in lending the sum. In case the recipient fails to repay the loan, the lender can seek legal help to make up for the loss incurred.

Eligibility Criteria for Personal Loans

Salaried Individuals • • • • Minimum Age of the Applicant - 21 years Maximum Age of Applicant at Loan Maturity - 58 years Minimum Employment Period - 2 years in total and 1 year at present organization Minimum Income - Rs. 8000 per month 55

Self Employed Professionals & Businessman • • • Minimum Age of the Applicant - 25 years Maximum age of Applicant at Loan Maturity - 65 years Minimum Business Period - Minimum 3 years in current business and 5 years total experience • Minimum Annual Income - Rs.60,000

Documents Required for Personal Loan • • Bank Statement for last three months (where salary/income is credited) Salary Slips for last three months (if salaried) or ITR for the last two years (if self employed) • Proof of Continuity in Current Job - Form 16 / Company Appointment Letter (if salaried) • Proof of Identity (Copy Of Passport / Driving License / Voters ID / PAN Card / Photo Credit Card / Employee ID Card) • • • Proof of Residence (Copy Of Ration Card / Utility Bill / LIC Policy Receipt) Proof of Qualification Highest Degree (for Professionals / Govt employees) For Professionals - proof of qualification, say degree, registration with professional council, etc. • Two passport size photographs

Auto loan With a plethora of auto loan opportunities available in India these days, it is now possible for you to buy your dream car within a matter of days. No need to save up money for making complete down payment at the time of buying. Urban citizen cooperative bank offer an easy auto loan service to provide its constomer satisfactory service. Just gather

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enough amount for the initial payment and pay the rest in easy installments, by taking up a loan. The best part about auto financing is that, apart from the new cars, loans are available for old cars as well. After you have decided to take an auto loan, check out the various schemes available in the bank. After undertaking a thorough research of each and every scheme, you will need to pick the one that suits you the most, in terms of interest rate, monthly installments, duration, and so on. The size of the loan will depend upon the cost of the vehicle and its type (standard or premium), along with the percentage financing you want or are being offered. Type of vehicle Three Wheelers/Scooter/Motor Cycle /Light Vehicle Car loans Upto Rs 4.00 lacs Car loans Above Rs 4.00 lacs Trucks and other Heavy Vehicles Rate of Interest 11.25% 11.25% 11.50% 13.50%

There is no necessity for any collateral to get a car loan from urban citizen cooperative bank Usually, the bank hypothecates the car in its name. The endorsement for hypothecation is made in the Registration Certificate (RC) book of the vehicle, which gets cancelled after the loan is repaid. Usually the tenure of auto loan varies from 1 to 5 years. However, Urban cizen cooperative bank has a schemes that offer loans for 7 years as well.

General Features • • • In case of a new car, loan amount is up to 90% of cost of the car. In case of used car, loan amount is up to 80% of the car. The maximum loan amount is up to 3 times the annual salary (for salaried professionals) or 6 times the annual income (for self employed professionals). • Urban citizen cooperative Bank generally offer a preferential treatment to their existing customers. If you have savings or current account with a bank, it is easier

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to get the loan and you might also get preference in terms of rate of interest. • • Loan is given for a period of 1 to 5 years. If you want to go for an early settlement of the loan amount, certain charges are taken as a penalty. • • For the purpose of auto loan, the interest is calculated on compound basis. In case you have been declared bankrupt, applied for bankruptcy, defaulted in some loan in the past or a court case pending against you, it will be very difficult for you to get an auto loan. • The rate of interest for an auto loan is 11.25% percent.

Eligibility Criteria • • • Minimum Age of Applicant While Applying For Loan: 21 years Maximum Age of Applicant at Loan Maturity: 58 years Minimum Employment: 1 year in current employment and minimum 2 years of employment in general • • Minimum Annual Income: Rs 100,000 (net) Telephone: Must at Residence

Documents Required • Proof of Identity (Copy of Passport, PAN Card, Voters ID Card or Driving License) • Income Proof (Latest salary slip with form 16 - for salaried individuals or IT returns for the last two financial years - for self employed individuals and professionals) • Address Proof (Copy of Ration Card/Driving License/Voters Card/Passport /Telephone Bill/ Electricity Bill/Life Insurance Policy/ Pan Card) • • Bank Statement (For the last 6 months) Two passport size photographs

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Real estate is currently one of the fastest growing sectors in India. Banking sector is also registering profitable business since the last few decades, with the growth of real estate. Majority of the banks are also offering easy home loans at attractive rates to their customers. Now that getting a home loan is so easy, it seems everyone can fulfill his / her long cherished dreams of purchasing lands, building their houses and expanding their homes. Different types of home loans are tailored to suit the heterogeneous requirements of the customers. The description of some of the most common types of home loans is given Types Of Home Loans • Home Purchase Loans: This is the basic home loan for the purchase of a new home. • Home Improvement Loans: These loans are given for implementing repair works and renovations in a home that has already been purchased by you. • Home Construction Loan: This loan is available for the construction of a new home. • Home Extension Loan: This is given for expanding or extending an existing home. For instance, you may apply for a loan for the addition of an extra room in your home and for similar cases. • Home Conversion Loan: This is available for those who have financed the present home with a home loan and wish to purchase and move to another home for which some extra funds are required. Through home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need of pre-payment of the previous loan. • Land Purchase Loans: This loan is available for purchase of land for both construction and investment purposes. • Stamp Duty Loans: This loan is sanctioned to pay the stamp duty amount that needs to be paid on the purchase of property 59 below.

Type of Loan

Rate of Interest House and Building (Owned ) Upto to Rs 5.00 Lacs Above Rs 5.00 Lacs to 20.00 Lacs 10.25% 10.80%

Above Rs 20.00 Lacs to Rs 25.00 lacs(Maximum) 11.25% House and Buliding(Trust and Edu. Society) 13.00%

General Information • The loan amount is based on the repayment capacity of the customer. However, it cannot be more than 85% of the cost of the property (including the cost of the land). • The minimum term of home loan is 5 years, while the maximum duration for the loan is 20 years, subject to the retirement age of the applicant. • Home Loans can be applied either individually or jointly, with spouse, children (son or daughter) and even earning parents (father or mother), but if staying with the applicant and having regular income. • Home loan eligibility can be enhanced by repaying the outstanding loans, clubbing the income, increasing the home loan tenure and opting for a step-up loan. • The amount of loan sanctioned varies from bank to bank. Generally, the maximum loan amount granted for the applicant would be 80% to 85% of the cost of the home. • The eligibility for the applicant depends upon his/her capacity of repayment. It stiffens with the increase in home loan rates. • Processing charge, pre-payment penalties, commitment fees and miscellaneous costs accompany a home loan, in many of the cases.

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Eligibility Criteria • • The minimum age limit for the person applying for loan is 21 years. For Government employees and those working at public limited companies, the maximum age limit for applying for home loan is 60 years, while for salaried individuals, it is 58 years.. For self employed people, the maximum age limit is 65 years. • • The applicant should be graduate. The applicant should have a stable source of income, at the time of availing the loan and should have a saving history as well.

Documents Required Salaried Customers Application form with photograph Identity and Residence Proof Latest Salary-slip Self Employed Professionals Self Employed Businessman Application form with photograph Identity and Residence Proof Education Qualifications Certificate and Proof of business existence Last 3 years Income Tax returns (self and business) Last 3 years Profit /Loss and Balance Sheet Application form with photograph Identity and Residence Proof Education Qualifications Certificate and Proof of business existence Business profile Last 3 years Income Tax returns (self and business) & Last 3 years Profit /Loss and Balance Sheet

Form 16

Last 6 months bank statements

Education Loan Education is the essence of life. To ensure that no deserving student is denied education for want of funds, the government is promoting education loans in a big way. The basic aim or idea behind education loan is to bring education within the reach of students and help them improve their prospects in life. Any student who has secured admission in an 61

institute of repute, whose degree/diploma is recognized by University/Institute affiliated to any Central/State Statutory Body or recognized by AICTE (All India Council of Technical Education) and other institutes of repute, is eligible for educational loan. Education loans cover cost of the school/college fee, hostel expenses, and cost of books and stationery. Apart from this, any other expense required to complete the course can also be considered. The maximum amount of education loan is up to Rs. 7.50 lakh in case of studies in India and Rs 15 lakhs for studying abroad. The sum of money offered is against a third-party guarantee. The third-party guarantee can come from an uncle, neighbor or friend standing guarantee for the full amount of the loan. On an average, an education loan has to be repaid over a period of 5 to 7 years, with the provision of a grace period of one year after completion of studies. The loan money has to be repaid within 84 months in equated monthly installments (EMIs), commencing 12 months after course completion or 6 months after getting the job, whichever is earlier. In case of overseas study loan of 7 lakhs or above, the sum of money is usually given against fixed deposits, NSC certificates and property worth the loan amount. General Information for taking education loan from urban citizen cooperative bank is:

The exact rate of interest for education loan differs from one bank to the other. Apart from the fee of the course, a list of other expenses is also covered by

However, it usually varies from 10 to 15 percent.

education loans. However, the list depends upon the bank from which you are taking the loan.

Education loan can be offered at fixed as well as floating interest rate. The Generally, nationalized banks have been seen to offer variable interest rates, While applying for education loan, you will have to pay a percentage of the loan

interest is usually charged on a daily or monthly reducing balance.

while private and foreign banks charged fixed interest rates on education loans.

amount, as processing fee.

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In most of the cases, the entire fee for a course is not financed by the bank. A

certain proportion, called margin, has to be paid by the applicant. The margin requirements on education loans are not very rigid, with the average being 5 percent for studying in India and 15 per cent for abroad. The Urban citizen cooperative bank ltd is providing higher education loan at the rate of 12.50%. Marriage Loan Marriage is one of the most important events in a person's life. You want to make sure that all the arrangements are perfect and match the occasion. Marriage loans ensure that money is not a hindrance in marriage preparations. Several Indian banks offer loans for marriage. The loan is available for meeting the expenses of marriage of your own self as well as that of your daughter, son dependent sister and dependent brother. The marriage loan amount that can be sanctioned varies from bank to bank and from customer to customer, depending on a number of factors, such as, security/collateral offered by the customer, repayment capacity of the borrower, age of the borrower. Generally, it is twice the net annual income of the applicant. There is no fixed interest rate for marriage loans in India. For the loan to be disbursed, the bride and the groom should not be less than 18 years and 21 years of age respectively. Anyone can apply for the loan. He/she has to fill a form at bank outlet. The bank charges processing fees, at the time of submission of the form, which varies from one bank to the other. The repayment of the loan can be done either through monthly/quarterly/half yearly installments or under Equated Monthly Installmentsscheme. The eligibility criteria to take marriage loan from Urban citizen cooperative bank is
• • • • •

Minimum Age for loan: 21 years (groom)/ 18 years (bride) Maximum Age of Applicant at the Time of Loan Maturity: 60 years Net Annual Income: Rs. 1,44,000 pa Years in Current Job / Profession: 1 year Years in Current Residence: 1 year

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Business Loan Business loans are available to self employed professionals, firms and corporations, to meet their operating expenses, finance capital expenditure (or acquisition of fixed assets) towards starting or expanding a business. Even industrial units are given business loans, to swap existing high-cost debt from other bank / financial institution. Apart from providing funding, bank can also issue letters of credit or give a guarantee, on behalf of the customer, to the suppliers and even government departments, for the procurement of goods and services on credit. The maximum amount of business loan that can be sanctioned varies from bank to bank. However, the minimum loan amount is Rs. 25000 and maximum loan tenure is 5 years. Generally, no security is required for business credit up to a certain limit. For business loans above the limit, banks usually require a collateral security or a percentage of business loans as margin, in the form of fixed deposit with the bank. Business loans are similar to an overdraft and are available like a limit on current account. In this case, the interest is charged only on the actual amount utilized, rather the entire amount of loan. Types of Business Loans Professional Loans Professional loans, as their very name suggests, are provided to self employed professionals like Doctor, Chartered Accountant, Interior Decorator, Architect, Company Secretary, etc. Unsecured in nature, this type of loan is not given to manufacturing, trading or processing units. The amount of loan varies between Rs. 25000 to Rs. 25 lakh, considering the age of the applicant, his financial standing, his repayment capacity, tenure of the loan (maximum 5 years), etc. The urban citizen cooperative bank provides loans to professionals including doctors,chartered accountants,company secretaries,architects,engineers at the rate of 12.25%. In case of professional loans, the rate of interest depends upon the prime lending rate, is calculated on diminishing balance and can be on the fixed as well as fluctuating basis. In

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many cases, it depends upon the customer's profile and his financial capacity. The payment is made through EMIs and in only a few cases, tangible collateral security is required. Most of the finance companies also charge a process fee, usually 1% of the loan amount. Trade Loans Trade loans are provided to traders/ businessmen, so as to help them either open a new business or operate/expand an existing one. The amount of loan varies between Rs. 25000 to Rs. 100 lakh, considering the age of the customer, his financial standing, his repayment capacity, tenure of the loan, etc. The maximum duration for which the loan is given is 5 years and it has to be repaid through Equated Monthly Installments or EMI. The rate of interest depends upon the prime lending rate and can be offered on the fixed as well as fluctuating basis. There are many banks that require customers to furnish collateral security for the loan, in the form of mortgage of land (not agricultural land) and building. Apart from that, National Savings Certificates, Government Bonds, Bank's Term Deposits, Assignment of Life Insurance Policies, Approved Shares & Bonds (in the name of borrower/proprietor/partner/director) are also acceptable. Loan against home Loan against home connotes a loan that is given or disbursed against the mortgage of home, as a certain percentage of market value of the property. Generally, the loan amount that is sanctioned ranges from 40% to 70% of the market value, with a minimum threshold limit of Rs 2 lakh. A loan against home works out to be much cheaper than personal loan. The rate is lower because the lending entity has a security in the form of the housing mortgage vis-à-vis a personal loan that is given without any security. The tenure for repaying loan against home has an upper limit of 10 years. The loan can be taken for any purpose and the customer is not required to disclose the motive behind the loan, to the lending authority. The criteria for loan against home are same as that of a home loan. Part prepayment as well as full prepayment of the loan is generally allowed 65

by most lending institutions, though with a charge. Loan against property is available in case of both residential and commercial property. Many housing finance companies allow individuals to take loan against home even if they have taken a housing loan from them. Amount of Loan Depends Upon
• • • •

Your income, savings, debt obligations Cost/value of the property mortgaged Your repayment track record for other loans, credit cards, etc Number of years in service/ business

The Urban citizen cooperative bank ltd is providing loan against home in following manner: Loan against home a)Business purpose(upto 60.00 lacs) b)General purpose(upto rs 60.00 lacs) Rate of interest 13.75% 14.00%

Generally, loan processing charge of 2% is levied. Pre-payment is allowed after 6 months. Generally, prepayment charge equivalent to 4% of the outstanding principal is levied. In most of the cases, the minimum amount of loan against property is Rs 25,000 and the maximum amount is Rs 60.00 Lacs. The charges that might apply in case of loan against property are processing fee, pre-payment fee, charges for changing from fixed to floating rate of interest and charges for changing from floating to fixed rate of interest. Advances Advances of the bank registered a phenomial increase during the year under review .Total advances of the bank increased from Rs. 10344 lacs as on march 31,2007 to Rs. 13189 lacs as on march 31,2008 registring an increase of 27.50%.The bank is concentrating on retail advance mainly for small business,traders,small scale industries.The bank has well

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defined creditr policy which takes due care of concentration of advances in particular segment.As against the myth of charging higher rates by cooperative banks , the lending rates of the bank are competitive or lower in comparison with lending rates of other public and private sector banks following the philosphy of mutual benefit of cooperation .The bank is adhering to all sensitive norms like capital adequecy,asset classifications and provisioning.

Advances to Priority Sector Priority sector constitutes small scale industry,self employement scheme,housing and infrastructure finance and weaker section of the society.The reserve bank of india has set up statutory requirements for the banks to lend atleast 60% of the total advances to priority sector .The bank has met this obligation by lending 65.69% of the total advances to priority sector upto the year 2007-08.

Internet Banking: Internet banking involves use of internet for delivery of banking products and services. With internet banking is now no longer confirmed to the branches where one has to approach the branch in person, to withdraw cash or deposits a cheque or request a statement of accounts. In internet banking, any inquiry or transaction is processed online without any reference to the branch (anywhere banking) at any time. The Internet Banking now is more of a normal rather than an exception due to the fact that it is the cheapest way of providing banking services. Benefits of Internet Banking: • • • • • Reduce the transaction costs of offering several banking services and diminishes the need for longer numbers of expensive brick and mortar branches and staff. Increase convenience for customers, since they can conduct many banking transaction 24 hours a day. Increase customer loyalty. Improve customer access. Attract new customers. 67

Easy online application for all accounts, including personal loans and mortgages

Financial Transaction on the Internet: • • Electronic Cash: Companies are developing electronic replicas of all existing payment system: cash, cheque, credit cards and coins. Automatic Payments: Utility companies, loans payments, and other businesses use on automatic payment system with bills paid through direct withdrawal from a bank account. • • • Direct Deposits: Earnings (or Government payments) automatically deposited into bank accounts, saving time, effort and money. Stored Value Cards: Prepaid cards for telephone service, transit fares, highway tolls, laundry service, library fees and school lunches. Point of Sale transactions: Acceptance of ATM/Cheque at retail stores and restaurants for payment of goods and services. This system has made functioning of the stock Market very smooth and efficient. BANKING SERVICES IN INDIA • Cyber Banking: It refers to banking through online services. Banks with web site “Cyber” branches allowed customers to check balances, pay bills, transfer funds, and apply for loans on the Internet.

Automatic Teller Machine: The introduction of ATM’s has given the customers the facility of round the clock banking. The ATM’s are used by banks for making the customers dealing easier. ATM card is a device that allows customer who has an ATM card to perform routine banking transaction at any time without interacting with human teller. It provides exchange services. This service helps the customer to withdraw money even when the banks ate closed. This can be done by inserting the card in the ATM and entering the Personal Identification Number and secret Password. ATM’s are currently becoming popular in India that enables the customer to withdraw their money 24 hours a day and 365 days. It provides the customers with the ability to withdraw or deposit funds, check account balances, transfer funds and check statement

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information. The advantages of ATM’s are many. It increases existing business and generates new business. It allows the customers. • • • • To transfer money to and from accounts. To view account information. To order cash To receive cash.

2.5 PERFORMANCE OF THE BANK Although the bank is facing stiff competition from the public sector and new generation private sector banks with the enhanced technological advancement in banking operations, but due to focused personalized service approach to the members nad small depositors,the bank has shown tremendous growth in all areas of its operations and attain new heights of progress during the financial year 2007-08 as under. The financial performance of the bank for the year ended March 31,2008 at a glance is as under

Mar-07 2582.0 Gross income Profit before depreciation ,tax and provisions Depreciation on fixed assets Profit before provisions and contingencies Provisions and contingencies Profit after tax Working funds Paid up capital Reserves and surplus Net worth • 8 471.55 34.85 436.7 198.57 238.13 28048 662 2247 3037

Mar-08 1807.24 279.72 30.86 248.86 119.83 129.03 24003 577 2095 2674

Gross income increased to Rs 2582.08 lacs as against rs. 1807.24 lacs in the previous year registering a growth of 42.87%

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Bank has earned the interest of rs 2516.14 lacs during the financial year ended march 31,2008as against rs 1731.72 lacs in the previous year depicting a growth of 45.30%

• • • • •

The operating profit increased from rs 248.86 lacs to 436.70 lacsduring the year registering a 75.48%increase in operating profits The profit after tax has increased to 238 lacs as against 129 lacs registering a growth of 84.50% Fixed assets of the bank has increased from rs 189.16 lacs to rs 461.60 lacs Net worth of the bank has increased to rs 3037 lacs as against rs 2674 lacs due to increase in profitability Reserves and surplus as on march 2008 increased to rs 2247 lacs from rs 2095 lacs as on march 2007

2.5.1 Working capital The working capital during the financial year 2006-2007 has shown significant growth as it has gone to rs 280.48 crores as on march 31,2008 as against rs 240.03 crores a son 31.03.2007
35000 30000 25000 20000 15000 10000 5000 0 2004-05 2005-06 2006-07 2007-08 2008-09 20526 21878 24003 28048 30584

working capital(in lacs)

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2.5.2 Share capital The membership of citizen urban cooperative bank ltd jalandhar continued to grow during the year 2007-08 ,the paid up share capital of the bank has increased from rs. 5.77 crores as on march 31,2007 to rs 6.62 crores as on march 31,2008.
800 700 600 500 400 300 200 100 0 708

662 499 547 577

share capital paid up(in lacs)

200405

200506

2006- 200707 08

200809

2.5.3 Reserves and other funds The strength of any economic organization can be gauged from its own funds which plays a crucial role in enhancing members faith and confidence in ht eorganization.the bank has accumulated the reserves and other funds to rs 22.47 crores as on 31.03.2008

2.5.4 Investment The bank investment portfolio as on 31 st march ,2008 stood at rs 57 crores comprising of government securities .the bank has also classified its investment into ‘held to maturity’, ‘available for sale’ ‘held to maturity’ categories as per R.B.I guidelines. Further the bank is in process of introducing asset liabilities management guidelines.

2.5.5 Profitability Although the bank is facing stiff competition from the public sector and new generation private sector banks with the enhanced technological advancement in banking operations,

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but due to focused personalized service approach to the members and small depositors,the bank has been able to achieve fabulous profitability during the year. Net profit of the bank after tax increased to rs 238 lacs as against rs 129 lacs in the previous year showing a growth of 84.50%.during the year the bank has written off rs 84.79 lacs as bad debts and provided for 100% NPAs of merged kurali branch

2.5.6 Dividend Urban citizen cooperative bank constantly endeavours to share the growth of the bank with the share holders in the form of dividend distribution and higher capital appreciation by retaining adequate quantum of profits to meet future plans.the bank has given 12% dividend for the year march 31,2008 amounting to rs 75.02 lacs to the valued share holders of the bank. Citizens Bank which has nine Branches made consistent profit gain right from it's inception and has also earned a profit after tax of Rs 238.13lakhs during the last financial year 2007-08. Bank has achieved this profit growth despite the fact that rate of interest was reduced from 0.5%-1% during the last financial year. The most satisfying aspect for the Bank management is that, all the nine branches have recorded profit in the financial year 2007-08. Bank has also taken initiative in the loan sector & advanced Rs. 13189 Lacs to weaker sections of the society, small-scale industries, housing, traders, shopkeepers and unemployed youths in the financial year 2008. This advancement has registered an increase of 27.50% from the financial year 2007. Further Bank has distributed 12% Dividend to it's members for the year 2007-08. The present membership of the Bank continue to grow during 2007-08, the paid up share capital of the bank has increased from Rs 5.77 crores as on March 31 2007 to Rs 6.62 crore as on March31 2008. Whereas Bank's working capital has touched to Rs. 28048 Lacs in 2008 from 24003 lacs in year 2007.

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2.6 FUTURE PROSPECTS/ PLANS The citizens urban co-op. Bank, Ltd. Jalandhar is a fast growing institution which has made an indelible mark in the history of urban banking in Northern India. The Board of Directors under the chairmanship of Sh. K.K. Sharma have drawn up ambitious futuristic plans to compete with other Banking institutions in the region.. • New Branches : The citizens bank which has now nine branches is planning to setup three more branches during the financial year 2001-02, thereby increase the total number of branches to 12. The proposed places for the setting-up of new branches are : • • • Kapurthala Bhogpur J.P. Nagar, Jalandhar

The above branches are proposed to setup during the year subject to the approval by the RBI. For the early issuance of licenses, necessary correspondence is being made with the RBI. Besides that, to have it's own premises is the priority of every organisation. Keeping this priority in mind, citizens bank has decided to get the bank building constructed by the engineering cell of Punjab Markfed on it's 53 marla plot adjoining, Hotal Shangrila, Jalandhar and architectural assignment has already been assigned.

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CHAPTER-III OBJECTIVES OF THE STUDY & RESEARCH METHODOLOGY

3.1 OBJECTIVES This study has been conducted with a variety of important objectives in mind. The following provides us with the chief objectives that have tried to achieve through the study. The extent to which these objectives have been met could be judged from the conclusions and suggestions, which appear in the later of this study. • • • • • To study the services provided by Citizens Urban Co-Op. Bank Ltd. To study the satisfaction level of the customers with Citizens Urban Co-Op. Bank Ltd. To get information regarding different conditions to be fulfilled for opening an account in the bank. To know the type of services provided by Citizens Urban Co-Op. Bank Ltd. in deposits accounts. To know the staff attitude towards bank’s customers.

2.4 RESEARCH METHODOLOGY
Research means a search for knowledge or gain some new knowledge and methodology can properly refer to the theoretical analysis of the methods appropriate to a field of study or to the body of methods and principles particular to a branch of knowledge. A Research methodology has a specified framework for collecting the data in an effective manner. Research methodology means a "defining a problem, defining the research objectives, developing the research plan, collecting the information, analyzing the information and presentation of findings." Such framework is called "Research Design". The research process that was followed by me consisting following steps; A) Defining the problem B) Developing the research plan

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C) Collection of Data D) Analysis and Interpretation of Data E) Presentation of findings A) Defining the problem and research objectives

My research problem is to know services provided by Citizens Urban Co-Op. Bank Ltd.

B) Developing the Research Plan The development of research plan has following steps: 1. 2. 3. 5. Data source Research approach Type of Research Design Sampling plan i) ii) 6. Sample unit Sample size

4. Research instrument

iii) Contact methods Questionnaire Design

1. Data Source: The researcher can get two types of data: a) b) a) Primary Data Secondary Data

Primary Data Primary data is a data which did not exist earlier and is being collected by the researcher first time for its specific objectives. In other words, direct collection of data from the source of information, technology including personal interview, observation, Questionnaire and through schedules.

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b)

Secondary data Any data which have been collected earlier for some purpose are the secondary data. Indirect collection of data from sources containing past or recent past information like bank's brochures, annual publication, books etc. Secondary sources used are:  Text books  Internet sites  Newspaper articles  Broachers 2. Research Approach

Survey is best suited for descriptive and analytical research. Survey are undertaken to learn about people's knowledge, beliefs, preferences, satisfaction and so on and to measure these magnitudes in the general public. Therefore, I have done this survey for Descriptive and analytical research process. Descriptive research includes surveys and fact finding enquiries of different kinds. The main purpose is description of the state of affairs is noted down and analytical research used to analyze the material and facts. 3. Research instrument Questionnaire: Questionnaire (also known as self-administered survey) is a type of statistical survey handed out in paper form usually to a specific demographic to gather information in order to provider better service or goods. A document that contains a set of questions that has been specially formulated as a means of collecting information and surveying opinions, etc on a specified subject or theme, etc . A questionnaire was constructed for my survey. 4.Sampling plan Sample is a group of few items which represents the population or universe from where it has been taken. The sampling plan calls for three decisions;

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a) Sample unit b) Sample size c) Contact methods a) Sample unit – who is to be surveyed? The target population must be defined that has to be sampled. It is necessary so as to develop a sample frame so that everyone in the target population has an equal chance of being sampled. I have completed my survey in Jalandhar . b) Sample size - how many people have to be surveyed? Generally, large sample size gives more reliable results than small samples. The sample consisted of 100 respondents. The sample was drawn from people having different educational qualification, age group, occupation. The selection of the respondents was done on the basis of Simple Random Sampling. Simple random sampling is the technique in which every item in the universe and population has an equal chance of being selected in the sample. Researcher has no role to play or he cannot influence the selection process there is no possibility of biasness. It can easily assess the accuracy of estimate.

c) Contact methods Once the sampling plan has been determined the Questionnaire is how the subject should be contacted i.e. by telephone interview, personal interview, mail etc. Here, in my survey, I have contacted the respondents through personal interviews. 5. Questionnaire Design : There are 13 questions in my questionnaire and I asked all these questions from 100 respondents in Jalandhar City.

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C) Collecting the information After this, I have collected the information from the respondents with the help of Questionnaire. D) Data Analysis and Interpretation The next step is to extract the pertinent findings from the collected data. I have tabulated the collected data and developed frequency distributions. Thus, the whole data was grouped aspect wise and was presented in tabular form. Thus, frequencies and percentages were prepared to render impact of study. E) Presentations of findings This was the last step of survey.

3.3 LIMITATIONS OF THE STUDY Due to constraints of time and resources, the study is likely to suffer from certain limitations. Some of these are mentioned here under so that the findings of the study may be understood in a proper perspective. The limitations of the study are:  Some of the respondents of the survey were unwilling to share information.  The research was carried out on in-house customers. i.e. within the branch in the small city of Punjab viz. Jalandhar so the response may vary by including the respondents from other branches in other areas as well.  The research was carried out in a short period of 6 weeks as a part of summer training. Therefore the sample size and other parameters were selected accordingly so as to finish the work within the given time frame.  The information given by the respondents might be biased because some of them might not be interested to give correct information.

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CHAPTER-IV DATA PRESENTATION, ANALYSIS AND INTERPRETATION

Q1.

Do you have account in Citizens Urban Co-Op. Bank Ltd. ? Table 4.1 : Account in Citizens Urban Co-Op. Bank Ltd. Response Yes No Total No. of Respondents 100 0 100 %age of Respondents 100% 0% 100%

0%

100%

Yes

No

Graph 4.1 : Account in Citizens Urban Co-Op. Bank Ltd.

Interpretation : The study is limited to only those 100 respondents who have account in Citizens Urban Co-Op. Bank Ltd. From the above graph it is clear that all the 100% respondents have their account in Citizen Urban Co-op. Bank.

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Q2.Are you aware of banking services provided by Citizens Urban Co-Op. Bank Ltd.? Table 4.2 : Awareness of banking services Particulars Saving A/c Current A/c Fixed Deposits NRI A/c Loans Total No. of Respondents 56 20 10 4 10 100 %age of Respondents 56% 20% 10% 4% 10% 100%

4% 10%

10%

56% 20%

Saving A/c

Current A/c

Fixed Deposits

NRI A/c

Loans

Graph 4.2 : Awareness of banking services

Interpretation: The study shows that maximum numbers of people are aware of saving account of Citizens Urban Co-Op. Bank Ltd. From the above graph it is clear that 56% of the respondents are aware of Saving account, 20% current account, 10% loans and fixed deposits and remaining 4% are aware of NRI A/c.

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3.

How do you come to know about these services of Citizens Urban Co-Op. Bank Ltd.? Table 4.3: Source of information regarding services of the bank Particulars TV Friends Hoarding /Banner Newspaper Pamphlets Total No. of Respondents 10 30 10 35 15 100 %age of Respondents 10% 30% 10% 35% 15% 100%

15%

10%

30% 35% 10%

TV

Friends

Hoarding /Banner

Newspaper

Pamphlets

Graph 4.3: Source of information regarding services of the bank Interpretation : From the above graph it is clear that majority of the respondents have come to know about the services of Citizens Urban Co-Op. Bank Ltd. through newspaper. 30% respondents have come to know about the product & services of Citizens Urban Co-Op. Bank Ltd. through friends, 15% through pamphlets and 10% through hoarding, banner & television.

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4.

From how long the you are dealing with Citizens Urban Co-Op. Bank Ltd. ? Table 4.4 : Period of dealing with the bank Duration 1 Year 2-3 Years 3-5 Years More than 5 years Total No. of respondents 10 20 44 26 100 %age of respondents 10% 20% 44% 26% 100%

26%

10% 20%

44%

1 Year

2-3 Years

3-5 Years

More than 5 years

Graph 4.4 : Period of dealing with the bank

Interpretation : From the above graph it is clear that 44% of customers are dealing with Citizens Urban Co-Op. Bank Ltd. from last 3-5 years, 26% of customers are dealing with Bank from last more than 5 years, 20% of customers are dealing with Bank from last 2-3 years and 10% of them are dealing with Bank from last one year.

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5.

Why do you have opened account with Citizens Urban Co-Op. Bank Ltd. ?
Table 4.5 : Reasons to open an account in Citizen Urban Co-op. Bank

Responses Network Quick Services Brand Name One stop bank Total

No. of Respondents 24 52 14 10 100

%age of Respondents 24% 52% 14% 10% 100%

10% 14%

24%

52%

Network

Quick Services

Brand Name

One stop bank

Graph 4.5 : Reasons to open an account in Citizen Urban Co-op. Bank

INTERPRETATION: The table shows 24% customers have opened their account in Citizens Urban Co-Op. Bank Ltd. due to good network of branches. 52% customers have opened their account due to quality of services provided by the Citizens Urban Co-Op. Bank Ltd. Only 14% customers have opened their account due to brand name. Other 10% customer’s response to one stop bank reason. Citizens Urban Co-Op. Bank Ltd. is a one stop bank because it provides all modern banking services and products to customers under one roof.

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6. How much time you spent for any transaction in Citizens Urban Co-Op. Bank Ltd. ? Table 4.6 : Average time for any transaction Time Spent 5 to 10 minutes 15 to 20 minutes More than 20 minutes Total No. of Respondents 60 30 10 100 %age respondents 60% 30% 10% 100%

10%

30% 60%

5 to 10 minutes

15 to 20 minutes

More than 20 minutes

Graph 4.6 : Average time for any transaction

INTERPRETATION : The above graph shows 60% customers spent only 5 to 10 minutes to perform only transaction in the Bank. 30% customers spent 5 to 10 minutes and only 10% customers spent more than that in Citizens Urban Co-Op. Bank Ltd.

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7.Are you satisfied with the time taken by bank for opening of an account ?
Table 4.7 : Satisfaction with the time taken by bank for opening a/c

Level of satisfaction Highly satisfactory Satisfactory Not satisfactory Total

No. of Respondents 48 50 2 100

%age of respondents 48% 50% 2% 100%

2%

48%

50%

Highly satisfactory

Satisfactory

Not satisfactory

Graph 4.7 : Satisfaction with the time taken by bank for opening a/c

Interpretation : The pie diagram shows the percentage of satisfaction level of customer for opening of A/c 50% of the customers is satisfied with the time taken by bank for opening of an A/c, 48% of the customers are highly satisfied with the time taken by bank for opening of an A/c & 2% of the customers are not satisfied with the time taken by bank for opening of an A/c. Therefore, it has been analyzed that most of the customers of the bank are satisfied with the time taken by bank for opening of A/c in the bank

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8.

Are you satisfied with the services provided by Citizens Urban Co-Op. Bank Ltd.? Table 4.8 : Satisfaction with the services of the bank Satisfaction Level Highly Satisfied Satisfied Average Satisfied Not Satisfied Total No. of Respondents 24 32 38 6 100 %age of Respondents 24% 32% 38% 6% 100%

6%

24%

38%

32%

Highly Satisfied

Satisfied

Average Satisfied

Not Satisfied

Graph 4.8 : Satisfaction with the services of the bank

Interpretation: From the above graph it is clear that majority of the respondents are average satisfied with services provided by Citizens Urban Co-Op. Bank Ltd. whereas 32% of the respondents are satisfied & 24% are highly satisfied with Citizens Urban Co-Op. Bank Ltd. The remaining 6% respondents are not satisfied with the services provided by bank.

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9.

Are you satisfied with the time taken by bank for clearing of cheques:
Table 4.9 : Satisfaction level with the time taken by bank for clearing cheques

Level of satisfaction Highly satisfactory Satisfactory Not satisfactory Total

No. of Respondents 4 72 24 100

%age of respondents 4% 72% 24% 100%

24%

4%

72%

Highly satisfactory

Satisfactory

Not satisfactory

Graph 4.9 : Satisfaction level with the time taken by bank for clearing cheques

Interpretation : The pie diagram shows the percentage of satisfaction level of customer regarding time taken by bank for clearing of cheques.72% of the customers are satisfied with the time taken by bank for clearing of cheques, 4% of the customers are highly satisfied with the time taken by bank for clearing of cheques, 24% of the customers are not satisfied with the bank for clearing of cheques. It has been observed that the most of the customers are satisfied with the time taken by bank for clearing of cheques but still there are many people who are not satisfied with the time taken by bank for clearing of cheques i.e. still 24% of the customers are not satisfied so, bank staff should be more efficient.

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10.

How many times do you visit Citizens Urban Co-Op. Bank Ltd. in a month? Table 4.10 : No. of visits at Citizen Urban Co-op. Bank Ltd. No. of Visits 1-4 Times 5-10 times 11-15 times Never Total No. of Respondents 70 20 10 0 100 %age of Respondents 70% 20% 10% 0% 100%

10% 20%

70%

1-4 Times

5-10 times

11-15 times

Graph 4.10 : No. of visits at Citizen Urban Co-op. Bank Ltd.

Interpretation : From the above graph it is clear that majority (70%) of the respondents visit the Citizens Urban Co-Op. Bank Ltd. 1-4 times in a month, 20% respondents visit 5-10 times and remaining 10% respondents visit the Bank 11-15 times in a month.

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11.

Would you like to recommend the name of Citizens Urban Co-Op. Bank Ltd. to your known person ? Table 4.11: Recommending the name of bank Response Yes No Can’t Say Total No. of Respondents 86 4 10 100 %age of Respondents 86% 4% 10% 100%

4%

10%

86%
Yes No Can’t Say

Graph 4.11: Recommending the name of bank

Interpretation : From the graph it is clear that 86% customers would like to recommend the name of Citizens Urban Co-Op. Bank Ltd. to other persons. Only 4% customers would not like to recommend the name of Citizens Urban Co-Op. Bank Ltd. and 10% customers are confused to give response.

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12

How do you rate the attitude of staff of Citizens Urban Co-Op. Bank Ltd. towards customers ? Table 4.12 : Rating the attitude of attitude of bank staff Response No. of Respondents %age of Respondents Highly Satisfied 14 14% Satisfied 60 60% Dissatisfied 20 20% Highly Dissatisfied 4 4% Total 100 100%

4% 20%

14%

62%
Highly Satisfied Satisfied Dissatisfied Highly Dissatisfied

Graph 4.12 : Rating the attitude of attitude of bank staff Interpretation : From the above graph it is clear that 14% respondents are highly satisfied with the staff behaviour of Citizens Urban Co-Op. Bank Ltd. while 60% respondents are satisfied with the staff behaviour. 20% of the respondents are not satisfied with the staff behaviour of Citizens Urban Co-Op. Bank Ltd. and 4% are highly dissatisfied with staff behaviour.

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13.

Are you satisfied with overall performance of Citizens Urban Co-Op. Bank Ltd.?
Table 4.13 : Satisfaction with the overall performance of the bank

Satisfaction Level Highly Satisfied Satisfied Average Satisfied Not Satisfied Total

No. of Respondents 16 34 46 4 100

%age of Respondents 16% 34% 46% 4% 100%

4%

16%

46% 34%

Highly Satisfied

Satisfied

Average Satisfied

Not Satisfied

Graph 4.13 : Satisfaction with the overall performance of the bank

Interpretation: From the above graph it is clear that majority (46%) of the respondents are average satisfied with the overall performance of Citizens Urban Co-Op. Bank Ltd. where they are operating their account. 34% of the respondents are satisfied, 16% are highly satisfied and remaining 4% respondents are not satisfied with the performance of Citizens Urban Co-Op. Bank Ltd. CHAPTER - V

SUMMARY, CONCLUSIONS & RECOMMENDATIONS
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5.1 FINDINGS OF THE STUDY • • • The study is limited to only those 100 respondents who have account in Citizens Urban Co-Op. Bank Ltd. The study shows that maximum numbers of people are aware of saving account of Citizens Urban Co-Op. Bank Ltd. It is revealed from the research study that majority of the respondents have come to know about the services of Citizens Urban Co-Op. Bank Ltd. through newspaper followed by other sources i.e. friends, pamphlets, TV, Banners etc. • It is depicted from the study that 44% of customers are dealing with Citizens Urban Co-Op. Bank Ltd. from last 3-5 years, 26% of customers are dealing with Bank from last more than 5 years, 20% of customers are dealing with Bank from last 2-3 years and 10% of them are dealing with Bank from last one year. • • Citizens Urban Co-Op. Bank Ltd. is a one stop bank because it provides all modern banking services and products to customers under one roof. It can be analyzed from the research study that 60% customers spent only 5 to 10 minutes to perform only transaction in the Bank. 30% customers spent 5 to 10 minutes and only 10% customers spent more than that in Citizens Urban Co-Op. Bank Ltd. • • • It has been analyzed that most of the customers of the bank are satisfied with the time taken by bank for opening of A/c in the bank It is clear that majority of the respondents are average satisfied with services provided by Citizens Urban Co-Op. Bank Ltd. It has been observed that the most of the customers are satisfied with the time taken by bank for clearing of cheques but still there are many people who are not satisfied with the time taken by bank for clearing of cheques i.e. still 24% of the customers are not satisfied so, bank staff should be more efficient.

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From the study it is clear that majority (70%) of the respondents visit the Citizens Urban Co-Op. Bank Ltd. 1-4 times in a month, 20% respondents visit 5-10 times and remaining 10% respondents visit the Bank 11-15 times in a month.

It is revealed that 86% customers would like to recommend the name of Citizens Urban Co-Op. Bank Ltd. to other persons. Only 4% customers would not like to recommend the name of Citizens Urban Co-Op. Bank Ltd. and 10% customers are confused to give response.

The study shows that 14% respondents are highly satisfied with the staff behaviour of Citizens Urban Co-Op. Bank Ltd. while 60% respondents are satisfied with the staff behaviour. 20% of the respondents are not satisfied with the staff behaviour of Citizens Urban Co-Op. Bank Ltd. and 4% are highly dissatisfied with staff behaviour.

Majority (46%) of the respondents are average satisfied with the overall performance of Citizens Urban Co-Op. Bank Ltd. where they are operating their account. 34% of the respondents are satisfied, 16% are highly satisfied and remaining 4% respondents are not satisfied with the performance of Citizens Urban Co-Op. Bank Ltd.

5.2 CONCLUSION The customer satisfaction is very important for success of Bank. Only those Banks will be at the top which satisfied their customer. If the employees are performing their Job efficiently it will improve the customer relations. The face of Indian banking is changing rapidly. The competition and challenges in Indian banking sector is increasing day by day. I made this project on the topic entitled “Services provided by Citizens Urban Co-Op. Bank Ltd.”. From the above study I concluded that the account holders of Citizens Urban Co-Op. Bank Ltd. are satisfied with the bank. The banking is providing all modern banking products & services like Saving A/c, Current A/c, Fixed Deposits, NRI A/c, Loans etc. to customers of Citizens Urban Co-Op. Bank Ltd. Citizens Urban Co-Op. Bank Ltd. is one of the fastest growing co-operative bank in Jalandhar. The bank has to take necessary initiatives in order to increase customer base. 93

The bank should increase number of branches and install ATMs at the prime locations of Jalandhar. The bank can also introduce gifts and prizes from time to time. The interest for different deposits account should be increased. From the above study, I can conclude that Citizens Urban Co-Op. Bank Ltd. has maintained excellent position in the market and the customers are satisfied with the overall performance of Citizens Urban Co-Op. Bank Ltd. So, we can say that Citizens Urban Co-Op. Bank Ltd. is well known for understanding the customer needs in the modern era of banking.

5.3 RECOMMENDATIONS  Citizens Urban Co-Op. Bank Ltd. should increase the number of branches in the city.  The bank should bring out new products and schemes at time-to-time so that more people can be attracted.  Even some gifts and prizes may be offered to the customers for their retention.  Citizens Urban Co-Op. Bank Ltd. should install ATMs in the prime locations of Jalandhar City.  Customer feedback should be taken at regular intervals, so as to keep track of the changing requirements of the customers.  The bank should increase rate of interest of deposit accounts.  The need of the customer should properly be understood so that customer feels satisfied.  24 hours banking should be induced so as to facilitate the customers who may not have a free time in the daytime. It will help in facing the competition more effectively.  Employees’ behavior should be so nice so that customer don’t feel any hesitation in asking his doubts.

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BIBLIOGRAPHY
Books : • Khan Masood Ahmed (1992), “Banking in India”, Anmol publications, 3rd Edition, New Delhi. • • • Kotahri C.R. (2005)- “Research Methodology” Tata Mcgraw Hill, New Delhi. Seethapathi K., Sivaram Y G and Rama T S, (2003) “Indian Banking System – The Changing Scene”, ICFAI University Press P. N. Varshney (1999) - “Indian Financial System And Commercial Banking”, Sultan Chand & Sons Publication.

Websites : • • • • • • • • • • http://www.emeraldinsight.com/10.1108/eb010811 www.emeraldinsight.com/10.1108/02652329710194964 www.emeraldinsight.com/Insight/html/Output/.../0320170304.pdf www.emeraldinsight.com/Insight/html/Output/.../0320180303.pdf http://www.emeraldinsight.com/10.1108/09564230210421164 http://www.emeraldinsight.com/10.1108/09590550310476079 www.emeraldinsight.com/10.1108/eb047465 http://www.emeraldinsight.com/10.1108/08876040010320948 http://www.emeraldinsight.com/10.1108/02652320610681729 www.emeraldinsight.com/Insight/ViewContentServlet?.../pdf/...

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www.emeraldinsight.com/10.1108/09564230910978539

Journals • Arun K. Jain, Christian Pinson, Naresh K. Malhotra (1987), “Customer Loyalty as a Construct in the Marketing of Banking Services”, International Journal of Bank Marketing, Volume: 5, Issue: 3, Page: 49 – 72, Publisher: MCB UP Ltd Peter Kangis, Vassilis Voukelatos (1997), “Private and public banks: a comparison of customer expectations and perceptions”, Journal: International Journal of Bank Marketing, 1997, Vol. 15, Issue: 7, Page: 279 – 287, published by MCB UP Ltd. • Naser K.; Jamal A.; Al-Khatib K.(1999), “Islamic banking: a study of customer satisfaction and preferences in Jordan” . The International Journal of Bank Marketing, Vol. 17, No. 3, 1999, pp. 135-151 published by Emerald Group Publishing Limited • Luiz Moutinho, Anne Smith (2000), “Modelling bank customer satisfaction through mediation of attitudes towards human and automated banking”, Journal: International Journal of Bank Marketing, Year: 2000, Vol. 18, Issue: 3, Page: 124 – 134, published by MCB UP Ltd. • Faye X. Zhu, Walter Wymer, Injazz Chen (2002), “IT-based services and service quality in consumer banking”, International Journal of Service Industry Management, Volume: 13, Issue: 1, Page: 69 – 90, MCB UP Ltd • Morna S.Y. Lee, Peter J. McGoldrick, Kathleen A. Keeling, Joanne Doherty (2003), “Using ZMET to explore barriers to the adoption of 3G mobile banking services”, International Journal of Retail & Distribution Management, Volume: 31, Issue: 6, Page: 340 – 348, MCB UP Ltd • Ahmad Jamal, Kamal Naser (2003), “Factors Influencing Customer Satisfaction in the Retail Banking Sector in Pakistan” Journal: International Journal of

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Commerce and Management, Vol. 13, Issue: 2, Pg. 29 – 53, published by: MCB UP Ltd • David J. Urban, Michael D. Pratt (2000), “Perceptions of banking services in the wake of bank mergers: an empirical study”, Journal of Services Marketing, Volume: 14, Issue: 2 Page: 118 – 131, MCB UP Ltd • Juan Carlos Fandos Roig, Javier Sanchez Garcia, Miguel Angel Moliner Tena, Jaume Llorens Monzonis (2006), “Customer perceived value in banking services”, International Journal of Bank Marketing, Volume: 24, Issue: 5, Page: 266 – 283, Emerald Group Publishing Limited • Arturo Molina, David Martín-Consuegra, Águeda Esteban (2007), “Relational benefits and customer satisfaction in retail banking”, Journal: International Journal of Bank Marketing, Year: 2007, Vol.: 25, Issue: 4, Page: 253 – 271, published by Emerald Group Publishing Limited • Al-Hawari, Mohammad; Ward, Tony; Newby, Leonce (2009), “The relationship between service quality and retention within the automated and traditional contexts of retail banking”, Journal of Service Management, Volume 20, Number 4, 2009 , pp. 455-472(18), Emerald Group Publishing Limited

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QUESTIONNAIRE

Q1.

Do you have account in Citizens Urban Co-Op. Bank Ltd. ? Yes  No 

2.

Are you aware of banking products provided by Citizens Urban Co-Op. Bank Ltd.? Saving A/c Fixed Deposits Loans    Current A/c NRI A/c  

3.

How do you come to know about these services of Citizens Urban Co-Op. Bank Ltd. ? TV Hoarding /Banner Pamphlets    Friends Newspaper  

4.

From how long the you are dealing with Citizens Urban Co-Op. Bank Ltd. ? 1 Year 3-5 Years   2-3 Years More than 5 years  

5.

Why do you have opened account with Citizens Urban Co-Op. Bank Ltd. ? Network Brand Name   Quick Services One stop bank  

6.

How much time you spent for any transaction in Citizens Urban Co-Op. Bank Ltd.? 5 to 10 minutes  15 to 20 minutes 

More than 20 minutes 

98

7.

Are you satisfied with the time taken by bank for opening of an account ? Highly satisfactory Not satisfactory   Satisfactory 

8.

Are you satisfied with the services provided by Citizens Urban Co-Op. Bank Ltd.? Highly Satisfied Average Satisfied   Satisfied Not Satisfied  

9.

Are you satisfied with the time taken by bank for clearing of cheques: Highly satisfactory Not satisfactory   Satisfactory 

10.

How many times do you visit Citizens Urban Co-Op. Bank Ltd. in a month? 1-4 Times 11-15 times   5-10 times Never  

11.

Would you like to recommend the name of Citizens Urban Co-Op. Bank Ltd. to your known person ? Yes  No  Can’t Say 

12

How do you rate the attitude of staff of Citizens Urban Co-Op. Bank Ltd. towards customers ? Highly Satisfied Dissatisfied   Satisfied Highly Dissatisfied  

13.

Are you satisfied with overall performance of Citizens Urban Co-Op. Bank Ltd.? Highly Satisfied Average Satisfied   Satisfied Not Satisfied  

99

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100

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