1.

1 INTRODUCTION
Co-operation means working together. Co operative efforts is
ultimately the group instinct in means which enable him to together and help
each other in times of stress and strain. England is considered to be the birth
place of co-operative movement in the world. The industrial revolution and its
result have a direct bearing on the origin of the co-operative movement in
Britain.
The term co-operative as generally understand today is a term which like
philosophy and religion details exact definition and description. Almost every
writer has tried to define this term in this own way. No two definition are
identified and no single definition has a far succeeded to include all the
ingredients of co-operative ideology Co-operative movement in Kerala is very
strong and stable, it first in the field of deposits among the states.

CO-OPERATIVE BANKS
Co-operative banks are institutions established on the principle of co-
operation and it deals in ordinary banking business. It is formed to extend credit
facilities to farmers and small scale industries if helps to promote habit of thrift
and self help among the low and middle income group of the society it collects
funds through shares, accept deposited and grand loans. The main feature of the
co-operative bank is that it has profit motive. A co-operative bank is one. Which
perform the banking functions such as (a) borrowing (b) lending (c) agency
services and (d) general utility service on a co-operative basis. It refers to a
mutual society formed by working people themselves for encouraging regular
serving and granting small loans on easy terms. The district Co-operative banks
are also known as central Co-operative banks the central banks are the
federation of Co-operative primary societies in special area. Usually in a

1
specified area. The central Co-operative banks is the important link between the
apex Co-operative banks and the primary agricultural credit societies

1.2 STATEMENT OF THE PROBLEM

Co-operative Banks are providing many services to its customers .There

is a need to ascertain the customer's perception towards deposit and lending
policies of co-operative urban banks. Also lending policies of co-operative
urban bank and various kinds of deposits of co-operative bank are to be studied
indeed for the better utilization of its services. The study focus on ascertaining
the perception of customers towards deposit and lending of co-operative urban
bank, its lending policies and also its various kinds of deposits.

1.3 OBJECTIVES OF THE STUDY

A study on customer perception towards deposit and lending.

To identify the lending policies of co-operative urban bank
To identify various kinds of deposit of co-operative urban bank

1.4 SIGNIFICANCE OF THE STUDY

Indian financial institution consist number of banks and institution.

Among this co-operative urban bank have an important role in the development
of country especially in urban and semi urban areas .They provide large number
of services to its customers. So a study about co-operative urban bank is very
significant, the study is also significant because it tries to measure satisfaction
level of customer perception towards deposit and lending policies of co-
operative urban bank.

2
1.5 HYPOTHESIS

Ho : There is no significant difference between satisfaction level of customers,

while studying various facilities of co-operative urban bank
H1 : There is no significant difference between gender and kind of deposit
maintained in the bank

1.6 RESEARCH METHODOLOGY

The study is designed as a descriptive study based on both secondary and
primary data
1.6.1SECONDARY DATA
Basics of Banking and Insurance
Co-operation in India
Banking Production Trading and Service Co-operatives
www.customersatisfaction.com
www,mcubank.corn
1.6.2 PRIMARY DATA
The study mainly based on primary data the primary data for the study is
collected from 60 customers through the use of approved questionnaire. The
questionnaire has been mainly used for understanding the customer perception
towards deposit and lending policies of Manjeri co-operative urban bank.

1.6.3 SAMPLE DESIGN

Total of 60 respondents are selected on the basis of convenience sampling
from Manjeri Area.
1.6.4 SAMPLING METHOD
Convenient sampling
1.6.5 TOOLS FOR DATA COLLECTION
Questionnaire

3
1.6.6 TOOLS FOR DATA PRESENTATION
Chart
Graph

1.6.7 TOOLS FOR DATA ANALYSIS

Anova
Chie-Square
1.7 AREA OF STUDY
The area selected for the survey is MANJERI AREA
1.8 PERIOD OF STUDY
The study on the topic "CUSTOMER PERCEPTION TOWARDS
DEPOSIT AND LENDING POLICIES OF CO-OPERATIVE URBAN BANK"
with special reference to Manjeri area is conducted at a period of 16 December
2015 to February 2016.

1.8 SCOPE FOR FURTHER RESEARCH

It is highly recommended for future research to expand the banking attitude of

customers.

1.9 LIMITATION OF THE STUDY

Shortage of time is affected the study
The sample size of study is small
The availability of literature is very difficult
Respondents may not give correct answer

4
2.1 REVIEW OF LITERATURE

Cronin and Taylor (2004) Noted that a customer's perception of service quality
can be best measured by his/her "perceived" attitude about the service being
rendered. Cronin and Taylor (2004) reported that t heir unweight performance
based SERVPERF scale was a better method of measuring service quality
than SERVQUAL. They contended that the SERV PERF scale consist entry
outperformed the SERVQUAL scale in terms of reliability and validity.

Heiko and martin (2007 ) of IMF conducted a study on co -operative banks

and their financial stability. The study was based on individual bank data drawn
from the bank scope database for 29 major organization economic co-operation
and development (OCED). They found that co-operation banks in advanced
economies and emerging markets had higher scores than commercial banks,
suggesting that co-operation bank were more stable.

Rutamu and Gansan (2008), in their research article titled, 'Profits and
Profitability of cooperative banks: The case of Banques Popularies (Peoples'
Bank) of Rawanda stated that financial institution in general and banking sector
in particular play a strategic role in the financing stage of capital formation. In
the banking sector, cooperative banking undertakes the responsibility of
mobilizing the scare savings of the community and channelizing these savings
for productive investment in the economy.

The European Association of Co-operative Banks (2009), in its article

titled, 'European co-operative banks in financial and economic turmoil' was of
the view that despite expensive interest rate cuts, liquidity injections and
support measures the financial markets were not stable. Figures showed that
global economy will experience a deep recession in 2009 and perhaps also

5
2010.But as has been demonstrated ,most co-operative bank groups had
fortunately been able to weather the financial crisis relatively well so far
without any state support. The co-operative banks that did report losses due to
the subprime crisis were affected primarily at the level of subsidiaries and at the
level of APEX institutions.

Singh and Singh (2010) In their study titled, 'Technical and scale efficiency in
District central co-operative banks of Punjab A Non parametric Analysis' had
attempted to investigate the extent of technical efficiency across 20 DCCBs of
Panjab with the help of Data Envelopment Analysis

Kammath (2011) suggested in order identifying the areas requiring

improvement in system, procedures and customer education. He found that
majority of customers of sub-urban and small branches were satisfied with the
bank service whereas large and medium size branch customers reported delay in
counter service and collection of cheques. Eighty percent f the customers do not
know the branch manager and 72 percent were of the opinion that it is not
necessary to know someone in the branch to expedite their transactions. In
credit related matters, majority of the respondents complained on unnecessary
information asked by the bankers and some of the in reported that officers
discouraged of loan proposals. The study strongly recommended for marketing
approach in these branches

Dr.Snehalkumar H Mistry (2013) suggested that the factors that affecting

customer satisfaction in banks and analyzes their effects. It is revealed that
customer satisfaction is the key for many banks to survive competition.
Customer gives third preference to assurance factor, it include criteria like
safety of transaction, consistency in service etc. So, banks whether they are
private sector bank or public sector bank they should give more focus on

6
increasing reliability, responsiveness and assurance. For that they can give
training to their employee which will help them to give personalized service.

Dr. A. H. Sequeira (2012) made an attempt to address the issues related to

customer satisfaction and quickness of transactions in co-operative banks. It is
clear from the results that the customer services are reasonably satisfactory.

S.Sivesan (2012) found the impact of the service quality on customer's

satisfaction in banking sectors. Service quality are inter related with customer
satisfaction. Manager of the bank or administrative body needs to identify the
primary quality determinants, clearly managing the customer expectation,
educating the knowledge to customer regarding the service for improving the
service quality in the banking sectors.

Ravi C.S & Kundan Basavaraj(2013) investigated the preference and

satisfaction level of customers towards loans, deposits schemes, insurances and
value added services rendered by private and public banks in Shivamogga
district. Business and vehicle loans are fast moving than other services and
overall satisfaction resulted at 50%. Further, overall satisfaction on bank deposit
schemes resulted positively while other services of banking still need to be
given attention by focusing on customer issues. New innovative schemes,
strategies to cater to non users other services have to be adopted.

7
2.2 FUNCTIONS OF THE BANK

This chapter attempt to examine the general functions of the bank.

Functions of any co-operative banks like-Manjeri - co-operative urban bank
performs the same. The functions of the are accepting deposits and lending
loans Banking functions can be classified in to two.
A. Primary functions
1. Accepting Deposits
2. Lending loans

B. Other functions
1. Collecting Bill
2. Discounting bills
3. Providing remittance facilities
4. Draft facilities

1. ACCEPTING DEPOSITS

The major functions of Manjeri co-operative urban Bank is accept deposits from
the members and non members and other units. The relationship between
banker and customer beginning with the opening of an accountant in the name
of customer. To attract savings from the public, the bank maintain different
types of deposits such as
1 Fixed Deposits
2. Current Deposits
3. Recurring Deposits
4. Saving Bank Deposits
5. Daily Deposits

8
Fixed Deposits
Under this deposits, a fixed amount is deposited for fixed period at a fixed rate
of interests at a fixed rate of interest legally the bank is not liable to repay the
fixed deposit before the due date. It is also known as time deposit or term
deposit. This deposits cannot be withdrawn before the expiry of that period. The
interest is payable monthly or quarterly a annually accounting to the instruction
given the depositor. The rate interest is payable monthly or quarterly a annually
according to the instruction given by the depositor. The rate interest is
comparatively high, because this deposit is the main source of fund of the bank
of lending long terms loans. When of funds of the bank for lending long
terms loans. When opening a fixed deposit account the bank issue fixed details
of deposited money due date, rate of interest etc. to the customer. The minimum
amount that should be deposited in the fixed Deposit account is Rs 50/- . there is
no limit on the maximum amount period of deposit can be even more than 5
years.

2..2.1 TABLE SHOWING CURRENT RATE OF INTEREST OF FIXED

DEPOSIT
Period Interest rate
15-45 days 7.5%
46-90 days 8%
91-179 days 8.75%
6 month -1 year 9.25%
Above 1 years 10%
Above 3 years (5 lakh-101akh 10.25%
Above 10 lakhs 10.50%

9
Current Deposit
This type of deposit is suitable for business man. In otherwise current
deposit are generally opened by trading and industrial concerns, public
authorities etc. having banking transactions involving huge amounts proper and
satisfactory introduction is necessary must be introduced to the bank by some
respectable person known to the bank in current accounts are active and
continuously in operation. In current accounts customers can deposit any
amount of money and in any numbers of times they can withdraw from the
current account any amount as and when required, provided that adequate funds
is available on the account. The bank may in some special cases issue overdraft
against these accounts. Their deposit are re-payable on that is why called
demand liabilities.

Saving bank deposits

Saving bank accounts are open by the low and middle income group who
save a part of their current for future need and there by earn fair interest on
deposits. The main objective of this deposit is to improve saving habits among
the people. Amount can be deposited and withdrawn of any time during
working hours. Through no cheque or withdrawn forms. The interest rate of
saving deposit is 5.5 %

Recurring deposit
Recurring deposits are introduced to encourage the public to save a fixed
sum regularly. When a fixed amount is deposited at a regular interval for a fixed
period of time is known as recurring deposit. The amount is paid in total after
the fixed period with interest. It is also known as cumulative deposits. The
minimum deposit should be Rs 5 or multiples of Rs 5%. The should from 1 year
to 10 years. The interest rate is some as that of fixed deposits.

10
Daily deposit
This special scheme which is useful to fulfill the needs of small business
and individuals. For daily deposit bill collections agent of the bank will
approach the customers and collect the amount from and deposit to the bank.
The bank provides 2 1/2 commission of the amount collected to agents as
remuneration.

11
LOANS AND ADVANCES

Another important function of the bank is to provide loan and advances.

"A loan is a financial arrangement under which an advances if granted by the
bank to the borrows". The bank should be, after keeping a certain percentage of
deposits as cash reserve the balance is given as loans and advances. Loans is
granted either against collateral securities or against personal security of
members. The loan is granted only to members and depositors on the basis of
their deposit. If is also given on the security of gold ornament etc. and advance
made by discounting negotiable instruments like cheque, bill draft etc. can be
granted by security. Sanctioned of all other loans required the approval of Board
of Directions.

CLASSIFICATION OF LOANS

On the basis of period for which loans are granted loans are classified in
to three. The period of loans may vary according to the purpose. Thus the are
three types of loans.
a. Short term loans
b. Medium term loans
c. Long term loans
a. Short term loans
This loan is granted normally granted for a period up to one year. It is also
called production loans, gold loan, NAST, etc are the various short term loans
granted by the bank.
b. Medium term loans
The medium term loans granted normally for a period of 1 to 5 year. This loan
may be taken for industrial of business purpose. The loan is also called
development loan.

12
c. Long term loans
This loan is granted for a period exceeding 5 years, now days K.S.C.B is
granting long term loans.
On the basis of nature important loans granted are
i. Gold loan
ii. Non Agricultural Short Term Loans (NASTL)
iii. Agriculture deposit loans

i. Gold loan
The gold loan the most profitable one because it gives comparatively
higher rate of interest to the bank. Backward are it us a popular loans
scheme among the people gold loans given by the co-operative up to the
maximum amount of Rs 30000. The duration period is one year.
ii. Agricultural loans
This loan is granted for agriculture purpose the amount of the agriculture
loan granted will be based on area of the land that has been pledged. The
NABARD OR DISTRICT Co-operative bank will issue a scale if finance
is respect of this loan up to 100000/- can he availed on the personal
security and to 100000 can be availed on the mortgage of property the
normal interest rate is 11% short term as well as the bank grants medium
term agricultural loans.
iii. Non Agriculture loan
These are loans which are not used for agriculture purpose non
agricultural loans are those for building industries, contracts or
construction works. The objective of the loan is to avail appropriate
finance for trade, business and other non agricultural purpose of the
members. This loan is grated on the personal surely of 2 members. The
form contains the details borrower. Purpose etc loan cal also avail on the
security of property

13
iv. Fixed deposit loans
The depositor on the security of fixed deposit receipt can obtain this loan 80%
of fixed is 2% above the interest on deposit. The period of loan depend on the
term of fixed deposit.
b. Non Agriculture Loans
These are loans which are not used for agricultural purpose. Non agriculture
loans are those for building industries, contract or construction works, the
objective of the loan is to avail appropriate finance for trade, business and other
non agriculture purpose of the members this loan is granted on the person of
surely 2 members. The from contain the details borrower purpose etc. loan can
also avail on the security of property

LOANS OVERDUE
Loans overdue means a part of the understanding loan was not realized
by the bank with in striptease time limit the loans are usually provided by the
bank out of the deposit relieved by them. If the loan amount is not repaid in
time it will affect the smooth function in of the bank. This is most important
problem affecting the successful working of the bank.
Usually the interest and principle are collected from the borrower. When
to installment of the loan and increase, the bank will send remainder notice to
the person's concerned band is still there is no response; the bank will initiate
revenues recovery procedure. When a loan falls overdue the rate of interest is
increased 2% on the amount, which fall due.

14
PROCEDURE FOR GRANTING LOAN

The members who which to get loans from the bank should apply for the
loan in the prescribed from. The following are the procedure to get alone.

1. Receiving application
Application for the loan should be submitted to the secretary in
prescribed from along with the following documents
a. Original document of land
b. Primary documents
c. Possession certificate
d. Tax Receipt
2. Legal verification
Bank sent the application and document to the legal administration of
bank for legal verification. After verification the administration send a report to
the secretary about legal validity of the document given as collateral security.
3. Site inspection
After verification of the application and documents they are handed over
to the concerned director for site inspection and report. The direction who visits
the land property will conduct. A local enquiry with reference to the documents
submitted by the applicant.
4. Submitting application to the director Board
Director board is the authority to sanction the loan if the director board
approved the application. It prepares a statement called director report signed
by the concerned director. After the receipt of report, the bank sanctioned the
loan.

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 Table 3.1: Age level classification of respondents
No of
SL NO Age Percentage
Respondent
1 Below 20 year 3 5
2 20-30 years 19 32
3 30- 40 years 23 38
4 Above 40 years 15 25
Total 60 100

Source: Primary Data

INTERPRETATION
From the above table it is found that of the respondents, 5% are below 20 years,
and 32% are 20-30 years .38 % of them are 30-40 years, and 25 % of them are
above 40 years'
Chart .1: Age level classification of respondents

40

35

30

25

20

15

10

0
Below 20 Year 20-30 years 30-40 years Above 40 years

16
 Table 3.2: Sex wise classification of respondents

Gender No of Respondent Percentage of

Respondent
Male 38 63
Female 22 37
Total 60 100
Source: Primary Data

INTERPRETATION

As whole of the total respondents, males are (63%) and (37%) are
Female.

Table 3.3: Occupation wise classification of respondents

SL. No. Occupation No of respondent Percen
1 Business 17 tage
28
2 Students 9 15
3 Profession 6 10
4 Others 28 47
Total 60 100
Source: Primary Data

INTERPRETATION
From the above study it is found that about 28 % of respondents are
businessmen', 15% of them are student, and 10% of them are professional
employees and 47 % of them have other occupations.

17
Table 3.4: Educational wise classification of respondents

SL. No. Educational No of respondent Percentage

Qualification
Below SSLC 14 23
12 SSLC 18 30
3 PDC/+2 14 23
4 Graduate 08 14
5 Post Graduate 06 10
Total 60 100

INTERPRETATION
The above table shows that the respondents, 23% are below the SSLC,
30% of are SSLC qualified, 23% of are PDC/+2 qualified, 14% are Graduates,
10% are Post Graduates and remaining 16.6% have other qualifications.

Chart 2 : Educational wise classification of respondents

20

18

16

14

12

10

0
Below SSLC SSLC PDC /+12 Graduate Post Graduate

18
 Table 3.5: Income wise classification of respondents

SL. No particular No of respondent Percentage

1 Below 10 17
2 10000-
10000 21 35
3 20000-
20000 20 33
4 Above
30000 9 15
Total 30000 60 100
Source: Primary Data

INTERPRETATION
From the above analysis it is found that the 17% respondents receive
income below 10000, and 35% respondents receive income between
1000020000, 33% respondents receive income between 20000-30000 and 15%
respondents receive income above 30000.

Chart 3: Income wise classification of respondents

25

20

15

10

0
Below 10000 10000-20000 20000-30000 Above 30000

19
Table 9.6: Usage of Bank's various services

SL. No particular No of respondent Percentage

1 Pass book 12 20
2 Cheque 14 23
3 ATM facility 9 15
4 Overdraft 3 5
5 Loan 18 30
6 Others 4 7
Total 60 100

Chart 4: Usage of Bank's various services

20

18

16

14

12

10

0
Passbook Cheque ATM Facility Overdraft Loan Others

20
Table 3.7: Reason for choosing the particular bank

No of
SL.No particular Percentage
respondent
1 Recommendation from friends and relatives 12 20
2 Image of the bank 12 20
3 Availability of zero balance a/c facility 9 15
4 Location advantages 16 27
5 Excellent service offered by the bank 6 10
6 High speed of operation 3 5
7 Better interest rate 2 3
Total 60 100

Source: Primary Data

INTERPRETATION

From the above analysis it is found that the 20% of respondents are chose
the bank by the recommendation for friends and relatives. Other 20% of
respondents considered the image of the bank, 15% of them considered the
availability of the zero balance a/c facility. 27% of the respondents considered
the location advantages. Other 10% of them on the basis of excellent service
offered by the bank, 5% of respondents are consider the high speed operation
and other 3% are choose by considering the better interest rate.

21
Chart 5: Reason for choosing the particular bank

Sales

Recommendation from Image of the bank

friends and relatives
Availability of zero Location advantages
balance a/c facility
Excellent service offered High speed of operation
by the bank
Better interest rate

22
4.4 FINDINGS OF THE STUDY

Majority of customers of the bank are in between the age of 30 and 40.

Majority of Customers of the bank are males.

Most of the customers are SSLC qualified.

Almost 35% of respondent income is in between Rs.10,000-20,000.

Only 5% customers uses Bank overdraft services.

Majority of the customers are using cheque book facility.

Least of customers (3%) choosed the bank because of interest rate.

Majority of the respondents considered the location advantages for selecting

the bank.

Majority of respondents of respondents dealing with bank for deposit and then
for lending.

Only 17% customers uses other facilities provided by the bank.

Majority of respondents are aware of loan procedure.

Only 9% of respondents are highly unaware of loan procedure of the bank.

Majority of customers rated the facilities of the bank is good

Only 3% of customers rated the facilities of the bank as very poor.

Most (33%) of respondents deal with bank among 3-5 years.

Majority of respondents dealing with bank for deposit

MCUB is the first Urban Bank placed as Direct Member of Local

Clearing House in Kerala.

MCUB introduced the first Evening Branch and the first Ladies Branch in
Malappuram District.

First Computerized Urban Bank in Kerala. (1991)

23
 First National Award winner among Urban Bank in Kerala. {Frontiers in Co-
op. Banking Award 2006-07)

There is no significant difference between customers preference to different

facilities of bank and customer's occupation.

25% of respondents are Highly Aware with Loan facility

Majority of respondents are highly satisfied with Interest Policy of the Bank.

Most of respondents are maintaining recurring deposit in the bank

There is a significant difference between gender and kind of deposit

Maintained in the bank

Majority of respondents are satisfied with Behavior of employees of the bank

Majority of customers are not willing to shift to other banks.

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4. 2 SUGGESTION

Bank should maintain the schemes of the bank well.

Bank should reduce rate of interest which helps to improve profit.

Bank should introduce varieties of loans, loans for different purposes at

different interest rate.

Bank should interact with customers more friendly. That they feel comfort
while attaining the services of the bank and motivate the customers to interact
with the bank more freely.

The bank should compare its performance with other banks; the bank can
adopt successive banks strategies.

Banks facilities should be improved and the same should be communicated to

the customers that they can know about it and avail those facilities.

Customer relationship should be enhanced. Proper training should be given to

staffs for interacting with customers.

New advancements of banking should be brought. New technologies should

be adopted by the bank for better banking services.

Internet banking should be made available to customers, its a main and

compulsory facility for a bank especially in the modern internet era.

Loan approval should be fastened. Educational loan should be provided

without delays.

Special accounts for students should be provided for attracting students to

open account in the banks.

25
 Accounts for women and children with special features should be provided.

Advertisement and promotional activities should be improved; all features and

facilities of the bank should be exposed to the customers.

Research and development be taken for the improvement of banking and

customer relationship

26
 CONCLUSION

The study which has been conducted in-Mank.6- co-operative urban bank
on customer's perception towards deposits and lending policies helped the
researcher to identify major factor which affect the customer perception. The
study helped to get a lot of experience and knowledge about the perception of
employees towards their various activities related to deposit lending policies of
the bank.

27