Critical Analysis of Change in Business Process & Products of Urban Cooperative Banks in India after Economic Reforms

Posted: 25 Mar 2008

Date Written: March 23, 2008


The cooperatives in India have made remarkable progress in the various segments of Indian Economy. There are more than half million cooperative societies with a membership of more than 209 million. In many segment of Indian economy, cooperatives are contributing predominant role in the credit sector despite of keen competition from nationalized and private sector banks. The Urban Cooperative Banking movement (UCB) in India can be traced to the close of nineteenth century. The economic reforms (1991) have given new dimensions to precepts and practices of economic development. Urban Cooperative 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. Over the years, UCBs have registered a significant growth in number, size and volume of business handled. There are 2,104 UCBs of which 56 were scheduled banks. About 80 percent of these are located in five developed states of the country. After economic reforms, the banks are under severe threat of survival on one hand while there is ample business opportunity to develop and grow. In the changing scenario, banks face policy endeavors due to competition and are geared to consolidate and strengthen business, introducing innovative banking products, service delivery, efficient process and effective & socially responsible governance.

This research paper critically analyzes how UCBs has witnessed changes in product design, business process, service delivery and innovative governance process. The study is based on secondary and primary data. The secondary data includes available literature, policy documents of Central Bank, Government of India and Annual Reports of selected UCBs. Primary Data consists of response from executives and consumers, i.e. members of UCBs. Suitable research methodology, principles and quantitative tools are applied for analysis and interpretation of data.

Keywords: Cooperative, Product, Business Process

JEL Classification: J5, J1, P13

Suggested Citation

Sapovadia, Vrajlal K., Critical Analysis of Change in Business Process & Products of Urban Cooperative Banks in India after Economic Reforms (March 23, 2008). Available at SSRN:

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