___________________________________________________________

CHAPTER III

PERFORMANCE OF URBAN
COOPERATIVE BANKS
IN INDIA AND KARNATAKA
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 CHAPTER - III
PERFORMANCE OF URBAN COOPERATIVE BANKS
IN INDIA AND KARNATAKA

3.1 Introduction
The major participants of the Indian financial system are the commercial
banks, the financial institutions (FIs), encompassing term-lending institutions,
investment institutions, specialized financial institutions and the state-level
development banks, Non-Bank Financial Companies (NBFCs) and other market
intermediaries such as the stock brokers and money-lenders. The commercial banks
and certain variants of NBFCs are among the oldest of the market participants. The
FIs, on the other hand, are relatively new entities in the financial market place.

3.2 Historical perspective

Reserve Bank of India Act was passed in 1934 & Reserve Bank of India (RBI)
was constituted as an apex bank in 1935 without major government ownership.
Banking Regulations Act was passed in 1949, this regulation brought the Reserve
Bank of India under government control. Under the act, RBI got wide range powers
for supervision& control of banks in India and also vested with licensing power& the
authority to conduct inspection of Banks by RBI.

In 1955, RBI acquired the control of the Imperial Bank of India, which was
renamed as State Bank of India. In 1959, SBI took over control of eight private banks
floated in the erstwhile princely states, making them as its 100 per cent subsidiaries.
RBI was empowered in 1960, to force compulsory merger of weak banks with the
strong ones. The total number of banks was thus reduced from 566 in 1951 to 85 in
1969. In July 1969, government nationalised 14 banks having deposits of Rs.50 crores
& above. In 1980, government acquired 6 more banks with deposits of more than
Rs.200 crores. Nationalisation of banks was to make them to play the role of
catalytic agents for economic growth. The Narsimham Committee report suggested
wide ranging reforms for the banking sector in 1992 to introduce internationally
accepted banking practices.

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3.3 The Role of Urban Cooperative Banks in Financial Inclusion
There are over 1,650 UCBs with nearly 7,000 branches in the country. Yet
they form a tiny part of the banking system accounting for less than 3 per cent of the
total banking assets and deposits and less than 3.5 per cent of total advances. The top
20 per cent of UCBs account for almost 80 per cent of its deposits.

In spite of their presence in 25 states, much (almost 80%) of the action

happens in the five states i.e., Gujarat, Maharashtra, Andhra Pradesh, Karnataka and
Tamil Nadu, with the lion’s share going to Maharashtra, as on March 31, 2010, the
state accounted for over a third of all UCBs, almost half of all UCB branches, around
60 per cent of total extension counters of UCBs and more than 85 per cent of all its
automated teller machines (ATMs).

Accordingly, more than 60 per cent of the total banking business of the UCB
sector was concentrated there but their numbers have been dwindling in recent years.
During 2000-2010, 132 banks had their licenses cancelled and 62 merged with other
banks. In this scenario, it is perhaps understandable why this sector does not exactly
steal the limelight in banking policy discussions is the question.

3.4 Financial Inclusion- Advantages of UCBs

While a large section of the financially excluded population inhabits in rural
areas, financial exclusion is widespread in urban and semi-urban areas as well.
Generally farmers, small vendors, agricultural and industrial labourers, people
engaged in unorganized sectors, the unemployed, women, older and physically
challenged people are the most commonly excluded segments are best addressed by
the UCBs. The key advantage that UCBs enjoy over commercial banks is derived
from their cost structure. The establishment costs of UCBs are considerably less than
that of commercial banks and generally the operating costs are also minimal.

Equally important is the local nature and the consequent informational

advantages of the UCBs, being an integral part of the community, UCBs have an
advantage over their commercial rivals in terms of having information both about
upcoming business opportunities as well as borrower quality, which national-level
banks have a hard time gathering.

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 Finally, the advantages of the local nature of the UCBs also manifest
themselves in the flexibility that these banks can provide to their local clientele.
Unlike their commercial counterparts, who need to adhere to national and global
policies to change in order to alter their practices, UCBs can be far more responsive to
the needs of the local community and the changes there, that provides a massive
competitive advantage.

Recently, the UCBs have increasingly started adopting the three-pronged

financial inclusion strategies used by commercial banks Banking Correspondents
(BC), “no-frill” accounts and promoting microfinance activities. Once again their
local nature gives them an advantage over their national rivals in executing these
strategies better. UCBs enjoy an undisputable/undeniable edge in the area of
relationship banking.

3.5 Growth & Development of the UCBs in India:

Growth and development of the UCBs may be classified under the following
heads with respect to their time duration;
a. Growth and development prior to independence period
b. Growth and development for the period from 1948 to 1966
c. Growth and development for the period from1966 to 1993
d. Growth and development after1993

3.5.1 Growth and Development Prior to Independence Period:

The first experiment in urban credit in India was made in the Baroda state by
Prof. V.L. Bhausaheb Kavathekar. The Madras Presidency developed indigenous
societies known as Nidhi’s, while Western India preferred mutual aid societies.

The enactment of co-operative credit societies act in 1904 conferred a legal

status on credit co operative societies and the first urban co-operative credit society
was registered in October 1904 at Conjeevaram in Madras Province, Subsequently the
Betegeri co- operative credit society in Dharwar district in the undivided Bombay
Province and Bengaluru city cooperative credit society in the erstwhile Mysore state
were registered in October 1905 and December 1905 respectively. However the real

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beginning was after the amendment in 1912, enhancing its scope to the formation of
societies other than credit societies. Hence the Government of India amended the Act
in 1912 and in 1919 to make a provision for non-agricultural credit co op societies.
But little attention was paid to the development of urban credit movement till 1914. In
1915,Maclagan committee expressed its opinion that Urban credit cooperative
Societies might serve a useful purpose in training the upper and middle upper classes
to understand ordinary banking activities/principles. This created a favorable
atmosphere and the Government realized the importance of the UCBs as most suitable
agencies for catering to the financial needs of small classes of urban/semi urban
people who were in the clutches of moneylenders.

The economic depression of 1930, severely affected the agricultural credit

cooperative societies more than urban credit cooperative societies, but the progress of
urban cooperative societies was steady. In the year 1938 all the list of non-
agricultural credit societies were made and found that there was no difference
between an urban society and urban bank. An Urban Cooperative Society having
Rs.20,000/ as working capital and if it maintains fluid resources according to a
standard fixed by the Registrar, was designated as an urban bank in Madras. In
Bombay an Urban Cooperative Credit Society could be styled as an urban bank up to
1938, if it had Rs.50,000/ as working capital. However the real growth of urban bank
was made only after the extension of provisions of RBI Act 1934.

3.5.2 Growth and Development During 1948-49 to 1959-60

After enactment of the Banking Regulation Act 1949, our country showed the
right path of development to urban co-operative banks and has made a steady growth
without any financial participation or help from the Government.

The most important development in Urban Cooperative Banking sector was

the survey undertaken by the RBI in 1958-59 for assessing the financial pattern of the
UCBs and the role in financing small scale industries. The survey revealed that
notwithstanding the absence of state support, the urban cooperative banking sector as
a whole registered a fairly high rate of progress as shown in table 3.1.

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Table 3.1 Performance of Urban Cooperative Banks in India (1948 to 1959-60)
Percentage
of Change
Indicators of 1949- 1951 - 1953- 1955- 1957- 1959-
1948-49 between
Progress 50 52 54 56 58 60
1948-49 and
1959-60
No. of 815 776 930 716 1585 826 1242 52.39
UCBs
Membership 535 580 674 873 1139 1181 1797 235.89
Owned 4 5 6 7 9 8 17 325.00
Funds
Deposits 17 18 20 24 32 27 61 258.82
Working 22 24 27 33 44 57 82 272.72
Capital
Advances 19 20 24 27 32 33 65 242.11
Overdues 1 2 2 3 3 3 4 300.00
Source : Review of Cooperative Movement in India published by the RBI Mumbai

It is apparent from the table 3.1 that there was a sizeable growth both in the
number of the UCBs and their operations during 1948-49 to 1959- 60. Both
membership and working capital increased nearly four times during the period while
increase in deposits and advances was 258.82 per cent and 242.11 per cent
respectively that shows a high growth rate. But at the same time the proportion of
outstanding advances and overdues showed an increasing trend.

3.5.3 Growth and Development during March 1st 1966 to March 1993:
On 1st March 1966, the Urban Cooperative Banks were brought under the
purview of the Banking Regulation Act 1949 i.e. some provisions of Banking
Regulation Act were made applicable to the UCBs in 1966. This was a landmark in
the evolution of urban banking movement in India and the UCBs came under duality
of control of the RBI and state Government.

3.5.4 Growth and development after1993

The year 1993 was a watershed in the annals of urban cooperative banking
movement. After Narasimham Committee addressed the ills of banking system in 1991,
and suggested a road map for liberalising the banking sector, a similar need was also felt
to look de novo at the regulatory issues relating to UCBs. Accordingly, RBI appointed the
Marathe Committee in 1991 to address these issues. Recommendations of this Committee

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were quite far reaching, particularly, in the realm of new bank licensing, branch licensing
and area of operation etc. Essentially, Marathe Committee, suggested to dispense with the
"one district-one bank" licensing policy and recommended organisation of banks based
on the need for an institution and potential for a bank to mobilise deposits and purveying
of credit. It also felt that existence of commercial banking network should not prevent the
cooperative initiative. RBI accepted these recommendations and had come out with its
new policy approach in May 1993, Between May 1993, when the revised policy was put
in place and 31 March 1999, RBI has issued as many as 537 licenses for setting up new
banks. The liberalised branch licensing policy's stress was more on bank's inherent
financial strength rather than assessing the need for a branch and its viability in a given
centre. As a result, the branch network of UCBs has increased from 3691 as at the end of
March 1993, to 6619 by 31 March, 1999. Urban cooperative banks were also allowed to
extend their area of operation to the entire district without specific approval from RBI and
banks, with deposits of Rs.50 crores and above, were permitted to cross the borders of the
States of their registration. Banks complying with certain norms can now also open
extension counters without RBI permission.

RBI had also appointed a Working Group under the Chairmanship of Shri
Uday M. Chitale in December 1995 to review the existing audit systems of UCBs.
With a view to instill professionalism in the audit of UCBs, the Working Group
suggested that audit of UCBs, with deposits of Rs.25 crores and above, be conducted
by Chartered Accountants, thus, ending the monopoly of State Government's audit of
UCBs. It has suggested a standard format of audit for all the states. The Working
Group also suggested revised audit rating model for UCBs. Regrettably, none of the
states, not even the cooperatively advanced states, has implemented the
recommendations of Chitale Working Group.

Besides, easing regulatory restrictions, a number of policy pronouncements

were made in the operational sphere too. UCBs can now invest 10 per cent of their
surplus funds outside cooperative fold. Ceiling on quantum of advances to nominal
members has been increased substantially and scheduled UCBs have been allowed to
do merchant banking/forex operations. Effective from November 1996, urban
cooperative banks have been given freedom to finance direct agricultural operations.

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The interest rates on deposits of urban banks have been deregulated from 21 October,
1997. They can also install ATMs without prior approval of RBI.

Thus, in the post Marathe Committee dispensation, there was a paradigm shift
in RBI's regulatory approach. An excessively controlled regime gave way to a
thoroughly liberalised dispensation. The shift in RBI policy on UCBs was a natural
corollary of its policy stance on financial sector. Strangely, State Governments who
are co-regulators, have not brought out any significant parallel reforms in tune with
liberalisation process set in by RBI. The notable exception is Andhra Pradesh which
enacted the Mutually Aided Cooperative Societies Act, 1995 freeing the cooperative
societies, registered under this Act, from Government control as long as they do not
solicit share capital or seek guarantees from State Government.

3.6. Cooperative Banks

Cooperative banks were set up by passing of Indian cooperative act in 1904. They
are organized and managed on the principles of cooperation and mutual help. The main
objectives of cooperative banks are to provide rural credit. The cooperative banks in India
play an important role even today in rural co-operative financing. The enactment of
Cooperative Credit Societies Act, 1904, however, gave the real impetus to the movement.
The Cooperative Credit Societies Act, 1904 was amended in 1912, with a view to
broaden its base to enable the organization of non-credit cooperative societies.

3.7 Three- tier structure of cooperative banking:

There exists a three tier system of organizations in Cooperative Banking sector
in India viz;
i. State cooperative bank at the apex level.
ii. Central cooperative banks at the district level.
iii. Primary cooperative banks at the base or local level.

3.8 Scheduled and Non-Scheduled banks

A bank is said to be a scheduled bank when it has a paid up Share capital and
reserves as per the prescription and requirements of RBI and included in the second
schedule of RBI Act 1934. Non-scheduled bank are those banks, which are not
included in the second schedule of RBI Act 1934.

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3.9 Development banks and other Financial Institutions:
A development bank is a financial institution, which provides a long term
funds to the industries for development purpose like IDBI, ICICI, IFCI etc. at the
national level and State level institutions like SFC’s SIDC’s etc. It also includes
investment institutions like UTI, LIC, and GIC etc.

3.10 Implementation of Core Banking Solutions (CBS) by Urban Co-operative

Banks (UCBs)
3.10.1 The usage of Information Technology (IT) is critical for the survival and
growth of banking institutions as IT usage not only helps banks to reduce their
cost of operations, but also enables them to offer products and services at
competitive rates to their customers. IT has become not just an enabler but a
differentiator for banks in a competitive environment. Further, for effective
regulatory and supervisory compliance the banks need to use IT in their
operations. Considering the importance of the matter, the Reserve Bank had
included ‘Review of Mechanization and Computerization’ as one of the
reviews to be placed annually before the Board of Directors of UCBs.
3.10.2 Core Banking Solutions (CBS) essentially helps in integration of the range of
services that can be offered by all the bank's branches from centralized data
centers. It also helps the banks, apart from providing better customer service,
in generating MIS reports for the top management and in submission of
various reports to the regulators and the Government. The Government of
India has also observed that UCBs without CBS do not integrate well with the
banking system and hence there is the need to quickly adopt this model. CBS
is a necessity in today’s banking scenario. UCBs are, therefore, advised in
their own interest, as also in the interest of their customers, to adopt CBS as
soon as possible. There are number of software solutions available today,
including cloud based solutions, and UCBs may adopt the model that meets
their bank’s requirement.
3.10.3 Information available with the Reserve Bank indicates that very few UCBs
have adopted CBS. Hence all UCBs are advised to implement CBS in all their
branches before December 31, 2013. The concerned Regional Office of the
Reserve Bank may be kept informed of the progress made in implementing

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 CBS. It may be noted that failure to implement CBS within the timeframe,
could result in denial of various facilities (expansion of branches, area of
operation etc.) to UCBs.

Table 3.2 State-Wise Distribution of UCBs in India

Number
of Number Number
branches Number Total of of
No.
States / (including of number districts districts Deposits Advances
of
Union Territories head extension of with a without (Billion) (Billion)
UCBs
office- counters ATMs UCB a UCB
cum- branch branch
branches)
Northern region 73 382 14 49 57 64 109 70
Haryana 7 20 1 7 7 14 6 4
Himachal Pradesh 5 12 3 6 4 8 5 3
Jammu &
4 26 5 0 8 14 5 2
Kashmir
Punjab 4 21 1 4 6 16 10 5
Rajasthan 38 213 3 22 28 5 49 27
Delhi 15 90 1 10 4 7 34 29
North-eastern
17 47 1 0 18 49 13 8
region
Assam 8 22 0 0 6 21 6 5
Manipur 3 10 1 0 4 5 4 2
Meghalaya 3 7 0 0 3 8 2 1
Mizoram 1 1 0 0 1 7 0 0
Sikkim 1 5 0 0 2 2 0 0
Tripura 1 2 0 0 2 6 0 0
Eastern region 59 158 5 7 29 83 51 25
Bihar 3 9 0 2 2 36 1 1
Jharkhand 2 3 0 0 2 22 0 0
Odisha 10 40 4 0 12 18 11 6
West Bengal 44 106 1 5 13 7 38 19
Central region 137 479 23 61 93 73 115 62
Chhattisgarh 12 25 0 1 9 18 5 2
Madhya Pradesh 51 100 1 6 25 26 22 11
Uttar Pradesh 69 261 20 40 46 29 57 31
Uttarakhand 5 93 2 14 13 0 31 18
Western region 746 6448 132 2880 65 8 2333 1467
Goa 6 94 1 33 2 0 30 20
Gujarat 228 1075 46 179 26 7 343 218
Maharashtra 512 5277 85 2668 36 0 1959 1229
Daman & Diu UT) 0 2 0 0 1 1 0 0
Southern region 557 2012 61 178 99 4 534 365
Andhra Pradesh 102 336 6 35 23 0 89 66
Karnataka 265 1058 53 113 30 0 265 179
Kerala 60 414 2 20 14 0 102 63
Tamilnadu 129 198 0 10 31 1 78 56
Puducherry 1 6 0 0 1 3 2 1
All-India 1589 9526 236 3175 361 281 3155 1997
Source: Reserve Bank of India Statistical Report - 2014
The table 3.2 reflects trends of Urban Cooperative Banks, Number of
Branches, number of extension centers and number of ATMs are functioning in India.

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 Totally, 1589 urban cooperative Banks are working across the India with 9526
branches including head office cum branches and Western region and southern region are
registered more number of Urban Cooperative Banks compared to Eastern region, North-
Eastern region and Northern region. The table shows that, southern region States and
western region States are in dominance compared to northern region States and north-
eastern region in all aspects like number of banks, branches, ATMs, Number of districts
with a UCB branch, Deposits and advances. The number of districts without a UCB
branch is more in northern region compared to southern region.

3.11 Financial Performance of Urban Cooperative banks in Karnataka

In Karnataka, details of financial position and performance of urban
cooperative banks are reflected in the Table 3.3.

Table 3.3 Financial position of Urban Cooperative Banks in Karnataka

Consolidated Data 31.03.2014
No. of Banks 266
No. of Branches 904
No. of Members 2322236
No. of Employees 8463
(Rs in Crores)
Share Capital 819.21
Reserve & other Funds (Total) 2623.13
Reserve 809.27
Building 308.31
BDDR 819.70
Provision on std Assets 71.15
Other Funds 614.70
Deposits 23006.68
Net Profits 298.13
Net Loss 6.39
Accumulated Loss 70.91
Working Capital 27955.84
Cash Balance 402.78
Bank Balance 1754.69
Investments (Total) 8793.13
Govt. Securities 5820.05
Non SLR 1195.50
Other Investments 1777.58
Borrowings, if any 27.70
Loans & Advances 15307.07
Premises Value (Book Value) 187.21
Gross NPA 958.76
Net NPA 190.93
Source : Reserve Bank of India Statistical Report - 2014

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 The table 3.3 reflects financial position of Urban Cooperative Banks in
Karnataka during the year 2014. The table figure indicates that, financial viability of
the Urban Cooperative Banks in Karnataka is not comfortable. In the case of Working
Capital and total number of employees performance assessment during the year of
2014, the per employee business is only 3.30 per cent. The percentage of per
employee business shows financial viability of the Urban Cooperative Banks, the 3.30
per cent per employee business is not viable for urban cooperative banks, efforts
should be made to control the cost by redeployment of staff.

3.12. Comparison of Performance of selected UCBs;

The equality variance analyses were made in identified variables like Reserves
and other funds, Membership, Share Capital, Deposits, Borrowings, Working Capital,
Advances, Loan Outstanding, Overdues and Number of Urban Cooperative Banks in
southern and northern regions of Karnataka for understanding the equality of southern
and northern regions of Karnataka.

3.13 Reserves and Other funds of Urban Cooperative Banks in Karnataka

The study tested the equality of variance before testing the mean difference
between Reserves and other funds by using Levene’s test for equal variance. The
result reveals that variance is same for Reserves and Other Funds for both northern
and southern regions of Karnataka.

The mean value of Reserves and other funds in southern region is registered
higher value (7.2041) than the northern region (6.3856). The result clearly shows that,
southern region selected urban cooperative banks are viable compared to the northern
region urban cooperative banks.

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Table 3.4 Reserves and Other funds of Urban Cooperative Banks in Karnataka
Group Statistics
Region N Mean Std. Deviation Std. Error Mean
Reserves & Other 1.4165
funds North 12 6.3856 4088496.245
South 14 7.2041 1.4997 4006160.143
Mean Comparison Test
Levene's Test for
Equality of t-test for Equality of Means
Variances
Sig. (2- Std. Error
F Sig. t df Mean Difference
tailed) Difference
Reserves & Equal
Other funds variances .142 .710 -.143 24 .887 -823626.36 5750129.58
assumed
Equal
variances not -.144 23.743 .887 -823626.36 5724082.51
assumed
Source : Compiled from Field data

Hence, t values are selected with equal variance. The calculated value of ‘t’ is
-0.143 and its significance is 0.887, hence, the null hypothesis of no difference in
Reserves and Other Funds between northern and southern regions of Karnataka is not
rejected. This implies that, in Reserves and Others Funds of Urban Cooperative banks
of Karnataka is same for both northern and southern regions of Karnataka.

3.14 Membership of Urban Cooperative Banks in Karnataka

The membership data were tested the equality of variance before testing the
mean difference testing the mean difference between Membership by using Levene’s
test for equality of variance. The result reveals the variance is same for Membership
of both northern and southern regions of Karnataka.

Table 3.5 Membership of Urban Cooperative Banks in Karnataka

Group Statistics

Region N Mean Std. Deviation Std. Error Mean

Membership North 12 8.175 777799.47 224531.36

South 14 8.125 1538418.666 411159.68

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 Mean Comparison Test
Levene's
Test for
t-test for Equality of Means
Equality of
Variances
Sig. Std. Error
F Sig. T df Mean Difference
(2-tailed) Difference
Equal
variances .088 .770 .010 24 .992 4843.976 491237.05
assumed
Membership
Equal
variances .010 19.826 .992 4843.976 468472.64
not assumed
Source : Compiled from Field data

Hence, ‘t’ values are selected with equal variance. The calculated value of ‘t’
is 0.10 and its significance value is 0.770, hence the null hypothesis of no difference
in Membership between northern and southern regions of Karnataka is not rejected.
This implies that on Membership of Urban Cooperative Banks of Karnataka there is
no ‘Significant’ difference between the northern and southern regions of Karnataka.

3.15 Performance of Share Capital of Urban Cooperative Banks in Karnataka

Levene’s test for equality of variance reveals that the variance is not same for
Share Capital of both the northern and southern regions of Karnataka.

Table 3.6 Performance Share Capital of urban cooperative Banks in Karnataka

Group statistics
Region N Mean Std. Deviation Std. Error Mean

Share Capital North 12 7.22E5 654143.645 188835.005

South 14 2.39E6 4219519.362 1127713.985

Mean Comparison Test

Levene's Test
for Equality of t-test for Equality of Means
Variances
Sig. (2- Std. Error
F Sig. t df Mean Difference
tailed) Difference
Equal
variances 8.328 .008 -1.355 24 .188 -1672133.04 1234049.89
assumed
Share
Capital Equal
variances
-1.462 13.726 .166 -1672133.04 1143414.83
not
assumed
Source : Compiled from Field data

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 Hence, ‘t’ values are selected with equal variance not assumed. The calculated
value of ‘t’-1.462 and its significance value 0.166, hence, the null hypothesis of no
difference in Share Capital between northern and southern region of Karnataka is not
rejected, which implies that, in Share Capital of Urban Cooperative Banks, there is no
‘Significant’ difference between the northern and southern regions of Karnataka.

3.16 Deposits of Urban Cooperative Banks in Karnataka

Levene’s test for equality of variance reveals the variance is same for Deposits
of both the northern and southern regions of Karnataka.

Table 3.7 Deposits of Urban Cooperative Banks in Karnataka

Group Statistics
Region N Mean Std. Deviation Std. Error Mean
Deposits North 12 1.417 1.6677 4811951.196
South 14 3.747 7.2727 1.9447
Mean Comparison Test
Levene's Test
for Equality of t-test for Equality of Means
Variances
Sig. (2- Mean Std. Error
F Sig. t df
tailed) Difference Difference
Deposits Equal
variances 4.931 .036 -1.081 24 .290 -2.3277 2.1527
assumed
Equal
variances not -1.162 14.578 .264 -2.3277 2.0027
assumed
Source : Compiled from Field data

Hence, ‘t’ values are selected with unequal variance. The calculated value of
‘t’-1.162 and its significance value is 0.264, hence the null hypothesis is significance
in Deposits between northern and southern region of Karnataka is not rejected. This
implies that in Deposits of Urban Cooperative Banks are the same between the
northern and southern regions of Karnataka.

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3.17 Borrowings of Urban Cooperative Banks in Karnataka
Levene’s test for equality of variance for Borrowings of both the northern and
southern region of Karnataka is here under.
Table 3.8 Borrowings of Urban Cooperative Banks in Karnataka
Group Statistics
Region N Mean Std. Deviation Std. Error Mean
Borrowings North 12 3.206 3517079.046 1015293.267
South 14 3.126 4917533.352 1314266.071
Mean Comparison Test
Levene's Test
for Equality t-test for Equality of Means
of Variances
Sig. (2- Mean Std. Error
F Sig. t df
tailed) Difference Difference
Borrowings Equal
variances 1.356 .256 .045 24 .964 77241.36 1704287.97
assumed
Equal
variances
.047 23.328 .963 77241.36 1660757.57
not
assumed
Source : Compiled from Field data

Hence, ‘t’ values are selected with equal variance. The calculated value of ‘t’
is 0.045 and its significance value is 0.256, the null hypothesis of no difference in
borrowings between northern and southern regions of Karnataka is not rejected. This
implies that in borrowings of Urban Cooperative Banks there is no significant
difference between the northern and southern regions of Karnataka.

3.18 Working Capital of Urban Cooperative Banks

Levene’s test for equality of variance for Working Capital of both the northern
and southern regions of Karnataka is narrated hereunder;

Table 3.9 Working Capital of Urban Cooperative Banks in Karnataka

Group Statistics
Region N Mean Std. Deviation Std. Error Mean
Working Capital North 12 2.207 2.4477 7065104.609
South 14 4.637 9.2057 2.4607

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 Mean Comparison Test
Levene's Test for
Equality of t-test for Equality of Means
Variances
Sig. (2- Mean Std. Error
F Sig. t df
tailed) Difference Difference
Working Equal
Capital variances 2.645 .117 -.883 24 .386 -2.4247 2.7447
assumed
Equal
variances
-.947 15.111 .359 -2.4247 2.5607
not
assumed
Source : Compiled from Field data

Hence, ‘t’ values are selected with equal variance. The calculated value of ‘t’
-0.883 and its significance value is 0.117, the null hypothesis of no difference of
Working Capital between northern and southern regions of Karnataka is not rejected.
Which implies that there is no significant difference in working capital of UCBs
between the northern and southern regions of Karnataka.

3.19 Advances of Urban Cooperative Banks in Karnataka

Levene’s test for equality of variance for Advances of both northern and
southern regions of Karnataka is made as hereunder.

Table 3.10 Advances of Urban Cooperative Banks in Karnataka

Group Statistics
Region N Mean Std. Deviation Std. Error Mean
Advance North 12 1.547 1.5577 4493707.781
South 14 1.747 2.8767 7685925.041
Mean Comparison Test
Levene's Test
for Equality t-test for Equality of Means
of Variances
Sig. (2- Mean Std. Error
F Sig. t df
tailed) Difference Difference
Advance Equal
variances .342 .564 -.216 24 .830 -2013398.10 9301488.47
assumed
Equal
variances -.226 20.567 .823 -2013398.10 8903193.43
not assumed
Source : Compiled from Field data

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 Hence, ‘t’ values are selected with equal variance. The calculated value is of
‘t’ -0.216 and significance value is 0.564, the null hypothesis of no difference of
Advances between northern and southern regions of Karnataka is not rejected, which
implies that in Advances of urban Cooperative Banks there is no significant difference
between the northern and southern regions of Karnataka.

3.20 Loan Outstanding of Urban Cooperative Banks in Karnataka

Levene’s test for equality of variance for Loan outstanding of UCBs between
northern and southern regions of Karnataka is made as hereunder;.

Table 3.11 Loan Outstanding of Urban Cooperative Banks in Karnataka

Group Statistics
Region N Mean Std. Deviation Std. Error Mean
L.Outstanding North 12 1.617 1.9037 5494472.619
South 14 3.227 6.9857 1.867E7
Mean Comparison Test
Levene's Test
for Equality t-test for Equality of Means
of Variances
Sig. (2- Mean Std. Error
F Sig. t df
tailed) Difference Difference
L.Outstanding Equal
variances 1.444 .241 -.774 24 .446 -1.6147 2.0857
assumed
Equal
variances
-.829 15.215 .420 -1.6147 1.9467
not
assumed
Source : Compiled from Field data

Hence, ‘t’ values are selected with equal variance. The calculated value of ‘t’ -
0.774 and its significance value is 0.241, the null hypothesis of no difference of Loan
Outstanding between northern and southern regions of Karnataka is not rejected,
which implies that, in Loan Outstanding of Urban Cooperative Banks there is no
significant difference between the northern and southern regions of Karnataka.

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3.21 Overdues of Urban Cooperative Banks in Karnataka
Levene’s test for equality of variance for Overdues of both the northern and
southern regions of Karnataka is carried out as under;.

Table 3.12 Overdues of Urban Cooperative Banks in Karnataka

Group Statistics
Region N Mean Std. Deviation Std. Error Mean
Overdues North 12 3.206 4473455.664 1291375.416
South 14 4.966 1.2037 3214545.452
Mean Comparison Test
Levene's Test
for Equality
of Variances t-test for Equality of Means
Sig. (2- Mean Std. Error
F Sig. t df tailed) Difference Difference
Overdues Equal
variances 1.244 .276 -.480 24 .635 -17672 36805
assumed
Equal
variances
-.510 17.011 .617 -17672 34642
not
assumed
Source : Compiled from Field data

Hence, ‘t’ values are selected with equal variance. The calculated value of ‘t’ -
0.480 and its significance value is 0.276,the null hypothesis of no difference of
overdues between northern and southern regions of Karnataka is not rejected, which
implies that, in overdues of Urban Cooperative Banks there is no significant
difference between the northern and southern regions of Karnataka.

3.22 Number of UCBs in northern and southern regions of Karnataka

Levene’s test for equality of variance for Number of Urban Cooperative banks
of both the northern and southern regions of Karnataka is made as under;

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 Table 3.13 Number of UCBs of in Northern & Southern regions of Karnataka
Group Statistics

Region N Mean Std. Deviation Std. Error Mean

UCBs North 12 128.42 102.590 29.615
South 14 87.36 114.492 30.599
Mean Comparison Test
Levene's Test
for Equality t-test for Equality of Means
of Variances
Sig. (2- Mean Std. Error
F Sig. t df
tailed) Difference Difference
UCBs Equal
variances .090 .767 .956 24 .349 41.06 42.95
assumed
Equal
variances not .964 23.938 .345 41.06 42.58
assumed
Source : Compiled from Field data

Hence, ‘t’ values are selected with equal variance. The calculated value of ‘t’
0.956 and its significance value is 0.349, the null hypothesis of no difference of
Number of UCBs between northern and southern regions of Karnataka is not rejected,
which implies that, in number of UCBs there is no significant difference between the
northern and southern regions of Karnataka.

3.23 Summary
The analysis based on the secondary data revealed the performance of the
Urban Cooperative Banks at the state level. The results revealed that there is no
considerable variation among the southern region and northern region of Karnataka
State.

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