Comparison of Interest Rates between Public Sector Banks and

Co-operative Banks in Kerala

Linchu Susan Cherian

B.Ed Student (Mathematics)
Mount Carmel College of Teacher Education, Kottayam

Abstract
The purpose of the present study is to compare the interest rates of public sector banks
and co-operative banks in Kerala. The method the investigator used was informal Inquiry. After
obtaining the different interest rates of public sector banks and co-operative banks the
investigator compared them and found that in public sector banks provide a lesser rate of interest
on loans compared to a co-operative banks provide a little higher rate of interest on deposit.

Introduction
Banking in India is the modern since originated in the last decades of the 18 th century.
The first banks were the Bank of Hindustan. The largest bank and the oldest still in existence is
the State Bank of India. Nationalized banks are the majority of lenders in the Indian economy.
The commercial banking system in India has improved and progressed appreciably after
bank nationalisation in 1969. Nationalized banks are giving lesser importance to Big Industries.
One of the main objectives of nationalisation of bank was to extend credit facilities to the
borrowers in the so far neglected sectors of the economy. Nationalized Banks are working in the
country to meet the financial requirements of the country people in which the banks are
providing following facilities:
Deposit accounts
Loans including Home, Car, Personal, Education, Trading etc.
Co operative bank is an institution established on the co- operative basics and dealing in
ordinary banking business. Like other banks, the co- operative banks are founded by
collecting funds through shares, accept deposits and grant loans.
Interest on deposits and interest on loans are different in Nationalized Banks and Co-
operative Banks. The study is conducted to know about the interest rate of different loans and
deposit schemes.

Objective of the Study

To compare the interest rates of public sector banks and cooperative banks.

Methodology
For the study two banks, one a public sector bank and other a Co-operative bank in my
locality were selected. The banks are State Bank of Travancore, Manganam and Co-operative
Bank, Manganam. Then I went to these banks and collected details regarding different rate of
interests from the officers. Later these data was analysed and arrived to a conclusion.

Analysis and Interpretation

Table 1: Different Rate of Interest in State Bank of Travancore & Co-operative Bank, Manganam

NAME RATE OF INTEREST

SBT CO-OPERATIVE BANK
Deposit 4 6.25 8.75
Housing Loan 10.15 10.40 12.5 13.5
Vehicle Loan 10.65 10.90 14
Gold Loan 11.90 12.90 11

Education Loan 12.50 13.50 12.5

From the table it is evident that the rate of interest on deposit in Co-operative bank is
higher than the SBT. So deposit in co-operative bank is more profitable than SBT. But rate of
interest on different loans in SBT is lesser than Co-operative bank.
Rate of interest on deposits in SBT is only 7-7.50, but in Co-operative bank it is 6.25-8.75. Home
loan rate in SBT is 10.15-10.40, but in Co-operative bank it is 12.5-13.5, that means the rate of
interest in home loan is approximately 2% greater than in Co-operative banks compared to SBT.
Rate of interest in gold loan in Co-operative bank is 11 and SBT it is 11.90-12.90. Education
loan in cooperative is lesser than compared to SBT. In Co-operative bank it is 12.5. But in SBT it
is 12.5-13.5.

Conclusion
Public sector banks provide a lesser rate of interest on loans compared to co-operative
banks. The co-operative banks provide a little higher rate of interest on deposits. Many
mathematical concepts are used for the proper functioning of Banks.

References
1. Sethna,M.J.(2008). Tannans Banking Law and Practice in India, LexisNexis Butterworths
Wadhwa Nagpur: Newdelhi.
2. www.moneycontrol.com
3. www.economicctimes.indiatimes.com