Comparison of Rural & Urban Branches

By
Nidhi Kumar – 08SJCCC341
Anand Nayak - 08SJCCC361
Michael Pinto - 08SJCCC374
Priyanka Jain - 08SJCCC376
Tara Mathias - 08SJCCC379
Kritika Shukla - 08SJCCC380
Smitha Srinath - 08SJCCC267
 ACKNOWLEDGEMENTS
. .

At the Onset, We would like to thank all those who helped us put this
project together.
We would like to thank our Banking teachers, Mr. Ravi Richard, for his
invaluable guidance without which this project would not have been
possible.
We would like to thank the branch managers of the Koramangala and
Bidadi Branch for the crucial information that they supplied for the
purpose of this project.
We would like to thank our parents for their Constant Moral Support.
 BANK PROFILE
.

Corporation Bank was founded in 1906 in Udupi, Karnataka state, India.

Corporation Bank, the oldest banking institution in the erstwhile undivided
Dakshina Kannada District of Karnataka and one of the oldest banks in
India, was founded in 12th March 1906 in the Temple Town of Udupi, by a
small group of philanthropists led by Khan Bahadur Haji Abdulla Haji Kasim
Saheb Bahadur.

The bank is a Public Sector Unit with 57.17% of Share Capital held by the
Government of India. The bank was founded with an initial capital of Rs.
5000 (USD 100), and has 11,325 full time employees, and operates from
several branches in India. The bank has the distinction of the first Indian
bank to publish its financial results (1998-99) conforming to US GAAP.

Corporation Bank head office is located in Mangalore, in the state of

Karnataka. At present bank has a network of 943 branches, 35 extension
counters and 19 currency chests covering 24 states and 2 union territories
of the country. The bank 933 ATMs are spread across the country and
interconnected online.

NATIONLISATION OF BANKS
.

Nationalised banks dominate the banking system in India.

The history of nationalised banks in India dates back to
mid-20th century, when Imperial Bank of India was
nationalized. The major nationalisation of banks occurred
in 1969 by the then-Prime Minister Indira Gandhi.
Some of the nationalised 14 major commercial banks were
Bank of Baroda, Bank of Maharashtra, Canara Bank and
Corporation Bank.

Some important advantages of a nationalized Bank are:

• Elimination of industrial monopoly: Before

nationalization of banks credit was concentrated to
few hands and no person other than big industrialist
could get loan and advances.
• Credit facility to agriculture & Small Scale Industries:
Agricultural sector is back bone of India. Agricultural
and Small Scale sector was neglected and no credit
facility was available to them before nationalization.
• Protection of black money: In order to avoid income
tax, the people kept black money with banks. For the
solution of this problem, the banks were nationalized.
• Economic Growth and generation of employment: In
private banks, there were anti-social practices,
speculation and hoarding. The country's economy
suffered badly and so, banks were nationalized.

COMPARISON OF RURAL (BIDADI)

& URBAN (KORAMANGALA) BRANCH
..

Branch Location
Urban Branch
Branch Manager –
83, 17D Main, 6th Cross, 6th Block, Koramangala
Phone No. -

Rural Branch
Branch Manager -
Bangalore - Mysore Road, Bidadi, Karnataka
Phone No. -

Comparison of Services/ Schemes

The general services presented by Corporation bank have been discussed

previously. Presented below is a comparison of these services, how they
vary in the sense of individual packages and modifications made to suit
the area:

1) DEPOSITS

The interest rates do not vary for the deposits, which

are also displayed below, however there is a gap in the
minimum balance required to be maintained
 2. LOANS

The loans offered in rural areas and urban areas are vastly different. The
rural areas mostly cater to the agricultural needs of the customers or for
the purpose of developing small scale industries whereas in urban areas,
the loans are mostly offered to meet personal or housing needs.
Rural Loans

The Rural loans offered are discussed

below:
 a) Corp Kisan Vehicle Loan Yojana
Objective For purchasing of vehicles for timely supply of inputs for
agricultural/ allied activities, transport of farm produce, for
farm supervision etc
Loan amount Max 90% of cost of vehicle and accessories or the eligibility
based on surplus income with party
Repayment The loan will be repayable in 5 to 7 years from the date of
period disbursement, depending on the income generation from
the project
Security Hypothecation of the vehicle financed out of bank loan
Rate of Upto Rs 2 lakhs - 10.50%
interest: Above Rs 2 Lakhs - 11.00%

b) Corporate Kisan Farm Mechanisation Scheme

Purpose For purchasing of Tractor, power tiller,harvester, thresher,

sprayers, Combine harvester etc., and also for machinery/
equipment such as Generator sets, Lift irrigation units, dairy
equipments such as milking machines, poultry equipments
etc
Loan Maximum 90% of the cost of the new Farm
amount Machinery/equipment
Repayment 5 to 9 years from the date of disbursement, depending upon
the machinery to be purchased
Security Hypothecation of Farm Machinery/ equipment to be financed.
Continuing security of land, if it is already mortgaged to the
Bank or suitable third party
Rate of Upto Rs 2 lakhs - 9.00%
interest Above Rs 2 Lakhs - 9.50%

c) Corp Kisan Tie-Up Loan Scheme

Purpos For financing group of farmers/ producers under tie-up
e arrangements with companies/ co-operative societies
Loan Need based/ as per requirement
amount
Securit Quantum of Security
y Loan

Upto Rs. Hypothecation of assets

50,000/-
Above Rs Hypothecation of assets and Mortgage of
50,000/- land or third party guarantee
Rate of Upto Rs 2 lakhs - 9.00%
interest Above Rs 2 Lakhs - 9.50%

d) Corp Gram Mitra Yojana[CGMY]

Purpose To provide consumption credit facility to people in rural
 /semi urban areas
Loan amount 20000/-
Repayment 24 months from the date of first disbursement
Security Nil
Rate of 11.50% as of now
interest

Some special schemes for furthering agriculture and small scale industries
are undertaken as this sector is often classified as priority sector by the
government.
Some of these are discussed below:

a)Corporate Agricultural Produce Loan

Purpose Credit facility to farmers to avoid distress sale.
Credit facility to traders to meet working capital need.
Loan amount Minimum Rs.10,000 and Maximum Rs.20 lakh.
Repayment Within 12 months or validity period of warehouse receipt
whichever is earlier
Security Pledge of warehouse receipt and suitable third party
guarantee.
Rate of Up to Rs.2 lakh—9%
interest above Rs. 2 lakh 9.50%.

b) National Equity Fund Scheme of SIDBI

Eligibility New projects in tiny/ small scale sector.
Existing tiny/ small scale sector units for expansion/
modernization/ up gradation/
diversification etc.,
For rehabilitation of viable sick units.
Soft Loan 25% of project cost (fixed assets) subject to a maximum
Amount of Rs.10 lakh
Repayment repayable in 7 years including 3 years moratorium
Rate of No interest on soft loan.
interest

Loans given in Rural & Urban Areas

The rational conclusion that is formed after examining the loans in both
areas is that one caters to the agricultural requirements and the other to
the living expenses in an urban area. The interest rates and processing
charges are shown below:
a) Housing Loans - Corporation Bank offers Corp Home, CorpHomeplus,
Corp Flexi Home Loan and many others for construction/ purchase of
house/flat, repairs/improvement of existing house/flat, take-over of
housing loans from other banks/institutions. The security is usually what is
purchased/constructed. Of these only Corp Home is given in both rural and
urban areas- the interest rates and processing charges remain common,
however the loan amount sanctioned differs. These facts can be seen in
the tables:
Interest Rates

Processing
Charges

Amount Sanctioned
Area Loan Amount Loan for Site
Metro & Port Town Centres Rs.100 lacs Rs.30 lacs
Urban Centres Rs.50 lacs Rs.15 lacs
Semi Urban & Rural Centres Rs.25 lacs Rs.10 lacs

b) Personal Loans – Includes Corp consumer, Corp

Personal – to meet genuine personal expenses such as
family functions, marriage, travel e.t.c.
Personal Loans Loan Amount Rate of Interest Processing Charges
(irrespective of limit)
Corp Personal Salaried per: 13.5% Rs. 500
12 times take
home pay
Others 14.5% Rs. 500
(persons with
agricultural or
business
income):
25% of gross
annual income
Corp Consumer Max. Rs. 1 lakh 15.25% 1% of loan subject to
minimum of Rs. 250
c) Vehicle Loans- These loans are offered for purchase of
2/3/4 wheelers/ heavy road/water transport vehicles for
personal / transport/ commercial purpose, and the options
are uniform for urban and rural areas.
 d) Educational Loan – Here the rates are also uniform
and loans are offered for graduate, post graduate,
professional and vocational courses. The loan may be
secured against co- obligation of parents, third party
guarantee or even a tangible collateral as assignment
of future income – depending on the quantum of loan amount. The
charges for this are given below:

On the whole, the principal distinction is the agricultural loans sanctioned

in rural areas. Further, there may be differences in the loan amounts as
listed in the tables shown above. But, mostly there is uniformity in the
charges for loans offered in both areas.
3. LOCKER FACILITIES
 4. BUSINESS AND NRI SERVICES

• NRI And Forex Services are provided mostly in Urban Areas. They
provide bank Accounts for Non Resident Indians such as Foreign
Currency Non Resident Account Scheme (FCNR), Non Resident Account
scheme , all of which facilitate frequent repatriation of money
transfers.
• The bank also offers services for corporates – They offer services
such as cash and payment services, speed remittance, short term
credit facilities:
o large corporate houses are mostly served in urban areas,
o whereas Small and Medium sized enterprises (SME) are
served in Rural areas – It includes schemes such as SME
Liquid Plus Scheme to meet the liquidity needs of the
enterprise, regional MSME care centres where there is
granting of need-based adhoc working capital demand loan
upto 20% of the existing fund-based working capital limits for
borrowers who are enjoying fund based working capital limits
upto Rs.10 crore.
 5. CARDS, ATM, TELE BANKING & INTERNET BANKING

• Tele Banking and Internet Banking

remain common in both areas. These
provide anywhere anytime banking.
Though these facilities are available in
rural areas also, they remain more
popular in urban areas. One to One
Banking is more prevalent in Rural areas.
• ATM cards enable customers to withdraw cash from ATM centres at
any time which are located all over – in both rural and urban areas.
• Debit cards enable customers to transact without the hassles of

carrying cash. It provides direct access to the bank a/c and

helps in day to day purchases. Customers of the Bank
having Savings Bank a/c, Current a/c, CorpClassic Savings Bank a/c,
Corp 4 in 1 Current a/c, CorpPayroll a/c and CorpMitra OD Account

are eligible for the Corp Convenience Debit Card.

• Credit Card facilities are also available in rural areas. However the
eligibility criteria may affect them, as self employed people require
higher minimum net income for qualifying for a credit card and
agriculturists will fall in this category. The details can be seen
below:
 OTHER SERVICES

Online Railway Reservation - The Bank has entered into a tie up with the
Indian Railway Catering & Tourism Corporation (IRCTC) for online booking
of railway tickets. CorpNet (Internet Banking facility) customers of the
Bank holding a Corp Convenience Card, can now book their tickets online,
over the Internet, by direct debit to their Corp Bank account.
Service Charges : Rs 12/- (inclusive of service tax) for every successful
transaction.

Some Other services that are not available in all branches are:
Issuing Govt. of India Bonds - 55 Branches of the Bank sell stamp paper
and stamp receipts in the state of Karnataka.

Collection of Central Excise and Service Tax - 250 Branches of the Bank
accept Central Excise and Service Tax challans. The Customers of all the
Core Branches of the Bank can remit their Central Excise and Service
Taxes through Internet, to any Commissionerate in the country. An
Internet Login ID may be procured from the concerned branch.

Collection of Customs through E-payment - (Delhi Air Cargo and ICDs

under Delhi Commissionerate) and Chennai (Sea Customs and Airport and
Cargo under Chennai Commissionerate). The Assesses may contact any
branch of the Bank for details.

Collection of Direct Tax - 480 Branches of the Bank accept Direct Taxes
like Corporation Tax, Income Tax, Wealth Tax, TDS, BCCT and Fringe
Benefit Taxes. Quoting of PAN/TAN is mandatory

Collection of Sales Tax - 124 Branches of the Bank in the states of Delhi,
Gujarat and Maharashtra are accepting the deposit of Sales Tax/VAT
 Comparison of customer relationship

The customer relationship in an urban and rural area is vastly different

A rural area requires customer handling on a one to one basis. The staff
has to be trained in the local language and well versed with the problems
and difficulties that a rural customer is likely to face. The staff needs to
spend a lot of time with each customer and lay ground work for building
confidence in their customers. The staff should be motivated to work as it
is a priority sector and provides finance at grass-root level .A crucial role
that a bank performs is of educating its customers in credit facilities and
government initiated schemes implemented by the bank.

In an urban area a professional relationship exists between the banker and

the customer. The customer is usually self motivated to avail the services
of the bank and does not require the persuasion of the banker. Instead of
one to one banking is done mostly via internet and tele banking.
Personalised banking is usually provided to high net worth individuals.

RURAL MODEL – BRANCHLESS BANKING

.

• In 2006, when Corporation Bank

introduced `branchless banking' model
it catered to the needs of rural masses
that did not have access to banking
service. This means providing basic
banking services without having to
open an expensive branch.
• The Bank appoints one of the villagers as “business correspondent”
and he is given the branchless banking kit and cash to dispense
basic banking services to the villagers. The customers in un-banked
villages are provided with smart cards or RFID (radio frequency
 identification) cards. These cards include their name, photograph,
address, and their fingerprints.
• The voice-guidance system from business correspondent's device
confirms the authentication of the transaction to both the customer
and the business correspondent.
• At present, the branchless banking model offers products such as
savings bank, general credit card to its customers. Loan and
remittance products are offered in some units. The business
correspondent uploads the daily transactions to the bank branch
through the telecommunication network.
For example, Zulaikha, a tailor in the village, says she never entered a
bank in her life till now. Her fellow villager Shobha is the banker, the
Business Correspondent of Corporation Bank in Surinje village of Dakshina
Kannada district. Her home serves as the extension counter of Tadambail
branch, situated 8 km away from the village.

The number of transactions and the amount transacted also witnessed

growth during the period. The bank saw a more than seven-fold jump in
transactions and nearly 10-fold jump in amount during November 2008.
Most of the customers of the branchless banking are women, constituting
more than 65 per cent of the total transactions, indicating the women
empowerment.

Challenges

The challenge was to take sophisticated technology to unsophisticated

areas, as most rural areas are short of power and telephone connectivity.
Plus, they are unfamiliar with complicated machine operations. So
simplicity and ease of operations were important considerations.
This system is now proving to be a role model on how banking facilities
can be taken to more un-banked areas in the country.

CONCLUSIONS
.

Over the years bank has earned a place of pride in the Banking
Community due to its good customer service, pre-eminent track record in
House Keeping, adherence to Prudential Accounting norms, consistent
profitability and adoption of modern technology for betterment of
customer service.
Corporation Bank was nationalized in 1980 and since then, it has been at
the forefront of responding instantly and adequately to the financial sector
reforms and changing pattern of Indian economy.
Furthermore, it was only the second public sector bank in India to enter
capital market. At the same time, it was the first to introduce Cash
Management Services, online approvals of Education Loans, m-Commerce,
Gold Banking, 100% CBS Compliance and many more. Low-cost
branchless banking and Business Correspondent model have been its
pioneering efforts to take modern banking technology to the remotest
area of the country.
Moreover, the bank sees no distinction between rural and urban
population while making available its specialized services to both
categories of customers.

BIBLIOGRAPHY
.

The material presented in this study has been collected through field work
i.e. by visiting the Urban and Rural Branch and also various online portals
including:
www.google.com
www.corpbank.com