A STUDY OF CUSTOMER LEVEL SATISFACTION REGARDING NON AGRICULUTURAL LOANS PROVIDED

BY PSCB

OBJECTIVES1. To study the loans and advances given

by bank.2. To study detail procedure of lending

regarding different forms of financing of cooperative banks.

3. To know the satisfaction level of the customers regarding the non agriculture loans

INDUSTRY INTRODUCTIONThe financial sector is in the process of rapid

transformation. Reforms are continuing as part of the overall structural reforms aimed at improving the productivity and efficiency of the economy. The role of an integrated financial infrastructure is to stimulate and sustain economic stability. The US$28 billion Indian financial sector has grown at around 15% and has display stability for the last several years, even when other markets in the Asian region were facing crises.

The Reserve bank of India has successfully introduced a regime where interest rates are more in line with market forces. Financial institutions have combated the reduction in interest rates and pressure on their margins by constantly innovating and targeting attractive consumer segments. Bank and trade financiers have also played an important role in promoting foreign of the country.

DEFINITION & FUNCTION OF BANK WHAT IS BANK?  To a layman, a bank is

one that accepts deposits from public and lends money. Few DEFINATIONS of bank are discussed below:-

THE CONCISE OXFORD DICTIONARY 

“Bank collects money from those who have it to spare or who are saving it out of their income, and

It lends this money to those who require it.”

This definition brings out the two important functions of a banker namely, acceptance of deposits and lending.

 

Phases of Banking

Foundation PhaseExpansion Phase

Consolidation Phase

Reforms Phase

PHASES OF BANKING

COOPERATIVE BANK

  The cooperative bank has history of almost 100 years. The

cooperative banks are an important constituent of the Indian Financial System, judging by the role assigned to them, the expectations they are supposed to fulfill their number and the number of offices they operates. The co-operative movement originated in the West, but the importance that such banks have assumed in India is rarely paralleled anywhere else in the world. Their role in rural financing continues to be important even today, and their business in the urban areas has increased phenomenally in the recent years mainly due to the sharp increase in the number of primary co-operative banks. While the co-operative banks in rural areas mainly finance agricultural base activities including farming, cattle , milk, hatchery , personal finance etc. along with some small scale industries and self-employment driven activities, the co-operative banks are quite forward looking and have developed sufficient core competencies to challenge state and private sector banks.

3 TYRE SOCIETY

PUNJAB STATE COOPERATIVE BANKThe Punjab State Cooperative Bank was

established on 31st August, 1949 at Shimla vide registration No. 720 has a principle financing institutionof the cooperative movement in Punjab.

In the cooperative Banking structure, the position of the Punjab State Cooperative Bank is extremely important as the whole credit system revolves around it.This bank ensures that its member central cooperative banks follow sound banking practices & observe strict financial discipline

STRUCTURE OF COOPERATVE BANKINGThe cooperative banking structure in

India is divided into 4 components:a) Primary cooperative credit societyb) Central cooperative banksc) State cooperative banksd) Landing development banks

ACTIVITIES

ACTIVITIES SOURCES OF FUNDS

1. NON-FARM SECTOR

2.AGRICULTURAL& DEVELOPMENT STABILIZATION FUND

3. EMPLOYEES WELFARE FUND

 

 

. OWN FUNDS:   .DEPOSITSBORROWINGS FROM

NABARD

INVESTMENT OF FUNDS

STATUTORY REQUIREMENTS LOANS & ADVANCES.1.SHORT TERM AGRICULTURAL ADVANCES.

. SHORT TERM AGRICULTURAL RECOVERY (DCCBs).

2.REVOLVING CASH CREDITS.3.NON FARM SECTOR LOANS

NON-FARMINGSECTOROF BANKINGDuring the early phase Punjab State Cooperative

Bank deals in agriculture loan only but to diversify its loaning portfolio the Punjab State Cooperative Bank entered in the field of Non Agriculture advances During the year 1992- 93.

Initially four Central Cooperative Banks namely Jalandhar, Nawanshahr, Kapurthala and Ludhiana were permitted by the Registrar Cooperative Societies. Punjab to undertake financing of Non Agricultural activities up to Rs. 50,000/- in a single case (composite loan). Later on all the Central Cooperative Banks were allowed to composite loan(block capital and working capital up to Rs. 62500/-

Under the loaning portfolios, various Non Agricultural Schemes were introduced by the Punjab State Cooperative Bank and these are as following:- 

revolving cash credit to farmerstwo wheeler loans to farmersrural godown schemepersonal loan schemecash credit to businessmen and tradersshekari bank bima yognasecond hand car loankisan credit card scheme.small road transport operation shekari education

loan facility consumer durable loan:to salary earnersto non salary earners

non farm sector loanloan against national saving certificate

TOPIC UNDERTAKEN FOR THIS STUDY During the training period, I concentrated only on

five kinds of loans, which are pervaded by the Punjab state cooperative bank, Chandigarh. The reason being that the branch has provisions for only these five finds of loans, thus is providing these non agricultural loans only. A detailed study of the procedure for applying to these loans, documents, required and other formalities relate to these loans were studied. These loans are stated as under: 

House Building LoanPersonal LoanConsumer LoanTwo Wheeler loanEducation Loan

What kind of loan have you taken from organization?

INTERPRETATION: Table reaveals that 16 respondents have taken house loans, 15 have taken personal loans and less people prefer consumer, educational and vechile loans.

Kind of Loan No. of Respondent Percentage(%)

House loan 16 32%

Personal loan 15 30%

Consumer loan 6 12%

Educational loan 8 16%

Vehicle loan 3 6%

Other 2 4%

What is the amount of loan taken?

Loan Amount No. of Respondent Percentage (%)

Less than 20,000 4 8%

20,000-50,000 10 20%

50,000- 1 lac 6 12%

More than 1 lac 30 60%

INTERPERTATION:Table reveals that 8 % people prefer loan less than 20,000, 20 % respondents prefer 20,000 to 50,000,12 % prefer more than 1 lac and 60% of the respondents prefer more than 1 lac.

What is the term of loan ?Term of Loan No. of respondent Percentage(%)

Less than 1 year 6 12%

1 to 3 years 10 20%

More than 3 years 32 64%

INTERPRETATION:-Table shows that 64 % respondents take loan for more than 3 years, 20 % take loan for for 1 to 3 years and 12% take loan for the period of less than 1 year .

4.What is the rate of interest you paying?

Rate of interest paid by

the customers

No. of Respondent Percentage (%)

Less than 9% 2 4%

9% to 12% 24 48%

More than 12 % 24 48%

INTERPRETATION:Table shows that 48% of the respondents are paying rate of interest 9 to 12 % and more than 12 % and 4 % of the Respondents pay less than 9 % of rate of interest.

How many time have you taken loan before?

INTERPRETATION:Table reveals that 58 % of the respondents took loan once , 32 % of the respondents took loan for 1 to 3 times and 10 % took loan for more than 3 times.

 

No. of times loan takenNo. of respondent Percentage (%)

Only once 29 58%

1 to 3 times 16 32%

More than 3 times 5 10%

What prompted you have to take loan from the institute?

INTERPRETATION:Table reveals that 38 % take loan because banks provide easy payment,34% take loans because of less formalities and other respondents take loan because of reasonable rate of interest, more schemes .

Reason for taking loan No. of Respondent Percentage (%)

Reasonable rate of

interest

6 12%

More schemes 5 10%

Less formalities 17 34%

Easy repayment 19 38%

Any other 3 6%

What is the average time taken for the processing of the loan?

Average time for

processing of loan

No. of respondent Percentage (%)

Less than 7 days 34 68%

Between 7 to 14 days 13 26%

More than 14 days 3 6%

INTERPRETATION:-

Table reveals that 68% respondents says that average time taken for processing of the loan is less than 7 days, 26% says that it takes 7 – 14 days and 6 % says that it takes more than 14 days.

Are you satisfied with the amount & period of installment?

No. Of respondent Percentage (%)

Yes 34 68%

No 6 12%

Can’t say 10 20%

INTERPRETATION:Table reveals that 68% are satisfied with the amount and period of installement ,12 % are not satisfied and 20 % can’t say.

To what extent are you satisfied with the following factors?

How would you rank the facility provided by the bank?

Rank the facility No. of respondent Percentage (%)

Above average 16 32%

Average 30 60%

Below average 4 8%

INTERPRETATION:Table shows that 60% of the respondent says that facility provided by the bank are average, 32% say that its above average and 8% says that its below average.

How would you rank the customer service of the bank?

Rank the customer

services

No. of responedent Percentage(%)

Excellent 12 24%

Good 26 52%

Average 12 24%

Poor 1 2%

INTERPRETATION: Table shows that 52% of the respondents says that customer service of the bank is good,24% says that it is excellent and another 24 % says its average and only 2 % says its poor.

If you are in need of loan in future from which in banks would you prefer to take loan?

Preferable banks in

future

No. of respondent Percentage (%)

Public banks 7 14%

Private banks 15 30%

Cooperative bank 28 56%

INTERPRETATION:Table shows that 56 % of the respondents wil prefer loans from co-operative banks, 30 % from the private banks and 14 % from the public banks

Do you think the bank is able to reach upto your satisfaction level?

No.of respondent Percentage (%)

Yes 37 74%

No 13 26%

INTERPRETATION:The bank is able to reach upto the satisfaction level of 74% of its employess while the remaining 26% are not satisfied by the services provided by the bank. Hence, the bank should work upon to increase the customer satisfaction level.

Would you like to refer the bank to your friends and relatives?

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

Always 39 78%

Sometimes 9 18%

Never 2 4%

PROBLEMS FACED BY COOPERATIVE BANKS1. The cooperative financial institution is facing severe problems

which have restricted their ability to ensure smooth flow of credit and also in meeting the requirement of the farming

Limited ability to mobilize resources. Low Level of recovery. High transaction of cost. Administered rate of interest structure for a long time. 2. Due to cooperative legislation and administration mandates Govt

interference has become a regular feature in the gay –to-day administration of the cooperative institution. Some of the problem area that arise out of the applicability of the cooperatives legislative are:

• Deliberate control of cooperatives by the government.• Nomination of board of director by the government.• Participation of the nominated director by the government.• Deputation of government officials to cooperative institution

etc.

3. The state cooperative banks are not able to formulate their respective policies for investment of their funds that include their surplus resources because of certain restrictions.

4. Prior approval of RBI is mandatory for opening of new branches of SCBs. The SCBs are required to submit the proposal for opening of new branches to RBI through NABARD, whose recommendation is primarily taken into consideration while according permission.

5. There is the condition of government guarantee by NABARD while sanctioning credit limits to SCBs and DCCBs but no stage the commercial bank and regional rural banks are called upon to execute any Govt Guarantee while sanctioning reference by NABARD. 

6. On the number of occasions institute like food cooperation of India. Indian Oil Corporation, Hindustan Petroleum etc. Have issued instruction in writing that demand draft/ pay order should be obtained from the nationalization/ schedule bank.

 7. SCBs does not provide loan directly to farmers due to which they cannot keep pace the changing requirements of the farmers.

FINDINGS & UGGESTOIONSFINDING SUGGESTIONS:Majority of the

respondent were having housing loan from this bank.

Most of the people prefer to take long term loan which is more than 3 years.

Easy repayment and less formalities are the main factors determining customer’s selection of loans.

The bank should adopt the modern methods of banking like internet banking, credit cards, ATM, etc

The bank should plan to introduce new schemes for attracting new customers and satisfying the present ones.

The bank should improve the customer services of the bank to a better extent