Cooperatives bank on IT to take on mainstream bankers

BANGALORE: Many of those who do their financial transactions through the mainstream banking system often do not realise it, but co-operative banks remain even today an integral part of the Indian financial system. Some estimate that the total deposits and lendings of co-operative banks is more than that of the old and new private sector banks.
In rural areas these banks provide finance for farming, cattle, milk, hatchery and personal finance.In urban areas they finance self-employment, industries, small scale units, home finance, consumer finance and personal finance. Their business is seen to be increasing, mainly on account of their better local reach, personal interaction with customers, and their ability to catch the nerve of the local clientele.
But now these banks also face major challenges: competition from nationalised and private banks who are targeting rural customers, customers demanding better solutions such as ATMs, debit cards, credit cards and mobile banking services, and meeting RBI's regulatory norms. This is pushing many of them to adopt core banking solutions (CBS) and back-end database solutions, and most are seeing positive results.
"The hire-purchase loan approval time has come down from two-three days to 24 hours,��� says Ravindra Babu, IT director of Manappuram General Finance and Leasing, a non-banking financial institution servicing more than 1 million customers across 13 states. ���Our clerical work has come down by a third, allowing us to provide enhanced customer service. The staff can concentrate more on marketing other products. Our month-end consolidation time has come down from 15 days to just one day. We have even started providing SMS messages for daily transactions."
There are over 2,000 co-operative banks and non-banking financial institutions in the country. Most of them have legacy technology deployments and many are at present in branch automation stage. Ashok Pamidi, director in HP India, one of the solutions providers, says these institutions are beginning to deploy IT infrastructure solutions to cut costs and improve operational efficiency.
"With rising customer demands, they are also providing services like shared ATMs," he says. Buldana Credit Co-op Society, which has 150 branches handling more than Rs 1,700 crore, needs to collect data from banks in remote locations. This invariably takes time, impacting decision-making.
"Following the implementation of CBS and database technology, our reports come in real-time and our processes have become faster. Even staff management has become easier," says Laddha, CEO of the society.