Definition and Meaning of Bank

It is very difficult to define the term bank or banker precisely. Even the

best authorities on banking have failed to provide a satisfactory definition of

this term. This is because a modern bank performs numerous activities and it

is really difficult to incorporate all the activities of the modern bank.

Section 5(1) (c) of the Indian Banking Regulation Act of 1949 defines

the term banking company as any company which transact business of

banking in India.

Section 5(1) of the same Act defines the term banking as accepting

for the purpose of lending or investment of deposit money from the public,

repayable on demand or otherwise and withdrawal by cheque, draft, order or

otherwise.

Functions of the Bank

Beside the functions like accepting deposit of various types for the

purpose of lending or for the investment banks are permitted to engage in

some other instruments, remittance of funds, opening letters of credit, issuing

travellers cheque, accepting articles for safe custody, settings out safe deposit

locker purchases and sales of securities, issuing, indemnities and guarantees,

acting as agent, executers and trustees underwriting the issue of shares and

debentures.

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Indian Banking System

The banking system in India can be divided to three categories namely

RBI, the commercial bank broadly classified in to nationalize or public sector

bank and private sector banks. The SBI and its associates banks along with

another 20 banks is the public sector bank. The private sector bank includes a

small number of Indian Scheduled bank which have not been nationalized and

branches of foreign bank

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REVIEW OF LITERATURE

NEED AND ORIGIN OF CO- OPERATIVE

The co. operative movement in India was started as a suitable credit

agency for areas. The scheme of the formation of Service co-operative was

launched in India about decades bank. After the working of the societies,

these societies would however reveal that by and large, they have succeeded in

achieving their objectives, these societies have been able to play a significant

role in providing adequate finance. Supply of agricultural and other production

requirement and in marketing of member produce.

CO-OPERATIVE MOVEMENT IN INDIA

The success achieved many co-operative societies in western countries

made the Govt to think that co-operative movement was the solution to relive

the hardships of farmers and weakers section of the society. Sir Frederic

Nicholson was deputed to European contries to study the working of co-

operative societies there and to suggest measures for introduction of co-

operative movement in India. On his recommendation in India by the

enactment of the co-operative societies Act of 1904 under this Act it was

possible to establish of credit co-operative societies. A large number of co-

operatve societies were set up in village under this Act. The co-operative

societies Act 1912 contributed to the establishment of state of co-operative

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bank central co-operative bank which provide refinance to primary credit

societies.

In India, more than 70 percent of people depend on agriculture for their

livelihood. A farmer cannot survive without external financial help in his

activities. An important source of rural credit in India was the money lenders.

Co-operative credit societies were started in India as a bulwark against the

money lenders, his trade and mal practice. He was exploiting the farmers by

charging high interest rate.

stand first in the field of deposits amoung the states. According to Co-

operative Societies Act of 1904, the membership of primary credit society was

restricted to persons of limited means. The members of the primary societies

are villagers. The primary credit societies at the village level are known as

Service Societies or Service Co-operative Bank. These societies are

functioning under certain accepted principles regarding the rate of interest,

amount and duration of loans, etc...Service co-operative societies aim at

economic progress of its members.

The ultimate aim of cooperative societies is that the local capital

should become the principal source of fund to the society.

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Co-operative movement in Kerala is very strong and stable. It

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OBJECTIVES OF SERVICE CO.OPERATIVE BANK

The main objectives of service co operative bank are;

1. To attract deposit from members and non-members.

2. To provide loans to members.

3. To provide gold loan to members.

4. To arrange for the safe custody of valuable documents of members.

5. To collect and markets the agricultural products of the members. A

member is open to all persons living within the area of operation of the

bank.

6. To provide agricultural loan to the members.

FUNCTIONS OF SERVICE CO.OPERATIVE BANK

Deposit mobilization and providing loans are the main functions of service co.

operative banks. Other main functions of service co. operative banks are;

To supply of credit both short term and medium term

To supply production requirements such as seeds, fertilizers, insecticide, etc

Marketing the agricultural produce.

Help to formulate and implement a plan of agricultural production for

the village.

Undertaking such educative advisory.

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PROFILE OF PORUR SERVICE CO-OPERATIVE BANK

Name : Porur Service Co-operative Bank Ltd. No. M.357

Address : Porur Service Co-operative Bank

Cherukode, Chathangottupuram

(PO), Malappuram Dist.,Kerala

Area of operation : Porur Grama Panchayath

Registration : 4/01/1986

Commencement : 28/02/1986

Branches : 5 Branches

1.Cherukode main branch

2.Cherukode evening branch

3.Thaliumkundu

4.Cheriprambu

5.Poothrakovu

Share Capital : 2, 30, 000, 00(Authorised

share4083457(Present subscribed capital)

Membership and paid-up share Capital

(as on 31/03/2014) 54938423.

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Employees : No.s 24

Borrowings : 65870

Investment : 78357532

The main function of the bank is to produce short term and medium

term credit, supply of agricultural and other requisites and marketing of

agricultural produce to the members.

The day to day management and supervision of the bank is vested

upon the board of directors elected according to section 28 rule 35 of the Co-

operative Societies Act. There are four types of members in this bank. These

are A class, B class, C class and D class members. The members of the

board of directors will be elected in the general body. The bank has its own

by-law and any change in the by-law will be effective only if has been

approved by the Registrar of the Co-operative Societies.

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BRIEF HISTORY OF PORUR SERVICE CO-OPERATIVE BANK

The porur service Co-operative Bank is a co-operative Bankltd

no:M357 It was registered co-op societies Act on 4/01/1986. In the

economical, social scenario of this village, Porur co operative Bank has tried

its level best to work among with the members knowing their needs and we

are glad forthat the bank is running in profit and classified as class first .The

main services could be summerised as follows

1) To provide longterm, shortterm &medium term loan

2) TO provide loan for construction&buying of house &other

properties.

3) It provide safe locker facility

4) Bank will act as an agent of the customers

5) It will provide LPG service to ctmr

Now the bank is propose to start a farmers service center for the

society with the assistance of govt of kerala . it is a social service model

focuses as farming as an enterprise on agriculture value chain and re

stratagising extension services through a demand lead agriculture based

mechanism

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CAPITAL STRUCTURE

The authorized capital of the bank for the present shall be Rs.15000000

made up of the following shares;

A class share holders- 1000000

B class share holders- 250000

B class share holders are state government, central or any other approved

body of government

Cclass share holders- 500000

D class share holders- 200000

SOURCE OF FUND

The following are the different source which provide the required fixed

and working capital and share capital. Deposit from members and non

members, loans and advances from central co-operative bank, govt and other

agencies. Following are the main type of deposits received by the bank from

their members. Term deposit, short term deposit, special fixed deposits agency

security deposits, daily deposits and staff security deposits. The bank has

borrowing from ICDP.

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MEMBERSHIP

Memberships of the bank open to all peoples good character who

resides within the area of operation of the bank. No consideration is given to

caste or of financial status of the person applied.

An individual who become the member of the bank should take one

share. No person is allowed to purchase shares more than the limit fixed by the

Act and Rules. Members are classified in to four. That is A class members,

B class members.C members and D class members.

TABLE SHOWING MEMBERS IN THE BANK

Sl. No Year Members Increase

1. 2006-07 8,974 832

2. 2007-08 9,879 905

3. 2008-09 10,907 1028

4. 2009-10 11,717 810

5. 2010-11 12,527 810

6. 2011-12 12,978 451

7. 2012-13 13,546 573

8. 2013-14 14,164 618

9. 2014-15 14,859 695

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10. 2015-16 15,499 640
BANK OF INDIA.

1. CASH BOOK

In this daily cash receipt and payment of cash transaction are recorded.

2. SB LEDGER

This book contains book account of individual account holders with

detailed address of account holders and balance of accounts.

3. SAVING BANK SUBSIDIARY DAY BOOK

Daily balance of individual receipt and payment of saving bank account is

showing this registrar.

4. LOAN REGISTERS AND GOLD LOAN LEDGER

Details of loans issued to member and non-members such as the amount

issued date of issue and the address of that person are marked in this

ledger.

5. LOAN SUBSIDIARY LEDGER

The total receipt and payment towards loan account like secured an

unsecured are recorded in the ledger on a daily basis.

6. MAIN DAY BOOK

The total receipt and payment in all types of account like deposit, loans

and other contingent heads are recorded in this ledger.

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7. DAY BOOK

It shows the actual cash transactions. It contains the day to day receipt

payment and balance of cash.

8. ATTENDANCE REGISTER

It is issued to make the attendance of the whole staff of the bank.

Co-operative Bank

The bank has no right to keep more liquid each in its cash in its

custody. The bank cannot lend loans from its owned fund to all loanees. So the

District Co-operative Bank allows loans to the bank on reimbursement basis.

It means that the after allowing loans to loanee the bank can reimburse this

amount from District Co-operative Bank.

Procedure for Granting Loans

The member who wishes to get loans from the bank should apply for

the loan in the prescribed from, the following is the procedure.

1. Receiving Application

2. Submitting Application

3. Loan Sanction

1. Receiving Application

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The first step for the granting loan is receiving application.

Application for the loan should be submitted to the secretary in the proper

form along with the documents.

2. Submitting Application to the District Bank

District Bank is authority to sanction the loan. After receiving the

application it is verified first and should be submitted to the district bank for

approval. If it is admissible, the Director will prepare a statement called

Director Report signed by the concerned Director.

3. Sanctioning the Loan

Final step is sanctioning the loan, after the receipt of Director Report

the secretary will sanction the loan. After giving the loan amount of the loan

granted will be reimbursed from the District Co-operative Bank.

Due to insufficient number of staff and inadequate financial assistance

from the District Co-operative Bank, is unable to sanction the loan in time.

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ANALYSIS AND INTERPRETATION

Financial analysis is the process of identifying the strength and weakness

of the firm with the help of accounting information provided by the profit and

loss account and balance sheet. It is the process of evaluation of relationship

between components part of financial statements to obtain a better outstanding

of the firms position and performance. It is a technique of x-raying the financial

positions as well as progress of the firm. Financial analysis wills the

management considerable insight in to the level and areas of the strength and

weakness.

Interpretation means explaining the meaning and significance of the data

so arranged. It is the study of relationship between various components of the

financial statements. The relation between current assets and current liabilities,

gross profit and sales, profit and capitals employed etc have to be explained

OBJECTIVE OF FINANCIAL ANALYSIS

1. To judge the financial position (both liquidity and solvency) of the enterprise.

2. To estimate the earning capacity of the enterprise.

3. To determine the debit capacity of the concern.

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TOOLS OF FINANCIAL ANALYSIS

A number of techniques or devices are used to undertake financial

analysis. The fundamental objectives of any analytical method are to simplify

the data to more understandable terms. The following are the important tools

used to financial analysis are comparative financial statements, trend analysis,

ratio analysis etc...

1. Comparative Financial Statement

The charges in the financial data over a period can be best

understood if the statements of two or more years are placed side by side to

facilitate comparison. Such statements are called comparative financial

statements. Comparative financial statements are two types; they are

comparative balance sheet and comparative profit and loss account.

Comparative a balance sheet indicate whether the business is moving in the

favorable or unfavorable direction. Comparative statements become difficult

to study the trend with more two period data. In such case trend percentages

are more useful.

2. Trend Analysis

Comparing the past data over a period of time with a base year is

called trend analysis. Under this technique, information for a number of years

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is taken and one year (usually the first year) is taken us the base year. Each

term of the base year is taken as 100 and on that basis the percentages for

other years are calculated. The object of the calculating the trend percentage is

two shows the direction of the change upward or downward. The trend

percentages are generally computed for major items in the statement.

3. Ratio Analysis

Ratio analysis is once of the most suitable tool for analysing and

interpretation of financial statements. According to ratios are relationships

expressed in the mathematical terms between two related figures in the

financial statements. As its nature ratios can be expressed in terms of time of

time, percentage or proportion.

Ratios are helpful in judging financial performance of an enterprise

over a period of time. The technique of ratio analysis is possible to test the

liquidity, solvency and profitability of the enterprises. Thus, ratio analysis

gives valuable information not only the managements but also creditors,

investors and share holders.

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CALCULATION OF VARIOUS RATIOS

1. Credit deposit ratio:-

Credit deposit ratio relates all recorded deposits to advances made

by the bank. This ratio is to measure the banks lending operations for which

have been established. A high ratio is preferable indicating that more credit

lending is possible for the bank. When the ratio is more than 100% it shows a

bad picture.

NON AGRICULTURAL LOANS

The word loan means lending anything for interest providing loans to

the needy customers is important task of every bank. The EESCB provides these

facilities to the needy people. Providing loans to the people is very important

otherwise the amount deposited by the costumer will be idle. The bank usually

grants three types of loans, they are;

1. Short Term Loans

2. Medium term loans
3. Long term loans

Loans Provided to all Members

1. Loans against security of gold jewels
2. Loans against approved securities. LIC policies
3. Discounting bill
4. Loans against the deposits held by with the bank loans expecting those

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Mentioned above shall be given to A class members only and the disposed

of by the board directors.

Maximum Limit of Medium and Long Term Loans

Two A class members surety 10000

Self employment loans Rs 500000
Vehicle loans 500000
Industrial loans 50000
Business loans 500000
Land loans 500000
Kudumbasree loans 300000
Maintenance loan 300000
Marriage loan 300000
NRI loan 500000

Documents to be submitted for Loans

1. For getting loan from the EESCB an application must be prepare in the

prescribed manner.
2. The document submitted for getting a loan is based on the type of the loans
3. The borrower should submit tax remittance certificate to the bank for

obtaining loan.
4. The borrower should submit person certificate to the bank
5. A document if 14 years non embrace certificate must be provided to the

bank.
6. State survey plan is another document to be submitted for loans
7. Another documents should be submitted for obtaining loan is building tax

remittance certificate.

Ways of Requirements of Loans

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The bank follows some type of ways of requirements of loans. Every loans

that the bank provided have a maximum period of repayment. After the period

of repayment some loans are pending in repayment. In case of their loans the

bank sends a demand notice that contains the matter of repayment of loan. In

case some loan could not repaid offers ending demand notice, then the Bank

send a register notice, when it cant get any response and the bank file a case in

ARC after these step the bank step in to japti and finally the bank file a civil

petition against the party.

Non Agricultural loans

Non agricultural loans are issued other than for agricultural purpose includes

business loans, consumption loans, self employment loans, housing loans,

industrial loans and educational loans etc. Non agricultural loans are mainly in

form of short term and medium term loans.

Types of Non Agricultural Loans

Business loans
Housing loans
Vehicle loans
Trade loans
Educational loans
Consumption loans
Gold loans

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Business Loans

Business loans will be sanctioned to business mans or small scale retail

traders or small business enterprises etc.. the maximum limit that can be

advanced under the scheme will be limited as per the laws. This type of loans

shall be advanced on crash credit or having a maximum period of 35 months.

The loan is payable on monthly or quarterly installments considering the type of

businessman. Interest for cash credit loans must be remitted quarterly under

loans must be recovered, every calendar year. For taking this loans some

essential record are submitted.

Trade Loan

This loans are sanctioned to business man or trader having shop or rented

shop in his possession. Under this scheme the maximum limit can be

advanced will be Rs.25000. Loan is paid for a maximum period of 35

months. The amount may be disbursed on the security of other businessman.

Housing Loans

This loan shall be sanctioned for construction of housing plots owned by

the applicant. The plot shall be in the operation of the bank loan sanctioned

to the individual shall be limited to Rs 500000 for construction and Rs 50000

for repair work, as per the directions of RBI. Maximum period for this loan

shall be 15 years or generally installments. A repayment holiday of 06

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months may be allowed for principles amount and interest must be remitted

monthly during the time construction of building. A copy of plan and

estimate signed by a competent authority and NOC (Non Objection

Certificate) from local body along with application. The interest rates for this

is 9.5% East Ernad Service Co-operative Bank provide housing loans only to

those staffs. The duration of the loans is 15 years. This loans provided only

on security basis. Interest rates of housing loans existing in East Ernad

Service Co-Operative Bank (EESCB) on 12th July 2011 is as follows.

Consumption Loan

This loan is granted for purchase of consumer durable goods or for other

consumption purpose, general clearing prior debts and for medical purpose

etc..

Maximum limit payable in monthly under the category of loan is Rs.50000

for a maximum period of 60 months payable in monthly or quarterly

installments.

Cash Credit (Gold Loan)

This loan shall be sanctioned to both A class and nominal members

against security of gold. Period of advance shall be 12 months (one year)

with interest payable at every quarter. The maximum limit can be advanced

is Rs500000. Rate of advance shall not exceed 8% of the market value of the

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gold pledged. Applicants of loan amount above 50000 must A class

members. Interest rate of goad loan changed by the East Ernad Service Co-

operative Bank is 13% R

Table3.1
Comparison between housing loan and gold loan
Amount of
Amount of total
Year housing loan Percentage
loan in (lakhs)
(lakhs)
2011-2012 431.87 760.48 56.78
2012-2013 868.35 1361.19 63.78
2013-2014 145.63 1965.1 7.41
2014-2015 216.36 2767.64 7.81
2015-2016 188.40 2471.44 7.62

Figure 3.1
Comparison between housong loan and gold loan
70

60

50

40

30

20

10

0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

The above shown table and graph represents the comparison between

gold loan and housing loan provided by the bank of the recent five years. Here

we can see that in 2011-2012 the comparative percentage is 56.78and it

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increased to 63.78 in the year 2012-2013, it is decreased to 7.41 in 2013-2014

then it is 7.81 in 2014-2015, and in 2015-2016 it is 7.62.

Table 3.2

Amount in gold Amount of housing

Year Percentage
loan in lakhs loan in lakhs
2011-2012 172.85 431.187 40.02

2012-2013 285.91 868.35 32.92

2013-2014 313.74 145.63 215.43

2014-2015 378.99 216.36 175.16

2015-2016 440.11 188.40 233.60

Figure 3.2
Comparison between gold loan and housing loan
250

200

150

100

50

0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

INTERPRETATION

The above shown table and graph showing the comparison between gold

and total loans provided by the bank of the recent five years. Here we can see

that in 2011-2012 the percentage of gold loan is 22.72% , it was 21% in 2012-

2013 it was 15.96 in 2013-2014, the gold loan was 13.69% and in 20092010 it

was 17.80 on the total loans provided by the bank.

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FINDINGS

From this project it is found that the overall performance of the bank is

satisfactory. Following are the finding of the study

Gold loan is the major item of loans given by the bank.

The Housing loan given by the bank was decreasing over the period of

study.
The consumption loan given by the bank is more or less stable
Gold loan in relation to total loans was decreasing
Profitability of the bank found satisfactory
The overall performance of the bank was satisfactory

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SUGGESTIONS

From this project it is found that the overall performance of the bank is

satisfactory. Following are the findings of the study

The bank maintain better customer relation by reducing formalities

connected with loans

The bank should increase the maximum limit of loan
The bank should provide different type of non Agricultural loans.
The bank should provide new facilities like ATM, net banking credit card

facilities.

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CONCLUSION

The East Ernad Service Co-operative Bank Ltd is registered on

18/11/1965. The EESC bank accepts deposit from the public and gave loans to

public on personal security and the security of movable and immovable

property. The areas of operation is according to the by laws of the bank. The

EESCB helps a lot in the development of the members of the bank as well as the

development of the Edakkara and Uppada area. The EESCB proposed to start a

new branch at palemad and they decided to apply new technologies in the

operation of the bank. The bank provide low interest rate for loans specially

non-agricultural loans. So the bank attracts the people. The EESCB plays an

important role in the development of Edakkara area.

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