Online published on 28 February, 2020.
Regional Rural Banks (RRBs) form an integral part of the Indian banking system. Though, like any other commercial banks, they were set up to provide banking services to the people, unlike other banks which were handicapped by urbanite culture, Regional Rural Banks were conceptualised as a bank ‘by the rural people, for the rural people and of the rural people. Service, not the profit, was the motto. But any financial organisation needs to be self-sustaining to flourish and to achieve its social goals. As a part of many reforms measures, to strengthen the RRBs, the Government of India initiated the process of amalgamation in 2005, among the RRBs operating in a state and sponsored by the same commercial bank. As a result of this, the number of RRBs which stood at 196 in March, 2005 reduced to 82 in March, 2010.
In the State of Odisha, at the instance of the Government of India, Cuttack Gramya Bank and Balasore Gramya in January, 2006; Bolangir Anchalik Gramya Bank, Kalahandi Anchalika Gramya Bank and Koraput Panchabati Gramya Bank in July, 2006 and Puri Gramya Bank and Dhenkanal Gramya Bank in August, 2007 were amalgamated to form Kalinga Gramya Bank, Utkal Gramya Bank and Neelachal Gramya Bank respectively.
The process of amalgamation incited the inquisitiveness to make an evaluation on the proposition whether the performance of the RRBs have undergone any change or improvement in the post amalgamation period in comparison to their performance in the pre amalgamation period.
Since no study had been made on the RRBs of Odisha after amalgamation and very few attempts had been made to assess the ‘service quality of the RRBs of Odisha, RRBs of Odisha formed the subject of this case study.
In the study, both primary and secondary data were used. Primary data were collected by way of canvassing questionnaires to the customers of Odisha Gramya Bank in 10 of its branches. Collected data were analysed using SPSS version 16.0 to find out the influence of the factors demographic profile on the service expectation by different customers of the bank. An attempt was also made to find out the satisfaction level of the respondents, with the service of the bank.
Secondary data analysis, which forms a major part of analysis, has been done in two steps. Firstly, judicious selection of appropriate ratios/indicators (to measure the performance) was made by compiling ‘Expert Opinion Survey” results. Secondly, the tool of ratio analysis and a Student's test were applied to assess whether there had been significant difference in the pre and post amalgamation performance of the banks under study.
The analysis primary data provided many important and interesting findings, which would be of immense help to the management and the policy makers in improving the service quality of the banks. One important finding was on the factor that influences the choice of a bank by a customer. Contrary to popular belief that advertisement had great influence over it, it observed that “employees behaviour” and “qualityof service” playmajor role whena customeris selecting a bank for transactions. Similarly, the findings on facilities expected by the customers of a RRB were eye opening. Even most of the rural customers expected advanced and sophisticated facilities like availability of ATMs at branches; air conditioned environment, perking facilities, etc.
To study thefinancial performance of thebanks, theselected ratios/indicatorswere classified intosixgroupsnamely Profitability, Liquidity, Operational Efficiency, Asset Management, Social Commitment and Productivity. The mean value of each ratio was deduced for both pre and post amalgamated period and t-test was applied to verify the hypotheses. Mixed results were found.
Kalinga Gramya Bank has shown improvement only in productivity indicators. Utkal Gramya has shown improvement in all the six indicators of performance measurement. Neelachal Gramya Bank has shown improvement in liquidity, operational efficiency and asset management but negative trend in social commitment.
The present study has much scope for future research. The present study covers a virgin area, as the study was conducted before lapse of considerable time since amalgamation. So the findings are not conclusive. More studies can be made in future to assess the performance of RRBs after amalgamation. The studies will give more accurate result. Only performance of RRBs of Odisha has been studied, inter-state comparison of performance of RRBs can also be made. Perception of employees on the impact of amalgamation also needs to be studied.
