Chapter 1: Introduction about the organization and industry

CO-OPERATIVE BANK

Introduction

Co-operative banks are an important constituent of the Indian Financial System, judging by the
role assigned to them, the expectations they are supposed to fulfil, their number and the number
of offices they operate. 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 also
has increased in recent years mainly due to the sharp increase in the number of primary co-
operative banks. Some of the co-operative banks are quite forward looking and have developed
sufficient core companies to challenge state and private sector banks.

Co-operative movement in India

The co-operative movement in India has its origin in agriculture and allied sectors. The first Co-
operative Credit Societies Act was enacted in 1904 subsequently to more comprehensive
legislation called the Co-operative Societies Act was enacted. This Act provided for the creation
of the post of registrar of co-operative societies and registration of co-operative societies for
various for various purpose and audit. Under the Montague-Chelmsford Reforms of 1919
cooperation became provincial subject and provinces were authorized to make their own
cooperation laws. Under the Government of India Act 1935 Co-operative were treated as a
provincial subject. The ‘Co-operative Societies' is state subject under entry No 32 of the state
List of the Constitution of India.

In order to cover Co-operative Societies with membership from than one province, the
Government of India enacted the Multi-Unit Co-operative Societies Act 1942. This Act deals
with incorporation and winding up of co-operative societies having jurisdiction in more than one
province. A need was felt for a comprehensive Central Legislation to consolidate laws governing
cooperative society. This led to the enactment of Multi-State Co-operative Societies Act 1984 by
the Parliament under Entry No 44 of the Union List of the Constitution of India.
After Independence, co-operative assumed a great significance in poverty removal and faster
socioeconomic growth. They became an integral part of the Five year plans. As a result they
emerged as a distinct segment in Indian economy. In the First Year Plan it was specifically stated
that the success of the plan would be judged among other things, by the extent it was
implemented through co-operative organizations.

Cooperative Credit Institutions

__________________________________________

Rural – co-operative Credit Urban Co-operative Banks

Institution
_______________________________________

Short term Long term

Structure
________________________________

State District Primary

Cooperative Central Agricultural
Bank Cooperative Credit Societies
Bank
__________________________

State Primary
Cooperative
Agriculture & Agriculture &
Rural Development Rural Development
Bank
Co-operative movement in Karnataka

Karnataka had build a traditional and culture for and effective network of co-operative in the
state the origin of co-operative credit movement in Karnataka can be traced pursuing of first Co-
operative act on 18th Oct 1904 in Shared was the first urban bank formed in Bombay Karnataka
area. The Bangalore city co-operative credit was registered on 18th Dec 1906. In Karnataka there
were 302 primary co-operative urban banks and are the salary earners.

Type of bank and working in par with the nationalized, commercial banks, and their functioning
by and large, self supplying and not dependent on outside progress

Formation of a co-operative society

This society must be formed under the co-operative societies act, 1912 or under the relevant state
co-operative society law. It can be formed by at least 10 adult members. The members willing to
form a society must have common bond among them. They may be the residents of some
locality, employees of some organization, belonging to some group having affinity etc. The basic
idea is that all the persons intending to form a society should have some common objections to
achieve.

Different types of co-operative society

Primary Agriculture Credit Societies:

 Operate in villages. A cooperative credit society can be formed by more than ten persons
in most of the states. Deposits are accepted by these societies from their members and
they provide them short term and medium term loans.

Central Cooperative Bank:

 These banks provide financial assistance and supervise the primary cooperative societies
of a district or any part of it.

State Cooperative Bank:

  There is main cooperative bank in every state that runs and lends money all the central
cooperative banks in that state.

Primary Cooperative Agriculture and Rural Development Bank:

 Provide long term loans by mortgaging immovable property of its debtors as security.

State Cooperative Agriculture and Rural Development Bank:

 Whole State comes under its jurisdiction and it advance loans to Primary Cooperative
Agriculture and Rural Development Banks.

Urban Cooperative Bank:

 These banks operate in urban areas and accept deposits from the public and also advance
loans to them.
 Supervised by the RBI and managed by the State governments.

Structure of co-operative banking in India

The structure of cooperative network in India can be dividing into 2 broad segments

1. Urban cooperative banks

2. Rural cooperative

Urban Cooperative bank:

It can be further divided into scheduled and non-scheduled. Both the Categories are further
divided into multi–state and single–state. Majority of these banks fall in the non-scheduled and
single-state category

 Banking activities of Urban Cooperative Banks are monitored by RBI.

 Registration and Management activities are managed by Registrar of cooperative
Societies (RCS). These RCS operate in single-state and Central RCS (CRCS) operate in
multiple state.
Rural Cooperative bank:

These banks are further into short-term and long-term structure. The short-term cooperative
banks are three tiered operating in different states, there are

1. State Co-operative Banks- They operate at the apex level in state.

2. District Central Co-operative Banks- They operate at the district levels.
3. Primary Agricultural Credit Societies- They operate at the village and grass-root level

Likewise, the long-term structures are further divided into-

1. State Cooperative Agriculture and Rural Development Banks (SCARDS)-This

Operate at state level.

2. Primary Cooperative Agriculture and Rural Development Banks (PCARDBS) This

Operate at district/block level.

The rural banking cooperatives have a complex monitoring structure as they have a dual control
which has led to many problems. A Forum called State Level Task Force on Cooperative Urban
Banks (TAFCUB) has been set-up to look into issues related to duality in control.

 All banking activities are regulated by a shared arrangement between RBI and NABARD
 All management and registration activities are managed by RCS.
Chapter 2: Organization Profile
I. Background

S.C.F.S Co-operative bank limited is a premium private sector Indian bank with a heritage of 40
years and 3 million satisfied customers.

Started in the date 13/09/1976 as the name "Sericulture's cum farmer's service co

Operative bank" in Hoskote town.

The name bank derives from the Italian word Banco desk or bench", used during the

renaissance by Jewish Florentine banker, who used to make their transition above a desk

covered by a green table cloth. However, there are traces of banking activity even in ancient

Time.

In fact, the word trace its origins back to the ancient Roman Empire, were moneylenders

would set up their stalls in the middle of enclosed courtyards called macula on a long bench

called a banco, from which the words banco and bank are derived. As a money changer, the

merchant at the banco did so much invest money as primer rely convert the foreign

currency into the only legal tender in Rome that of the imperial mint.

The earliest evidence of money changing activity in depicted on a silver drachma coin from

ancient Hellenic colony trapezes on the black sea, modern Trabzon, c.350-325 BC, presented

in the British museum in London. The coin shows a bankers table (trapeze) laden with coin

pun on the name of the city.

A bank is a financial Institution that accepts deposits and changes those deposit into lending

activities. Bank primarily provides financial services to customers while enriching investors.

Government restrictions on financial activities by banks vary time and location Banks are

important players in financial markets and offer services such as investment funds and loans.
In some countries such as Germany, banks have historically owned major stakes in industrial

corporations while in other countries such as the United States banks are prohibited from

owning non financial companies. In France bank assurance is prevalent as most bank offer

insurance services (and real estate services) to their clients.

The level of government regulation of the banking industry varies widely, with countries

such as iceland. Having relatively light regulation of the banking sector, and countries such

as china having a wide variety of regulation but no systematic process that can be followed

typical of a communist system.

Background of co-operative bank:

Co-operative was introduced in Indian in the early years of the present century as a means

of helping the poor agriculture to face their economic conditions.

It started as a movement for providing credit to agriculturists and was further extended to

other type of activities. It has become a part of our national planning. It is recognized that,

co-operation should progressively become the basis of organization in many branches of

economic life.

Co-operative have played an important role in promoting agricultural and rural

development in India, particularly in the fields of credit, supply of production inputs,

processing and marketing of agriculture produce.

REGISTER NUMBER:

DRB R.G.N.S-113/76-77 on 13/09/1976

Hoskote is taluk in Bangalore rural district, India. Headquartered at the hoskote town, it

consists of five Hoblis - Anugondanahalli, Jadigenahalli, kasaba, nandhugudi and sulibele.

HISTORY

Hoskote was Jagir part of great Maratha warrior shahaji raje approx 50 years and also part of

swarajya of chhatrapati Shivaji maharaj. Site of the battle of ooscata in the first British

Mysore

War, on the night of 22-23 August 1768

ii. Nature of Business
A banking system also referred as a system which provide and offer cash management services
for customers, reporting the transactions of their accounts and portfolios throughout the day,
trade with financial and bank’s financial instruments, offer exchange of currency and disburse
different type of fund. The Banks are the main participants of the financial system in any
country. The Banking sector offers several facilities and opportunities to their customers. All the
banks safeguard the money and valuables and provide loans, credit, and payment services, such
as checking accounts, money orders, and cashier’s checks. The banks also offer investment and
insurance products. As a variety of models for cooperation and integration among finance
industries have emerged, some of the traditional distinctions between banks, insurance
companies and securities firms have diminished.

iii. vision mission, quality policy

Vision
 Providing banking service with smiling face to our custom smile.
 To mobilize deposits, disburse loan prudently and invest surplus wisely with the
involvement of our committee, dedicated and hardworking staff to achieve the best.

Mission
To improve the economic development of the members of society and also paying attention
In p-providing loans to the farmers. Releasing them from the clutches of money lenders by
making loans available at reasonable rates of interest with simple terms.

Quality policy
SCFS Co-operative society Ltd, are committed to be the Bank of the people by rendering all
innovative banking services at an affordable cost in a consistent, seamless manner and adaptable to
changes with utmost social commitment, and we share all our gains to the people of the locality.
iv. workflow model

workflow model of SCFS Co-operative society ltd

Administrative work Business work

Banking business Retailing Business

1. Leading & Funding

2.Borrowing
3.Mobilising deposite 1. Sale of furtiliers
4.Providing loan & Advances 2. Public distribution system
5.Intrest free loan for Agriculture 3. Sale of cattf foods
purpose 4.Providing other agriculural
inputs
6. Loans to SHG
V. Product/Service profile
KCC (kissan credit card) loan

He should be living in bank service area. Crop wishes, the Kissan credit card was introduced in
the year 1997-98 aim at providing adequate and timely credit supports from the banking system
to the farmers for their cultivation needs in flexible and cost effective manner. The scheme
enables farmers to purchase agricultural inputs such as fertilizer, pesticides and draw cash for
their production needs.
Gold loan
Market value of the gold on 70% of loan authorized apparel recommended amount.
Personal loan
On the basis of salary on percentage 5%, 10%.
Medium term loan
 Dairy loan (purchase of cross bid cow)
 13 years encumbrance certificate
 Trip agreement with borrower consult dairy and bank (for supply of milk and loan
repayment purpose)
 Insurance coverage
Tractor loan

 Minimum 5 acres land should be there

 Hypothecation to the bank in RC book
 Insurance coverage
Pledge loan
KVP-80%
MSC (national service crops)
SHG & SSHG

 Members limit from 10-20 maximum

 UN registered group
 Loan in the basis of capital of SHG i.e. 1:5
 Limit 30000-600000
 Self-employment

SCFSC Bank personal loan

The accelerated growth in the customer market has bought in number of competitors with
packages and much liberalized financial assistance to the individual while the growing economy
has played a pivoted role in strengthening the buying powers of millions of Indian nationals. The
various financial scheming are only uncreative and useful to there the financiers have found and
an immense potential in there are of lending with yield and scatted risk.

1) Facility purpose

2) Financial for personals needs

3) Facility type

4) Unsecured loans
Eligibility

 Salaried individuals including SCFSC group member

 Self-employed professionals

 Self-employed individuals/proprietorship

Loan range

Minimum Rs 20000 and minimum Rs 25000 in case of gold credit card holders program
maximum Rs 10000

Program range

 Income proof program

 Surrogate income program

 Corporate tie-up

 Loans to SCFSC group employees

Tenure

 Minimum tenor of 12 months for individuals under income program and 6 months in case
of track record program

 Minimum tenor of 60 months for individuals under income program

 36 months under track record program

 48 months for SCFSS group employee

Fees

Processing fee 2% for individuals 1% for corporate tie-ups. Predominates fee 2% of principle
outstanding. Fee structure will be announced by retail from time to time. To salaries and self
employed professional.
Age

21 years as on the date Personal loans of application 55 years as on the date of application or 60
years or less as on maturing of the loan.

Interest rate

 13% for salaries customers and self-employed professionals

 13% for existing SCFCS Bank customers

 13% for self employed non-professionals

vi. Ownership pattern

Members of Co-Operative society are the true owners.

Establishment

Management commity

President

Vice President

Directors

CEO

Chief Accounted

Supervisors

Clerical staff
vii. Achievements/Awards

 Trade award from IFFICO.

 Administrative Best Institute in Bangalore Ural area .
 Only one computerized institution 3 district Kolar, Chikkaballapur, Banglaore Rural .
 For excelity award from APEX Bank 2018-19.
 Government of Karnataka graded in ‘A’ classification by Audit department.
 Providing agriculture loans at 3% interest.
 Donated Rs. 60000 towards north district of Karnataka flood relief fund and contributed
Rs. 1lakhs to construct a house for flood affected families.
 Organizing animal health checkup camps.

viii. Future growth and prospects

All the branches should become computerised with ATM facility

Undertaking commercial activities-
Increasing sales
Becoming a RBI clearing member
Chapter 3: McKenzie’s 7S framework and Porter’s Five Force Model
The 7-S model is better known as McKinsey 7-S model. This is because the two persons who
developed this model, Tom Peters and Robert Waterman, have been consultants at McKinsey &
co. at that time. They published their 7-S model in their article “Structure is not organization”
(1980) and in their books “The art of Japanese management” (1981) and “In search of
excellence” (1982).
The model starts on the premise that an organization is not just structure, but consists of seven
elements:

The 7-s model is represented by seven inter-connected circles arranged with six spaced around
the seventh (Shared Values) in the centre. This networked ‘Atomium-like’ image illustrates
well, the network nature of these dimensions and their inter-relatedness. The Seven S are:
1. Shared Values – Altogether the industry is very important for the whole economy and
is one of the industries on which the economic growth of the country is dependent.
1. To remove Superstition and ignorance.
2. To spread education among all to sub-serve the first principle.
3. To inculcate the habit of thrift and savings.
4. To transform the financial institution not only as the financial heart of the community but the
social heart as well.
5. To assist the needy.
2. Skill - Highly Skilled employees are required in banking industry. The current
employees in the industry.
Training policies and programs are suitably designed, modified and updated on a continuous
basis to upgrade the knowledge levels and skills of its Executives, Officers, and Workmen on par
with the best in the industry. While several new programs are introduced in tune with the
corporate goals, the existing programs are made more interactive and learner friendly. Risk
management and Basel II are the focus areas of their training programs.
3. Strategy - The strategy focuses on a range of products and services, to be innovative
and excellent in serving the customers – hence enabling the industry to increase its
influence on the economy, to increase the market share and hence build a better and
fixed loyal customer following.
4. Style - Consequently, The industry is able to attract the very best staff, and is very
demanding of them. This is exactly the view of the highly efficient and effective management
team. The decisions relating to department matters are taken by the departmental heads. The
bank follows a participative leadership style which allows the ideas, suggestions etc. for the
betterment of the bank. The team members are cooperative rather than being competitive.
5. Staff – There is a huge number of new employees every year in the industry. All the staff
employed are highly professional as they are employed after a serious of rigorous training and
a number of interviews. The workforce is a highly motivated one as the overall turnover proves
this fact. As a whole team member’s opinions are held with high regard.
6. Structure – The banking in India is well organised with the work being divided
accordingly and systematically through the lower level, middle level and the toplevel.
The overall working or functioning of the banking sector is monitored by the RBI(
Reserve Bank of India).
7. System - The System is strictly regulated and monitored by the RBI. The system is
simple and smooth and hence there is simple and efficient functioning if the banking
sector.

Porter’s Five Model

The focused structure of an industry is an alternate critical segment of recognizing variables
that are a danger to lessen benefit. A standout amongst the most proficient approaches to
evaluate aggressive issues is to consider Michael Porter's five-power examination. He has
highlighted five such components:
 Rivalry between existing competitors,
 Threat of entry by new competitors,
 Price pressure from substitute or complementary products.
 Bargaining power of buyers, and
 Bargaining power of suppliers.
1. Rivalry between existing competitors
The banking industry is considered highly/intense competitive.
Factors affecting The Competitive Rivalry:
• Too many players of same size
• Players have similar strategies
• Less product differentiation, price competition
• Barriers for entry and exit are high
2. Threat of entry by new competitors
Despite of the biggest entry barrier like regulatory and capital requirements, between 1977
and 2002 an average of 215 new banks opened each year according to the FDIC. But in
present scenario the threat of new entrants is low due to stringent norms, RBI Regulations,
High initial investment & entry barriers.
Factors affecting the threat of new entry barriers:
• Government Licensing and RBI regulations
• Skills manpower
• High Initial investment.
• Protected intellectual property
• The entry of foreign banks.
3. Price pressure from substitute or complementary products
Largest threats of substitution are not from rival banks but from non-financial
competitors, investors, NBFCs (attract a significant proportion of market share) and
small co-operative banks and borrowing avenues. No real threat of substitutes as far as
deposits or withdrawals, however insurances, mutual funds, and fixed income securities
-offered by non-banking companies.
The Factors affecting threats of substitutes:
• Close customer relationships
• Conservative Customers
• Risk taking customers attitude.
• Easy Switching
4. Bargaining Power of Buyers
Bargaining power of customers is high.
Factors affecting The Bargaining power of customers:
• Long-term finance.
• Margins and volumes.
• Multiple Options
• Banks Competitors
• Retail lending
5. Bargaining Power of Suppliers
The bargaining power of Suppliers is high.
The Factors affecting bargaining power:
• Rise in investment avenues
• Providers of funds
• Interest rates
• Valuations
• The economic outlook
.