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A Study of Punjab State Cooperative Bank Chandigarh with Special Reference to

Lending Practices

Article  in  SSRN Electronic Journal · January 2016

DOI: 10.2139/ssrn.3385158

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 A study of Punjab State Cooperative Bank
Chandigarh with special reference to
Lending Practices
Dr. BikramjitKaur Dr. Manoj Kumar Bhambu
Assistant Professor Associate Professor
GCCBA-50, Chandigarh GCCBA-50, Chandigarh

ABSTRACT

The Indian Banking industry, which is governed by the Banking Regulation Act of India,1949
can be classified into two major categories, non-scheduled banks and scheduled banks.
Scheduled banks having paid-up capital and reserve of not less than Rs. 50, 00,000 are further
classified as State co-operative Banks&Commercial Banks. Non-Scheduled Banks are not
included in the second schedule of the Banking Regulations Act, 1965. They are further classified
as Central co-operative banks and primary credit societies & Commercial Banks. The
cooperative banks in India play an important role even today in rural financing. The Businesses
of cooperative bank in the urban areas have increased phenomenally in recent years due to the
sharp increase in the number of primary co-operative banks. Cooperative Banks in India
registered under the Co -operative Societies Act is regulated by the RBI. They are governed by
the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.In this
paper an attempt is made to study the lending practices at PUNJAB STATE COOPERATIVE
BANK, Sector – 34, Chandigarh.

Key Words: Co-operative Banks, Bank‟s Performance, LendingPractices, Loan,, Satisfaction

level of the customers.

INTRODUCTION

Co-operative banks are small-sized units organized in the co-operative sector which operate both
in urban and non-urban centers. These banks are traditionally centered on communities, localities
and work place groups and they essentially lend to small borrowers and businesses. The term
Urban Co-operative Banks (UCBs), though not formally defined, refers to primary cooperative
banks located in urban and semi-urban areas. These banks, until 1996, could only lend for non-
agricultural purposes. However, today this limitation is no longer prevalent. While the co-
operative banks in rural areas mainly finance agricultural based activities including farming,
cattle, milk, hatchery, personal finance, et cetera, along with some small scale industries and
1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.
2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

self-employment driven activities, the co-operativebanks in urban areas mainly finance various
categories of people for self-employment, industries, small scale units and home finance. Co-
operative Banks in India are registered under the Co-operative Societies Act. The cooperative
bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and
Banking Laws (Co-operative Societies) Act,1965.These banks provide most services such as
savings and current accounts, safe deposit lockers, loan or mortgages to private and business
customers. For middle class users, for whom a bank is where they can save their money,
facilities like Internet banking or phone banking is not very important. Co-operative banks
function on the basis of 'no-profit no-loss'. Co-operative banks, as a principle, do not pursue the
goal of profit maximization. Therefore, these banks do not focus on offering more than the basic
banking services. So, co-operative banks finance small borrowers in industrial and trade sectors,
besides professional and salary classes. Co-operative banks differ from stockholder banks by
their organization, their goals, their values and their governance. In most countries, they are
supervised and controlled by banking authorities and have to respect prudential banking
regulations, which put them at a level playing field with stockholder banks. Depending on
countries, this control and supervision can be implemented directly by state entities or delegated
to a co-operative federation or central body.

The cooperative banks in India play an important role even today in rural financing the
Businesses of cooperative bank in the urban areas also have increased phenomenally in recent
years due to the sharp increase in the number of primary co-operative banks. Co-operative Banks
in India are registered under the Co -operative Societies Act. The co-operative bank is also
regulated by the RBI. They are governed by the Banking Regulations Act 1949 and Banking
Laws (Co-operative Societies)Act, 1965.The cooperative banking structure is divided into
following five categories:
 Primary urban cooperative bank: Located in urban and semi-urban areas. These banks,
till 1996, were allowed to lend money only for non-agricultural purposes. Today, their
scope of operations has widened considerably.
 Primary agriculture credit societies: These societies finance farmers not only for
farmers short term requirements (use of improved seeds, fertilizers, insecticides, etc.) but
for medium and long term(irrigation and land development activities)activities also.
 District central cooperation bank: These institutions act as Balancing Centers of
Finance at the district level. They provide the short term and medium term credit to the
agriculturists. They also supervise the PCAs in the districts.
 State cooperative bank: The state cooperative bank is the apex body of cooperative
bank in any state. The long-term cooperative credit structure has two tiers in many states
with Primary Cooperative Agriculture and Rural Development Banks (PCARDB) at the
primary level and State Cooperative Agriculture and Rural Development Bank at the state
level. Under the Banking Regulation Act1949, only State Cooperative Apex Banks,

1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.

2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

 District Central Cooperative Banks and select Urban Credit Cooperatives are qualified to
be called as banks in the cooperative sector.
 Land development bank: The Land Development Banks meet the requirements of the
farmers for developmental purposes viz., provision of equipment like pump-sets, tractors
and machinery and land improvement in the form of leveling, bundling, reclamation of
land, fencing, sinking of new wells and repairs to old wells, Loans are granted on the
security of mortgage of immovable property of the farmers.

PUNJAB STATE COOPERATIVE BANK

The Punjab State Cooperative Bank was established on 31st August, 1949 at Shimla vide
registration No. 720 is a principle financing institution of the cooperative movement in Punjab.
In 1951 its Head Office was shifted to Jalandhar from where it moved in 1963 to Chandigarh. In
the cooperative banking structure, the position of the Punjab State Cooperative Bank is
extremely important as the whole credit system revolves around it.It has 17 branches and 1
extension counters in Chandigarh. There are 20 District Central Cooperative Banks having 802
branches all over Punjab, mostly in rural areas of the State.The head office is in sector 34
Chandigarh.

Objectives of Punjab State Cooperative Bank

 To serve as a Balancing Center for Cooperative Societies in the State of Punjab registered
under the Punjab Cooperative Societies Ac, 1961 for the time being in force.
 To promote the economic interest of the member banks and cooperative societies in the
state in accordance with cooperative principles and to facilitate the development and
funding of any cooperative society registered under the said act.
 To carry on banking and credit business.

AWARDS: The Punjab State Cooperative Bank has already been awarded “BEST
PERFORMANCE AWARD" by NABARD and NAFSCOB on number of occasions.

ACHIVEMENTS: Bank provides loans to the DCCBs and Govt. employees under various Loan
schemes for meeting out their credit needs. The total loans and advances as on 31-3-14 stood at
Rs 7830.73 crore against Rs 7101.07 crore as on 31-3-2013. Thus, there is an increase of 10.27%
in loan and advances in the year 2013-14.

TYPES OF CREDITS OFFERED BY PUNJAB STATE COOPERATIVE BANK

Banks usually provides following types of credit:

1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.

2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

1. CASH CREDIT (HYPO.):Cash Credit or continuing credits are those that form continuous
debits and credits up to a limit and have and expiration date. Aservice charge that is effect an
interest charge is normally made as a percentage of the value of purchases. These credits may be
of the nature of pledged and /or hypothecated and banks should report these in separate heads
incorporated under the main head cash credit.
Under this arrangement a credit is sanctioned against hypothecation of the raw materials or
finished goods. The letter of hypothecation creates a charge against the goods in favor of the
Bank but neither the ownership nor its possession is passed on to it; only a right or interest in the
goods is created in favor of the Bank and the borrower binds himself to give possession of the
goods to the bank when called upon to do so. When the possession is handed over, the charge is
converted into pledge. This type of facility is generally given to the reputed borrowers of
undoubted integrity.

2. CASH CREDIT (PLEDGE):Under this arrangement a cash credit is sanctioned against

pledge of goods or raw materials. By signing the letter of pledge, the borrower surrenders the
physical possession of the goods under the Banks effective control as security for payment of
Bank dues. The ownership of the goods, however, remains with the borrower. The pledge creates
an implied lien in favor of the Bank on the underlying merchandise. In the event of failure of the
borrower to honor his commitment the Bank can sell the goods for recovery of the advance. No
collateral security is normally asked for grant of such credit.

3. LOAN AGAINST TRUST RECEIPTS (LTR): This is a loan facility up to a satisfactory

limit to the traders / customers by a Bank against security of the value of the imported
merchandise. This item also includes loan against Trust Receipts.

4. TERM LOAN:A Bank advance for a specific period repaid with interest under fixed
schedules. The term loans may be as follow:
 Short Term: Up to and including 12 months.
 Medium Term: More than 12 months up to and including 60 months.
 Long Term: More than 60 months. [This item includes lease financing]

5. LEASE FINANCING:An entrepreneur, under this Scheme, may avail of the lease facilities to
procure industrial machinery (without having to purchase it by down payment) with easy
repayment schedule. The clients also get special rebate in their income-tax payment under the
scheme.

6. SECURED OVERDRAFTS (SOD):A loan facility on a customer’s current account at a Bank

permitting him to overdraw up to a certain agreed limit for an agreed period. The terms of the
loan are normally that it is repayable on demand or at the expiration date of the agreement.
1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.
2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

7.OTHERS:Any loan that does not fall in any of the above facilities is considered as “other”.
Blocked/Segregated continuing credits (Pledge, Hypothecation or Overdraft) when re -scheduled
by the Banks for payments over a number of periods should also be reported against the head
“other”.

THE BANK USE EIGHT ‘C’S RULE WHILE GIVING LOAN

1. Credit (must be god)
2. Capacity (ability to pay)
3. Capital (money that going into business)
4. Collateral (assets that secure the loan)
5. Character (the person)
6. Commitment (ability and willingness to succeed)
7. Cash flow (can it support business debt and expense)
8. Conditions (economic, finance anything that effect the business)

OBJECTIVE OF THE STUDY

Considering the importance of loan and credit facility, the main objectives of our study are
delineated below as:

 To know the lending practices of cooperative banks in India.

 To study the impact of sizeon the efficiency of the Cooperative Banks.
 To suggest the appropriate measures to improve the efficiency of the Cooperative banks.
 To know different type of loans preferred by different sets of customers.
 To know the satisfaction level of the customers from Banks lending policies.

REVIEW OF THE LITERATURE

Various studies conducted and numerous suggestions were sought to bring effectiveness in the working
and operations of financial institutions.
 Narsimham Committee (1991) emphasized on capital adequacy and liquidity, Padamanabhan
Committee (1995) suggested CAMEL rating (in the form of ratios) to evaluate financial and
operational efficiency, Tarapore Committee (1997) talked about Non-performing assets and asset
quality, Kannan Committee (1998) opined about working capital and lending methods, Basel
committee (1998 and revised in 2001) recommended capital adequacy norms and risk
management measures. Kapoor Committee (1998) recommended for credit delivery system and

1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.

2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

 credit guarantee and Verma Committee (1999) recommended seven parameters (ratios) to judge
financial performance and several other committees constituted by Reserve Bank of India to bring
reforms in the banking sector by emphasizing on the improvement in the financial health of the
banks.
 Jain (2001) has done a comparative performance analysis of District Central Cooperative
Banks (DCCBs) of Western India, namely Maharashtra, Gujarat and Rajasthan and
found that DCCBs of Rajasthan have performed better in profitability and liquidity as
compared to Gujarat and Maharashtra.
 Singh and Singh (2006) studied the funds management in the District Central
Cooperative Banks (DCCBs) of Punjab with specific reference tothe analysis of financial
margin. It noted that a higher proportion of own funds and the recovery concerns have
resulted in the increased margin of the Central Co-operative Banks and thus hada larger
provision for non-performing assets.
 Singla(2008) emphasized on financial management and examined the financial position
of sixteen banks by considering profitability, capital adequacy, debt-equity and NPA.
 Chander and Chandel (2010) analyzed the financial efficiency and viability of HARCO Bank and
found poor performance of the bank on capital adequacy, liquidity, earning quality and the
management efficiency parameters.

RESEARCH METHODOLOGY

The study is exploratory and descriptive in nature. Data was collected both from primary and
secondary sources. Primary data through face-to-face conversation from employees and through
questionnaire being filled by the bank customerswith sample size 100 in the year 2015.
Secondary data was collected from annual reports of bank, bank pamphlets and internet etc.

LOAN APPRAISAL SYSTEM OF PUNJAB STATE COOPERATIVE BANK

The Loans Scheme Interest Rates of PSCB are as below:

Interest Rates on Loans

S.No Schemes Rate of interest(Public)

1 Personal Loan Scheme 15%
2 Non-Farm Sector Loan Scheme (NFS) 12% to 13%
3 Consumer Durable Loan 15%
4 Vehicle Loan Scheme 11%
5 Second hand Vehicle Loan Scheme 13%
6 Urban Housing Scheme 10.50% to 11%

1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.

2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

7 Cash Credit Facility to Traders 14%
8 Revolving Cash Credit to Farmers (RCC) 11%
9 Two Wheeler Loan to Farmers 12%
10 Rural Housing Scheme 10.5%
11 Mini Dairy Scheme 10.25%
12 Commercial Dairy Development Scheme 10.25%
13 Cooperative Education Loan Scheme 7.25%
children of poor farmers, Dalits, BC, etc.
14 Loan against Rental Income Scheme 14%
15 Loan against Property 14%
16 Loan scheme for Earnest Money As fixed by the bank
17 Mai BhagoIstri Shakti Scheme PACS to members
10.75%CCB to PACS 9.25%
18 Bhai Lalo Sehkari Kirt Shakti Scheme PACS to members 12% CCB
to PACS 10%
19 Education Loan 11%
20 Credit for Setting up of Net House 12%
21 Credit for Setting up of Agricultural Service 11.25% for PACS , 12% for
Centre individuals
22 Bee Keeping Loan Scheme 10.25%
23 Piggery Loan Scheme 10.25%
24 Goat Rearing Loan Scheme 10.25%
25 Fishery Development Loan Scheme 10.25%

LOAN RECOVERY OFPUNJAB STATE COOPERATIVE BANKIN AUGUST, 2014

Sr. PARTICULARS Total. No. OF LOANS AMOUNT (Rs. In lacs)
No.
1. CONSUMER LOAN 137 142
2. HOUSE BUILDING LOAN 49 334
3. PERSONAL LOAN 277 339
4. VEHICLE LOAN 43 50.10
5. NFS LOANS 42 125
TOTAL 548 990.10

LOAN RECOVERY OFPUNJAB STATE COOPERATIVE BANKIN JUNE, 2015

Sr. PARTICULARS Total. No. OF LOANS AMOUNT (Rs. In lacs)

No.
1 CONSUMER LOAN 246 203.32
2 HOUSE BUILDING LOAN 45 278.24
3 PERSONAL LOAN 327 548.38
4 VEHICLE LOAN 38 32.04
5 EDUCATION LOANS 82 350.62
1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.
2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

 Total 738 1412.60

Following points which bank takes care while lending money:

• Date of sanction of loan.
• Amount of loan sanctioned.
• Rate of Interest that would be charged.
• Last date of repayment of loan.
• Period for which loan is granted.
• Details regarding securities offered.
Normal measures to be adopted by bank officials for recovery of dues

Whenever, a borrower commits breach of agreement in respect of repayment of schedule of the

amount of loans with interest etc., we safely say that there are 'OVERDUES ' in the Loan
Account. Once the Loan A/c is an overdue A/c i.e. the borrower has committed default in
repayment of loan amount as per the dates specified in the Agreement, then the Banker has
necessarily to adopt measures which will result into recovery of overdue amounts.

Whenever the borrower commits default in repayment of loan amount, immediately the bank
should serve ' Preliminary Notices' on the principal borrower and the sureties advising them to
repay the amount of overdue with interest etc. Such Preliminary Notices should invariably
mention information which is of factual nature relating to

i. Amount of loan sanctioned.

ii. Date of sanction of loan.
iii. Names of the sureties.
iv. Amount of the loan sanctioned.
v. Amount of over dues with interest etc. on a particular date.

Addition to the above it must also be communicated the bank shall proceed to take further action
against the principal borrower and sureties in case of failure to repay the amount of loan/over
dues. The banker must be vigilant, right from the disbursement of loan amount till the recovery
of the entire loan amount. There should be effective supervision over the amount of loan
sanctioned.

Recovery through salary / wages

After issue of such preliminary notices, there may be a positive response from the principal
borrower and he may repay the amount of defaulted loan installment, or the principal borrower
and the surety may approach the authorities of the bank and may explain their genuine

1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.

2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

difficulties regarding repayment of loan amount or there may offer to repay the dues partially.
There may be cases where there is no response from the borrower / sureties.

With this background, the bank should precede further to devise such steps which will result in
recovery of dues. Under various State Cooperative Acts (e.g. Section 49 of M.C.S. Act 1960) it
has been provided that if a member of a society. /Bank authorizes his Employer to make
deduction from his salary/wages, in order to satisfy the claims of the society/Bank, and then on
receipt of requisition letter from the concerned Bank, the Employer shall proceed to make
deduction from the salary/wages from the concerned employee/member to meet the claims of the
Bank. The Employer must remit the amount so deducted immediately to the Bank concerned.
Non-compliance of these provisions under the State Cooperative Act shall be constructed as
'offence' and further Civil and Criminal action can be instituted against such Erring Employer. In
addition to the above, there are provisions under the Indian Payment of Wages Act 1936(vide
Section 7(2) and Section 7(2) (j) which stipulates that the Employer shall make deduction from
the salary/wages of an Employee to satisfy the claims of the Cooperative Society / Banks.

POOR RECOVERY OF BANK LOAN BY PUNJAB STATE

COOPERATIVE BANK
The following are the common causes of NPAs / reasons for poor recovery of loans in
banks:
EXTERNAL FACTORS
• Calamities beyond the means of borrower to cope with
• Political interference in recovery process
• Vitiated recovery climate
• Failure of activity due to economic and managerial reasons
• Geographical factors
• Changes in policy environment
• Changes in technology
• Changes in economic conditions
INTERNAL FACTORS
i) Borrower related:
• Misutilisation of loan
• Diversion of funds
• Lack of technical/ managerial skills
• Failure of activity for economic reasons
• Poor maintenance of assests
• Personal accident, death etc.,
• Shifting of place of residence/business
1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.
2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

• Willful default
ii) BANK RELATED:
• Improper identification of borrower / activity
• Inadequate appraisal
• Delay in loan sanctioning
• Under/over financing
• Insufficient gestation/repayment period
• Lack of post-disbursement follow-up
• Inefficient internal control systems
• Low motivation and commitment of staff
• Perception of bank as charity institution
• Lack of information to borrower on due dates , amount etc

Details of Non-Performing Assets in 2015

Sr. No. DETAILS OF N.P.A NO. OF CASES AMOUNT
(Rs. In Lacs)
1 CONSUMER DURABLES 105 44.92
2 VEHICLE LOAN 4 10.21
3 PERSONAL LOAN 63 64.66
4 EDUCATION LOAN 1 3.03
5 H.B. 1 6.73
1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.
2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

 6 OD 4 3.84
TOTAL 178 133.39

MANAGEMENT OF NON PERFORMING ASSESTS

Management of NPA needs action in three dimensions
I. Preventive action
II. Remedial action
III. Credit Risk Management
 To avoid creation of NPA, a bank must have a well-defined Credit Policy and
procedure in place. A good Credit Policy and procedures will have the following
procedures.
 Banks should establish proactive credit risk management practices like annual/
half yearly NPA studies and individual obligor reviews, periodic credit calls that
are documented, periodic visits to borrowers, and at least quarterly management
reviews of troubled exposures/weak credits.
 Managers in banks should be accountable for managing risk and for establishing
and maintaining appropriate risk limits and risk management procedures for their
businesses.
 Banks should have a system of checks and balances in place around the extension
of credit which are
I. An independent credit risk management function (bank level)
II. Multiple credit approvers (loan committee level)
 Delegation of power to sanction credit should be granted to individual secretary/
manager based upon a consistent set of standards of experience, judgment and ability
 Banks should ensure that there are consistent standards with reference to documentation

ANALYSIS AND INTERPRETATIONS OF THE STUDY

1.The following number of customers avail different facilities in PSCB.

OPTIONS No. of respondent Percentage (%)
a) Fixed deposits 19 19%
b) Saving accounts 21 21%
c) Loan 19 19%
d) Locker 17 17%
e) Enquiry 24 24%

1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.

2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

 24% 19%
FIXED DEPOSITS
SAVING ACCOUNTS
21% LOAN
19% LOCKER
17%

2. Following Preferences of the customers for the loansfromPSCB.

Kinds of loan No. of respondent Percentage (%)
Consumer loan 30 30%
House building loan 9 9%
Personal loan 37 37%
Vehicle loan 7 7%
Education loan 17 17%
17% CONSUMER LOAN
7% HOUSE BUILDING LOAN
30%
PERSONAL LOAN
VEHICLE LOAN
37% EDUCATIONAL LOAN
9%

It reveals that maximum people have opted for consumer and personal loan and less people
prefer for vehicle and educational loan.

3. AMOUNT RANGE OF THE AMOUNT OF TAKEN BY CUSTOMER FROM PSCB.

LOAN AMOUNT NO. OF RESPONDENTS PERCENTAGE
Less than 50000 8 8%
50000- 1 lakh 20 20%
1 lakh- 2 lakh 12 12%
More than 2 lakh 60 60%
8%

20% less than 50000

50000 to 1 lakh
60% 12%
1 lakh- 2 lakh
more than 2 lakh

1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.

2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

Table shows that 8%people prefer loans less than 20,000; 20% respondent prefer 20,000 to
50,000; 12% prefer 1 lakh to 2 lakh amount 60% of the respondent prefers to the loan more than
2 lakh loan.

4.THE PREFERABLE TERM OF LOAN TAKEN

Term of loan No. of respondent Percentage (%)
Less than 1 year 12 12%
1-3 year 30 30%
More than 3 year 58 58%
Table shows the 58% respondent prefers to the loan more than 3 years while 30% respondent
prefers to 1-3 year loan and the least preferred loan is less than 1 year period i.e. 12%.

5.NUMBER OF TIMES LOAN TAKEN EARLIER

No. of time loan taken No. of respondent Percentage (%)
Only once 74 74%
1 to 3 time 22 22%
More than 3 time 4 4%

Table reveals that 74% of the respondent took loan once, 22% of respondent took loan for 1 to 3
time and 4% respondent take loan more than 3 time.

6. WHAT PROMPTED THE CUSTOMERS TO TAKE LOAN FROM PSCB

Reasons for taking loan No. of respondent Percentage (%)
Reasonable rate of interest 20 20%
More schemes 10 10%
Less formalities 36 36%
Easy repayment 28 28%
Any other 6 6%

6% RESAONABLE RATE OF
20% INTEREST
28%
10% MORE SCHEMES
36%
LESS FORMALITIES

1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.

2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

Table shows that 36% respondent took loan from PSCB because of its less formalities, 28%
prefer here because of its easy repayment, 20% because of reasonable rate of interest and 10%
and 6% because of more schemes and other reasons.

7. AVERAGE TIME TAKEN FOR THE PROCESSING OF THE LOAN.

Average time for processing No. of respondent Percentage (%)
loan
Less than 7 days 64 64%
7-14 days 26 26%
More than 14 days 10 10%

Table shows that 64% respondent says that average time taken for processing of the loan is less
than 7 days, 26% says that it takes 26% and 10% says that it takes more than 14 days.

8. SATISFACTION OF THE CUSTOMERS WITH THE AMOUNT &PERIOD OF

INSTALMENT
Are you satisfied No. of respondent Percentage (%)
Yes 68 68%
No 12 12%
Can’t say 20 20%

20%

YES
12%
NO
68%
CAN'T SAY

9. CUSTOMER’S RANKING FOR SERVICES OF THE BANK

Rank the facility No. of respondent Percentage (%)

Above average 64 64%
Average 26 26%
Below average 10 10%

1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.

2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

Table shows that 64% of the respondent says that facility provided by the bank is above average
26% says that the facility is average and 10% feels it to be below average.

10. SATISFACTION AMONG FOLLOWING VARIABLES.

100%
90%
80%
70%
60%
50% HIGHLY SATISFIED2
40%
30% DISSATISFIED
20%
10%
0% CAN'T SAY
SATISFIED
HIGHLY SATISFIED

11. PREFERENCE OF PSCB AGAIN IN FUTURE FOR TAKING LOAN

Options No. of respondent Percentage (%)

Yes 76 76%
No 8 8%
Can’t say 16 16%

Maximum people are ready to prefer this bank again i.e. 76%

12. OVERALL SATISFACTION WITH THE PSCB.

Are you satisfied No. of respondents Percentage (%)

Yes 84 84%
No 16 16%

16%

YES NO
84%

1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.

2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

84% of its customers are satisfied while the remaining 16% are not satisfied by the services
provided by the bank. Hence, the bank should work upon to increase the customer satisfaction
level.

13. PREFERABLE BANKS FOR BORROWING FACILITIES

Preferable banks in future No. of respondent Percentage (%)

Public banks 14 14%
Private Banks 30 30%
Cooperative Banks 56 56%

14. CUSTOMERS WHO WOULD LIKE TO REFER THE PSCOOP. BANKS TO THEIR
FRIENDS AND RELATIVES

Bank refer to others No. of respondent Percentage (%)

Always 78 78%
Sometimes 18 18%
Never 04 04%

CONCLUSION
FINDINGS
 Majority (37% as per the study) of the respondent prefers to Personal Loan and
Consumer Loan (30% as per the study) from this bank.
 Most people (58% as per the study) prefer to take long term loan which is more than 3
years.
 There is a very simple procedure followed by bank for loan.
 Easy repayment and less formalities are the main factors determining customer’s
selection of loans.
 Quality services provided by the staff are satisfactory because bank is catering to a small
segment only and the customers are properly dealt with.
 Customers are satisfied with the mode of repayment of installments.
 Average time for the processing of loan is less i.e. approx. 7 days.

RECOMMENDATION AND SUGGESTIONS

1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.

2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

  Some of the major loan facilities like Personal Loan, Consumer Loan, House Building
Loan are only for the class of Punjab govt. PSUs or any other organization as approved
by the Board of Directors of the respective banks only so I would like to suggest that to
give competition to another commercial banks they have to diversify their class to sustain
their business.
 More mass awareness campaigns should be organized in order to enhance market share
of bank. So Bank should concentrate on its advertisement itself.
 Bank should refocus on its interest rate as responded by people. Periodic review of the
interest rate should be done.
 There should be computerized system in the bank as it will reduce the time wastage of
manual work and will lead to the better performance of the bank.
 Training of the employees should be there to meet the needs of the time.
 Proper posting of the staff should be done.
 Customer’s satisfaction must be the top priority of the bank.
 Maximum practical exposure should be provided to the job trainees so that they may
handle the various enquiries of customer effectively.
 Communication gap within the bank and with the head-office should be reduced.
 Infrastructure facilities should be provided to the branch of Cooperative Bank
 Banks is also advised to have proper internal control measures for monitoring its
functions and transactions
 Mobile banking to its customer.

BIBLIOGRAPHY
 Andrew Campbell (2007), "Bank insolvency and the problem of nonperformingloans",
Journal of Banking Regulation, 25-45.
 Chander Ramesh and Chandel Jai Kishan (2010), “Financial Viability of anApex
Cooperative Credit Institution- A Case Study of the HARCO Bank”,Asia-Pacific
Business Review Vol. VI, No.2, April-June 2010, pp 61-70
 Chandra, Buddhadeb (2006), “Performance of Burdwan Central CooperativeBank in the
Development of the District (1988-89 to 1998-99)”,Finance India, September, 2006.
 DuttaUttam and BasakAmit (2008), “Appraisal of financial performanceof urban
cooperative banks- a case study.” The Management Accountant,case study, March 2008,
170-174.
 Geeta Sharma and Ganesh Kawadia (2006), "Efficiency of urban cooperativebanks of
Maharashtra: A DEA Analysis", The ICFAI Journal ofManagement, Vol. 5, Issue 4.
 Harish Kumar Singla (2008), "Financial performance of banks in India",The ICFAI
Journal of Management, Vol. 7, Issue 1.

1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.

2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

  Jain (2001),“Comparative study of performance of District Central Cooperative Banks
(DCCBs) of Western India i.e. Maharashtra, Gujarat & Rajasthan for the year 1999-2000
from the point of view of net profit/loss”, NAFSCOB Bulletin, April-June 2001.
 Ved Pal & N S Malik (2007), "A multivariate analysis of the financial characteristics of
commercial banks in India", The ICFAI Journal of Management, Vol. 6, Issue 3.
 Justin Paul and Padmalatha Suresh (2008),“Management of Banking and Financial
Services”, Second impression, Dorling Kindersley (India) Pvt. Ltd., PHI, Chapter: 6, 78-
116.

FIRST AUTHOR:
Dr. BikramjitKaur
Assistant Professor
Govt. College of Commerce & Business Administration,
Sector-50,
Chandigarh

SECOND AUTHOR:
Dr. Manoj Kumar Bhambu
Associate Professor
Govt. College of Commerce & Business Administration,
Sector-50,
Chandigarh

1. Dr. BikramjitKaur, Assistant Professor, GCCBA-50, Chandigarh.

2. Dr. Manoj Kumar, Associate Professor, GCCBA-50, Chandigarh.

Electronic copy available at: https://ssrn.com/abstract=3385158

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