Customer Satisfaction

Customer satisfaction is a term frequently used in marketing. It is a measure of how products and
services supplied by a company meet customer expectation. Customer satisfaction is defined as
"the number of customers, or percentage of total customers, whose reported experience with a
firm, its products, or its services (ratings) exceeds specified goals. The meaning of customer
satisfaction has been commonly disputed as companies progressively attempt to review it.
Customer satisfaction can be experienced in a wide range of circumstances and linked with both
products and solutions. It is a highly individual evaluation that is significantly affected
by customer satisfaction.
Customer satisfaction is an important concept to consider when developing a customer loyalty
programme. It is the measure of how well the customers expectations are met, whereas if we
compare customer loyalty with customer expectation, customer loyalty is a measure of how
likely a customer is to repurchase and engage in relationship activities. Loyalty is vulnerable
because even if customers are satisfied with the service they will continue to defect if they
believe they can get better value, convenience or quality elsewhere.

Satisfaction is necessary but not a sufficient condition for loyalty. A customer travelling away
from home may be very satisfied with a hotel in which they stay, but he may not necessarily stay
in the same hotel when he visits that area again. Other variables impact on the customer's choice
including price, location and convenience. Loyalty is established when the customer makes a
commitment to the brand and returns to the same hotel whenever they are in the area. In other
words, we can have satisfaction without loyalty, but it is hard to have loyalty without satisfaction
while there is no guarantee that a satisfied customer will return it is almost certain that a
dissatisfied customer will not return.
Customer satisfaction can be defined as satisfaction based on an outcome or a process. Customer
satisfaction characterizes satisfaction as the end-state resulting from the experience of
consumption. This end state may be a cognitive state of reward, an emotional response to an
experience or a comparison of rewards and costs to the anticipated consequences.
Social psychologists, marketing researchers, and students of consumer behaviour, have
extensively studied the concepts of customer satisfaction and dissatisfaction
The increasing importance of quality in both service and manufacturing industries has also
created a proliferation of research, the result of all this research has been the development of nine
distinct theories of customer satisfaction. The majority of these theories are based on cognitive
psychology amongst which some have received moderate attention, while other theories have
been introduced without any empirical research.

Customer satisfaction is the leading criterion for determining the quality that is actually delivered
to customers through the product/ service and by the accompanying servicing. In simple terms
customer satisfaction is essential for corporate survival. As mentioned earlier, several studies
have found that it costs about five times as much in time, money and resources to attract a new
customer as it does to retain an existing customer This creates the challenge of maintaining high
levels of service, awareness of customer expectations and improvement in services and product.

Components of customer satisfaction

Unlike material products or pure services, most hospitality experiences are a fusion of products
and services. Therefore it is possible to say that satisfaction with a hospitality experience such as
a hotel stay or a restaurant meal is a sum total of satisfactions with the individual elements or
attributes of all the products and services that make up the experience. There is no uniformity of
opinion among marketing experts as to the classification of the elements in service encounters.
Hospitality services consist of a harmonious mixture of three elements: the material product in a
narrow sense which in the case of a restaurant is the food and beverages; the behaviour and
attitude of the employees who are responsible for hosting the guest, serving the meal and
beverages and who come in direct contact with the guests, and the environment, such as the
building, the layout, the furnishing, the lighting in the restaurant, etc..On the other hand,
satisfaction

Within organizations, customer satisfaction ratings can have powerful effects. They focus
employees on the importance of fulfilling customers' expectations. Furthermore, when these
ratings dip, they warn of problems that can affect sales and profitability. These metrics quantify
an important dynamic. When a brand has loyal customers, it gains positive word-of-mouth
marketing, which is both free and highly effective. Customer satisfaction provides a leading
indicator of consumer purchase intentions and loyalty. "Customer satisfaction data are among the
most frequently collected indicators of market perceptions. Their principal use is twofold:"
"Within organizations, the collection, analysis and dissemination of these data send a message
about the importance of tending to customers and ensuring that they have a positive experience
with the company's goods and services."(1)

Kumar Arun, Minakshi N. Marketing ManagementVikash Publication 1st Edition 2006. P.No.
213, 214. (1)

Although sales or market share can indicate how well a firm is performing currently, satisfaction
is perhaps the best indicator of how likely it is that the firms customers will make further
purchases in the future. Much research has focused on the relationship between customer
satisfaction and retention. Studies indicate that the ramifications of satisfaction are most strongly
realized at the extremes Organizations need to retain existing customers while targeting
noncustomers. Measuring customer satisfaction provides an indication of how successful the
organization is at providing products and/or services to the marketplace. The importance of
customer satisfaction is apparent when you realize that, without customers, you don't have a
business. A single unsatisfied customer can send more business away from your company than
10 satisfied customers The more you focus on customer retention and customer support, the more
long-term business you'll get. It's worth it to focus on customer satisfaction strategies, no matter
how large or small your company is understanding the needs of customer is critical .A business
relationship, just like any other relationship, relies on both people getting their needs met. No
matter what type of business you are in, all customers want the same thing. They want to feel
welcomed and appreciated by you and your staff. They don't want to get the impression that they
are just being used by you for money.
A business is a measure of how products and services supplied by a company meet or surpass
customer expectation. It is seen as a key performance indicator within the business in a
competitive market place where business can compete satisfaction is a seen as a key
differentiator and increasingly has become a key element of business strategy. Customer
satisfaction is an ambiguous and abstract concept and the actual manifestation of the state of
satisfaction will vary from person to person and service to service. The state of satisfaction
depends on a number of both psychological and physical variables The banking industry like
many other financial service industries is facing a rapidly changing market, new
technologies, economic uncertainties, fierce competition and more demanding customers and
the changing climate has presented an unprecedented set of challenges. Customer
loyalty is much harder to obtain than satisfaction. Even though customers are satisfied with the
company there are several factors that could cause the customer to defect to the competition,
such as finding a better value or the competitor is more convenient. With that said, having high
levels of customer satisfaction does not always lead to customer loyalty. However, a company
cannot achieve customer loyalty without having customer satisfaction. Thus, though customer
satisfaction does not guarantee the repurchase from a company but it does play a very important
role in achieving customer loyalty. Conducting customer satisfaction research will provide your
company with the necessary insight it needs to make informed decisions in order to retain and
increase your customer base and improve customer relationships.

Measuring customer satisfaction

Organizations need to retain existing customers while targeting non-customers. Measuring

customer satisfaction provides an indication of how successful the organization is at providing
products and/or services to the marketplace.
Customer satisfaction is an abstract concept and the actual manifestation of the state of
satisfaction will vary from person to person and product/service to product/service. The state of
satisfaction depends on a number of both psychological and physical variables which correlate
with satisfaction behaviors such as return and recommend rate. The level of satisfaction can also
vary depending on other factors the customer, such as other products against which the customer
can compare the organization's products.
Importance in banking sector
There are number of reasons why customer satisfaction is important in banking sector.
1. Meeting the needs of the customer is the underlying rationale for the existence of
community service organizations. Customers have a right to quality services that deliver
outcomes.
2. Organizations that strive beyond minimum standards and exceed the expectation of their
customers are likely to be leaders in their sector.
3. Customers are recognized as key partners in shaping service development and assessing
quality of service delivery.
4 . I n the organised segment, banking system occupies an important place in nationseconom
y. It plays a pivotal role in the economic development of a country and forms the core of
the money market in an advanced country.
"Customer satisfaction is measured at the individual level, but it is almost always reported at an
aggregate level. It can be, and often is, measured along various dimensions. A hotel, for example,
might ask customers to rate their experience with its front desk and check-in service, with the
room, with the amenities in the room, with the restaurants, and so on. Additionally, in a holistic
sense, the hotel might ask about overall satisfaction 'with your stay.
Good quality measures need to have high satisfaction loadings, good reliability, and low error
variances. In an empirical study comparing commonly used satisfaction measures it was found
that two multi-item semantic differential scales performed best across both hedonic and
utilitarian service consumption contexts. According to studies by Wirtz & Lee (2008), they
identified a six-item 7-point semantic differential scale (for example, Oliver and Swan 1983),

which is a six-item 7-point bipolar scale, that consistently performed best across both hedonic
and utilitarian services. It loaded most highly on satisfaction, had the highest item reliability, and
had by far the lowest error variance across both studies. In the study, the six items asked
respondents evaluation of their most recent experience with ATM services and ice cream
restaurant, along seven points within these six items: pleased me to displeased me, contented
with to disgusted with, very satisfied with to very dissatisfied with, did a good job for
me to did a poor job for me, wise choice to poor choice and happy with to unhappy
with.and ice cream restaurants, along seven points within delighted to terrible.(2)

Wirtz, Jochen; Chung Lee, Meng (2008), An Empirical Study on The Quality and Contextspecific Applicability of Commonly Used Customer Satisfaction Measures, Journal of Service
Research, Vol. 5, No. 4, 345-355. (2)
A semantic differential (4 items) scale (e.g., Eroglu and Machleit 1990), which is a four-item 7point bipolar scale, was the second best performing measure, which was again consistent across
both contexts. In the study, respondents were asked to evaluate their experience with both
products,

along

seven

points

within

these

four

items:

satisfied to

dissatisfied,

favorable to unfavorable, pleasant to unpleasant and I like it very much to I didnt like it at
all
The third best scale was single-item percentage measure, a one-item 7-point bipolar scale (e.g.,
Westbrook 2013(3) Again, the respondents were asked to evaluate their experience on both ATM
services and ice cream restaurants, along seven points within delighted to terrible.
"Customer satisfaction provides a leading indicator of consumer purchase intentions and
loyalty." "Customer satisfaction data are among the most frequently collected indicators of
market perceptions. Their principal use is twofold:"
1. "Within organizations, the collection, analysis and dissemination of these data send a
message about the importance of tending to customers and ensuring that they have a
positive experience with with the company's goods and services."
2. "Although sales or market share can indicate how well a firm is performing currently,
satisfaction is perhaps the best indicator of how likely it is that the firms customers will
make further purchases in the future. Much research has focused on the relationship
between customer satisfaction and retention. Studies indicate that the ramifications of
satisfaction are most strongly realized at the extremes."

Westbrook, Robert A. (2013), A Rating Scale for Measuring Product/Service Satisfaction,

Journal of Marketing, 44 (Fall), 68-72. (3)

BENEFITS OF CUSTOMER SATISFACTION

Feedback
Customer feedback in the form of answers, comments and suggestions about a company's
products, business practices and customer service is one of the major benefits of a customer
satisfaction survey.
Desired Improvements
If feedback is critical or negative on any aspect, quick measures can be taken to bring about the
desired improvements or address grievances and placate relevant customers.
Better Innovation
Analysis of customer feedback surveys and the information collected becomes the basis for
customer intelligence. Used strategically, such intelligence can be used to drive innovation
efforts and initiatives at the company.
Greater Customization
A customer satisfaction survey also shows critical insights about different customer segments
and products so that services and marketing approaches can be tailored accordingly.
Long-Term Relationship
Customer satisfaction surveys enable companies to consistently and better address customer
needs and expectations, maintain brand reputation and facilitate long-term relationships with
customers.(4)

Kotler Philip, Keller Lane Kvin Marketing Management.12th edition Pearson Education P.No.
117,118,121.(4)
Sometimes companies are misguided by the notion that customers depend on them. The truth of
the matter is that we very much so depend on them. Many researchers and academia have
highlighted the importance of customers in todays market.
The level of satisfaction a customer has with a company has profound effects. Studies have
found that the level of customers satisfaction has a positive effect on profitability:

A totally satisfied customer contributes 26 times as much revenue to a company as a

somewhat satisfied customer.

A totally satisfied customer contributes 17 times as much revenue as a somewhat

dissatisfied customer.

A totally dissatisfied customer decreases revenue at a rate equal to 18 times what a totally
satisfied customer contributes to a company.

Process of customer satisfaction.

Step 1 Understanding Customer Expectations
Step 2- Promises to Customers
Step 3 Execution
Step 4 - Ongoing Dialog with a Customer
Step 5 - Customer Satisfaction Surveys
IMPORTANCE OF CUSTOMER SATISFACTION

I. To delivers excellent quality

Our core business is to deliver excellent service for any product, at any time, at any place. We
provide worldwide door-to-door services ('old integrator') as well as comprehensive solutions
('new integrator'). We improve our services based upon the demands of our customers in our

national and international markets. We continuously challenge and improve our structures and
production processes.
II. To make our customers successful

Customer satisfaction determines our Group's success. Our customers' success is our success.
We have the best possible knowledge of customers, markets and competitors and are therefore
the standard setters in the market. Our activities are governed by our knowledge of the global
and local requirements of our customers and market

III. To foster openness

We think global, act local and respect different cultural values in the countries where we operate.
Being open helps us to promote integration and, in turn, the success of the Group. We make
decisions based on facts and analyses. To do so, we use the combined knowledge of our Group in
all our locations and units and the expertise of all our employees at all times. We learn from
successes and failures, from internal and external best practices, from every single employee.

IV. To act according to clear priorities

1. The success of our customers

2. The success of our Group
3. The success of each organizational unit and the success of each individual

V. To act in an entrepreneurial way

Entrepreneurial conduct constitutes the spirit of our Group. We demand and promote individual
responsibility. Excellent people are key to our success. We welcome motivated and loyal
employees who strive for top performance. It is one of our core tasks to attract, develop and
retain such employees in the long term.
VI. To act with integrity internally and externally
Integrity determines the way we work within the Group as well as our conduct toward our
business partners, shareholders and the general public. Each employee has the opportunity for

personal development according to individual performance independent of gender, religion or

culture. We do not tolerate discrimination. Each executive respects each employee's personal
dignity and personality within his staff and is responsible for creating an atmosphere of mutual
trust within the team. Executives delegate tasks effectively; however, they remain responsible
for the results (5)

Kotler Philip, Koshy Abraham, Marketing Management 13th Edition

Education P.No. 115,116,120.(5)

Pearson

MEANING OF RESEARCH
Research comprises creative work undertaken on a systematic basis in order to increase the
stock of knowledge, including knowledge of man ,culture, society, and the use of this stock of
knowledge to devise new applications .It is a way to systematically solve the research problem .it
may be understood as a science of studying how research is done scientifically the scope of
research methodology is wider than that of research methods. When we talk of research
methodology we not only talk of research methods we use in the context of our research study
and explain why we are using a particular method. A research is purely and simply the
framework and plan the study that guides the collection and analysis of data..

OBJECTIVES OF THE STUDY

To know the lending practices of MUCB.

To study the impact of size on the efficiency of the MUCB.
To know different type of loans preferred by different sets of customers.
To know the satisfaction level of the customers from Banks lending policies.

SCOPE OF THE STUDY

1. The research will bring to light the perception of customers regarding the awareness and
demand of various services presently offered by MUCB.
2. The study is limited to the customers of Jaipur only.
3. This study will help us to understand customers, preference and their needs, and it will
help to improve the standard of service.

4. The study will be able to reveal the banking services. It also help s banks to know
whether the existing products or services which they are offering are really satisfying the
customer needs.

RESEARCH DESIGN
A research design is the arrangement of conditions for collection and analysis of data in a manner
that aims to combine relevance to the research purpose with economy in procedure it is a
process of systematic study. A research design is a systematic plan to study a scientific problem.
the design of a study defines the study type (descriptive, experimental) research design is the
framework that has been created to seek answers to research questions.
Descriptive research is used in this research in order to identify the lending practices of malviya
urban cooperative bank determining customers level of satisfaction.
Descriptive research is also called statistical research the main goal of this type of research is to
describe the data and characteristics about what it is studied the idea behind this type of research
is to study averages and other statistical calculations. Descriptive research is the exploration of
the existing certain phenomena.
COLLECTION OF DATA
Primary Data
Primary data are those collected by the investigator himself for the first time and thus they are
original in character, they are collected for a particular purpose.
A questionnaire was used to the selected sample to collect the primary data.
Secondary Data
a. Books
b. Internet

SAMPLING

Sampling Unit: The Study population includes the customers of bank and Sampling Unit for
Study was Individual Customer.
Sampling Size: 50 Respondents
Sampling Area: Jaipur

REVIEW OF LITERATURE
Estiri, Hosseini, Yazdani, and Nejad (2013) performed a review of the set of attributes capable of
being incorporated in the measure of customer satisfaction for banks. Later, the possibility was
posed of grouping these attributes into dimensions of quality and testing their reliability and
validity.
Ganguly and Roy (2012) studied the factors affecting customer satisfaction in the Indian banking
sector; Questionnaire developed to determine the factors for customer satisfaction was
distributed among the respondents.the dimensions were identified using a exploratory factor
analysis. The paper identifies four generic dimensions in the technology, convenience, and
technology convenience, easiness, reliability.
Chander and Chandel (2011) analyzed the financial efficiency and viability of HARCO Bank and
found poor performance of the bank on capital adequacy, liquidity, earning quality and the
management efficiency parameters.
Singla (2010) emphasized on financial management and examined the financial position of
sixteen banks by considering profitability, capital adequacy, debt-equity and NPA (7)
Dutta and Basak (2008) suggested that Co-operative banks should improve their recovery
performance, adopt new system of computerized monitoring of loans, implement proper
prudential norms and organize regular workshops to sustain in the competitive banking
environment. (6)
Ganguly.S,& Roy,S.K. (2011). Generic technology-based service quality dimensions in banking:
impact on customer satisfaction and loyalty. International journal of bank marketing, 292(2),
168.

Dutta Uttam and Basak Amit (2008), Appraisal of Financial Performance of urban cooperative
bank a Case Study The management accountant, case study, March 2008, pg -170-174.(6)
Harish Kumar Singla (2008), Financial performance of banks in India, The ICFAI Journal of
Management, Vol. 5, Issue 1(7)
Campbell (2007) focused on the relationship between nonperforming loans (NPLs) and bank
failure and argued for an effective bank insolvency law for the prevention and control of NPLs
for developing and transitional economies as these have been suffering severe problems due to
NPL
Singh and Singh (2006) studied the funds management in the District Central Co- operative
Banks (DCCBs) of Punjab with specific reference to the analysis of financial margin. It noted
that a higher proportion of own funds and the recovery concerns have resulted in the increased
margin of the Central Co-operative Banks and thus had a larger provision for non-performing
assets.
Mavaluri, Boppana and Nagarjuna (2006) suggested that performance of banking in terms of
profitability, productivity, asset quality and financial management has become important to stable
the economy. They found that public sector banks have been more efficient than other banks
operating in India.
Edwinraj (2005) [31] described the role of information technology in co-operative banks. The
information technology in cooperative banks plays a significant role in establishing and
maintaining contact with potential customers.
Hebbar Raveendranath (2004) [29] described that the advancements in computing and telecom
have revolutionised the financial industry. Banks are developing alternative mchannels of
delivery like ATM, telebanking, remote access, internet banking etc., Some questions that need to
be answered are , how can one trust these channels, our personal data and transactions which are
driven by technology
Pal and Malik (2007) investigated the differences in the financial characteristics of 74 (public,
private and foreign) banks in India based on factors, such as profitability, liquidity, risk and

efficiency. it is suggested that foreign banks were better performers, as compared to other
category of banks, in general and in terms of utilization of resources in particular.(8)

Ved Pal & N S Malik (2007),"A multivariate analysis of the financial characteristics
commercial banks in India", The ICFAI Journal of Management, Vol. 6, Issue 3(8)

LIMITATIONS OF THE STUDY

1.
2.
3.
4.
5.
6.
7.
8.

The data for study mainly based on a single bank

Questionnaire is the major limitation for the project.
The time period of the research was limited. .
Study is limited to concept of lending practices cooperative bank.
The information collected from 50 respondents only.
The responses given by the respondents may not be true
It was difficult to find respondents as they were busy in their schedule.
Collection of data was very difficult therefore study is based on availability of
respondents.

CO-OPERATIVE BANKS:
Co-operative banks are small-sized units organized in the co-operative sector which operate both
in urban and non-urban centers. These banks are traditionally centered communities, localities
work place groups and they essentially lend to small borrowers and businesses. The term Urban
Co-operative Banks (UCBs), though not formally defined, refers to primary cooperative banks
located in urban and semi-urban areas. These banks, until 1996, could only lend for nonagricultural purposes However, today this limitation is no longer prevalent. While the cooperative banks in rural areas mainly finance agricultural based activities including
farming, cattle, milk, hatchery, personal finance, etcetera, along with some small scale industries
and self employment driven activities, the co-operative banks in urban areas mainly finance
various categories of people for self-employment, industries, small scale units and home finance
Co operative Banks in India are registered under the Co -operative Societies
Act. The cooperative bank is also regulated by the RBI. They are governed by the Banking
Regulations Act 1949 and Banking Laws.
Cooperative societies Act, 1965.These banks provide most services such as savings and current
accounts, safe deposit lockers, loan or mortgages to private and business customers. For middle
class users, for whom a bank is where they can save their money, facilities like Internet banking
or phone banking is not very important .Co-operative banks function on the basis of 'no-profit
no-loss'. Co-operative banks, as a principle, do not pursue the goal of profit maximization.
Therefore, these banks do not focus on offering more than the basic banking services. So, cooperative banks finance small borrowers in industrial and trade sectors, besides professional and
salary classes .Co-operative banks differ from stockholder banks by their organization, their
goals, their values and their governance. In most countries, they are supervised and controlled by
banking authorities and have to respect prudential banking regulations, which put them at a level
playing field with stockholder banks. Depending on countries, this control and supervision can
be implemented directly by state entities or delegated to a co-operative federation or central
body.

Even if their organizational rules can vary according to their respective national legislations, cooperative banks share common features:
Customer-owned entities:
In a co-operative bank, the needs of the customers meet the needs of the owners, as co-operative
bank members are both.
As a consequence, the first aim of a co-operative bank is not to maximize profit but to provide
the best possible products and services to its members. Some co-operative banks only operate
with their members but most of them also admit non-member clients to benefit from their
banking and financial services.
Democratic member control.
Co-operative banks are owned and controlled by their members, who democratically elect the board of directors.
Members usually have equal voting rights, according to the co-operative principle of one person, one vote.
Profit allocation:
In a co-operative bank, a significant part of the yearly profit, benefits or surplus is usually
allocated to constitute reserves.
A part of this profit can also be distributed to the co-operative members, with legal or statutory
limitations in most cases. Profit is usually allocated to members either through a patronage
dividend, which is related to the use of the co-operatives products and services by each member,
or through an interest or a dividend, which is related to the number of shares subscribed by each
member. Co-operative banks are deeply rooted inside local areas and communities. They are
involved in local development and contribute to the sustainable development of their
communities, as their members and management board usually belong to the communities in
which they exercise their activities. By increasing banking access in areas or markets where
other banks are less present farmers in rural areas, middle or low income households in urban
areas - co-operative banks reduce banking exclusion and foster the economic ability of millions
of people. They play an influential role on the economic growth in the countries in which they
work in and increase the efficiency of the international financial system. Their specific form of
enterprise, relying on the above-mentioned principles of organization, has proven successful both
in developed and developing countries .The Co operative banks in India started functioning
almost 100 years ago. The Cooperative bank is an important constituent of the Indian
financial system judging by the role assigned to cooperative, the expectations the co operative is
supposed to fulfill, their number, and the number of offices the cooperative bank operate Though
the co operative movement originated

HISTORY OF CO-OPERATIVE BANKING

The origins of the cooperative banking movement in India can be traced to the close of
nineteenth century when, inspired by the success of the experiments related to the cooperative
movement in Britain and the cooperative credit movement in Germany, such societies were set
up in India. Now, Co-operative movement is quite well established in India. The first legislation
on co-operation was passed in 1904. In 1914 the Maclagen committee envisaged a three tier
structure for co-operative banking viz. Primary Agricultural Credit Societies (PACs) at the grass
root level, Central Co-operative Banks at the district level and State Co-operative Banks at state
level or Apex Level. In the beginning of 20th century, availability of credit in India, more
particularly in rural areas, was almost absent. Agricultural and related activities were starved of
organised, institutional credit. The rural folk had to depend entirely on the co- operative banks
arrived in India in the beginning of 20 th Century as an official effort to create a new type of
institution based on the principles of co-operative organisation and management, suitable for
problems peculiar to Indian conditions. These banks were conceived as substitutes for money
lenders, to provide timely and adequate short-term and long-term institutional credit at
reasonable rates of interest, money lenders who lent often at usurious rates of interest.
The Anyonya Co-operative Bank in India is considered to have been the first co-operative bank
in Asia which was formed nearly 100 years back in Baroda. It was established in 1889 with the
name Anyonya Sahayakari Mandali Co-operative Bank Limited, with a primary objective of
providing an alternative to exploitation by moneylenders for Baroda's residents. In the formative
stage Co-operative Banks were Urban Co-operative Societies run on community basis and their
lending activities were restricted to meeting the credit requirements of their members. The
concept of Urban Co-operative Bank was first spelt out by Mehta Bhansali Committee in 1939
which defined on Urban Co-operative Bank. Provisions of Section 5 (CCV) of Banking
Regulation Act, 1949 (as applicable to Co-operative Societies) defined an Urban Co-operative
Bank as a Primary Co-operative Bank other than a Primary Co-operative Society was made
applicable in 1966. With gradual growth and also given Philip with the economic boom, urban
banking sector received tremendous boost and started diversifying its credit portfolio. Besides
giving traditional lending activity meeting the credit requirements of their customers they started
catering to various sorts of customers viz. self -employed, small businessmen / industries, house
finance, consumer finance, personal finance etc.
Urban Co-operative Banks:

Urban Co-operative Banks is also referred as Primary Co-operative banks by the Reserve Bank
of India. Among the non-agricultural credit societies urban co-operative banks occupy an
important place. This bank is started in India with the object of catering to the banking and credit
requirements of the urban middle classes.

Urban Co-operative banks mobilize savings from the middle and lower income groups and
purvey credit to small borrowers, including weaker sections of the society. These banks organize
on a limited liability basis; generally extend their area of operation over a town. The main
functions of these banks are to promote thrift by attracting deposits from members and nonmembers and to advance loans to the members. It is registered under Co-operatives Societies Act
of the respective state Governments. Prior to 1966, Urban Co-operative banks were exclusively
under the purview of State Government. From March 1, 1966 certain provisions of Banking
Regulation Act have been made applicable to these banks. Consequently, RBI became the
regulatory a supervisory authority of Urban Co-operative Banks for their related operations.
Managerial aspects of such banks continue to remain with State Governments under the
respective Cooperative societies act. These banks with multi-presence are regulated by the
Central Governments and registered under Multi-State Co-operative Societies Act. The RBI
extends refinance to Urban Co-operative Banks at bank rate against their advances to tiny and
cottage industrial units. These banks grants sizeable loans and advances under priority sector for
lending to small business enterprises, retail trade, road and water transport operators and
professional and self-employed persons. Urban Co-operative banks are mostly located in towns
and cities and cater to the credit requirement of the urban clientele.
Some facts about Cooperative banks in India:
Some cooperative banks in India are more forward than many of the state and private sector
banks.
According to NAFCUB the total deposits & landings of Cooperative Banks in India is much
more than Old Private Sector Banks & also the New Private Sector Banks.
This exponential growth of Co operative Banks in India is attributed mainly to their local reach,
personal interaction with customers, and their ability to catch the nerve of the local clientele.
There are two main categories of the co-operative banks are:
a) Short term lending oriented co-operative Banks
In this category there are three sub categories of banks viz. state co-operative banks, District cooperative banks and Primary Agricultural co-operative societies.
b) Long term lending oriented co-operative Banks
In the second category there are land development banks at three levels state level, district level
and village level.
The cooperation banking structure is divided into following five categories
1. Primary urban cooperative bank

2. Primary agriculture credit societies

3. District central cooperation bank
4. State cooperative bank
5. Land development bank

Primary urban cooperative bank.

The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary
cooperative banks located in urban and semi-urban areas. These banks, till 1996, were allowed to
lend money only for non-agricultural purposes. This distinction does not hold today. These banks
were traditionally centered on communities, localities work place groups. They essentially lent to
small borrowers and businesses. Today, their scope of operations has widened considerably
Malviya urban cooperative bank (MUCB).
The Malviya Urban Co-operative Bank Ltd., Jaipur is registered under the Rajasthan Cooperative Societies Act 1965 dated 28.08.1999 vide registration number 269/LC having its
registered office at Jaipur. The date of commencement of business was 24.01.2000, as the license
to carry on banking business had been issued by R.B.I. vide no. UBD. Rajasthan 0003 (P) dated
29.10.1999. Since commencement of its business from January 2000 the bank is running as a
profitable entity. Malviya Urban Co-Operative Bank Ltd. is a credit co-operative society, initially
registered under Rajasthan Co-operative Society Act 2001. Malviya Urban Co-Operative Bank
Ltd. strictly abides by the state cooperative societies act. Society is not a personal institution
owned by an individual. But is a fully democratic organization managed by the
Board of Directors who are elected by the members of the society in the Annual General
Meeting and the Board of Directors take decisions unanimously with total transparency. More so,
the Department of Co-operative of the Central Government constantly reviews the functioning of
the society at regular intervals. Co-operative banks are small-sized units organized in the cooperative sector which operate both in urban and non-urban regions. These banks are
traditionally centered on communities, localities and work place groups and they essentially lend
to small borrowers and businesses. The term Urban Co-operative Banks (UCBs), though not
formally defined, refers to primary cooperative banks located in urban and semi-urban areas.
These banks, until 1996, could only lend for non- agricultural purposes. As at end-March 2011,
there were 1,645 UCBs operating in the country, of which majority were non- scheduled UCBs.
Moreover, while majority of the UCBs were operating within a single State, there were 42 UCBs
having Operations in more than one State. However, today this limitation is no longer prevalent.
While the co-operative banks in rural areas mainly finance agricultural based activities including
farming, cattle, milk, hatchery, personal finance, etc. along with some small scale industries and

self-employment driven activities, the co-operative banks in urban areas mainly finance various
categories of people for self-employment, industries, small scale units and home finance. These
banks provide most services such as savings and current accounts, safe deposit lockers, loan or
mortgages to private and business customers. For middle class users, for whom a bank is where
they can save their money, facilities like Internet banking or phone banking is not very
important. Although they are not better than private banks in terms of facilities provided, their
interest rates are definitely competitive. (9)

www.mucb.com(9)
BOARD OF DIRECTORS
Sh. Ram Prasad Agarwal
Sh. Mohan lal Sharma
Dr. Urmila Sharma
Sh. Gaurav Gupta
Smt. Munni devi Nagori
Sh. Mohan Singh
Smt. Richa Agarwal
Smt. Rimpy Sharma
Sh. Virendra Singh
Smt. Sarita Sharma
Smt. Sweety Agarwal
Shri. N.L. Sharma
Mr. Sanjeev Sharma
Mr. Pawan Sharma
Mr. Virendra Singh
Mr. Ram Naresh Sharma
Ms. Madhu Singh Khangaroth
Mr. Nirmal tailor

Chairman
Vice chairman
Director
Director
Director
Director
Director
Director
Director
Director
Director
Advisor
Managing Director
General Manager
Chief Manager
Deputy General Manager
Senior Manager
Manager

Vision of the Malviya Urban Co-operative bank

Primarily, to raise funds for lending money to its members.

To attract deposits from members as well as non-members.
To encourage thrift, self-help ad mutual aid among members.
To draw, make, accept, discount, buy, sell, collect and deal in bills of exchange, drafts,
certificates and other securities.

Annual business plan (annual action plan) for 2014-2015

The following annual business plan (annual action plan) was approved by the board of directors
for the year 2014-2015 ending 31st march 2015.
1. To enroll 192 new members so as to reach the membership at 4550.
2. To increase share capital to get the level of 320lac as on 31.03.2015.
3. To increase loans and advances up to the level of rs.6000lac.
4. To increase the deposits of bank so as to reach to the level of rs.10200lac.
5. To increase the working capital by 12000lac.
6. To organize customers meet.
PRODUCTS:
MUCB has various products for the customers like Deposits, and Loans. When we say about the
deposits the MUCB has the following accounts Current account, saving bank account, Term
deposit, bank further has the following schemes like fixed deposits. It includes different types of
loan schemes. Currently the MUCB bank has many loans schemes. Like personal loans, home
loans, vehicles loans, Education loans etc.

IMPORTANCE OF CO-OPERATIVE BANKING

Co-operative bank forms an integral part of banking system in India. This bank operates mainly
for the benefit of rural area, particularly the agricultural sector. Co-operative bank mobilize
deposits and supply agricultural and rural credit with the wider outreach. They are the main
source for the institutional credit to farmers. They are chiefly responsible for breaking the
monopoly of moneylenders in providing credit to agriculturists. Co-operative bank has also been
an important instrument for various development schemes, particularly subsidy-based
programmes for the poor. Co-operative banks operate for non-agricultural sector also but their
role is small. Though much smaller as compared to scheduled commercial banks, co-operative
banks constitute an important segment of the Indian banking system. They have extensive branch
network and reach out to people in remote areas. They have traditionally played an important
role in creating banking habits among the lower and middle income groups and in strengthening
the rural credit delivery system.
STRENGTH AND WEAKNESS OF COOPERATIVE BANKS:
The main weaknesses of co-operative banks are as follows:

i.
ii.
iii.

iv.

v.

The vital link in the co-operative credit system namely, the Primary Agricultural Cooperative Societies, themselves remain very weak. They are too small in size to be
economical and viable; besides too many of them are dormant, existing only on paper.
With the expanding credit needs of the rural sector, the commercial banks have come
in actively to meet the credit requirements of this sector, and this has aggravated the
difficulties of co-operative banks.
Most of the Co-operative banks are suffering from the lack of professional
management. In the deregulated environment and stiff competition in the banking
sector, due to lack of the professionalism in carrying out banking activities, the
weakness of these banks has become more prominent.
Many co-operative banks even now continue to follow age-old system and
procedures, which are not conductive in the present technologically driven banking
environment. Except some Co-operative banks, technological development in
Information Technology or computerized data management is conspicuously absent.
Another problem arises out of the duality of control over them i.e. these banks are
organized under dual control of RBI and as well as respective state government. Apart
from the intervention of the apex bodies, the Government is also found to exercise
control in various ways on these banks. Government intervention in the management,
administration and business operation of co-operative banks has made the institution
lose his own distinct character(10)

OPERATION OF COOPERATIVE BANK

i.
ii.
iii.
iv.
v.

Co-operative bank performs all the main banking functions of deposit mobilisation,
supply of credit and provision of remittance facilities.
Co-operative Banks belong to the money market as well as to the Capital market.
Co-operative Banks provide limited banking products and are functional specialists in
agriculture related products
UCBs provide working capital loans and term loan as well.

www.rbi,org.in(10)
THE FUNCTIONS OF COOPERATIVE BANK
a. To attract deposit from non-agriculturist.
b. To use excess funds of some societies temporarily to make up for shortage in another.
c. To supervise and guide affiliated societies
ROLE OF CO-OPERATIVE BANK

Co-operative Banks are much more important in India than anywhere else in the world. The
distinctive character of this bank is service at a lower cost and service without exploitation. It has
gained its importance by the role assigned to them, the expectations they are supposed to fulfill,
their number, and the number of offices they operate. Co-operative banks role in rural financing
continues to be important day by day, and their business in the urban areas also has increased
phenomenally in recent years mainly due to the sharp increase in the number of primary cooperative banks. In rural areas, as far as the agricultural and related activities are concerned, the
supply of credit was inadequate, and money lenders would exploit the poor people in rural areas
providing them loans at higher rates. So, Co-operative banks mobilize deposits and purvey
agricultural and rural credit with a wider outreach and provide institutional credit to the farmers.
Co-operative bank have also been an important instrument for various development schemes,
particularly subsidy-based programmes for poor. (11)
The Co-operative banks in urban areas finance in activities like:
Self-employment
Industries
Small scale units
Home finance
Consumer finance

www.urbancooperativebank.com (11)
Table 1: Preferences of the customers for the loans

Kind of loan
House loan
Personal loan
Consumer loan
Educational loan
Vehicle loan

No. of respondents
12
10
8
9
6

Percentage (%)
24
20
16
18
12

Other
Total

5
50

10
100

No. of respondents
House loan
Educational loan

Personal loan
Vehicle loan

10%
12%
18%

Consumer loan
Other

24%

20%
16%

Figure 1: Preference of kinds of loan

INFERENCE
Present study reveals that majority of the respondents have taken house loans & personal loans
and less respondents prefer consumer, educational and vehicle loans.

Table 2: Range of the amount of loans

Loan amount
Less than 20000
20000-50000
50000-100000
More than 1 lakh

No. Of respondent
11
26
10
3

Percentage (%)
22
52
20
6

Total

50

100

No. Of respondent
Less than 20000
50000-100000

6%
20%

20000-50000
More than 1 lakh

22%

52%

Figure 2: Range of the amount of loans

INFERENCE
Present Study reveals that 22% people prefer loan less than 20,000, 52 % respondents prefer
20,000 to 50,000,20% prefer more than 1 lakh and 6% of the respondents prefer more than 1
lakh.

Table 3: Preferable term of loan

Term of loan
Less than 1 year
1 to 3 years
More than 3 years
Total

No. of respondent
7
13
30
50

Percentage (%)
14
26
60
100

No. of respondent
Less than 1 year

1 to 3 years

More than 3 years

14%

60%

26%

Figure 3: Terms of loan.

INFERENCE
Study shows that 60% respondents take loan for more than 3 years, 26 % take loan for 1 to 3
years and 14% take loan for the period of less than 1 year.

Table 4: What prompted the customers to take loan from cooperative banks?
Reason for taking loan
Reasonable rate of interest
More schemes
Less formalities
Easy repayment

No. of respondents
6
17
9
10

Percentage (%)
12
34
18
20

Any other
Total

8
50

16
100

No. of respondents
Reasonable rate of interest
Easy repayment

More schemes
Any other

16%
20%

Less formalities

12%

34%
18%

Figure 4: What prompted the customers to take loan from cooperative banks
INFERENCE
34% take loans because of more schemes and other respondents take loan because of reasonable
rate of interest, and less formalities. Study reveals that 20% take loan because banks provide
easy repayment.

Table 5: Average time taken for the processing of the loan

Average time for processing of No. of respondent
loan
Less than 7 days
35
Between 7 to 14 days
10

Percentage (%)
70
20

More than 14 days

Total

10

50

100

No. of respondent
Less than 7 days

Between 7 to 14 days

More than 14 days

10%
20%
70%

Figure 5: Average time taken for the processing of the loan

INFERENCE
Study reveals that 70% respondents says that average time taken for processing of the loan is less
than 10 days, 20% says that it takes 7 14 days and 10 % says that it takes more than 14 days.

Table 6. Ranking of the facilities provided by the cooperative banks.

Rank the facility
Above average

No. of respondent
32

Percentage (%)
64

Average
Below average
Total

11
7
50

22
14
100

No. of respondent
Above average

Average

Below average

14%
22%
64%

Figure 6: Ranking of the facilities provided by the co-op. banks

INFERENCE
Study shows that 22% of the respondent says that facility provided by the bank are average,
64% say that its above average and 14% says that its below average.

Table 7: Customers ranking for service of the bank

Rank the customer services

Excellent
Good
Average
Poor
Total

No. of respondent
25
15
7
3
50

Percentage (%)
50
30
14
6
100

No. of respondent
Excellent

14%

Good

Average

Poor

6%
50%

30%

Figure 7: Customers ranking for service of the bank

INFERENCE
Study shows that 30% of the respondents says that customer service of the bank is good 50%
says that it is excellent and another 14 % says its average and only 6 % says its poor.

Table 8: Customers who would like to refer the co-op. banks to their friends and relatives.
Bank refers to others

No. of respondent

Percentage (%)

Always
Sometimes
Never
Total

34
10
6
50

68
20
12
100

No. of respondent
Yes

No

Cant say

17%
47%
37%

Figure 8: Customers who would like to refer the co-op. banks to their friends and relatives

INFERENCE
68 % of the respondents would like to refer the bank to their friends and relatives which shows
that they are satisfied from the services and lending practices of the bank.

Table 9: Satisfaction of the customers with the amount and period of installment.

Yes
No
Cant say
Total

No. of respondent
28
22
10
50

Percentage (%)
56
44
20
100

No. of respondent
Yes

No

Cant say

17%
47%
37%

Figure 9: Satisfaction of the customers with the amount & period of installment
INFERENCE
Study reveals that 56% are satisfied with the amount and period of installment, 44 % are not
satisfied and 20 % cant say.

FINDINGS

 Majority (32% as per the study) of the respondent were having housing loan from this
bank
Most (64% as per the study) of the people prefer to take long term loan which is more
than 3 years.
There is a very simple procedure followed by bank for loan
Easy repayment and less formality are the main factors determining customers selection
of loans.
Quality of services provided by the staff is satisfactory because bank is catering to a small
segment only and the customers are properly dealt with.
Customers are satisfied with the mode of repayment of installments.
Average time for the processing of loan is less i.e. approx 7 days.
Most of the respondents are satisfied with the service offered by malviya urban
cooperative bank.
The reason can be increasing customer satisfaction and quality services offered by
malviya urban cooperative bank.
Majority of the respondents rates good, very good, and excellent because of the customer
service offered by the bank.

SUGGESTIONS
The COOPERATIVE BANKS should adopt the modern methods of banking like internet

Banking, credit cards, ATM, etc.

The MUCB should plan to introduce new schemes for attracting new customers and
satisfying the present ones.
The MUCB should plan for expansion of branches.
The MUCB should improve the customer services of the bank to a better extent.
MUCB should adopt effective promotional strategies to increase the awareness level
among the consumers.
MUCB should ask their customers feedback to know whether the consumers are really
satisfied or dissatisfied with the service and the product of the bank .if they are
dissatisfied then the reasons for dissatisfaction should be found out and should be
corrected in future.
MUCB should work hard to maintain its position and offer better service and products to
consumers.

CONCLUSION
Presently, the urban cooperative banks occupy an important place in the Indian financial system.
Majority of the people prefer to take long term loan which is for 3 years .they showed preference
for personal business and house loan, firstly the corporation should target the existing customer
base and try to increase their awareness levels. Then they should make the other customer of the

bank at least aware of the various schemes so that the next stage of interest, desire and action
becomes easy to execute. Bank should look to open new branches with proper planning &careful
selection of location, which is convenient to the target customer especially in places where there
are a lot of options in front of the consumers. Malviya urban cooperative bank will learn from the
present experiences and adjust to new realities since banking is risky business .In future the
urban cooperative banks are ready to face many challenges in the competitive environment. The
cooperative banks are best vehicles for taking banking to doorsteps of common men, unbanked
people in rural and urban areas. Without the help of cooperative banks, people would be lacking
the much needed financial support. These banks are sure to win in the race because they are from
the people ,by the people, and of the people.

BIBLIOGRAPHY
Books:

Kothari C.R. Research Methodology Methods & Techniques, Revised Second Edition
(New age international publishers), 2013.

Kotler Philip, Keller Lane Kvin Marketing Management.12 th edition Pearson Education

P.No. 117,118,121.
Sudha G.S. (2012-2013), Human Resource Management, RBD Publications.
Kumar Arun, Minakshi N. Marketing ManagementVikash Publication 1 st Edition 2006.

P.No. 213, 214.

Bhasak Amit,Cooperative Banks in India- Functioning and Reforms New Century

Publications, 2010.
Kotler Philip, Koshy Abraham, Marketing Management 13 th Edition Pearson Education

P.No. 115,116,120.
Nakkiran.S Co-operative Banking in India Rainbow Publications, 2007.
R.L. Naulakha,Business Management Publication R.B.D Publication House (2013-

2014).
Peelen EdCustomer Relationship Management, Publication Pearson Education.(2010).
C.M. Prasad, Organizational Behaviour, Sultan Chand &Sons First Edition 1984,
2011,2012.

Websites
www.mucb.com
www.urbancooperativebank.com
www.rbi,org.in

REFERENCES

Westbrook, Robert A. (2013), A Rating Scale for Measuring Product/Service

Satisfaction, Journal of Marketing, 44 (Fall), 68-72. (3)

Chander and Chandel (2012) Financial Viability of an apex cooperative credit institution
Vol. VI, No.2, April-June 2010, pg 61-70.

Dutta Uttam and Basak Amit (2011), Appraisal of Financial Performance of urban
cooperative bank a Case Study The management accountant, case study, March 2008, pg
-170-174.

Harish Kumar Singla (2010), Financial performance of banks in India, The ICFAI
Journal of Management, Vol. 5, Issue 1.

Ved Pal & N S Malik (2007),"A multivariate analysis of the financial characteristics of
commercial banks in India", The ICFAI Journal of Management, Vol. 6, Issue 3.

Ramesha and Nagaraju (2007), "Prudential Standards and the performance of Urban Cooperative Banks in India: An Empirical Investigation", The ICFAI Journal of Financial
Risk Management, June, (2007)

K.C., Shekhar and Lekshmy Shekhar (2007), Banking theory and practice, Nineteenth
edition, reprint 2007, Vikas publishing house Pvt. ltd. (India), Chapter: 16, pp. 356-374.
Ganguly.S, & Roy, S.K. (2011).Generic technology based service quality dimensions in
banking impact on customer satisfaction and loyalty. International journal of bank

marketing, 292(2), 168.

Wirtz, Jochen; Chung Lee, Meng (2003), An Empirical Study on The Quality and
Context-specific Applicability of Commonly Used Customer Satisfaction Measures,
Journal of Service Research, Vol. 5, No. 4, 345-355. (2)

Annexure
Questionnaire
Personal data
Name:
Sex:
Age:
Marital status:
1. To which loan you will give more preference?
House loan

personal loan
consumer loan
educational loan
vehicle loan
other
2. Which range of the amount of loan you generally required?
Less than 20000
20000-50000
50000-1lac
More than 1lac
3. Your preferable term of loan is for?
Less than 1 year
1 to 3 years
More than 3 years
4. What prompted you to take loan from cooperative banks?
Reasonable rate of return
Less formality
Easy repayment
More schemes
Other

5. According to you the average time taken for the processing of the loan by urban
cooperative bank is
Less than 7 days
Between 7 to 14 days
more than 14 days
6. Rank the facilities provided by Malviya urban cooperative bank
Above average
Average
Below average
7. Rank for service provided by Malviya urban cooperative bank.
Excellent
Good
.Average
Poor

8. Would you like to give reference of this cooperative bank to your friends and relatives?
Always
Sometimes
Never
9. Are you satisfied with the amount and period of installment?
Yes
No
Cant say