A PROJECT REPORT

ON

“EXAMINE STATUS OF RETAIL BANKING IN COOPERATIVE

SECTOR IN STATE OF MAHARASHTRA AND NATIONAL
SCENERIO WITH REFERENCE TO TBSB”

FOR

MASTERS OF MANAGEMENT STUDIES

FINANCE

SUBMITTED BY

RUTUJA AMBRE

ROLL NO. MS1718002

SUBMITTED TO
MRS.TEJASVI BHOSALE

INSTITUTE OF MANAGEMENT & COMPUTER STUDIES

THANE (W)

Batch 2017-19
 A PROJECT REPORT

ON

“EXAMINE STATUS OF RETAIL BANKING IN COOPERATIVE

SECTOR IN STATE OF MAHARASHTRA AND NATIONAL
SCENERIO WITH REFERENCE TO TBSB”

FOR

MASTERS OF MANAGEMENT STUDIES

FINANCE

SUBMITTED BY

RUTUJA AMBRE

ROLL NO. MS1718002

SUBMITTED TO

MRS. TEJASVI BHOSALE

INSTITUTE OF MANAGEMENT & COMPUTER STUDIES

THANE (W)
 Batch 2017-19

CERTIFICATE

This is to certify that RUTUJA AMBRE of MMS (Masters of

Management Studies) Semester III, Batch (2017-2019) has successfully
completed the project on EXAMINE STATUS OF RETAIL BANKING IN
COOPERATIVE SECTOR IN STATE OF MAHARASHTRA AND NATIONAL

SCENERIO WITH REFERENCE TO TBSB under the guidance of Mrs. Tejasvi

Bhosale

Date:-
Place:-THANE

Director

Project Guide / Internal Examiner External Examiner

 Company Certificate (On Companies Letter Head)

DECLARATION

I, RUTUJA AMBRE the student of MMS Semester III, Batch (2017-19) hereby
declare that I have completed the project on EXAMINE STATUS OF RETAIL
BANKING IN COOPERATIVE SECTOR IN STATE OF MAHARASHTRA AND
NATIONAL SCENERIO WITH REFERENCE TO TBSB successfully.

The information submitted is true and original to the best of my knowledge.

Date:-
Place:-THANE

Yours faithfully,

RUTUJA AMBRE
 ACKNOWLEDGEMENT

I take this apportunity to express my gratitude and extend my thanks to all those
who helped and guided me to make this endeavor successful.

I express my sincere thanks to Director Sir for giving us the facilities and resources
in bringing project successfully.

I would also like to thank our project guide (Mrs. Tejasvi Bhosale) who helped me
in the completion of project.

I cannot end this page without thanking my family and friends for their support and
encouragement while undertaking this project.
 SIGNATURE AND NAME OF THE STUDENT

Executive Summary

This chapter is devoted to present the role of banks in economic development and an
overview of the Indian Banking industry and a detailed study of working of Retail Banking in
India. . It determines the performance of retail banking in public and private sector banks
India also adopted the path of planned economy to provide a new environment for socio-
economic development of the country. To put the economy on optimum path of growth and re-
orient the social structure for maximum social welfare have been the main objective of our
planners. Therefore, they adopted mixed economy model in which co-operatives have been given
important role
The fore going discussion and analysis lead to the conclusion that banking structure of
India is full of potential for growth. Indian banking industry have registered considerable
development with significant impact on growth of GDP, a spectacular rise in National income,
increase in per capita income and expansion of financial sector of India.
For future prospects retail banking has emerged as the showcase of innovation and
development, through its various products like personal loan, home loans, educational loans,
deposits, credit cards and depository services. Hence there is need of constant innovation of
Retail banking, a paradigm shift in bank financing through innovative products and mechanism
involving constant upgradation and revalidation of the banks internal system and processes
 INDEX

Chapter No. Chapter Page No.

Chapter 1 : Introduction to the Study
1.1 INTRODUCTION 1-3
1
1.2 OBJECTIVE OF THE STUDY 4
1.3 RESEARCH METHODOLOGY 5
1.4 DATA COLLECTION 6
1.5 SCOPE OF THE STUDY 7
1.6 LIMITATION OF THE STUDY 8
Chapter 2 : Company Profile
2 2.1 INTRODUCTION 9-12
3 Chapter 3 : The Conceptual Background
3.1 BACKGROUND 13-21
Chapter 4: Data Analysis & Interpretation
4 4.1 DATA ANALYSIS AND INTERPRETATION 22-28
5 Chapter 5: Findings, Suggestions & Conclusion 29-30
Bibliography 31
Annexure
 List of Graphs

Graph No. Title Page No.

1. RETAIL FINANCIAL SERVICES 23
2. COOPERATIVE BANK IN LOAN 24
FACILITY
3. GROSS REVENUE IN RETAIL 25
BANKING
4. GROWTH IN DEPOSITS 26
5. PROGRESS IN SAVING ACCOUNT 27
6. BANKS MOSTLY USED IN 28
MAHARASHTRA
 CHAPTER-1
INTRODUCTION TO THE STUDY

1.1 INTRODUCTION
Coperative banks are small-sized units organized in the co-operative sector which
operate both in urban and non-urban regions. 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

1
primary cooperative banks located in urban and semi-urban areas. In India, out of total
population 70 per cent of the population lives in rural areas. Majority of the population depends
on agricultural. Hence development of agriculture, agro-based industries, employment generating
activities, infrastructure facilities like roads, drinking water, water for irrigating the crops,
electricity, telephones, markets, etc. form part of the rural development. After the independence,
national policy of India reaffirmed their faith in the co-operative movement as a vital instrument
for economic development and as a vehicle of social change and social justice. Agriculture is the
main dealing of the farmers in state of Maharashtra. But farmers have been facing a number of
socio-economic problems. Such as- lack of credit availability for small farmers, persecution by
moneylenders, inability to repay debts following crop loss, high interest rate charged by the
moneylenders, rising cost of the cultivation. However, the agriculture sector has been wit
conomic development and as a vehicle of social change and social justice. Maharashtra
Government has also identified the importance of the co-operative movement as the best source
through which to apply it for rural development, people’s empowerment and poverty alleviation
programme. The basic nature of the co-operative societies is to encourage the ‘values of self-
help, democracy, equality, and solidarity. Co-operative members believe in the ethical values of
honesty, openness, and social responsibility and caring for others. The movement was welcomed
with great enthusiasm, the movement teaches the ordinary farmers, downtrodden community and
landless laborers to live with prestige and selfconfidence.
Co-operative movement helps in all round development of the rural areas,
which can possible through unity, trustworthiness and consistency of membership. The
government hopes that the revival is successful co-operative societies could well become the
biggest employer in the country and will create new employment opportunities for the people,
especially, in rural areas. people, especially, in rural areas. Agriculture is the leading activity of
the rural area of the Maharashtra. Agriculture occupies main location for survival of the largest
population of Maharashtra State. Informal credit market of Maharashtra which is dominated by
moneylenders is quite more active in rural areas. With the commercialization of agriculture, rural
indebtedness further increased and by the end of the nineteenth century, the agricultural and
artisans became almost totally subjected to the control of usurious moneylenders. In the State of
Maharashtra agriculturists faces several problems- small holding, indebtedness, lack of irrigation
facilities, low productivity, etc During the early days the rural credit societies could not satisfy
the needs of the farmers. They did not have enough funds or facilities to offer to the farmers.

2
Thus the farmers continued to rely on the money lenders and suffer. Money lender not only lends
money for his seeds, fertilizers, insecticides etc. but also provides him credit for his household
needs and when the crops are harvested the trader also markets the crops at low rate. In fact,
moneylenders proved to be the most common and easy source of loans for the farmer (28.4%),
followed by loans procured by relatives(22.93%) while only (3.94%) turned to land development
banks. Co-operatives played crucial role to fulfill these needs of the farmers. Co-operative
societies support for purchase of seeds, fertilizers, insecticides etc. they also provide several
services such as marketing, processing, storage, credit, transport etc. Co-operatives in fact
supports to the poor and marginal farmers. However, due to small size of the co-operative
societies they could not provide adequate services to their members. The Government therefore
gave financial assistance to these societies and thus increased their borrowing capacity. Crop
Loan System has also been introduced. The government has introduced various schemes to
improve the economic conditions at the rural level i.e. subsidy to agricultural credit stabilization
fund, contribution to risk fund, share capital contribution, loans to cooperative credit societies for
the conversion of loans from short term to medium term and crop production incentive to
agriculurists.
In the rural areas, way back in 1930, the farmers were illiterate and distressed by
poverty. There were adversities, helplessness, famines, indebtedness and domination by
moneylenders. The rural economy gradually became dependent on an informal credit market
dominated by moneylenders known as Mahajan. With the commercialization of the agriculture
under the green revolu tion rural indebtedness more increased. Co-operative societ y’s render
various services to the agriculture and non agriculture Sector viz. industrial, housing,
labor,etc.)in Maharashtra State. Co-operative societies Create an encouraging environment, spirit
of competition and support economic activities in the rural areas, which promote participation of
rural people in sustaining development in the rural areas. The co-operative movement in
Maharashtra has played a significant role in the social and economic development of the state

3
 1.2 OBJECTIVE OF THE STUDY:

1. To study share of cooperative bank in retail banking state of Maharashtra.

2. Identify Areas where cooperative play a very vital role in state of Maharashtra.

3. Study impact of cooperative bank in rural area in terms of assistance small scale
industries unit self-help group and people who are self-employed in terms of seed capital.

1.3 RESEARCH METHODOLOGY:

The study is concerned with the retail banking industry in India. Movements in
cooperative sector in state of Maharashtra has shown transformation in banking industry.
Particularly, with the introduction of IT in banking industry a lot of changes have taken place in
public sector banks but slowly whereas in new private sector banks and foreign banks working in
India, these changes have come at fast pace because these banks are fully computerized by birth.
Many public sector banks are managing transformation manually not through IT channels (due to
some internal and external constraints) but on the other hand new private sector banks and
foreign banks are managing whole process through e-channels. New private sector banks and
foreign banks as compared to public seector banks provide many new product sector. The

4
performance is analyzed on bank, bank group and industry level. The study is descriptive and
empirical in nature where secondary and primary data is used to address the objectives.

1.3.1 RESEARCH TYPE (DESCRIPTIVE METHOD):

DESCRIPTIVE METHOD:
Researcher adopted descriptive method for this report. They help to self-group,
small scale industries and agriculture assist in Terms of growth of economy. they offered
quality services to the various sector in rural area as well as urban area.

1.3.2 DATA COLLECTION

SECONDARY DATA

a. Annual reports of the bank

b. Manual of instructions on loans and advances
c. Books
d. Articles and Research Papers
e. Internet

5
 1.4 Scope To the Study:-

The research study is confined to the Financial Performance Appraisal of The Urban Co-
operative Banks in state of maharashtra The scope of the study has been divided into three
groups:

i) Geographical: The study has covered the financial performance appraisal of only those rural
co-operative banks whose head offices are situated in state of Maharashtra.

ii) Operational: The study has covered the financial activities carried out by the urban co-
operative banks in state of Maharashtra.

iii) Temporal: The study has covered the analysis and interpretation of data for the period of ten
years from 1998-99 to 200 7-08.

6
 1.6 Limitations of the study:-

1.The study suffers from the inherent limitations of the financial statements and techniques of
analysis like ratio analysis and trend analysis.

2.The study is based on the data of past three or four years

only.

3.The data for study mainly based on a Various bank.

4.As majority of the customers are employees of the bank,

5.They might be biased in giving the information.

6.The time period of the research was limited.

7
 CHAPTER 2

COMPANY PROFILE

2.1 INTRODUCTION

8
 According to the oxford dictionary, “Bank who keeps people money safe as their
particular account and gives suitable interest rates on that money, and also who gives loan
facilities and also fixed deposit facilities. Banks are the most important factor in human
life.Without banks people cannot manage their large amount of money or handle the money.With
the potential to become the fifth largest banking industry in the world by 2020, & third largest by
2025, india’s banking sector is expanding rapidly. the banking industry is currently worth
Rs.81trillion (in US $ 1.31 trillion) roughly t ess, inward cheque clearing process, NEFT &
RTGS fund transfer cheque book issue process. Account opening process, etc. The Thane Bharat
Sahakari Bank Ltd., established in 1979, is one of the leading Co-operative Banks in Thane
district. Since the date of inception, the Bank has grown by leaps & bounds with 24 branches,
spread over Mumbai, Thane, Raigad and Pune districts. (as on 31.03.2016) At the time of
inception of the Bank, i.e. in late 1970s, there were only 2 Co-operative Banks in Thane city.
Thane city, being centrally situated in the growing industrial belt on one hand, and being
equidistant to western side on Ghodbunder Road to Karjat, Kasara and also Mumbai on the other,
was developing vertically and horizontally as well, which resulted into growth in the population
belonging to all strata of the society. Naturally, a need for another Bank was evident. Two
enthusiastic persons, viz. Dr.V.N.Bedekar and Mr.M.Y.Gokhale, along with many such
likeminded senior social workers, came up with an idea of having one more Co-operative Bank
for Thane city and district. After completing preliminary formalities, the Bank was registered
with District Co-operative Registrar on 25th September 1978.
Subsequently, the first General Body Meeting of the Bank was held on 28th October
1978 and in that Meetin ing, a Team of first Board of Directors was elected. Dr.V.N.Bedekar was
elected as the Chairman and Mr.M.Y.Gokhale as Vice Chairman.The relative Reserve Bank of
India (RBI) Licence for opening the Bank was obtained on 19th April 1979 and on the auspicious
day of ‘Akshaya Tritiya’, on 29th April 1979, the Bank was inaugurated at the hands of noted
Economist of that era, Dr.V.M.Dandekar. The Bank started functioning at spacious premises at
‘Shatataraka’, with its Administrative Office and the first Branch viz. Main Branch.The Bank
was awarded status of ‘Scheduled Bank’ on 8th March 2003.It will be interesting to know that,
initially the Bank was named as the “Bharat Sahakari Bank” Ltd., Thane. Subsequently, the name
was changed to the “Thane Bharat Sahakari Bank” Ltd. to avoid confusion in the minds of the

9
people, as two other banks, styled as “Bharat Co-operative Bank” and Bharat Sahakari Bank”
were also functioning at the time. Thus, the transformation in the name from “Bharat Sahakari
Bank Ltd”.
Thane to “Thane Bharat Sahakari Bank Ltd”, took place.In the year 2003-04, the Bank
celebrated Silver Jubilee Year. A Souvenir was published in the Silver Jubilee year, highlighting
various milestones achieved by the Bank during its journey of 25 years.The Bank participates in
many social events in Thane city, like “Nav Varsha Shobha Yatra” (Nandi songs of which were
famous / popular ) on the eve of Gudhi Padwa and also contributes to many social events through
donations, ads and, even on few occasions it sponsors some social programmes.
The Bank is well equipped in the area of mechanization / computerization of its services
through 24 ATMs, Mobile Banking, RTGS, NEFT etc. etc.

Functions of the bank:

We all need banking services:

1.To receive our monthly salaries.

2.To pay for goods and services.

3.To give loans, save or invest money.

4.As of today, these services are offered almost exclusively by banks.

10
 CHAPTER 3
THE CONCEPTUAL BACKGROUND

11
 RETAIL BANKING – AN INTRODUCTION

Banking industry includes a number of businesses such as corporate banking, investment

banking, wealth management, capital market etc. Retail banking is another segment of the banking
industry. It is a typical mass- market banking characterized by a large customer base and a large volume
of transactions. There is a high level of co-operation between banks, retailers, customers and consumers
in this segment. 74 The retail banking industry is diverse and competitive. In addition to provide loans,
checking and savings account services, banks also offer underwriting, brokerage and insurance
capabilities to manage all aspects of a customer‟s financial portfolio. Identifying and attracting profitable
customers from competitors is essential for long term success. Retail banking includes deposit products,
residential mortgage loans, credit cards, auto finance, personal loans, consumer durable loans, loans
against equity shares, loans for subscribing to initial public offers (POs), debit cards, bill payment
services, mutual funds and investment advisory services. These retail products provide an opportunity
for banks to diversify the asset portfolio with high profitability and relatively low Non-Performing Assets.
The categorization of retail banking services is shown in Today most banks have entered the
retailbanking segment and have identified it as a principal growth driver. They slowly gaining market
share in the retail space.
Automation, Competition, Securitization and Regulation are the major forces that are
driving and shaping consumer lending. Net banking, Mobile banking, ATMs and Bill payments are the
new facilities that banks are using not only to lure customers but also to help them reduce their total
operating costs . The growth in retail banking has been facilitated by the growth in banking technology
and automation of banking processes that enable extension of reach and rationalization of costs. ATMs
have emerged as an alternative banking channel, which facilitate low-cost transactions vis-à-vis
traditional branches. It also has the advantage of reducing the branch traffic and enables banks with
small networks to offset the traditional disadvantages by increasing their reach and spread.
The concept of Retail Banking is not new to banks but is now viewed as an important
and attractive market segment that offers opportunities for growth and profits. Retail banking and retail
lending are often used as synonyms but in fact, the later is just the part of retail banking. In retail
banking all the needs of individual customers are taken care of in a well – integrated manner. Retail

12
banking in the country is characterized by multiple products, multiple channels and multiple customer
groups. This multiplicity of the roles to be played by the retail bankers adds to the excitement as well as
the challenges faced by the bankers.

Multiple Products The products included in retail banking are—

 Various types of deposits/accounts.
 Credit and Debit cards
 Loans (Personal, Auto, Housing etc.)
 Insurance, Mutual funds etc.
 Multiple channels of distribution
 Internet banking
 Mobile banking
 Call centers
 Multiple Customer Groups
 Individual customers
 Petty businesses
 Small and Medium Enterprises (SMEs)

 TYPES OF RETAIL BANKING

The retail banks are generally classified into
1. Commercial Bank: It is a normal bank that distinguishes from an Investment Bank. The US congress
after the Great Depression required banks that are engaged only in banking activities, which is different
from Investment Bank that is limited to capital market activities. Some people use the term commercial
bank for a bank or a branch of bank that deals mostly with loans and deposits from corporate and large
businesses.
2. Community Bank: The financial institution that operates locally and empowers the employee‟s to
make local decisions in order to serve their customers and the other partners.
3. Community Development Bank: The regulated banks, that serves the underserved markets or
population with various financial services.
4. Postal Savings Bank: The national postal system that offers services related to savings banking.
5. Private Bank: The banks that basically manage the high net worth individual‟s assets.
6. Offshore Bank: Banks those are located in the jurisdiction with low tax rates and regulation.
Generally many offshore banks are private banks.
7. Savings Bank: Savings Banks have its roots into 18th or early 19th century. The basic objective of
savings bank was to offer easy accessible savings products and services to all categories of public. The
savings banks were created on public initiation in some parts of the world where as they were started by
some socially committed individuals to put in place the necessary infrastructure. These days‟ European

13
savings banks started focusing on retail banking: payments, savings products, credits and insurance for
individual customers, small and medium-sized enterprises.
8. Building Societies: These are the organizations which just conduct retail banking.
9. Ethical Banks: The banks that give more importance to the transparency of all the operations and
that make only social-responsible investments.
CHALLENGES TO REAIL BANKING IN INDIA:
 The issue of money laundering is very important in retail banking. This compels all the banks to
consider seriously all the documents which they accept while approving the loans.
 The dependency on technology has brought Information Technology Department‟s additional
responsibilities and challenges in managing, maintaining and optimizing the performance of
retail banking networks. It is equally important that banks should maintain security at the
advanced level to retain the faith of the customer.
 Difficulty and high cost of acquiring new customers in a matured market.  Less options for
growth via acquisition, as the banking industry continues to consolidate.
 A study conducted by Reichheld (published in Harvard Business Review), which identified that
“5% increase in customer retention can increase profitability by 35% in banking business, 50% in
insurance and brokerage and 125% in credit card market”. Thus, the customer retention is a
paramount important for the profitability of Retail banking business. So banks need to retail
their customers in order to increase the market share.
 The issue of outsourcing has become very important in the recent past because various core
activities such as hardware and software maintenance, entire ATM setup and operation
(including cash, refilling), MIS and data center management, etc., are being outsourced by Indian
banks. That is
 why, before taking any decision on outsourcing banks are expected to take utmost care to retain
the ongoing trust of the public.
 Customer service should be all and end all of retail banking. Someone has rightly said, “It takes
months to find a good customer but only seconds to lose one”. Thus, strategy of knowing your
customer (KYC) is paramount important. So, the banks are required to adopt innovative
strategies to meet customer‟s needs and requirements in terms of services/products, etc.

RETAIL BANKING ACTIVITIES

' activities can be divided into retail banking, dealing directly with individuals; business
banking, providing services to mid-size business; corporate banking dealing with large business entities;
private banking, providing wealth management services to High Networth Individuals; and investment
banking, relates to helping customers raise funds in the Capital Markets and advising on mergers and

14
acquisitions. Banks are now moving towards Universal Banking, which is a combination of commercial
banking, investment banking and various other activities including insurance.
 Internet Banking (E-Banking)
Internet banking (or E-banking) means any user with a personal computer and browser can
get connected to his banks website to perform any of the virtual banking functions. Internet banking
refers to extension of banking services through the net work of computers. In internet banking system
the bank has a centralized database that is web-enabled. All the services that the bank has permitted on
the internet are displayed in menu. Any service can be selected and further interaction is dictated by the
nature of service.
 Information Only System
General purpose information like interest rates, branch location, bank products and
their features, loan and deposit calculations are provided in the banks website
 Fully Electronic Transactional System
The system provides customer- specific information in the form of account balances,
transaction details, and statement of accounts. This system allows bidirectional capabilities.
Transactions can be submitted by the customer for online update. This system requires high
degree of security and control.
 Automated Teller Machine (ATM)
ATM is designed to perform the most important function of bank. It is operated by
plastic card with its special features. The plastic card is replacing cheques, personal
attendance of the customer, banking hour‟s restrictions and paper based verification.

COOPERATIVE MOVEMENTS IN MAHARASHTRA

The cooperative movement was started in India largely with a view for providing
agriculturists funds for agricultural operations at a low rates of interest and protect them from the
clutches of moneylenders. The average Indian Agriculturists is the delight tiller of the soil, whose
diet is sparse, whose wants are few and whose standard of living is perhaps the lowest in the
civilized world. He lives on the margin of subsistence very often he borrows not because he can
but because he must. His chronic indebtedness is the result of his poverty. Without removing the
factors, which contribute to his chronic poverty, indebtedness cannot be liquidated. The
increasing dependence of the population on agriculture, the decline of rural industries which
once furnished subsidiary occupaation, the oppressive burden of land taxation, the uneconomic

15
system of land tenure, dependence on money lender cum-trader for the sale of his produce and as
a source of credit, and other indisputable economic factors have contributed largely to the ever
growing economic ability of the agriculturist and his proverbial poverty.
the royal commission on agriculture remarked, "The Indian peasant is born in debt,
dies in debt and bequeath death". It is this debt which has been the root cause of the degeneration
of the peasantry in India. It is here that the cooperative movement can and must come forward to
improve the economic conditions of the masses and increase their income and purchasing power
The process of rural development is of vital importance in a developing country like India,
where according to census 2001, near about 72.2 percent population is living in the rural areas.
For increasing agricultural production and implementing advanced methods in the agriculture
sector, the farmers need adequate credit for stimulating the tempo of agricultural production. It is
imperative that the farmers must be provided with essential pre-requisites like fertilizers,
improved seeds, irrigation facilities, modern implements, marketingfacilities etc. It is quite
natural that without adequate and timely credit they would not be able to make use of these
essential inputs. The use of greater and better quantity of inputs would mean greater demand for
rural credit Mr. Hohn D. Black, professor of Economics, Harvard university has very rightly
stated", If we are all concerned about increasing total agricultural output in the shorter period, we
must provide credit first and foremost.
. Thus the government of India, in 1901 appointed a committee under the
chairmanship of sir Edward Low to study the questions of starting cooperative credit societies in
India. This committee also recommended the establishment of cooperative societies on the
Raiffeisen model. The famine committee of 1901 also recommended the setting up of mutual
credit associations. Accordingly the cooperative credit societies Act was passed in 1904. This act
provided for the establishment of credit societies both in rural and urban areas, for providing
credit facilities at cheap rates to smmall men living in the same locality. The cooperative
movement began in Europe in the 19th century, primarily in Britain and France, although The
Shore Porters Society claims to be one of the world's first cooperatives, being established in
Aberdeen in 1498 (although it has since demutualized to become a private partnership).
The industrial revolution and the increasing mechanism of the economy
transformed society and threatened the livelihoods of many workers. The concurrent labour and
social movements and the issues they attempted toaddress describe the climate at the time. The
first documented consumer cooperative was founded in 1769, in a barely furnished cottage in

16
Fenwick, East Ayrshire, when local weavers manhandled a sack of oatmeal into John Walker's
whitewashed frontroom and began selling the contents at a discount, forming the Fenwick
Weavers' Society. In the decades that followed, several cooperatives or cooperative societies
formed including Lennoxtown Friendly Victualling Society, founded in 1812. By 1830, there
were several hundred co-operatives. Some were initially successful, but most cooperatives
founded in the early 19th century had failed by 1840. However, Lockhurst Lane Industrial
Cooperative Society (founded in 1832 and now Heart of England Cooperative Society), and
Galashiels and Hawick Co-operative Societies (1839 or earlier, merged with The Co-operative
Group) still trade today It was not until 1844 when the Rochdale Society of Equitable Pioneers
established the ‘Rochdale Principles’ on which they ran their cooperative, that the basis for
development and growth of the modern cooperative movement was established.
particularly in the rural areas. Initially, this movement was confined mainly to the
fields of agricultural credit. Later it rapidly spread to other fields like agro-processing, agro-
marketing, rural industries, consumer stores, social services, etc. Progress of co-operative
movement in the last four decades showed increase historical, social and cultural heritage. It is
particularly strong in Western Maharashtra as the independent movement and the leaders from
Pune, Mumbai and Ahmednagar initiated social reforms. Due to favorable climate conditions,
soil and the development of irrigation facilities Maharashtra made good progress in sugarcane
and sugar production through the help of cooperative sugar factories. The Pravara Sugar Co-
operative Factory Ltd., established in 1949, made a success. Agriculture is the leading activity of
therural area of the Maharashtra. Ag riculture occupies main location for survival of the largest
population of Maharashtra State. Informal credit market of Maharashtra which is dominated by
moneylenders is quite more active in rural areas. With the commercialization of agriculture, rural
indebtedness further increased and by the end of the nineteenth century, the agricultural and
artisans became almost totally subjected to the control of usurious moneylenders. In the State of
Maharashtra agriculturists faces several problems- small holding, indebtedness, lack of irrigation
facilities, low productivity, etc.
Cooperative banking is retail and commercial banking organized on
a cooperative basis. Cooperative banking institutions take deposits and lend money in most parts
of the world.Cooperative banking, as discussed here, includes retail banking carried out by credit
unions, mutual savings banks, building societiesand cooperatives, as well as commercial banking
services provided by mutual organizations (such as cooperative federations) to cooperative

17
businesses. A 2013 report by ILO concluded that cooperative banks outperformed their
competitors during the financial crisis of 2007-2008. The cooperative banking sector had 20%
market share of the European banking sector, but accounted for only 7 per cent of all the write-
downs and losses between the third quarter of 2007 and first quarter of 2011. Cooperative banks
were also over-represented in lending to small and medium-sized businesses in all of the 10
countries included in the report[. Credit unions in the US had five times lower failure rate than
other banks during the crisis and more than doubled lending to small businesses between 2008 -
2016, from $30 billion to $60 billion, while lending to small businesses overall during the same
period declined by around $100 billion . Public trust in credit unions stands at 60%, compared to
30% for big banks and small businesses are eighty percent less likely to be dissatisfied with a
credit union than with a big bank

Cooperative banks are owned by their customers and follow the cooperative
principle of one person, one vote. Co-operative banks are often regulated under both banking and
cooperative legislation. They provide services such as savings and loans to non-members as well
as to members, and some participate in the wholesale markets for bonds, money and even
equities.[6] Many cooperative banks are traded on public stock markets, with the result that they
are partly owned by non-members. Member control is diluted by these outside stakes, so they
may be regarded as semi-cooperative.Cooperative banking systems are also usually more
integrated than credit union systems. Local branches of co-operative banks select their own
boards of directors and manage their own operations, but most strategic decisions require
approval from a central office. Credit unions usually retain strategic decision-making at a local
level, though they share back-office functions, such as access to the global payments system, by
federating.
Some cooperative banks are criticized for diluting their cooperative principles.
Principles 2-4 of the "Statement on the Co-operative Identity" can be interpreted to require that
members must control both the governance systems and capital of their cooperatives. A
cooperative bank that raises capital on public stock markets creates a second class of
shareholders who compete with the members for control. In some circumstances, the members
may lose control. This effectively means that the bank ceases to be a cooperative. Accepting
deposits from non-members may also lead to a dilution of member control.

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The retail banking industry is diverse and competitive. In addition to provide loans, checking and
savings account services, banks also offer underwriting, brokerage and insurance capabilities to
manage all aspects of a customer‟s financial portfolio. Identifying and attracting profitable
customers from competitors is essential for long term success. Retail banking includes deposit
products, residential mortgage loans, credit cards, auto finance, personal loans, consumer durable
loans, loans against equity shares, loans for subscribing to initial public offers (POs), debit cards,
bill payment services, mutual funds and investment advisory services. These retail products
provide an opportunity for banks to diversify the asset portfolio with high profitability and
relatively low Non-Performing Assets. The categorization of retail banking services is shown in
Today most banks have entered the retailbanking segment and have identified it as a principal
growth driver. They slowly gaining market share in the retail space.
Automation, Competition, Securitization and Regulation are the major forces that are driving and
shaping consumer lending. Net banking, Mobile banking, ATMs and Bill payments are the new
facilities that banks are using not only to lure customers but also to help them reduce their total
operating costs.

Reasons of Growth of Retail Banking in India:

Retail banking has gained enormous momentum in the Indian Banking Scene during the last five
years. The reasons are:
1. Introduction of Technology,
2. Increased competition among different types of banks,
3. Opening of new generation private banks,
4. Inviting of more foreign banks in post WTO (World Trade Organization) era,
5. Focus on productivity and profitability,
6. Deregulation of interest rates,
7. Drive towards low non-performing asset
8.They function with the rule of “one member, one vote” and function on “no profit, no loss”
basis
9.It performs all the main banking functions of deposit mobilization, the supply of credit and
provision of remittance facilities
10. It provides financial assistance to the people with small means to protect them from the debt
trap of the moneylenders.
11.It is engaged in tasks of production, processing, marketing, distribution, servicing and
banking in India
12.It supervises and guides affiliated societies
13.Mobilization of funds from their members
14.Advance loans to the members

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15.Rural financing for farming, cattle, milk, hatchery, personal finance, etc.
16.Urban financing for Self – employment, Industries Small scale units, Home finance,
Consumer finance, Personal finance
A co-operative bank is a financial entity which belongs to its members, who are
at the sametime the owners and the customers of their bank. Co-operative banks are often created
by persons belonging to the same local or professional community or sharing a common
interest.Co-operative banks generally provide their members with a wide range of banking
andfinancial services (loans, deposits, banking accounts«). Co-operative banks differ
fromstockholder banks by their organization, their goals, their values and their governance.
Inmost 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 bystate entities or delegated to a co-operative federation or central body. Even if
their organizational rules can vary according to their respective national legislations, co-
operative banks share common features:
Customer-owned entities: in a co-operative bank, the needs of the customers meet theneeds of the owners, as
co-operative bank members are both. As a consequence, the first aimof a co-operative bank is not to
maximise profit but to provide the best possible products andservices to its members. Some co-operative
banks only operate with their members but mostof them also admit non-member clients to
benefit from their banking and financial services.
Democratic member control: co-operative banks are owned and controlled by their members, who
democratically elect the board of directors. Members usually have equalvoting rights, according
to the co-operative principle of ³one person, one vote´.
Profit allocation: in a co-operative bank, a significant part of the yearly profit, benefits or surplus is usually
allocated to constitute reserves. A part of this profit can also be distributedto the co-operative
members, with legal or statutory limitations in most cases. Profit isusually allocated to members
either through a patronage dividend, which is related to the useof the co-operative¶s products and
services by each member, or through an interest or adividend, which is related to the number of
shares subscribed by each member.Co-operative banks are deeply rooted inside local areas and
communities. They are involvedin local development and contribute to the sustainable
development of their communities, astheir members and management board usually belong to
the communities in which theyexercise their activities. By increasing banking access in areas or
markets where other banksare less present ± SMEs, farmers in rural areas, middle or low income

20
households in urbanareas - co-operative banks reduce banking exclusion and foster the economic
ability of millions of people. They play an influential role on the economic growth in the
countries inwhich they work in and increase the efficiency of the international financial system.
Their specific form of enterprise, relying on the above-mentioned principles of organization,
has proven successful both in developed and developing countries.
Credit unions:Credit unions have the purpose of promoting thrift, providing credit at reasonable
rates, and providing other financial services to its members. Credit union members are usually
requiredto share a common bond, such as locality, employer, religion or profession. Credit
unions areusually funded entirely by member deposits, and avoid outside borrowing. They are
typically(though not exclusively) the smaller form of cooperative banking institution. In
somecountries they are restricted to providing only unsecured personal loans, whereas in
others,they can provide business loans to farmers, and mortgages

TYPES OF COOPERATIVE BANKS:

1. Primary/Urban Cooperative Banks: Based on villages and small towns functions of

these banks are limited to small area.

2. District/Central Cooperative Banks: These are the district level banks. It works as a
link between Primary and State Cooperative Banks. This can be two types like one
having only Primary Cooperatives as its members and other one having both Primary
Cooperatives and public individuals as its member.

3. State Cooperative Banks: State Cooperative Banks operate at the state level. Some even
operate in multi States with multiple branches.

Land Development Banks

The Land development banks are organized in 3 tiers namely; state, central, and primary level
and they meet the long term credit requirements of the farmers for developmental purposes. The
state land development banks oversee, the primary land development banks situated in the
districts and tehsil areas in the state. They are governed both by the state government and
Reserve Bank of India. Recently, the supervision of land development banks has been assumed
by National Bank for Agriculture and Rural development (NABARD). The sources of funds for
these banks are the debentures subscribed by both central and state government. These banks do
not accept deposits from the general public.
Urban Co-operative Banks
The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary co-
operative banks located in urban and semi-urban areas. These banks, till 1996, were allowed to
lend money only for non-agricultural purposes. This distinction does not hold today. These banks

21
were traditionally centered on communities, localities, work place groups. They essentially lend
to small borrowers and businesses. Today, their scope of operations has widened considerably.
The origins of the urban co-operative banking movement in India can be traced to the
close of nineteenth century. Inspired by the success of the experiments related to the co-operative
movement in Britain and the co-operative credit movement in Germany, such societies were set
up in India. Co-operative societies are based on the principles of cooperation, mutual help,
democratic decision making, and open membership. Co-operatives represented a new and
alternative approach to organization as against proprietary firms, partnership firms, and joint
stock companies which represent the dominant form of commercial organization. They mainly
rely upon deposits from members and non-members and in case of need, they get finance from
either the district central co-operative bank to which they are affiliated or from the apex co-
operative bank if they work in big cities where the apex bank has its Head Office. They provide
credit to small scale industrialists, salaried employees, and other urban and semi-urban residents.
Functions of Co-operative Banks
Co-operative banks also perform the basic banking functions of banking but they differ from
commercial banks in the following respects
1. Commercial banks are joint-stock companies under the companies’ act of 1956, or public
sector bank under a separate act of a parliament whereas co-operative banks were established
under the co-operative society’s acts of different states.
2. Commercial bank structure is branch banking structure whereas co-operative banks have a
three tier setup, with state co-operative bank at apex level, central / district co-operative bank at
district level, and primary co-operative societies at rural level.
3. Only some of the sections of banking regulation act of 1949 (fully applicable to commercial
banks), are applicable to co-operative banks, resulting only in partial control by RBI of co-
operative banks and
4. Co-operative banks function on the principle of cooperation and not entirely on commercial
parameters

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 CHAPTER 4
DATA ANALYSIS AND INTERPRETATION

1. Share of of retail banking in cooperative sector in maharashra.

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INTERPRETATION:
In state of Maharashtra share of bank in retail lending is expanding in corporate sector at
63 and 53. Lowest retail lending is expanding in retail banking sector it is 5 and 18.Small
business are slightly increased than retail sector.

2.Retail banking services in cooperative sector in India.

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INTERPRETATION:
In Cooperative sector retail banking provide financial sevices of mortgage loan, vehicle
loan, credit card loan, and others. In 2019 mortgage loan are mostly used in 11.4% as compare
to others year .credit cards loans minimum time used in 2013.people most refer other services in
cooperative sector.

2.Cooperative bank provided various type of loan facility.

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INTERPRETATION:
Cooperative banks various types of loan facility to the customers like house loan,
personal loan, consumer loan, educational loan, vehicle loan, other etc.In that people mostly
taking house loan as the investment. Rarely people take vehicle loan and other loan from the
banks. Personal loan also preferred customer as 15%.

4. .Retail banking gross revenue in India.

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INTERPRETATION:
From 2013 to 2018 retail banking gross revenue decreased till 8% .between 2000 to
3000. In year 2013 they are increased gross revenue above 6000 billion . They assume in 2019 to
2020 gross revenue should be stable between 6% to 8% annual growth rate.

5. .Growth in deposits in cooperative bank in state of Maharashtra.

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INTERPRETATION:
According to RBI, In Cooperative sector growth in deposits increased from 2012.
Then next two years they are slightly decreased and those 2 years they are in stable position In
2015 increased in largely its 1479.It is rapidly growth in deposits from 2005 to 2016 in
Maharashtra in retail banking.

6. Number of Accounts and Amount outstanding in retail banking in cooperative sector.

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INTERPRETATION:
In 2010 most of the people are not aware about the cooperative bank and there facilities.
But now till 2015 rapidly progress in opening bank accounts .In 2015 number of accounts open
in 460 million .amount outstanding also maximum its approximately 550 as compare to others
years. Minimum number of account opening and amount outstanding in march 2010.

7. Which banks are mostly used in Maharashtra.

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INTERPRETATION:
In state of Maharashtra 55% of people opening account or prefer cooperative bank
.because of there facilities and trustworthiness and for security purpose also. Only 14% people
are go with public banks because of there slow procedural and they slowly adopt technology in
banking sector.

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 CHAPTER 5
FINDINGS AND SUGGESTION

FINDINGS

 To create a separate cell for recovery of NPAs in the Retail Segment in the NPA
Department.

 Establishing a framework for continuous quality improvement.

 Ensuring consistency and standardization in operations, and optimality in work

allocation.

 The Bank should reduce rate of interest.

 From 2013 to 2018 retail banking gross revenue decreased till 8% .between 2000 to
3000. In year 2013 they are increased gross revenue above 6000 billion . They assume in
2019 to 2020 gross revenue should be stable between 6% to 8% annual growth rate.

 According to RBI, In Cooperative sector growth in deposits increased from 2012. Then
next two years they are slightly decreased and those 2 years they are in stable position In

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 2015 increased in largely its 1479.It is rapidly growth in deposits from 2005 to 2016 in
Maharashtra in retail banking

SUGGESTION:

 The bank should ensure adequate sanction of funds

 The Bank should devise and finance schemes for amelioration of the financial
condition of the members.

 The Bank should ensure clarity in the policy of loan repayment.

 The Bank should further ensure timely repayment of loans.

 To keep the Co-operative stables and enterprising.

 To provides fair and adequate return to the capital provided and the undertaken

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 CONCLUSION:

 The fore going discussion and analysis lead to the conclusion that banking structure of
India is full of potential for growth. Indian banking industry have registered considerable
development with significant impact on growth of GDP, a spectacular rise in National
income, increase in per capita income and expansion of financial sector of India.
 For future prospects retail banking has emerged as the showcase of innovation and
development, through its various products like personal loan, home loans, educational
loans, deposits, credit cards and depository services.
 Hence there is need of constant innovation of Retail banking, a paradigm shift in bank
financing through innovative products and mechanism involving constant upgradation
and revalidation of the banks internal system and processes
 The share o f co-operatives was 62 percent in the year 1992-93 which is reduced to 22 percent in
the year 2005-06 .
 In India ground level credit flow for agriculture and allied activities was registered compound
annual growth rate o f 7.24 percent for cooperative banks which are low as compared to RRBs
and CBs during the period from 1999-2000 to 2008-09.
 In Maharashtra at the end o f 2007, there were 21,184 Primary Agriculture Credit societies
having membership o f 110.78 lakhs
 This study showed the positive opinion toward the service of bank and the behavior of
employees for rendering services. .But compared to other private and public banks, co-operative
banks little bit poorer in the adoption of technology and modern equipment.
 Gradually the co-operative banks will adopt more and modern technologies for facing
competition and make their services more qualitative one

BIBLIGRAPHY

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 A.H.sequeria,‟ customer services in co-operative banks: A case study,” science research
network, research paper, 2012.

 Jyothi gupta suman Jain (2012) “A study on co-operative banks in India with special
reference to lending practice” International journal of scientific and research publication.

 Dutta and Basak (2008) Appraisal of Financial performance of urban co-operative banks
a case study“The Management account, case study march 2008, 170-174.
http://en.wikipedia.org/wiki/cooperative-banking.

 http://www.icba.coop/co-operative-bank/what-is-a-co-operative

http://www.rediff.com/money/report/perfinwhat-you-need-to-know-about-co-
operative-

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