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Executive Summary: Chapter 1
Executive Summary: Chapter 1
CHAPTER1
EXECUTIVESUMMARY
INTRODUCTION
Cooperative movement in India was entitle to provide for the Credit
needs of the rural class by organizing on democrative principles, based on mutual support aimed at overall development. Accordingly the cooperative societiesactwaspassedin1904,whichwaslaterreplacedbythecooperative societysAct1912thecooperativeCreditStatureisfunctioningundera3tier systemconsistingofstatecooperativebankthecentralcooperativebanksin thedistrictlevelandprimarycreditsocietiesatgrossroots level.Thesystem consist of primary agricultural credit societies and nonagricultural credit societies central cooperative banks state cooperative banks including land developmentbanksthatspecializeinlongtermcredittothefarmers.
TITLEOFSTUDY
TO STUDY MANAGEMENT OF LOANS AND ADVANCES AT AZAD
COOPERATIVE.BANKLTD.,GADAG.
OBJECTIVESOFTHESTUDY
1. 2. 3. 4. Tostudythepositionofvariousloansandadvancesinthebank. Tostudythemannerinwhichfundsareraisedandutilizedinthebank. Tostudythenonperformingassets(NPAs)inthebank. Tostudytherecoverymeasuresandmethodsfollowedbythebank.
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SCOPEOFTHESTUDY
The present study is a case study on The Azad CoOperative Bank
Limited, Gadag. The study converted to all functional areas of the bank. The functionalareasofthebanktheperformanceindicatorsareidentifiedtomake more effective study. The financial statements of the bank for the period of 2008,2009,2010,2011areusedforanalysis.
NEEDFORSTUDY
Theneedsforthisstudyisassesswhethertheirbankhasbeenableto
METHODOLOGY
The primary data is collected through person interview with manager
and the staff members and the secondary data is collected from the annual reportsofbanksandbythelawsofbankwherevernecessary. The make effective financial analysis comparative statements and
commonsizestatementsareused. ANALYSISANDINTERPRETATION This chapter provides an analysis of the data with required interpretation. Tablesgraphandchartsareusedwherevernecessary
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FINDINGS
1. 2. 3. 4. Theamountofrecoveryisinproportiontotherespectiveadvance. Thereisincreaseintherecoveryrateofcashcredit. Theaverageproportionofcashcreditis54.03%ofthetotaladvances. The average proportion of pledge/mortgage loans 25.78% of the total advances.
LIMITATIONSOFTHESTUDY
1. 2. 3. ThestudyislimitedonlytoAzadCooperativeBankLtd. Thestudyislimitedtoinformationprovidedbybank. Thedataiscollectedonlyfor4years.
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CHAPTER2
INDUSTRYPROFILE
INTRODUCTION
Bankisaninstitution,whichcreatesandissuescredit.Inotherwords,it
is a lender and borrower of money. There are various types of Institutions performingthefunctionsofabankunderdifferenttypesofmanagementsand serving different types of managements and serving different classes of people. Hence for its classification the functions of bank are to be taken into consideration because "Just as a tree is known by it fruit so is abank by the functionsitdischarge." Section 5[b] of the Banking Regulation Act 1949 defines Banking as
"Acceptingforthepurposeoflendingorinvestmentthedepositofmoneyfrom the Public repayable on demand or otherwise withdrawal by cheque, draft, orderorotherwise." DifferentTypesofBankingInstitutionare: 1. 2. 3. 4. 5. CommercialBanks. IndustrialBanks. LanddevelopmentBanks. ExchangeBanks. CooperativeBanks.
HISTORYOFCOOPERATIVEBANK
The word 'bank' is derived on the word 'Bancus' or 'Banque' that is a bench. Jews who were considered to be the early bankers transacted their business on benches in the market. Some people trace the origin of word 'bank'fromGermanword'bank'meaninga"Jointstockfund".
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country.Theentirecommercialandindustrialactivitiesarewellknittedwith thebanks.Intheearlydays,thebankingbusinesswasconfinedtoreceivingof deposits and lending of money. But the modern bankers undertake a wide variety of functions to assist there, customers. The peculiar of the Indian bankingisthatthebankswerestarted,foundedandmanagedbyindustrialist toenablethemtogetadequatefinancefortheirbusinessorindustries,cansee adirectrelationshipbetweenbanksandbusinesshouses.
COOPERATIVEBANKS
Cooperationmeansworkingtogether.Acooperativeisanautonomous
association of person united voluntarily to meet their common, economical, social and culture needs aspirations through a jointly owned and democraticallycontrolledenterprise.Thehistoryofmoderncivilizationisthat without cooperation the social and economic progress would have been impossible. Therefore cooperatives are based on the values of self help, responsibility,democracy,democracy,equityandsolidarity.Inthetraditionof theirfounders,cooperativemembersbelieveintheethicalvaluesofhonesty, openness,socialresponsibilityandcaringforothers. Cooperative movement owes it origin to England where a great
philosopher. Robert Owen (17711858) gave. The idea of "Self help through mutual help" to mitigate the sufferings to exploited class in the wake of industrialrevolution. The cooperative banking in India has grown in size and volume. A
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agriculturalcooperativebanks areprimarycooperativebanks atthevillage level,centralcooperativebankatthedistrictlevelandthestatecooperative bankatthestatelevel. The non agricultural cooperative bank includes urban cooperative
banks, Employees Credit cooperative banks and Housing Cooperatives Banks. Themainobjectiveofcooperativebankistofacilitateruralcreditand
COOPERATIVEMOVEMENTININDIA:
Therealbeginningofthecooperativemovementwasmadeonlywhen
theGovernmentpassedthecooperativeSocietiesActin1904providedforthe formation of cooperative credit Societies only. After passing this act a large number of credit societies were started but this act had certain defects they were. a) b) Inprovidedfortheformationofcreditsocietiesonly. TheclassificationofCreditSocietiesintoruralandurbanconsideredto beunscientificandinconvenient.
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To rectify these defects the net act that the cooperative society act of
1912 was passed, which provided for the establishment of cooperative control banks by a union of primary credit societies or buy individuals. It gainedgreathelptothegrowthofmovement. In 1999, another act was passed called cooperative societies act of
1919. This act gave the states, the option to follow the 1912 act or to have their own act. Accordingly Several States passed their own acts in their restrictionstates.Asaresult,cooperationmovementmadegoodprogressand thenumberofcooperativesocietiesarealsoincreased. A major development took place after the independence. It received
took place after the independence. It received extra support from the government to enquire the working of the cooperative movement. In 1951, Government appointed committee called :All India Rural Credit Survey Committee. This committee remarked that cooperative has failed but co operationmustsucceed. The government accepted the recommendations made by the
committee and implemented it positively. Therefore, the number of co operative societies increased considerably. Idea of growth of cooperative movementinIndiacanbehadfromthefactthattherewereasmany3.5lakhs cooperative societies of all types with total membership abut 16 crore and total working capital about 62,500 crores as on 30th June 1990. The distinguishingfeatureofcooperativesystemisthatifislargelyvillagebased. In other words it is suitable for village dominate country like ours. Participationofmassesatdifferentlevelsindevelopmentschemeisamust.
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three tier structure, has been enabled to extend credit to agriculturists, artisanset.Thethreetiersystemalsoallowsarationalizedblowofresources from the metropolitan centers to villages and combines this with fairly low costsofoperations. COOPERATIVEBANKSTRUCTURE
CoOperativeBank
Institutionsforshort TermandMedium
Village/Primary Co operativeBanks StateCoOperative
InstitutionsforLong term
PrimaryDevelopment Banks
banks
CentralLand DevelopmentBanks
CentralorDistrictCo OperativeBank
UrbanCoOperative Bank
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I.
PRIMARYCOOPERATIVEBANK These operate at village level and maintain direct relationship with
farmersfortheirownrequirementsoffinancethesearelinked tocentralco operative banks which in turn, are linked to state cooperative banks. They fulfillshorttermandmediumtermcreditneedsofthefarmers.Themembers elect the managing committee, who conduct the day to day activities of the society,whereasgeneralbodyissupremeauthority. Themainfunctionsofprimarycooperativesocietiesareasfollows. 1. To supply short term and medium term credit to their members. (i.e. shareholders) 2. Tosupplyagriculturalandotherproductionrequirementssuchasterm equipmentsandtotakemarketingoftermproduce. 3. Inculcatingthehabitsofsavinguponthemembersisalsoafunctionof thesesocieties. 4. A society helps in the formulation and implementation of plans for agriculturalproductionforthevillageandundertakensucheducative, advisoryandwelfarefunctiondesiredbythemembers. The primary cooperative societies occupy strategic position in co
operativecreditstructureofruraleconomy.In195051therewere1.08lakh primarycooperativesocieties.Whichwereincreasedto2.12lakh.in196061 duetoreorganizationprogrammeinvariousstates,theirnumberdeclinedto 94.48in198081whichfurtherdeclinedto91.749in1985. Now considerable attention is gives to build the primary agricultural
societiesintostronginstitutions.Infact,RBIhasbeentaking,adequatesteps to strengthen the weak cooperative credit banks in collaboration with state government.
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II.
CENTRALCOOPERATIVEBANK These banks are the federation of the primary cooperative credit
societies.Thesebanksaremanagedbyaboardofdirectorsconsistingof1215 members. They have been function as an intermediary between the primary cooperativesocietiesandstatecooperativesocieties.Themainobjectiveisto raisefinancethroughdepositsfromthepublicandlendtothe primarycredit societiesatthevillagelevel. In addition to this, they are expected to give technical advise,
supervisionandadministrativeadvisetoprimarycooperativesocieties.These banks are normally situated at the district head quarters and open branches areTaluqlevel. In 198182 there were 332 Central cooperative banks with aggregate
workingcapitalof5327croreanddepositsofRs2768crore. In198586thiswasincreasedto352withaggregateworkingcapitalof
Rs. 8663 crore and deposits of Rs 4932 crore. Total deposits of central co operativebanksamountedtoRs.11,180.56crores.ByJune1986,173central cooperativebankswereunderrehabilitationprogramme.Althoughthebank showed good amount progress. Yet, many of them were financially and organizationallyweak.
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III.
toberegisteredunderthecooperativesocietyactof1912. Everystatehasastatecooperativebank.Itistheapexbankandleader
ofthecooperativecreditinstitutionsinthestate. Themainfunctionsareasfollows. 1. 2. Itactsasbankers'banktothentralcooperativebank. It links different sectors of the money market the cooperative institutionsandtheNABARD. 3. To manage financial requirement of the state as a whole and acts as financialcenterofallcooperativebanks. 4. To maintain a central reserve of fluid resources, so that central cooperativebankmaybeassertedofitssupportintimesofdifficulties. 5. 6. Year 198081 198586 TocoordinatetheworkingofCentralcooperativebanks. TospreadcooperativeEducation. Number 27 29 WorkingCapital 2749.6Crores 5547.0Crores
Statecooperativebankshave667offices.Theprogressshownbythese
banks is remarkable but still some state cooperative banks are under rehabilitationprogramme.
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IV.
URBANCOOPERATIVEBANKS Urban Cooperative Bank has been defined as one which has been
organized for accepting of deposits from the public which are usually repayable by cheques, drafts etc and which carry on normal banking transactions. These banks are situated in urban areas. These Urban Co operative Banks are enjoying various concessions. Such as, higher rate of interestondeposits,lowerliquidityratio,exclusionofborrowingsfromhigher financing agencies from outside liabilities etc., With the objective, among otherstopromotethriftandmobilizationofresources,fromthecommunityof areaof operation for the purpose of provisionof credit at reasonable rate to smallborrowers.Thebankreceivesdepositsfromitsmembersandpublicand lendsloanstothem.AnUrbanCooperativebankisrestrictedtomoneytoits customers residing in the municipal corporation limits depending on its bye laws. These banks act as commercial bank generally accepting time and
demanddeposits. V. CENTRALLANDDEVELOPMENTBANK These banks are organized on cooperative banks. The structural
systemofthesebanksfallintofederaltypeorunitarytype.Whilecommercial andcooperativebanksprovidesonlyshorttermcredit.Therewasnoagency toprovidelongtermcredit.Aspecialinstitutionwassetuptometlongterm needs. The idea of the institution was land mortgage bank. This was set up primarily on cooperative basis. Now these banks are known as Land DevelopmentBanks.
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development bank and central land development bank. The primary land developmentbankgrantsloansforcultivationattheTaluqanddistrictlevels, whereascentrallanddevelopmentbankfunctionsatstatelevel. Land Development Bank made a beginning in the twenties, mainly to
provide loans to farmers for the purpose of debt redemption. These banks provide credit for variety of purposes like irrigations, farm mechanization through tractors, etc, Land reclamations and development of horticulture. During recently years land development banks are bent upon lending loans onlyforlandimprovementandcultivation.
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CHAPTER3
COMPANYPROFILE
The "Azad cooperative bank "Gadag, was established on 1/8/1961 undertheleadershipofAlHajSayyedTajuddinsahebR.Umachagitrustingthe cooperative movement, a few enthusiastic people at business were involved inestablishingthisbankwithasmallamountofcapitali.e.9000. ShriAlHajSayyadTajuddinsahebR.UmachagiwastheFounderofthe
Umchagithebankwasrenamedas'"Azadcooperativebankltd." Intheyear 1961. In that same year the bank was a rented building at Sir M. Vishweshwarayya Road, and stared its operation with the permission of the cooperativedepartment. Thebankwasgivenpermissiontofunction,bytheRBIandcooperative
department under the license NO.UBDKAN1463P.RROM 1997 /since then thebankhasexpendeditsoperationandhelpedmanyfamiliesandbymaking manytradersasitsmembers,ithasbeenfunctioningsuccessfullyinthisarea. ThebankislocatedinthecentralareaofGadagcityanditisnearH.O.
Muslim, community, Hindus and others communities. At the time of its establishment it had only 69 members but in the year 2007 it has 3062 members.Thechairmanandvicechairmenhavebeenexperiencedinthefield
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of banking. They concentrated more on the recovery of loans granted to the members in order to reduce the percentage of nonperforming assets (NPA). Many small traders expanded their field of activity by taking financial assistance from the bank. Member/customers who have taken the loan from this bank have now become the DEPOSITORS of the bank it has won the confidenceoftheshareholders.DepositorsaswellaspublicoftheGadagcity andithavecontinuedasan"A"gradebank. Thebankhasprovidedloantoprioritysectorsweakersectionsmalland
tiny industrieslike village/cottage industries, carpenters, potters,vegetables, vendorsand.smalltradersinthedirectionofmakingthemselfreliant. InformationoftheBank Name Address : : : : : : : : : TheAzadCoOperativeBankLtd.Gadag Near,SirM.VishweshwarayyaRoad, GangapurPeth,Gadag GadagDistrict. 1961 UBDKAN1463P(591997) 1 MarketArea,NamjoshiRoad,Gadag UBDBG.BL369201199 Late. Alhaj Sayyed Tajuddinsaheb R
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THESALIENTFEATURESOFTHEBANKARE: