International Journal of Advances in Management and Economics (IJAME)

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TitleImpact of Business Diversification in District Central Co-operative Banks in Punjab
AuthorPriya Goel
AbstractCooperative Banking has a crucial role to play in the Indian Financial System. The cooperative principles of managing finance in India serve via media between the sophisticated institution like commercial banks on one hand and the unscrupulous moneylenders on the other. Despite the fact that the nationalized banks are spreading their operations in the rural areas, cooperative banking remains the best answer for catering to the needs of the small borrowers Challenges before the cooperative banks are two folds, on the one hand they are supposed to provide cheap and timely credit to rural masses and on the other hand they have to ensure their profitability and viability in turbulent interest regime. Financial sector reforms, globalization of financial services and technology revolution have strengthened the commercial banking system to a great extent and have improved their internal working systems. All these changes have resulted in improved productivity and profitability of the commercial banking system which enabled them to offer low cost services to customers. But all these changes have created problems for cooperative banking system. To be able to create a balance between their social objectives and economic compulsions, these banks were needed to change working strategy. So as a result, cooperative banks have diversified their areas of operation. Business diversification process in cooperative banks started in the year 1992. In this paper an attempt has been made to study the impact of business diversification on assets structure and their yield by regression analysis i.e. by regressing different components of assets and yield against diversification index. What and how the management of cooperative banks views, the business diversification and its impact on functioning of banks is of paramount importance for betterment and improvement of the banking system in cooperative sector in India. Therefore, management perception regarding business diversification in cooperative sector was also studied.For this purpose, Two District Central Cooperative Banks (DCCBs) were randomly selected from each zone. (Punjab state is divided into three agro-climatic zones on the basis of several factors such as soil type, soil quality, cropping systems, underground water tables, water quality, rainfall, humidity, etc). Then 100 bank officials were randomly selected, from each selected DCCB for studying the perceptions of bank officials

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