INTRODUCTION

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INTRODUCTION

Indian Banking Sector

Banking in India has its origin as early as the Vedic period. It is believed that the
transaction from money lending to money banking must have occurred even before
Manu, the great Hindu Jurist, who has devoted a section of his work to deposits and
advances and laid down the rules relating to rate of interest. During Mogul Period, the
indigenous bankers played a very important role in lending money and finance foreign
trade and commerce. During the days of the east- India Company, it was the turn of the
agency house to carry on the banking business the general bank of India was the first
joint stock bank to be established in the year 1786. The others that followed were the
Bank of Hindustan and the Bengal Bank. The Bank of Hindustan is reported to have
continued till 1906 while the other two failed in the meantime. In the first half of the 19th
century the east-India company established three banks, the Bank of Bengal in 1809, the
Bank of Bombay in 1840 and the banks of Madras in 1843. These three banks are also
known as the presidency banks were amalgamated in 1920 and a new Bank – the imperial
bank of India established ion 27th January 1921. With the passing of the state bank act
1955 the under taking of the imperial Bank of India is taken over by the newly
constituted the state bank of India

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What is banking:-

The term bank derived from that Italian word “Banka” and the banking refers to the
companies that provides banking products and services such as checking and saving,
deposits , Loans, leases, Mortgages credit cards ATM network , securities brokerage
investment banking, insurance , mutual funds and pensions( Kamath, 2005).Banking
means accepting for the purpose of landing or investment of deposits of money from the
public repayable on demand or otherwise one withdraw able by cheque, draft or
otherwise Banks in India were started on the British Pattern in the beginning of the 19th
century. in those days, all the. At the time of Second World War about 1500 joint stock
banks were operating in undivided India, out of which over 1400 were non- scheduled
banks. These banks were managed by bad and dishonest management and naturally there
were number of bank failures. Hence the government has to step in and the banking
companies act 1949 was enacted which led to gradual elimination of weak banks who
were not in position of fulfill the various requirements of the Act. In order to strengthen
the weak banks and receive public confidence in banking system , a new section 45 was
inserted in the Banking Regulation Act in September 1960, Empowering the Government
of India to compulsory amalgamate weak unit with stronger ones on the
recommendations of RBI.

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INDUSTRY PROFILE

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INDUSTRY PROFILE

Co-operative banks

The word cooperative stands for willing to work together in the production and marketing
of goods, it is profitable to both producer and consumer to avoid middlemen. If, for
instance, farmers can set up their own markets instead of sending their produce to a
wholesaler, they can sell at a price that includes only their costs and a fair profit: Additional
wholesale and retail costs are avoided, and prices to the consumer are kept relatively low. In
order to take part in this kind of direct production–marketing enterprise, people have
formed cooperatives these are voluntary associations of either producers or consumers who
band together for the group members' benefits. Cooperative organizations formed for
financial benefits exist in most countries of the world. The cooperative way of doing
business takes many forms, ranging from local to regional and federated organizations and
from highly specialized to multipurpose societies. The cooperative banks have a three
tier structure. At the top level there are state cooperative banks, At the district level there
are central cooperative bank, At local level there are Rural primary cooperative banks and
Urban primary cooperative banks Cooperative banking structure has unique position in the
rural credit delivery system of India. The cooperative banking sector which is now a
century old has a significant role in the field of credit to the rural through the short term and
long term structure from many years the cooperative banks are the prime institutional
agencies with a vast network, wide coverage and reach up to the remote areas. Co-operative
banks in this country are a part of vast and powerful structure of co- operative institutions
which are engaged in tasks of production, processing, marketing, distribution, servicing and
banking in India. The beginning co-operative banking in this country dates back to about
1904, when official efforts were made to create a new type of institution based on principles
of co-operative organization & management, which were considered to be suitable for
solving the problems peculiar to Indian conditions

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In rural areas, as far as the agricultural and related activities are concerned, the supply of
credit was inadequate, and money lenders would exploit the poor people in rural areas
providing them loans at higher rates.

Co operative Banks in India are registered under the Co-operative Societies Act. The
cooperative bank is also regulated by the RBI. They are governed by the Banking
Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.

Definition:

A co-operative bank is a financial entity which belongs to its members, who are at the
same time the owners and the customers of their bank. Co-operative banks are often
created by persons belonging to the same local or professional community or sharing a
common interest. Co-operative banks generally provide their members with a wide range
of banking and financial services.

Initiatives towards development of co-operative banks:

1. Reorganisation of PACS’s (a scheme by NABARD).

Licensing of new USB’s liberalized National Co-operative Bank of India (NCBI) was
registered in 1993.(Multi-state co-operative society)-it has no regulatory functions.

2. Co-operative development bank (set up by NABARD).

3. Lending and borrowing rates of all co-operative have been more or less
completely freed or deregulated.

Allowing all PCB’s to undertake equipment leasing and hire-purchase financing National
Co-operative Bank of India (NCBI) was registered in 1993.(Multi-state co-operative
society)-it has no regulatory functions.

4. Co-operative development bank (set up by NABARD).

5. Lending and borrowing rates of all co-operative have been more or less
completely freed or deregulated.

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6. Co-operative development bank (set up by NABARD).
7. Lending and borrowing rates of all co-operative have been more or less
completely freed or deregulated.
8. Allowing all PCB’s to undertake equipment leasing and hire-purchase financing.

Establishments:

 Co-operative bank performs all the main banking functions of deposit

mobilisation, supply of credit and provision of remittance facilities.
 Co-operative Banks belong to the money market as well as to the capital market.
 Co-operative Banks provide limited banking products and are functionally
specialists in agriculture related products. However, co-operative banks now
provide housing loans also.
 UCBs provide working capital loans and term loan as well.

Functions:

 Co-operative Banks are organised and managed on the principal of co-operation,

self-help, and mutual help. They work on the basis of “no profit no loss”. Profit
maximization is not their goal.
 Co-operative banks do banking business mainly in the agriculture and rural sector.
However, UCBs, SCBs, and CCBs operate in semi-urban, urban, and
metropolitan areas also.
 The State Co-operative Banks (SCBs), Central Cooperative Banks (CCBs) and
Urban Co-operative Banks (UCBs) can normally extend housing loans up to Rs 1
lakh to an individual. The scheduled UCBs, however, can lend up to Rs 3 lakh for
housing purposes. The UCBs can provide advances against shares and debentures
Cooperative
banks in India finance rural areas under:
 Farming

 Cattle
 Milk
 Hatchery
 Personal finance
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Cooperative banks in India finance urban areas under:

 Self-employment
 Small scale units
 Home finance
 Consumer finance
 Personal finance

Some facts about Cooperative banks in India

 Some cooperative banks in India are more forward than many of the state and
private sector banks.
 According to NAFCUB the total deposits & lending of Cooperative Banks in
India is much more than Old Private Sector Banks & also the New Private Sector
Banks.
 This exponential growth of Co operative Banks in India is attributed mainly to
their much better local reach, personal interaction with customers, and their
ability to catch the nerve of the local clientele.

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COMPANY PROFILE

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COMPANY PROFILE

The Cooperative Bank was established on 31st August, 1949 at Shimla vide
registration No. 720 has a principle financing institutionof the cooperative
movement in Punjab. In 1951 its Head Office was shifted to Jalandhar from
where it moved in 1963 to its present building at Chandigarh. In the cooperative

Banking structure, the position of the Punjab State Cooperative Bank is

extremely important as the whole credit system revolves around it. It has 18
branches and 3 extension counter in Chandigarh. There are 19 District
Central Cooperative Banks having 813 branches all over Punjab, mostly in
rural areas of the State. One new Central Cooperative Bank and 110 new bank
branches have been opened during the four years, 1997-2001.

Mission

Promotion and sustainance of economic interest & providing easy finance, cost
effective and quality banking services ot customer & PACs.

Awards

 The deposits of Central Cooperative Banks have touched Rs.2759.80 crore as on

31.12.2000, showing an increase of Rs.326.26 crore over the last year upto this
date. The deposits of the State Coop. Bank have increased from Rs.810.00 crore
as on 31.3.2000 to Rs.844.18 crore upto 31.12.2000, showing a net increase of
Rs.34.18 crore.
 The Punjab State Cooperative Bank has been awarded First Prize for its excellent
performance for the year 1997-98 by NABARD, in All India ranking under the
best performance awards scheme.
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 The Fazilka Central Cooperative Bank and the Nawanshahr Central Cooperative
Bank have also been adjudged as the best central cooperative banks in India for
the years 1997-98 and 1998-99 respectively.

The Punjab State Cooperative Bank has already been awarded“BEST

PERFORMANCE AWARD” from NABARD and NAFSCOB. For the year 2003-04,Punjab
Cooperative Bank has been selected for NABARD “Best Performance Award " which is based on
performance of all the SCBs in the country. Similarly our Jalandhar DCCB has also been selected
for NABARD’s “Best Performance Award” out of all the DCCBs in the country for the year 2003-
04.

ACHIEVEMENTS

1. S.T. AGRI. LOAN

The Cooperative Banks in the State have advanced Rs.5894.28 Crores as ST Agri. Loan
during the year 2010-11 as compared to Rs.5828.28 crore during 2008-09. Similarly
during 2009-10, Rs 7538.33 crores stand disbursed against the target of Rs.6800.00
Crores. The home plans to disbursed Rs. 8300.00 crore during 2011-12.

2. R.C.C. LIMIT
During 2010-11 the Central Coop. Banks in Punjab have sanctioned R.C.C limits worth
Rs.2091.75 crores as compared to Rs.1919.55 crore of 2008-09. During the year 2011-12
the bank has sanctioned RCC limits worth Rs.2296.62 crore against the target of
Rs.2300.00 crores during 2011-12.

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3. TWO WHEELER LOANS TO AGRICULTURISTS
Under Two Wheeler Loan Scheme the farmers can take loan up to 75% of two-wheeler’s
cost or Rs.50,000/- whichever is lower from the Central Cooperative Banks. During the
year 2010-11, the Bank has advanced a sum of Rs.34.42 crore. Similarly, during 2011-12,
Rs..30.90 crore has been advanced against the target of Rs.40.00 crore during 2011-12.

4. HOUSING LOANS
During the year 2009-10 Central Cooperative Banks in the State have advanced
Rs.101.38 Crores against the target of Rs.80.00 crores.
During 2010-11, Rs.88.32 crores has been disbursed against the target of Rs.100.00 crore.
During 2011-12 Rs..86.97 crore has been disbursed during 2011-12.

5. NON FARM SECTOR LOANS

During 2009-10 Rs 49.50 crores were advanced under the scheme by DCCBs in the State
of Punjab. During the year 2010-11, Rs.42.32 crores has been advanced.
Similarly during 2011-12, Rs.39.42 crore has been advanced against the target of
Rs.50.00 crore during 2010-11.

6. LOAN FOR CONSUMER DURABLES

Under Consumer Durables Loan Scheme, Rs.68.58 crores has been advanced during
2010-11 against the target of Rs.72.00 crore. Similarly, during 2010-11, Rs.71.46 crore
has been advanced during 2010-11.

7. PERSONAL LOAN SCHEME

Under Personal Loan Scheme, the Bank has advanced Rs.133.89 crore during the year
2010-11 against the target of Rs.120.00 crore. During 2011-12, Rs.133.02 crore have
been disbursed during 2011-12 against the target of Rs.125.00 crore.

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8. DEPOSIT MOBILIZATION
The deposit of Punjab State Coop. Bank and Central Cooperative Banks were Rs.7343.49
crores during the year 2009-10 whereas during 2010-11, the deposits were Rs. 8668.59
crores. During the year 2011-12 the deposits are Rs.8864.21 crore.During the year 2011-
2012 the deposit of PSCB+CCBS are Rs 9672.50 crore

9. PROFITS
In 2011-12, there was a profit Rs.44.42 crore whereas 1 DCCB, namely; Amritsar was in
loss. During 2011-12 the profit of PSCB DCCB\'s is Rs. 49.20Crore

10. REDUCTION IN THE RATE OF INTEREST

Rate of Interest on Crop Loan has been reduced to 7.00% w.e.f. 01-04-2008.

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ORGANIZATION STURCTURE

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SCHEMES

Special Settlement Scheme-2000

Objectives

 Opportunity to borrower defaulters for more than five years to clear

 Opportunity to clear Non Performing Assets (NPA).

 Reduction in cost and time for recovery.

 To encourage and assist genuine defaulters.

 To facilitate mutually accepted reconciliation and settlement of dormant loan

accounts.

 To provide Buy Back facility for decreed property.

 Defaulters for short, medium and long term loans for more than five years.

 Defaulters for medium term loans for purchase of assets for more than five years.

 Defaulters for consumption loan to weaker section for more than five years.

 Members/Ex-employees involved in embezzlements.

 Members whose land has been purchased.

 Short term loans converted into medium term loan due to natural calamities

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Duration & Eligibility

Duration: The special settlement scheme is valid from 1st February to June 2001.

Eligibility: All overdue cases for more than five years in case of CCBS/PACS and
six years in case of PADBS as on 31.01.2000 even if arbitration, awards have been
obtained and execution of proceedings have been initiated.

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Operational Guidelines

Preparation and submission of list of eligible borrowers to block and Distrct

Level Review Comities.

 Eligible borrowers or legal heirs (in case of death) can apply on prescribed form
for the scheme.

 After review block level, Default Review Comities (BLRC) recommends to

district Level Default Review Committee (DLRC)

 After hearing the applicant DLRC recommends the case.

 DLRC recommends to Provisional Authority (RA) and copy to applicant.

 BLRC would meet on every 1st and 3rd Tuesday whereas DLRC would meet on
2nd and 4th Monday.

 RA after considering the recommendations of DLRC and facts, pass specific order
of settlement amount and amount to be written off.

 RA should seek a priif of payment of settlement amount before passing final

order.

 CCB/PSCB would debit the difference amount as per RA's order without further
sanctions from RCS and also liquidate outstanding amount from records.

 The above procedure shall be followed for buy back facility of land purchased by
the PACS/CCBS/PADBS, no relief of interest to the farmers under buy back
facility.

 The above procedure shall be followed for embezzlement cases even after taking
legal measures for cases older than six years

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Relief

DLRC, on merits, decide about the charging of simple interest from date of
account turned bad, provided that:

 Amount reclaimed shall not be less than the principal amount plus 100% there of.
 Amount received is principal amount plus 50% where the borrower has no asset
or source of income.

 In case of buy back facility, the original owner shall pay the total outstanding
amount.

 Any other action initiated earlier under IPC shall continue unabated, also the
proceedings under the scheme shall not be prejudiced to on longing legal
proceedings.

 The amount of net loss to PACs/CCBs/PADBs shall be charged to reserve for Bad
Doubtful Debts available with CCBs PADBs. There are no such reserves with
PACs.

Revolving Cash Credit

In 1998, the cooperative banks launched a new scheme of revolving cash credit
for the farmers. The scheme envisages to provide Cash credit limit to the
farmers against the mortgage of their land for all credit requirements of the
farmers. It aims at freeing them from the clutches of traditional money lenders.
A cash credit limit of Rs.1,50,000/- is sanctioned to farmers having 5 acres of
land and Rs.3 lacs for those having 10 acres of land. So far Rs.655.00 crores
have been sanctioned under the scheme. The scheme has been evaluated by
experts from the department of economics and sociology, PAU, Ludhiana.

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Key Observations made by the Experts

 The Revolving cash credit scheme has proved beneficial to the farmers its
contribution has been multi directional. It has helps the farmers in the purchase of
production inputs, farm investments, consumptions and social requirements and
reduced their dependence on high interest loans.

 The recovery under the scheme has been execellent and more than 70% of the
credit availed under the scheme has been spent for productive purposes, whereas
remaining was provided for consumption and other purposes.

 Nabard should has no hesitation in providing refinance facility for the scheme.

 The scheme has so far covered medium and large farmers and it should be
extended to cover small and marginal farmers as well.

 The rate of interest on credit facility under the scheme should be reduced.

 Revolving cash credit has supplemented inadequate availability of production

credits besides creating provisions for consumption credit. Therefore, its role is
complementary to the institutions credit available to farmers from different
sources. Revolving cash credit scheme should be strengthen and expanded.

Sehkari Bima Yojna

The Cooperative Banks in Punjab are pioneers of starting the Sehkari bima Yojna
w.e.f. 01.06.1999 in the country. Under this scheme, every depositor who opens
a Saving Bank Account with Rs.1100/- or more is provided Personal Accidental
Insurance cover for Rs. 1 lakh, during the period he keep s the account with the
bank, at a very nominal premium. The scheme has benefited the
undreprivlelaged. rural masseds, particularly those who have no access to the
insurance companies. More than 12,05,000 depositors have been covered under
the scheme.

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Kisan Credit Card Scheme

A new scheme namely ‘Kisan Credit Card Scheme’ has been implemented by
the bank for the benefit of farmers. The Scheme improves upon existing scheme
of Crop Loans by allowing the farmers flexibility and freedom of choice to avail
and repay loans as per their requirements. Under the scheme, 1,87,000 cards
have been issued to the farmers upto 31.3.2001. Maximum Credit Limit of the
farmers has been raised from Rs. 70,000 per crop to Rs. 85,000 per crop.

Jeevan Raksha Pension-cum-Gratuity Scheme

A new scheme namely, Jeevan Raksha Pension-cum-Gratuity Scheme has been

started by the bank particularly for the benefit of rural old farmers who can
enjoy pension facility in their old age by depositing Rs. 500/- per month for 10
years and will get pension Rs. 650/- per month. If the depositor dies before 10
years, the nominee of the deceased is allowed to continue to deposit the money
in the scheme and for the pension after 10 years.

Advances

Agricultural advances

Short Term Agricultural advances

During the year 2000-2001, the Punjab State Cooperative Bank has advanced loans of
Rs.1950.49 crore upto 31.12..2000 against the target of Rs.1550.00 crore for financing
agro-inputs for crop production.

Medium Term Agricultural advances

The Central Cooperative Banks have advanced Rs.6.80 crore as Medium-term

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Agricultural advances in the State upto 31.10.2000. This loan is given to farmers

for undertaking activities allied to agriculture Revolving Cash Credit Under the
scheme, the Central Cooperative Banks have sanctioned credit limits of
Rs.655.55 crore to 69620 farmers upto 31 January 2001. The rate of interest is
15 – 15.5%. The Bank proposes to reduce the rate of interest to 14.5% w.e.f.
01.4.2001.

Non-Farm Sector loans The most important feature of the cooperative banks in the State
is that they started advances of Non-Farm Sector during the year 1993. The
Central Cooperative Banks have advanced Rs.31.53 crore from 1.4.2000 to
January, 2001 to 6180 beneficiaries. These loans are mainly given to rural youth
for self-employment. The rate of interest is 15% and is proposed to be reduced
to 14% w.e.f. 01.4.2001.The Punjab State Cooperative Bank is providing non-
agricultural loans to Sugar Mills, Spinning Mills, HOUSEFED, MARKFED,
MILKFED and Central Cooperative Banks. Rs.321.65 crore have been
sanctioned to these institutions.

Loans for consumer durables to salary earners With a view to provide credit facilities
to their customers, the Cooperative Banks introduced a scheme of loans for
purchase of consumer durables. Under the scheme, every Government/semi-
Government employee is provided loan upto Rs.50000/- repayable in 3-5 years
in easy monthly installments. The loan can be utilized for purchase of TV,
Refrigerator, Scooter, Furniture etc. A significant section of the salaried class
has benefited from the scheme. More than Rs.121 crore have been advanced
under the scheme upto 28-2-2001.
Cash Credit to Businessmen and traders With a view to diversify and benefit the small
retail traders/ businessmen, the Cooperative Banks started a cash credit scheme
in the year 1997. Under this scheme, a Cash Credit Limit is sanctioned upto
Rs.10.00 lakh to small businessmen and traders, depending upon their business
turnover on easy terms at a normal rate of interest. Small shopkeepers and petty
traders who were earlier deprived of institutional finance, are covered under the
scheme, particularly, in rural and semi-urban areas where other banks are not
advancing such type of loans

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During the current year, more than Rs.50.00 crore have been advanced under the
scheme.Collection of Electricity Bills Keeping in view the difficulty faced by
rural people in paying of electricity bills at far off places and Cities, it has been
decided that from 1 February 2001, all branches of CCBs in the State will accept
payment of Electricity Bills on behalf of Punjab State Electricity Board.

Deposits and loans

DIFFERENT TYPES OF DEPOSIT ACCOUNTS

A Saving Bank A/c

A Saving Bank A/c can be opened with an initial deposit of Rs.1500/- without Cheque
Book facility and Rs.2500/-with Cheque Book facility.

Eligible categories to open SB A/c

1. Any individuals
2. Joint A/c with others in the form of 'either or Survivor', 'Former or Survivor', and
'joint' etc.
3. Minors
4. Illiterate persons.
5. Blind Persons.
6. Joint Hindu family(HUF)
7. Coop Societies, Clubs, Societies, Associations etc.

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The intending customer should visit the bank to fill in A/c opening forms with complete
particulars such as parentage, occupation, address, latest two passport size photographs,
residence such as copies of Voter card, Passport, Telephone/Electricity bill etc. and PAN
or form No.60. The accounts are required to be introduced properly by the existing
account holder of the bank or any person known to the bank.

Only 30 withdrawals are allowed per half year for a saving Bank A/c exceeding which
service charges are levied by the bank.

A minimum balance of Rs.1500/- (without Cheque Book) and Rs.2500/- (with Cheque
Book) has to be maintained in the account, otherwise services charges are levied on
monthly Basis.
At the time of opening the account, pass book is issued to the customer, which needs
to be accompanied every time when payment is drawn through a withdrawals form.
Maximum limit of withdrawl form is Rs. 40000/- with passbook. Nomination facility
is also in these accounts. A depositor or depositors can nominate one Person only.

Current A/c
A Current A/c can be opened with the initial deposit of Rs.5100/-. It can be opened in the
name of individual, a Sole Proprietary Concern partnership firm, club, Religious
Institution, Association Govt/ Semi Govt. Deptt., Local Bodies. As usual, all prospective
applicants need to fill in the Account opening forms wherein following documents are
required to be attached

1. Sole Proprietary Concern - Declaration of Sole Proprietorship

2. Partnership firm - Partnership Deed duly attested
3. Clubs, Schools, Societies,
Association. 4.
1. Certificate of Registration
2. Copy of Bye Laws.
3. Memorandum of Association, if any.
4. Resolution of Board of Directors.

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5. Limited Companies, Pvt. Ltd. Companies

a. Certificate of incorporation
b. Certificate of commencement of business
c. Memorandum & article of Association
d. Resolution of board.
e. Latest Audited Balance Sheet & P&L Account

Instrument or Document of Trust Resolution Certification of registration.

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Introduction

All Current A/c need to be introduced properly from another current account A/c holder
only. Staff members are not allowed to introduce a Current A/c.

Minimum Balance

A minimum balance of Rs.5100/- has to be maintained.

Photographs: Recent Passport size photographs of the operator/s need to be affixed on

the AOF. All payment is made by Cheques only. There is no restriction on the number of
withdrawals unlike that in SB A/c Pass Book is issued at the time of opening of account.
Statement of account can also be got issued.

Recurring Deposit A/c

A Recurring Deposit A/c can be opened with a certain initial deposit wherein a Depositor
needs to deposit money by way of monthly installments over stipulated period. The
period may be 2, 24, 36, 48, 60 month etc. On the expiry of the period, the accumulated
amount along with interest is paid in lump sum. All individuals, jointly with others
minors, blind/illiterate person etc. can open the A/c. Rate of interest on Recurring
Deposits for various period will be the rate applicable on term deposit for that period

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Minimum monthly installment- Minimum monthly installment of the A/c is
Rs.100/-

Maximum period is 10 years.

The intending customer should fill in A/c opening form with complete particulars such as
parentage, occupation, address etc. Two passport size photographs are required to be
affixed along with furnishing of residence proof such as copies of ration card, Voter card,
Passport, Telephone/Electricity bill etc. and PAN or Form No.60. The account is required
to be introduce properly by the existing A/c holder of the bank of any person know to the
bank. On the expiry of the stipulated period, accumulated amount is paid to the customer.

Term Deposit A/c

Term Deposit is a deposit received by the bank for a specific fixed period which is
withdraw able after expiry of said period.

Eligible categories to open Term Deposit A/c

 Individual
 Joint A/c with other in the form of Either or Survivor , Former or Survivor, any
one or survivor jointly etc.
 Minors
 Illiterate persons
 Joint Hindu Family (HUF)
 Coop. Deptt, Clubs, Societies, Associations etc.

The intending customer should fill A/c opening form with complete particulars such as
parentage, occupation, address etc. Two passport size photographs are required to be
affixed along with furnishing of residence proof such as copies of Voter Card, Passport,
Telephone/ Electricity bill etc and PAN or Form No.60. The account is required to be
introduced properly by the existing A/c holder of the bank or any person known to the
bank.

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Minimum Amount – A minimum of Rs. 1000/- can be placed in a term deposit.

Period – Minimum & maximum period for which the amount is place in a term deposit
are fixed by the bank from time to time. In a fixed deposit A/c, it usually ranges from 7
days to 120 months whereas in Long Term Deposit,The minimum period is 12months.

 Rate of Interest – As fixed by the bank from time to time, keeping in view the
market trends.
 Mode of Payment of Interest – Interest on Fixed Deposit can be fixed quarterly,
half yearly or yearly etc. But in Long term deposit it is cumulative with quarterly
rests with the result that is paid only on maturity.After opening the account in
Computer, FDR is issued to the customer. A TDS is to be deducted at source as
per Income Tax Act; The mode of operation should be clearly mentioned while
opening the A/c. Term deposit A/c can also be opened with Cheques drawn on the
same branch or other banks.
 Payments of FDR on due date – After getting proper discharge on the back side
of the FDR from the depositor payment can be made on due date.
 Payment before due date – For payment before due date, The FDR has to be
discharged on the backside by all the operators.
 Renewal of FDR – FDRs can be got renewed on due date by mentioning the
period for which they are to be renewed on the back side.

TDS is deducted if interest is Rs.10000/- and more in a financial year prohibition

for payment in cash – The payment of FDR is prohibited to be made in each if the
amount of the FDR along with interest exceeds Rs.20,000/- . So usually
thepayment of FDR should be made either by way of Bank Draft/ Pay order or
through an a/c.

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Saving Bank-No frill A/c

The No Frill A/c can be opened by any person without furnishing any resident proof or
any proper introduction. The A/c Can be opened with a minimum amount of Rs.10 /-
only. In such accounts, the Balance should not exceed Rs. 50000/- otherwise, it will
become an ordinary SB A/c. No cheque book is allowed to be issued to the customer. The
condition of maintaining any minimum balance in this A/c is waived off.

DIFFERENT LOANS SCHEMS OF COOPERATIVE BANK FOR

PUNJAB

Revolving Cash Credit to Farmers (RCC)

Beneficiary : Any individual farmer holding the agricultural land.

Purpose : Credit facility for meeting out socio-economic needs.
Loan Limit : Maximum amount Rs.6.00 Lac. Subject to Rs.1.00 Lac per acre
Margin : No margin money required
Rate of Intt : 11%
Repayment Period : Renewable on annual basis
Collateral Security : Agriculture Land valuing at 150% of the loan amount.

Non Farm Sector Loan Scheme (NFS)

Beneficiary : Individual, Sole Prop., Firm, Coop. Societies or a

Company. Purpose : For the establishment of cottage, tiny and SSI unit.
Loan Limit : Maximum amount up-to Rs. 25.00 Lac at CCB Level.
Up to Rs.0.50 Lac 11.50%
Rate of Intt : Above Rs.0.50 Lac 12.00%
Margin : Minimum 10%
Repayment Period : Maximum 5 to 7 Years.
Collateral Security : Immovable Properties for the value of 150% of the amount.
Installment : Rs. 2225.00 for 5 years.

Personal Loan Scheme

30
Beneficiary : Employees of Punjab Govt., PSU, Boards, Corporations etc.
Purpose : Credit Facility for meeting out socio-economic needs.
Loan Limit : 12 times of gross monthly salary or Rs. 2.00, whichever is less.
Rate of Intt : 13%
Margin : No Margin required.
Repayment Period : Maximum years.
Collateral Security : Two Good Sureties as per satisfaction of the bank.
Installment : Rs. 2276.00 for 5 years.

Consumer Durable Loan

Beneficiary : Individual salary earners and non salary earners.

Purpose : For the purchase of consumer durables.
Loan Limit : Maximum amount up-to Rs. 1.00 Lac.
Rate of Intt : 13%
Margin : 25%
Repayment Period : Maximum 5 years.
Collateral Security : Two Good Sureties as per satisfaction of the bank.
Installment : Rs. 2276.00 for 5 years.

Two Wheeler Loan to Farmers

An agriculturist having land in his own name or his family

Beneficiary : member.
Purpose : For the purchase of new two wheelers.
Loan Limit : Maximum amount up-to Rs. 0.50 Lac.
Rate of Intt : 11.00%
Margin : 15%
Repayment Period : Maximum 5 years.
Collateral Security : Two Good Sureties as per satisfaction of the bank.
Installment : Rs. 1087.00 for 5 years.

31
Cash Credit Facility to Traders

Beneficiary : Individual, Sole Prop., Firm, Coop. Societies or a

Company. Purpose : For meeting working capital requirement of business.
Loan Limit : Maximum amount up-to Rs. 25.00 Lac.
Rate of Intt : 13%
Margin : 25%
Repayment Period : Renewable on annual basis.
Collateral Security : Immovable Properties for the value of 150% of the amount.

Vehicle Loan Scheme

Beneficiary : Individual, Firm, HUF, Trust, Coop. Societies or a Company.

Purpose : For the purchase of new vehicle for business and personal use.
Loan Limit : Maximum amount up-to Rs. 10.00 Lac or 80% of cost of vehicle.
Rate of Intt : 11%
Margin : 20%
Repayment Period : Maximum 5 years.
Two Good Sureties as per satisfaction of the bank besides the
Collateral Security : hypothecation of the vehicle.
Installment : Rs. 2174.00 for 5 years

Second hand Vehicle Loan Scheme

Beneficiary : Individual, Sole Prop., Professionals and Partnership Firm.

For the purchase of second hand vehicle should be not more
Purpose : than 3 years.
Loan Limit : Maximum amount up-to Rs. 5.00 Lac or 75% of cost of vehicle.
Rate of Intt : 12%
Margin : 25%
Repayment Period : Maximum 5 years.
Two Good Sureties as per satisfaction of the bank besides the
Collateral Security : Hypothecation of the vehicle.
Installment : Rs.2225.00 for 5 years.

32
Rural Housing Scheme

Beneficiary : Individual and Members of Coop. Housing Societies.

Purchase of built up house, construction of new house, repairs /
Purpose : Renovation and addition of existing house in rural areas.
Loan Limit : Maximum amount up-to Rs. 15.00 Lac.
Rate of Intt : 10%
Margin : 15%
Repayment Period : Maximum 15 years.
Agricultural land for the value of 100% of the loan amount besides
Collateral Security : the Mort - gage of house to be financed by the bank.
Installment : Rs. 1074.00 for 15 years.

Urban Housing Scheme

Beneficiary : Individual and Members of Coop. Housing Societies.
Purchase of built up house or flat, construction of new house,
Purpoppoi :
repairs/Renovation and addition of existing house in urban areas.
Loan Limit : Maximum amount up-to Rs. 25.00 Lac.
Rate of Intt : 10%
Margin : 25%
Repayment Period : Maximum 15 years.
Collateral Security : First mortgage of House Property to be financed by the bank.
Installment : Rs. 1074.00 for 5 years

Mini Dairy Scheme

Beneficiary : Members of Coop. Milk Producers Society/ PACS.

Purpose : Purchase of up to 25 milch cattle.
Loan Limit : Maximum amount up-to Rs. 5.00 Lac.
Rate of Intt : 10.50%
Margin : 15%
Repayment Period : Maximum 5 years.
Mortgage of landed property value of 150% of the loan
Collateral Security : amount.
Installment : Rs. 2150.00 for 5 years.

33
Cooperative Education Loan Scheme children of poor farmers, Dalits, BC,

Beneficiary : Children of poor farmers, Dalits, BC, and other poor sections.
To provide financial assistance to deserving and meritorious
Purpose : students for Pursuing higher studies in India or abroad.
Loan Limit : Maximum amount up-to Rs. 10.00 Lac.
Rate of Intt : 7.25%
Margin : No Margin required.
The installment will start after completion of course. Maximum 5
Repayment Period : years.
Collateral Security : Mortgage of landed property value of 100% of the loan amount.
Installment : Rs. 1992.00 for 5 years.
.

Dairy Loan Scheme to purchase a Cow

Beneficiary : Members of Coop. Milk Producers Society.

Purpose : Purchase of a cow.
Loan Limit : Maximum amount up-to Rs. 0.50 Lac.
Rate of Intt : 10.5%
Margin : 10%
Repayment Period : Maximum 5 years.
Collateral Security : Two Good Sureties as per satisfaction of the bank.
Installment : Rs. 1075.00 for 5 years.

Loan against Property

Beneficiary : Any Individual.

To offer instant solutions relating to socio-economic needs and business
Purpose : Needs such as children’s higher education, Travel, daughter’s marriage
Medical emergencies etc.
Loan Limit : Maximum amount up-to Rs. 25.00 Lac.
Rate of Intt : 14%
Margin : No Margin required.

34
HIERARCHY OF THE COMPANY

35
HIERARCHY OF THE COMPANY.

The study needs to be conducted because in the recent years the performance of
cooperative banks has not been well. There is a need to check on the factors which
contributes to the performance of cooperative banks. Financial aspects need to be
reviewed to understand the role of cooperative banks. There is also a need to know the
problems faced by cooperative banks and solutions provided by Government. Studies
Relating to Mobilisation of Funds, Deployment of Funds, Cost of Banking, Recovery and
Overdues An early study in this area was made by the Study Team appointed by Reserve
bank of India (1972). They went into the problems of overdues of the co-operative credit
institutions in the country. The team found that the position of overdues in backward and
undeveloped districts were quite high. It was also reported that the members of the
managing committee of societies and the director of the central co- operative banks were
showing a general apathy in the matter of recovery of loans. John Winfred (1974), while
analysing overdues in co-operatives in India noted that for prompt recovery of loans, a
well co-ordinated and energetic drive for recoveries in each DCB around harvest time
with supervisory staff and non-official leadership should be mobilised. He also
recommended a member education programme to make them understand the implications
of prudent use of credit, a programme to generate additional income - through subsidiary
occupation to farmers and to organise marketing through marketing societies which can
recover the loans from sales proceeds. Subhash Chandra Sarkar (1974), examined the
overdues of co-operative banks in India and found that the heavy overdues at the level
of DCBs are said to impair their capacity to borrow from the higher financial
institutions. He was of the opinion that the reasons for the rise in the level of overdues
were the failure of the DBCs to recover their dues and not due to any inherent inability
of the borrowers to repay. The failure of the executives of the co-operative institutions
to adopt appropriate measures, political patronage to agricultural Credit Societies and
administrative weaknesses were the other reasons cited for higher overdues in co-
operative financial institutions.

36
Kanakasabhai (1976), made an attempt to study the credit planning and financial
management in co-operative banks and observed that the success of a co-operative
society will be judged from the way it deals with the management of funds, increases the
profitability and thereby improves the image of the institution.

Varkey (1976) found that the main problem faced by co-operative societies is in the
raising of resources. The ratio of deposits between commercial and co-operative banks
was 88.19: 11.81 in 1970-71 and the same has deteriorated to 89.05: 10.95 during 1973-
74. The author noted that the co-operatives have to concentrate more on the deposit
mobilisation aspect instead of depending on government contribution.

Pandey and Muralidharan (1977), observed that the size of loan and consumption
expenditures were the major factors influencing overdues in co-operative credit societies
at the farmers level irrespective of the categories. They reported that the loans issued
were without keeping the repayment capacity of the borrower in mind and were not
properly supervised resulting into diversion of loan either for consumption purposes or
for non-stated capital investments According to the Report prepared by the Co-operative
Training College, Trivandrum (1977), an all-out effort was made in 1976 by the Kerala
State Co-operative bank, DCBs, PACS and urban banks for mobilising deposits. It noted
that the results of the programme had surpassed even the best expectations of its sponsors
with an additional amount of 85 per cent of mobilisation and most of the districts
exceeding their targets.

Bhaskar Rao (1978), observed that the growth in investment is not adequately
supplemented by satisfactory recovery performance both in DCBs and Primary
agricultural Credit Societies.

37
Desai and Narayana Rao (1978), are of the view that the default rate in co-operative
credit is very high. It is relatively high for short term loan than for long term loans.
Excepting a few states like Tamil Nadu, Andhra Pradesh, Kerala, Punjab and Haryana all
the other states have more than 30 to 35 per cent default rate. The analysis revealed that
inappropriate loan terms and administration were the most important reasons. It also
revealed that these factors were interrelated. For solving these problems, the study
emphasised the need for reorientation of the credit projects with better economic analysis.

Pancras (1978),studied the funds management in co-operative banks and came to the
conclusion that the co-operative banks in the far flung areas are forced to keep more
cash/liquid assets due to their far away location from apex banks. He opined that
profitability in co-operative banks is a factor of efficient management of funds-
mobilisation and deployment of funds. Further, he stressed that it should be the objective
of a Punjab to increase profitability by efficient control of costs associated with funds
management.

A study on the performance of Trichur District Co-operative bank in deposit mobilisation

scheme by Jose, (1984), revealed that the total deposits of the Trichur DCB increased
from Rs.635.19 lakhs in 1976-77 to Rs.1763.63 lakhs in 1981-82, making an annual
average increase of 35.53 per cent. The share of fixed deposits was reported to show a
decline during the period 1976-77 to 1978-79, and to increase considerably during the
deposit mobilisation campaign in 1981-82.

Sharma (1985), conducted a case study of short term agricultural credit of Central Co-
operativebanks . The study brought out the case that, with regard to short term credit, the
central co-operative banks should re-orient their loan policies and procedures on the basis
of crop loan system. He suggested that loans should be given in instalments and there
should be a proper linkage between advancing and repayment of loans in the sowing and
harvesting seasons.

38
John Winfred (1986), made an attempt to discuss the funds management of Central Co-
operative Banks (CCBs) in India and found that mobilisation of resources is one of the
core functions of CCBs. He noted that they have to tap the rural resources not only to
keep the credit system in an efficient order but also to reduce their dependence on outside
borrowings. He opined that co-operative capital should be employed judiciously and in
the most economical and fruitful manner so as to derive maximum benefits with
minimum expenditure . Again, the efficient utilisation of resources calls for a
developmental approach in the diversified direction without sacrificing the main
principles of banking, namely liquidity, safety and profitability. Lastly, he reported that
better deployment of funds not only improves the image and income earning capacity of
the banks but also reduces regional and functional imbalances.

Naidu and Prasad (1987), analysed the utilisation pattern of cooperative short term
production credit with the help of cross tabular analysis and regression analysis. They
found that, the proportion of co-operative short term credit used for production purpose
was inversely related to farm size and the amount diverted was mostly used for
consumption purpose by marginal and small farmers while it was used for other non-
agricpurpose by medium and large farmers. They further opined that regular follow-up
visits are necessary to assure the use of loan amount for stipulated purposes

According to Rajeev Kumar Saxena (1987), Central Co- operative bank at district level
form an important link between the state co-operative bank and the primary agricultural
credit societies at the base. He noted that in the case of central co-operative banks,
overdue was the main problem, and the recovery of the same was urgently needed to
make the central co-operative banks financially and administratively strong and viable
units. Effective supervision over the end use and close contact of higher officials with the
farmers was further highlighted by the author.

39
ACTIVITIES OF THE COMPANY

40
ACTIVITIES OF THE COMPANY

The study includes employees working in the bank on different designations. It includes
analysis of financial statements of cooperative bank Samana. Study also includes
analyzing the problems faced by cooperative banks. The study is confined to area of
samana and sample size is 5 as the number of employees working is only 5.

 To know financial position of the bank.

 To know about contributions of various loans and advances.
 To know allocations of profits.
 To know the issues related to finance and solution provided by Government.
 To know the recent changes made.

41
Satendra Pal Singh (1990), made an attempt to identify the factors affecting overdues of
agricultural loans. The four major variables identified by them were amount of loan
borrowed, amount of loan put under non-productive uses, size of holding and repayment
capacity. The authors noted that loans must be provided only to those farmers who satisfy
the test of technical feasibility and financial viability. They also suggested that
appropriate steps be taken to educate farmers for proper utilisation of loans and avoiding
excess expenditure at the cost of repayment of loans.

Lakshminarayana and Adinarayana (1990), conducted a study on borrowers of crop

loans. They analysed the nature and pattern of overdues and factors influencing overdues
both under co-operatives and commercial banks and by farm size with the help of two
stage stratified sampling. They observed that the repayment capacity of a borrower is a
measure of his ability to ensure the return of funds acquired for purposes of investment
and consumption. It was based on the analysis of productivity, ie., the additional returns
that would accrue due to borrowed funds and the anticipated income from all sources of
the borrower during the year. Repayment capacity was worked out as a residual after
meeting the requirements of family consumption needs, payment of other dues, debts
outstanding and payments . Accordingly, the authors found that the repayment capacity
of farmers who borrowed from co-operatives was less per farm for small, large and
pooled farmers, compared to those who borrowed from commercial banks. Irrespective of
farm size, all borrowers from commercial banks enjoyed better repayment capacity,
particularly in the case of small farms. They found that the inadequacy of loan amount
from co-operative banks has resulted in mounting overdues and suggested that the scale
of finance and individual maximum borrowing power should be increased keeping in
view the present day costs of cultivation.

Abdul Noorbasha et al.(1990), studied the impact of certain selected variables on the
mobilisation of deposits, deployment of funds as advances and net profits of Vijayawada

42
DCB in order to identify factors of growth. It was found that the selected cogent variables
explained more than 98 per cent of variability in respect of deposits and advances. While
time and share capital of societies were positively related to deposits of the bank, the
number of shareholders was also found to have significant influence on the advances of
the bank. However , the selected variables for identifying the impact on net profits, could
not explain any significant influence . In short, this study showed that the deposits and
advances of the banks have been influenced by certain well identified factors.

Mohandas and Indira (1991), observed that according to All India Debt and Investment
Survey (1971-72), the deposits of DCBs of Kerala had increased from Rs.253.14 lakh in
1960-61 to Rs.3117.75 lakh by 1974-75. The increase was appreciable since 1971-72. In
spite of the appreciable increase in the deposits of the co-operatives they noted that the
co-operatives are still far behind the commercial banks.

Sivaprakasam (1993), discussed the personnel management in DCBs and found that the
employee turn over ratio of DCBs was low when compared to those in Regional Rural
Banks. He found that 'influence' was an important criterion for nearly 1/3 of the
employees in getting appointment. The author suggested that the DCBs should evolve a
promotion policy in such a way that the base level employees are able to get at least two
promotions in their entire career. According to him majority of the employees oppose
deputation because of such reasons as lack of knowledge, lack of commitment on the part
of the deputationist, lack of banking knowledge, blocking the promotion of bank
employees, delay in policy and decision making and frequent transfer since they are from
the Government. The study also revealed that the employees were able to improve their
work after undergoing training.

43
OBSERVATIONS IN THE
COMPANY

44
OBSERVATIONS IN THE COMPANY

Related Issues of cooperative banks and solutions provided

• Governance Issues – Dual Control and Borrower driven structure

• Management and HR Issues
• Issues relating to Finance

(1) Governance Issues - Dual Control

Cooperation” is a State subject under the Indian Constitution; hence all cooperative
societies are governed by the Cooperative Societies Act of the State. Registration,
incorporation, management, amalgamation etc are governed by the RCS of the particular
State.

• At the same time, certain provisions of the Banking Regulation (BR) Act, 1949, are
applicable to the cooperative banks that accept public deposit. In the rural structure,
StCBs and the DCCBs and in the urban structure, PCBs are covered by these provisions
of the BR Act.

• This “duality” of control and regulation has given rise to serious problems in the
governance structure (such as interference by the State Govt. due to its combined role as
dominant shareholder, manager, regulator, supervisor and auditor; further the precise
demarcation of the powers between the two regulators is ambiguous.)

Governance Issues - Borrower Driven Structure

• The rural cooperative structure in India is focused mainly on credit. The upper tiers
refinance the lower tiers hence the structure is driven by borrowers at all levels.
• Depositors are either non-members or “nominal” members without voting rights while
the borrowers have full voting rights.
• This is inconsistent to the concept of mutuality (thrift and credit going hand in hand).
This also prevents any incentive for good governance since the depositors.

45
Management and HR Issues
• Management problem arises due to the impairment of Governance. But following
are also important
• Poor human capital leading
• Generally ageing staff profile characterised by inadequate qualification and training.

Issues relating to finance (Rural structure)

• The poor recovery of outstanding credit by the rural cooperative banks makes the whole
system unsustainable.
• Lack of standardised business model and risk management systems
• Over exposure to the agri sector and lack of diversification of the loan portfolios.

Solutions planned

Revival Package for RSTCCS

1. Financial Revival: Assistance by Govt. of India to eligible credit societies for (i)
wiping out accumulated losses;(ii) Bring a minimum CRAR of 7%; (iii) refund of share
capital to the State Govt; and (iv) cost of special audit

2. Capacity Building and Technical Assistance: For capacity upgradation, training,

installing common accounting and monitoring systems and for computerization.
The estimated budget for these 2 components is Rs. 13,596 Crore; to be shared by Central
Govt., State Govts and RSTCCS units in the proportion 68:28:4
3. Institutional, legal and regulatory reforms: Amendments in the State Cooperative
Societies Act; in some provisions of the BR Act (1949) and in the NABARD Act to
enable to refinance PACS
• remove State intervention in financial and administrative matters
• give voting rights to depositors
• pave way to regulatory control by RBI
• bring coop banks on par with the commercial banks in terms of regulatory norms
46
Revival Package for RSTCCS: the status so far

•As of Sept 2010, 25 out of 29 States have executed MoU with GoI and NABARD
• As of March 2010, special audit was completed in 59294 PACS in the country
• As of Sept 2010, governments of 8 States have passed bills to amend their coop
societies Acts.
•Common Accounting System (CAS) and Management Information System (MIS) have
been introduced along with human resources development initiatives in the States
willing to participate.

Oracle real Application Clusters, Punjab State Co-operative bank (PSCB) is about to
conduct an operation on deployment of the core banking system across its all 800
branches of the 19 district central co-operative banks, according to Indian fintech vendor
I-flex . I-flex subsidiary Flexcel will deploy, host and manage the core banking system.

At present, the technology has been successfully deployed in about 40 branches, and the
next 200 locations are awaiting their turn.

The program of deployment was worked out to improve transaction processing and to
provide online, real-time banking to accounts from any of the 800 bank branches in the
network

. Plus it will help PSCB to set the fixed standardization of products and services to
customers.

PS Sidhu, MD, Punjab State Co-operative Bank, says: "We selected Flexcube, Oracle
Database and Oracle Financial Services On Demand to enhance our efficiency by
replacing manual processes, maintain the customer intimacy we have created over the
years, and develop competitive differentiation because we expect the market to be
increasingly demanding."

47
Launch of debt swap scheme

Chairing the meeting, PNB, executive director, Nagesh Pydah said, “In order to save the
farmers from the clutches of money lenders, Bankers should sensitise the market
committee. Farmers Club can also play an important role in disseminating information to
the farmers.” He also asked the lead district managers of the Banks to report in next
SLBC meeting.

The progress of the scheme is not satisfactory in the state. According to the SLBC (state
level bankers committee) data, compiled by Punjab National Bank, during the financial
year 2011-12, the total disbursement target was Rs 28045.63 crore. Further, the target for
the scheme(on the basis of 3 per cent of agriculture credit) was Rs 841.4 crore. However,
against the target, the Bank in Punjab achieved only 10.52 per cent of the target. Banks in
Punjab has disbursed only Rs88.5 crore in the financial year 2011-12, against the
designated target of RS 841.4 crore.

None of the private sector and cooperative banks in Punjab have provided assistance to
farmers under the Debt Swap Scheme. Only regional rural banks and public sector banks
(barring a few) have assisted farmers under the scheme. Banks in Punjab have decided to
adopt a block in each district of the state to implement debt swap scheme.

Punjab farmers are highly debt ridden. Of the total debt of over Rs 30, 000 crore, the
share of the non institutional loan in the state is about Rs14,000 crore. So, banks can play
a proactive role in saving the farming community from distress under the debt swap
scheme.

Also, PNB has recently revised some of the stipulation of the Debt Swap Scheme to
popularise it. Since majority of money lenders are not registered as per the provision of
Punjab and they are lending to farmers privately without any documentary proof,
consequently they are reluctant to give any certificate to the farmers. To remove this
hurdle, PNB has decided to allow financing under this scheme on the basis of affidavits
of the farmers.

48
SUMMARIZING THE
EXPERIENCE

49
SUMMARIZING THE EXPERIENCE

Research Methodology: Research methodology is a way to systematically solve the

research problem. The research methodology includes the various methods and
techniques for conducting a research. Marketing research is a systematic design,
collection, analysis and reporting of data and finding relevant solution to a specific
marketing situation or problem. It includes the following:

I. Research Design

A research design is a framework or blue print for conducting the marketing research
project. It details the procedures necessary for obtaining the information needed to
structure and/or solve marketing research problems. This research is exploratory
research in nature because it is regarding the study of various factors contributing to the
performance of the bank and discovering the factors responsible for such and defining
different problems faced by the bank and the way they invest in stock market.

II. Sampling Design

Sample Universe: All those who work in cooperative bank samana and few

customers. Sampling technique: Non probability- judgmental sampling is used.

Sample unit: employees

Sample Size: respondents from Samana

Sample frame: employees of the bank.

50
III. Data Collection: There are two methods of data collection-primary data and
secondary data.

Primary data are originated by researcher for the specific purpose of addressing the
problem at hand. Not much primary data has been collected in this research.

Secondary data are data that have already been collected for purposes other than
problem at hand. Financial reports of the bank and balance sheet has been used for this
research.

Sources of data collection

A. Primary Sources:

1. Personal Interview

B. Secondary Sources

1. Internet sites

2. Books

III. Tools of Analysis: The current analysis has been undertaken using following non
statistical tools. These are:

1. Percentages (ratio analysis).

2. Charts (trend analysis).

51
Analysis of Survey

(a) Ratio analysis

SN Ratio Interpretation As on 31.3.2012

1 Current and saving The ratio indicates the 50593646.26/124507757.6
deposit to total proportion of low cost 8
deposits Deposits in the total = 40.63 %
deposits. Higher the ratio,
Better it is for the
institution. This would
help in
keeping down the
Financial Cost (FC)
2 Customer deposit to Higher ratio helps in 26325961.55/42957447.32
total assets(deposits reducing the liquidity risk = 6.1 %
of individuals only) substantially.
3 Non-earning Assets This ratio indicates 2461424.46/42957447.32
to proportion of non- earning = 4.96 %
Total Assets assets to total assets.
(Nonearning assets Higher the ratio, lower
to cash, current will
account balances, be earning ability of the
interest receivable, banks. Normally, banks
other fixed should attempt to maintain
asset etc.) non-earning assets at
the minimum. Lower the
ratio, better it for the bank.
These ratios indicate what
4 Short term loans proportion of loans and 227979548.20/417102566.
outstanding to Total advances are of short-term 43
loans outstanding and long term in nature. = 54 %
These ratios
have to be compared with
the ratios of ST and LT
liabilities to total liabilities
to understand whether
there is any unduly large
asset liability mismatch
which may lead to
liquidity crunch.

52
5 Ratio of Volatile Lower the ratio, better 2131942.60/42957447.32
Liabilities to Total the liquidity = 4.96 %
Assets (Volatile
Liabilities refer to
all
liabilities which are
likely to be
withdrawn
even if slightly
higher
rate is paid by other
market players. Ex:
Institutional
deposits,
govt. deposits etc.)

6 Interest Cost (on This ratio gives the 184696.38/4819326.94

deposits and average cost of funds = 3.8%
borrowings ) to
average
Working Funds
7 Interest Cost (on This ratio gives the 305403.02/4819326.94
loans average yield on WF = 8.33%
and advances plus
investments ) to
average
Working Funds
8 Current ratio Short term liquidity 21094586.89/5464472.50 =
3.86 %

9 Acid test ratio Short term liquidity 12169611.39/5464472.50 =

2.2 %

10 Absolute liquid Short term liquidity 4819326.94/5464472.50 = .

ratio 88 %

11 Solvency ratio Long term liquidity 20190010.15/429574471.32

= 4.7 %

12 Debt service ratio Long term liquidity 6600000/184696.38=

or interest coverage 35 times
Ratio

53
Trend analysis

(1) Advances and outstanding loans

Financial year Amt. in thousands %age

2009-10 237960.26 100
2010-11 300305.52 126.20
2011-12 411339.65 172.86

45000
0
40000
0 Amt. in
35000 thousands
0 %age
30000
0
25000
0
20000
0 2009-10 2010-11
15000 2011-12
0
10000
0
50000
0

Inference = the advances and outstanding loans has increased by 26.20 % in the year
2010-11 and it has increased by 72.86 % in the year 2010-11 from the base year 2009-10

54
55
(1) Different type of deposits

Financial Fixed %age Saving %age Current %age

Year deposit bank deposit
2009-10 51113.10 100 32524.25 100 1445.50 100
2010-11 63891.38 111 38219.24 117.51 2521.82 174.46
2011-12 73899.33 144.58 48246.46 148.34 2361.95 163.40

80500
75500
70500
65500
60500
55500
50500 2009-10
45500 2010-11
40500 2011-12
35500
30500
25500
20500
15500
10500
5500
500

Inference = fixed deposits of the bank has increased by 11% and 44.58% in the year
2009-10 and 2010-11 respectively. Whereas saving bank deposits have increased by
17.51% and 48.34 % in 2010-11 and 2011-12 respectively. On the other hand current
deposits are showing increase of 74.46 % increase in the year 2010-11 but have
decreased in the year 2011-12.

56
(2) Other assets and liabilities

Financial year Other assets % age Other % ge

liabilities
2009-10 5467.14 100 232573.54 100
2010-11 8435.79 154.30 395491.30 170.05
2011-12 12472.20 228.13 305066.71 131.17

Other assets

14000
12000
10000
8000
6000
4000
2000 Other assets
0

2009-10 2010-11 2011-12

Inference = there has been an increase of 54.30% and 128.13% in the year 2010-11
and 2011-12 respectively in the amount of other assets.

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FINDINGS AND SUGGESTIONS
DURING INTERNSHIP WORK

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FINDINGS AND SUGGESTIONS DURING INTERNSHIP WORK

To run any organization successfully the management needs to think always for the
betterment of their service and product, every time there is a chance of improvement in
the functioning of every organization specially when we talk about the banking sector
in past there is very less or no competition in the market and the banks has no pressure
to provide better facilities to the peoples but in recent years the competition is increased
due to the entry of the public banks and other money lending units . Considering this
the state cooperative banks need to be more careful and needs to take such steps which
favors hem to stay ahead in the market. Some of the suggestions and recommendation
are given here which may help the Cooperative Bank to stay in the competitive market
if they adopt these.

 More mass awareness campaigns should be organized in order to enhance

market share of bank.
 Customer’s satisfaction must be the top priority of the bank
 Maximum practical exposure should be provided to the job trainees so that they
may handle the various enquiries of customer effectively.
 Bank can provide the facility of ZERO BALANCE ACCOUNT to the students
or the employees.
 Loaning procedure should be simple; less documentation should be involved
in the loan sanctioning procedure.
 Functioning should be fast i.e. the time taken to do any work should be
reduced efficiently.
 Online banking should be provided to customers for their batter service.
 Customer’s care center should be established.
 A.T.M. machines should be installed at the faster rate so that maximum
customers can take advantage of this facility in wide spread area.
 Staff should be more cooperative.

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 Bank should provide appropriate knowledge about their products.
 All branches should be online.
 No inter branch charges should be deduced
 Proper use of machinery and the infrastructure, assets should do.
 Special line of credit may be extended to rural credit cooperative financing rural
women entrepreneurs at lesser interest rate
 Today the commercial banks are taking to the correspondent or agency model to
increase their outreach and to meet their financial inclusion goals. They are
associating with MFs in a big way to finance large no. of SHGs. Cooperative
bank should be aggressive in this direction as they are not aggressive in this
direction.
 Bank should adopt the essential feature of good corporate governance i.e.
efficiency, professionalism, transparency and accountability.
 In order to compete at the market place, brand image is of great significance in
public acceptance of product and services.
 Cooperative bank has fewer resources than required which should be overcome.
 Proper posting of the staff should be done. It is generally seen the branch has
requirement of 5 employees but there are only 3-4 employees working in that
branch.
 Policies should be made for the less chances of the NPA.
 Proper channel for the recovery of the loans should be established by telephonic
conversation.
 Market status of the bank should be informed to the customers periodically.
 Seminars on the working of the bank should be held time to time.
 Refresher training to the employees should be given time to time.
 Staff should be more supportive with the customers.
 Supporting environment should be provided to the employees.
 Mobile banking should be included in the future plane of the bank.
 Website should be updated regularly and the details of the different policies
and Interest rates must be posted properly.

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 More and more information pamphlets should be provided to the customers.
 Bank should upgrade the technological infrastructure of the financial system.
 Bank may provide consumer goods, especially essential commodities under
P.D.S program at reasonable prices.
 Bank may work on the updating of skill of the Artisans, Craftsmen and weaker
sections of the society engaged in Industrial activities and help them to market
their produce.
 Bank should work to enable to all persons to come together and gainfully
employ themselves in diverse field such as Horticulture, Floriculture, Fisheries,
Housing, Wool, Poultry, Labor & Construction, Dairy and Tourism etc.
 Bank should encourage the un-employed educated youth, for organize tourism
Cooperative.

 Bank has a good amount of flow cost deposits which helps it to keep down

the financial cost.

 Liquidity risk is moderate as the amount of deposits of individual’s deposits

is quite good.

 The amount of NPA (non performing assets) is also less.

 Amount of short term loans is quite higher which thus shows mismatch of

liquidity crunch between short term assets and liabilities.

 Amount of volatile liabilities is satisfactory.

 Earnings in form of interest are more than the cost paid in form of interest.

 Short term liquidity is quite good but is not ideal whereas long term liquidity

is satisfactory.

 Amount of loans and deposits both have increased and amount of assets

have increased more as compared to liabilities.

 Most of the share out of profits is kept for reserves and bad & doubtful debts.

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