A commercial bank (or business bank) is a type
of bank that provides services, such as accepting
deposits, giving business loans and basic
Commercial bank can also refer to a bank or a
division of a bank that mostly deals with deposits
and loans from corporations or large businesses,
as opposed to individual members of the public
A co-operative bank is a financial entity which
belongs to its members, who are at the same
time the owners and the customers of their
bank. Co-operative banks are often created by
persons belonging to the same local or
professional community or sharing a common
interest. Co-operative banks generally provide
their members with a wide range of banking and
financial services (loans, deposits, banking
WHAT IS COMMERCIAL BANKS ?
• Commercial banks are the most important source of
institutional credit in the money market.
Commercial bank is a profit-seeking business firm,
dealing in money or rather dealing in claims to money.
• Moreover, deposits in a commercial bank circulate as
money, while deposits in other financial institutions do
FUNCTIONS OF COMMERCIAL
1. PRIMARY FUNCTIONS
These are the original functions of a bank whichare
obligatory in nature. Each bank must perform these
Acceptance of deposits from the public:
Savings Bank Deposits:
Current Account deposits:
Fixed Account Deposits:
Recurring Account deposits:
2. LOANS AND ADVANCES:
Cash credit facility:
Discounting bills of exchange:
3. CREDIT CREATION:
“Banks are not merely the manufacturers of money , but
also in an important sense manufacturers of money”.
SECONDARY OR NON-BANKING
In addition to the above mentioned banking functions, the
commercial banks performs a number of non-banking
functions such as :
Trustee Executor And Attorney
Letter of Credit
Providing ATM facilities
CATEGORIES OF CO-OPERATIVE BANKS
• Short term lending oriented CO-OPERATIVE
• Long term lending oriented CO-OPERATIVE
STRUCTURE OF CO-OPERATIVE BANKS
• Primary Agricultural Credit Societies : The Primary
Co-operative Credit Society is an association of
borrowers and non-borrowers residing in a particular
• District Central Co-operative Banks : These are the
federations of primary societies in a district.
• State Co-operative bank : the state co-operative bank is
a federation of central co-operative bank and acts as a
watchdog of the co-operative banking structure in the
• Land Development Banks : The land development
banks are organised in 3 tiers namely state, central and
primary level and they meet the long term credit
requirements of the farmers for development purposes.
IMPORTANCE OF COMMERCIAL BANK
• Capital Formation
• Banking & Investment
• Banking & Industry
• Banking & Agriculture
• Banking & Trade
Service to customer
IMPORTANCE OF CO-OPERATIVE BANK
Credit To Agriculture
Small scale operation
• Main operation
• Extensive branch network
• Traditional importance
RELATIONSHIP BETWEEN BANK AND
• In India, banks face a challenge of providing services to a broad
range of customers, varying from highly rated corporates and high
net worth individuals to low-end depositors and borrowers.
• Banks usually place their customers into certain categories so that
they are able to (a) develop suitable products according to customer
requirements and (b) service customers efficiently.
• While banks are competing with each other to attract the most
profitable businesses, financial inclusion is increasingly becoming
part of their agenda.
CUSTOMER RELATIONSHIP MANAGEMENT
• RBI has set up a full-fledged Customer Service Department with a
view to making banks more customer-friendly.
• Customers of commercial banks can also approach the RBI with
• In February 2006, RBI set up the Banking Codes and Standards
Board of India (BCSBI) as an independent autonomous watchdog to
ensure that customers get fair treatment in their dealings with banks.
• The BCSBI has published the "Code of Banks' Commitments to
Customers "(the Code)" which sets minimum standards of banking
practice and benchmarks in customer service for banks to follow.
STRATEGY FOR EXPANDING CUSTOMER
Driven by competition, banks are increasingly making
their services customer-friendly. There are three
key components of strategies to expand and retain
the customer base:
• Product life cycle strategy
• Appropriate targeting
• Expanding product portfolio
COMMITTEES ON CUSTOMER SERVICE
• Banks are required to constitute a Customer Service
Committee of their respective Boards and include
experts and representatives of customers as invitees to
enable improvements in the quality of customer service.
• Further, banks have to establish Customer Service
Committee at branch level.
• Each bank is also expected to have a nodal department /
official for customer service in the Head Office.
CUSTOMER RELATION MANAGEMENT OF COOPERATIVE BANKS
The process of maintaining a lasting relationship with
customers relationship management(CRM).This process
brings the customers & the company closer together.
Maintaining good relationship with customers lie at
heart of success in business. It is a strategy for the
company and tool for the employees
CRM IN CO-OPERATIVES
• According to Dr. O.R krishnasamy, co-operation is a
• The core values of co-operation are spontaneity,
ny,participation and frugality.
• The principles and values of co-operation make the cooperatives unique organisations.
CRM IN CO-OPERATIVES
• The Members and Customers.
• Member Institutions.
• The Method Used for CRM.
• The Principles of CRM.
• RETENTION of CUSTOMERS.
EVOLVING TRENDS IN COMMERCIAL BANKS
There are a number of trends evolving in modern banking, the most important
of which relate to :
Banks in India have started using technology in a proactive manner. The huge
number of bank customers and their myriad needs are being met in increasingly
sophisticated ways such as :
Internet Banking - Through its website, a bank may offer its customers
online access to account information and payment and fund transfer
Mobile Banking Transactions - Some banks have started offering mobile
banking and telebanking to customers. The expansion in the use of mobile
phones has created new opportunities for banks to use this mode for
Point of Sale (PoS) Terminals - To use smart cards/debit cards/credit cards for
the purchase of an item or for payment of a service at a merchant's store, the
card has to be swiped in a terminal (known as Point of Sale or POS terminal)
kept at the merchant's store. POS terminal is a relatively new concept.
2. FINANCIAL INCLUSION
Financial Inclusion implies providing financial services viz., access to payments
and remittance facilities, savings, loans and insurance services at affordable cost
to those who are excluded from the formal financial system. There are various
initiatives taken by the RBI such as :
Basic banking 'no-frills' account
Use of Business Facilitators and Correspondents
Self-Help Groups (SHGs)
3. OUTSOURCING OF WORK BY BANKS
Outsourcing represent utilization of services of another entity or
outside service provider to perform certain functions/activities,
continuously which otherwise would have been normally
undertaken by the bank itself. This may be through an affiliated
entity (say a subsidiary) or an external entity like a marketing agent.
The outside service provider is an entity undertaking the outsourced
function on behalf of the bank. Outsourcing enables them to
economize their cost of operations. It however involves certain risks.
RECENT TRENDS IN COOPERATIVE BANKS
• India’s cooperative banking sector has been suffering in the last
many years due to poor management and capital shortage.
• During 2000-2010, 132 banks had their licenses cancelled and 62
merged with other banks.
• There are over 1,650 UCBs with close to 7,000 branches in the
• About 45 Indian co-operative banks with combined deposits
of Rs.35,600 crore face penal action by the Reserve Bank of India
(RBI), including possible prohibition on their operations, if they fail
to meet a 30 June deadline to achieve minimum capital and reserve
• Of the 45 cooperative banks, 23 do not even have
licences but these together have Rs.7,600 crore
• Of these, 16 are in Uttar Pradesh, three in
Maharashtra, three in Jammu and Kashmir and one
in West Bengal.
• The 16 banks in Uttar Pradesh together have a deposit
base of Rs.2,900 crore and will require Rs.1,400 crore of
capital to meet the 4% CAR stipulation. The three banks
in Maharashtra have about Rs.3,000 crore of deposits.
• These 23 banks will require about Rs.2,100 crore of
capital to achieve 4% capital adequacy ratio, according
to NABARD’s estimates.
• The remaining 22 of the 45 cooperative banks have
licences but were served notices by the central bank two
months ago for non-compliance with its stipulations.
• Of these, seven are in Kerala. These banks have to raise
their capital adequacy to 4% by the end of June and to
7% by March 2014. All cooperative banks have to
gradually migrate to 7% capital adequacy by March,
• In March 2011, the total deposits of all district
cooperative banks stood at Rs.1.61 trillion and the
advances at Rs.1.2 trillion.
ECONOMIC DEVELOPMENT BY BANKING
Development of Agriculture sector
Investment in new enterprise by banking
Promotion of trade and industry
Balance development of Different region
Influencing economic activity
Implementation of monetary policy
Export promotion cells
Federal structure in
nature i.e at the top
level State Cooperative Banks
,and at the village
level primary Cooperative credit
They are functioning
on branch banking
and the branches
are located in all
urban,etc. the head
They are generally
rural credit and
agricultural and rural
In Co-operative Banks
the borrowers are
They are mainly
the requirements of
trade and industry.
Borrowers can be any
At present cooperative banks in
India do not operate
Banks provide a
little higher rate of
interest on deposits
as compared to
in India such as
Canara Bank, Bank
of India, State Bank
of India, do operate
Banks provide a
lesser rate of
compared to cooperative banks.