Co-operative Banking in Competitive Environment
Sea changes have been taking place in the global economy. LPG (Liberalization, Privatization and Globalization) process has widen the business horizons for gaint business players. These drastic changes have left foot prints on each segments of the economy, banking segment is one of them.
The changes are clearly evident in the number of players with range of innovative products and services supported by high level of IT integration to enhance the market share and customer services. This has provided uneven competition for the co-operative banks. These small banks have to compete with the banks whose branch business is equivalent to the bank business of the entire co-operative banks. Size is not only the factor but their major focus is on managing quality portfolio, reduction of NPAs, pricing of their services, leveraging technology for the cost reduction, taking the benefits of large scale of operations and multi skilled and professional staff. Moreover, commercial banks also witnessed change in corporate governance practices, adoption of prudential norms and strategic planning. No doubt that co-operative banks serve altogether different segment of the economy, their credit portfolio consists of 60% of priority sector advances and amongst this, 15% to weaker section of the economy. But with the passage of time, the line of difference in the target customers is erased day by day due to improvement in standard of living of the people of priority and weaker sections and competitiveness of the giant commercial banks to reach till the lower range of customers by their tech savvy products and services.
Therefore, the question arises whether the co-operative banks and its system can leverage its strength of ability to serve the very small accounts to tackle the competition that has arisen. Whether the committed clientele of Co-operative banks will stick to their commitment or not, there also lies a big question...
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