Submitted in the partial fulfillment of the award of degree in Master of Business Administration (Agri-Business) (2008-2010

)

DEPARTMENT OF BUSINESS MANAGEMENT College of Horticulture
Dr. Yashwant Singh Parmar University of Horticulture & Forestry Nauni, Solan (HP) 173230

ACKNOWLEDGEMENT
Pride praises and perfection belongs to the almighty alone, so I would like to consecrate myself before the LORD SHIVA and MAA JAWALA JI who bestowed on me to be through the ups and downs of life and enabling me to see today “The joy of task done”. I am highly grateful to Dr. Y. S. Negi, Professor & Head, Department of Business Management for his ideological contribution and valuable suggestions during the course of summer training Academic life without friends is distance reality so I am conscious of my feelings to my generous friends for their constant encouragement, inspiration and help to achieve my goal. I am thankful to Mr. Jagdeep, Staff of HP State Cooperative Bank Shimla (secrete branch) and finance department of HP State Cooperative Bank H.O. Shimla for their valuable guidance and information about functioning of bank. Language seems to be inadequate to express my sentiments for my loving sister Kiran & Simran All the words in the lexicon will be futile and meaningless if I fail to divulge my extreme sense of gratitude to my parents since the beginning of my academic career at the cost of their personal inconvenience, I shall remain indebted to them for their contribution to my educational goal. Needless to say, errors and omissions are solely mine. Place Date Dogra Vikas

CONTENT CHAPTER TITLE Company profile/ Introduction
1. 1.1 1.2 1.3 1.4 1.5 1.6 1.7 History and evolution Positional status Mission & vision Alliance and Joint Ventures. Research & development Present status Awards & other recognitions

PAGE NO.

2.

Organizational Structure 2.1 Channel Of Information Sharing 2.2 Management structure 2.3 Channel Of Documentation 2.3 Channel Of Statement Result Analysis Analysis of annual report Key operational process SWOT Analysis 5.1 Strength 5.2 Weakness 5.3 Opportunity 5.4 Threat Summary and conclusion. Suggestions and recommendations Personal Learning References Annexure

3. 4. 5.

6. 7. 8. 9. 10.

Chapter 1 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

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,

Financial institution
ORGANISED STRUCTURE RBI BANKS COMMERCIAL BANKS UN-SCHEDULED COMMERCIAL BANKS MONEY LENDERS UNREGULATED NONBANKERS UN- ORGANISED STTRUCTURE INDIGENOUS

SCHEDULED COMMERCIAL BANK

STATE BANK GROUPS NATIONALISED BANKS INDIAN BANKS FOREGION BANKS REGIONAL RURAL BANK

P.O. SAVINGS NON BANKING FINANCIAL COMPANIES COOPERATIVE BANKS

STATE COOPERATIVE BANKS CENTRAL COOPERATIVE BANKS PRIMERY AGRICULTURE CREDIT SCITIES

Financial institution of India consists of organized sector and un-organized sector

ORGANISED SECTOR: the sector whose parts and activities are systematically

coordinated by the monetary authority. It includes the RBI. COMMERCIAL BANKS, P.O. SAVING, NON- BANKING COMPANIES, AND COOPERATIVE BANKS. Is an apex of the Indian money market.

R.B.I: Reserve Bank of India, being the central Bank of the country though the R.B.I.
Does not enter into direct transaction in the money market, but it guides and controls the money market through the bank rate.

Commercial Banks: These are very most important segment of our money market. These
commercial banks play a very important role in mobilizing the money (savings) from various sectors to the economy.

SCHEDULED COMMERCIAL BANKS: it includes SBI and its 8 associates, 19 nationalized commercial banks and other scheduled banks, foreign banks and regional banks. Today we have 64,918 branches of scheduled banks these are those banks which are included in the second schedule to the Reserve Bank of India Act 1934. In term of Sec 42/5 of Reserve Bank of India Act a commercial bank should fulfill the following conditions Bank must have a paid up capital and reserve of an aggregate value of not less than Rs. 5 lakh. • It must satisfy RBI that all of its affairs are not conducted in a manner detrimental to the depositor. The scheduled banks enjoy certain privilege like approaching RBI for financial assistance; refinance etc and correspondingly, they have certain obligations alike maintaining certain cash reserves as prescribed by the RBI, submission of returns etc. NON SCHEDULED BANKS: these are those banks which are not included in the second schedule of the RBI Act on the account of failure of the bank with the minimum requirements for being scheduled •

P.O. SAVINGS Banks: this is the oldest in the official small saving schemes in India.

Though P.O. saving scheme have received a lot of attention from the attraction of savings, but these are not as much popular as the saving deposits accounts with the commercial banks.

REGIONAL RURAL BANK: in 1975 the Regional banks are established in the

supervision and recommendation by a working group headed by Mr. M Narasima when it was felt that the commercial and cooperative banks are not able to serve the small, marginal farmers, agricultural labor and artisans. Thus to serve this segment the Regional banks are established.

NON- BANKING FINANCIAL: IT includes LIC, the GIC and subsidiaries, the UTI.

COOPERATIVE 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. Keeping the view of cooperation the H.P. State Cooperative bank was established in Himachal Pradesh in august 1953 under the Cooperative Society Act, 1912. Onward from its establishment the bank is developing day by day and satisfying the needs of many people.

History
The commercial Banks were operating for the years, but it was being felt that these banks were not paying necessary head to the credit requirements of common masses. Further the commercial banks, were mainly concentrating their business in the urban area and the banking facilities to rural people were not available consequently, the Co-operative Banks came into picture after 1904. Himachal Pradesh has the distinction of having first Coop. Society Registered in India. Cooperative were primarily visualized as specialized agency for financing the credit requirement of rural people in the country particularly agriculture. Foundation of the Himachal Pradesh state cooperative bank was laid in 1953 by uniting the Mahasu central cooperative bank ltd. The Mandi central bank and the Chamba cooperative bank. Its registration is done in august 1953 under the cooperative societies act 1912. Later the bank starts functioning on 15th march 1954. Bank start functioning as APEX (at the top) Bank under 2- tier system in 6 – districts of Himachal. In 1955 two more Banks namely “Bank of Sirmour & Joint Stock Bank” merged into H.P. State Cooperative Bank. On 1st November 1966 many parts of Punjab ( previous districts Kangra, Kullu, Lahaul & Spiti, and some parts of districts Hoshiarpur, Gurdaspur, ambala) were merged into Himachal Pradesh. This results in transfer of Cooperative Banking System of these areas into Himachal Pradesh with 2 already functioning banks “The Kangra Central Cooperative Bank & The Jogindra Central Cooperative Bank”. In 1972 when Solan awarded with the status of separate district two separate branches of H.P. State Cooperative bank at Solan & Arki. While 1 Branch of Jogindra central Cooperative bank is working at Totu (Shimla). Till 29th September 1976 the assets and liabilities of all these 3 Banks were transferred to each other Now In Himachal Pradesh, the state cooperative bank ltd. With head office at Shimla is functioning as a central cooperative bank in 6 districts namely Solan Shimla Bilaspur Mandi Chamba Sirmour and Kinnaur having 36 blocks. The Kangra central cooperative bank with head office at Dhramshala is functioning as a central cooperative bank banks in 5 districts having 28 blocks. in Solan district the Jogindra cooperative bank with head office at Solan is functioning as cooperative bank creating the need of peoples of 5 districts beside being a state

cooperative bank for the stat as whole, the Himachal Pradesh cooperative bank is working as the financing agency for the 6 districts of state and an apex bank for whole of the state. The Himachal Pradesh Co-operative Bank is serving the people of the State through a network of 190 branches and Extension Counter of which about 94% is in the rural areas of the State and one branch at New Subzi Mandi Azadpur New Delhi for the benefit horticulturists of the State. Particular No. of branches Share capital (in lacks) Deposits (in lacks) 1955 10 7.32 41.14 2006 154 757.73 212052 78564 170735 278129 2007 160 791 241273 107607 1815904 312653 2008 175 798.91 343433 124765 219421 418300

Loans & adv. (in lacks) 29.19 Investment (in lacks) Working lacks) capital 8.25

(in 52.23

PERFPRMANCE OF THE BANKS OVER THE YEARS

POSITIONAL STATUS
The Himachal Pradesh State Cooperative Bank works at the APEX level in the hierarchy of the cooperative banking. It acts as the central financing agency to the Kangra central cooperative bank & Jogindra central cooperative bank the bank has the working capital of Rs. 418334.59 lacks and deposits are 343375.01 lacks.

Mission & vision
Mission/Targets of the bank is to help the self helped groups by providing them loans at low rate. Providing the education to the workers/employees of the cooperative societies. Managing the financial status of the cooperative societies. 1. Connecting all the branches with the core banking system (C.B.S.) to provide the online banking facility till 2010. 2. Installing the A.T.Machines in all the branches. 3. Achieving the schedule status for the bank. 4. Providing the retail banking to the customers with the help of Information Kiosk. 5. Providing the SAMAGR banking facilities to the customers in one branch.

Vision
1. To providing the loans to the cooperative societies to establish the viaduct pariyojana. 2. Starting the new schemes for the cooperative societies to recover the N.P.A.(non performing assets ) 3. Opening the education center for cooperative societies to improve/increase the business through giving them proper training & suggestions. 4. Providing the loans for new schemas time to time. 5. Repairing the plans for encouraging & awarding the employees of the Bank.

Alliance & Joint Ventures
The bank has alliances with the UTI bank and has RIMITANCES ALLIANCE with all the banks to cash the drafts and deposit the money in the account of customers in any branch of any banks in India

Research and Development:
The business development department (BDD) of the H.P. State Cooperative Bank Shimla deals with the research and development of the organization. The main focus of the department is to find out the possibilities of the bank for serving more peoples in the rural and urban areas and to provide a frame work for the future expectation of the bank .other functions are providing the better facilities for the consumers like installing the ATMs, developing the blue print for online banking , internet banking, determining the market strategies for the future , determining the interest rate on various schemas to earn reasonable profit for the bank

PRODUCT LINE:
H.P. state cooperative Bank has various products for the customers like Deposits, Loans, Others. When we say about the deposits the HP state cooperative bank has the following accounts Current account, saving bank account, Term deposit, R.D., in term deposit bank further have the following schemes like Fixed deposits, Sarvapriya deposits, mahalakshmi deposits. Himpuran nivesh Loans it includes different types of loan schemes. Currently the hp state cooperative bank has 40 loans schemes. Like personal loans, home loans, vehicles loans, Education loans, Non agriculture loan, Minor irrigation, self helped group scheme, self employed group scheme etc… Others it includes the locker facilities, drafts, electronic funds transfers

Present status of Bank
In term of market share the market share of the bank in the Himachal Pradesh is about 55% of the total shares of the banks in Himachal Pradesh. When we talk about the size of the bank it has 175 branches all over the Himachal Pradesh. The major competitors of the Himachal Pradesh State Cooperative Bank and its alliance are S.B.I, I.C.I.C., Punjab National Bank, Uko Bank, and other banks. In case if the bank has shortage of money and bank needs the money for its various purposes then the main supplier/ lender of the money is the share holders or the RBI. When we say bank need money then the question arises why the bank need the money it may be for lending the money to the needy persons, or to provide the money to the depositors in case when the depositor takes the money back or person who takes the loan are known as the customers of the Bank.

Awards and other recognitions
The H.P. State Cooperative Bank Ltd. has granted the national award for achieving overall excellence in banking operations. The H.P. State Cooperative Bank Ltd “the first cooperative bank to implement coor banking computer solution (the facilitator of internet banking) where as only few of nationalized banks are providing this system.”

The H.P. State Cooperative Bank Ltd. Is one of the few organizations which are in true profit and are paying the dividend continuously. The H.P. State Cooperative Bank Ltd. Has double the agricultural advancement in about 2 years against the planed period of Govt. of India of 3 years The H.P. State Cooperative Bank Ltd is the winner of the “Best Outreach Award” for SHGs. Bank has implemented the various loan schemas for the all sectors of society to suit them, the main focus of bank‘s service is to develop the rural masses. Bank is also involved in implementing the programs related to eradication of Poverty run by the Govt. like SGSY/SJSRY, Rural Housing etc. The credit needs of farmers are also fulfilled by the bank at low rate of 7%.

CHAPTER 2 ORGANISATIONAL STRUCTURE
The organizational structure of the H.P. State Cooperative Bank Ltd. Is as shown below

MANAGEMENT
As per Bye-Law No. 36 of the Bank’s Bye –laws, the management of the affair of the Bank vests in General Body, Board of directors, president and the Managing Director. The President is elected among the members of Board of Directors on its constitution and the appointment of Managing Director is done by the State Govt. Under the provision of section 35-B of the H.P. Cooperative Societies Act, 1968. The BOD is elected after every 4 -5 years as under 1. 6 Directors are elected from six districts duly elected by the members of Cooperative societies. Each one Director is from Kinnaur, Bilaspur, Chamba, Shimla, Mandi and Sirmour Districts. Out of these 6 Directors one Director must be from MF/SF/SC/ST. BOTH Kangra Central Cooperative Bank and Jogindra Central Cooperative Bank from their members of board nominate 1 Director each. H.P State Cooperative M&C Federation also nominated 1 director. H.P State Cooperative Agriculture & Rural Development Bank also nominates 1 director. 1 director who represent the Weaver and Industrial Cooperative Societies nominated by HP Handloom Weaver Apex Cooperative Society Kullu. State Govt. (under section 35 of HP Coop. Societies Act, 1971) nominates 3 directors or 1/3 of total no. of directors. (Whichever is less). Registrar Cooperative Societies or its nominee 2 directors (under rules 39 of HP Cooperative Societies rule 1971) are nominated by the Registrar Cooperative Societies. Managing director as Ex- officio director.

2. 3. 4. 5. 6. 7. 8. 9.

CHANNEL OF INFORMATION SHARING: - in the H.P. state cooperative
bank the channel of information sharing from top to bottom and from bottom to top if the management has to pass the information to the other branches then it is passed through a circular by the bank to the different branches. These information’s are sent to the district office which circulate the information to the divisions branches. Where these information’s are then given to the employees who work according to these information’s/guidelines. Any information from the bottom level is passed to the higher level through branch manager then to the division manager then to district manager then to head office then the information is presented to the management

CHANNELS OF INFORMATION SHARING
Information at corporate level and unit level is exchanged by using one of the following channels: ➢ On line / internet : Website of NFL ➢ E-mail system ➢ Paper reply system ➢ Courier system Information exchanged can be broadly divided into two categories of communication namely verbal and written communication.

Verbal Communication:
This refers to informal type of communication where information is exchanged verbally for example Telephonic conversation . There is no legal restriction of keeping record of the exchanged information.

Written Communication:
In this type of communication a record of information exchanged is kept .It is legally bound to keep such records. Maintenance of Master file is an example of this type of communication.

CHANNEL OF DOCUMENTATION: - The channel of documentation is same
as that of the channel of information sharing but the difference is that in the documentation there is generally the flow of different type of written reports about the branch to the head office. These may include the weekly book , quarterly report, yearly report, etc

CHAPTER 3 Analysis of annual report
ANALYSIS is the process of evaluating the relationship between components parts of financial statement to obtain a better understanding of firm position and performance. The purpose of financial analysis is to diagnose the information contained in it so as to judge the profitability and financial status of the firm. In the words of Myers, “Financial statement Analysis is largely a study of relationship among the various financial factors in a business as disclosed by a single set of statement, and a study of the trends of these factors as shown in a series of statements”.

METHODS OF FINANCIAL ANALYSIS:
there are various methods of annual report analysis the following methods of analysis is

generally used 1. 2. 3. 4. 5. 6. Comparative statement Trend analysis Common size statement Funds flow analysis Ratio analysis Cost volume profit analysis

FINANCIAL YEAR 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

Amount (in lacks) trend percentage 74868500.00 76198200.00 75773300.00 79120700.00 79891100.00

100.00 101.78 101.21 105.68 106.71

FINANCIAL POSITIONS OF THE BANK IN RECENT YEARS STARTING FROM THE FINANCIAL YEAR 2003-04 TO 2007-08

Particular Capital reserve funds and other funds fixed deposits saving bank deposits current deposits Borrowings overdue interest revenue interest payable other liabilities Provision Profits Cash balance with other banks Investments Advances interest receivable branch adj premises less depreciation other assets

2003-2004(base year) 74868500.00 1784044114.67 11407803231.99 4664540265.58 406796873.58 2305211259.08 101545736.66 22670180.03 256001472.73 652890247.45 316641483.84 1032594439.08 2289272341.02 10819697915.99 6225131399.29 669359342.01 311957832.24 43387933.13 542901283.53

2004-05 2005-06 2006-07 2007-08 76198200.00 75773300.00 79120700.00 79891100.00 1782884182.76 2009811367.15 2007214709.15 2561016783.94 12720977213.59 14353418535.22 16493064660.34 25618203646.98 5493584952.32 6090965527.69 6919163118.36 8222530379.22 341542003.46 709722064.79 664733958.72 416367640.71 2378236712.08 2421882725.08 2464500264.08 1831021333.00 98039421.09 94356053.29 155452173.39 161093725.46 22881111.03 25258966.10 32707644.03 26462949.97 395016879.84 533707421.43 584005199.71 881945510.61 690232611.72 618778674.76 748274591.29 991255093.72 605758234.25 858676377.19 1152681197.15 1017820170.86 660184826.48 4004907803.33 10383959790.50 7704446604.18 531392255.53 521386862.06 36549909.91 710040384.50 63260437.31 6770074259.74 10508778366.67 7856385765.56 441310420.58 582498257.91 30958606.34 923191533.20 1096016735.71 7872977039.38 10277424381.20 10760522714.66 457048686.73 221475603.13 74089921.52 498682440.75 4465424294.39 11804482166.93 11021080106.00 12476970459.87 721916427.51 722184042.33 86421979.70 712146504.93

1.

TREND ANALYSIS:- the analysis in which the trend of last few years is taken into consideration in this we take one year as the
base year then we see the trend according to that year i.e. what trend is followed W.R.T the base year. I. Capital build of the bank

FINANCIAL YEAR 2003-2004 2004-05 2005-06 2006-07 2007-08

Amount (in lacks) 10325.94 6601.85 6326.20 10960.17 44654.24

%age 100.00 63.93 61.27 106.14 432.45

INFRENCE: Starting from the financial year
2003-04 the capital build up of the H.P. Sate Cooperative Bank was Rs.74868500.00 which increases by 1.7% of base year in 2004-05. In 200506 the capital decreases and remains only about 1.2% of the base year. But in the financial year 2006-07 capital increases by large value and become more than base year by 5.6% ,and in the financial year 6.7%. thus the capital is increasing continually thus the

2007-08 the capital still increases than the base year and is more than the base year by Capital growth is satisfactory. And thus the bank has greater capacity to bear risk.

II.

Cash flow to bank in different years

INFRENCE: - Starting from the financial year 2003-04 the CASH of the H.P. Sate Cooperative Bank was Rs.10325.94 which decrease by
36.07% of base year in 2004-05. In 2005-06 the cash further decreases and remains about 38.73 % of the base year. But in the financial year 2006-07 cash increases by large value and become more than base year by 6.14% ,and in the financial year 2007-08 the cash with bank increase un expectedly instead of the recession by 332.45%than the base year.

III.
FINANCIAL YEAR 2003-2004 2004-05 2005-06 2006-07 2007-08

Advances and outstanding loans of the bank from 2003-04 to 2007-08.
advances & outstanding loans Amount (in lacks) %age 62251.31 77044.47 78563.86 107605.23 124769.70

100.00 123.76 126.20 172.86 200.43

INFERENCE:-

Starting from the financial year 2003-04 the ADVANCES & OURTSTANDING LOANS of the H.P. Sate Cooperative Bank was Rs.62251.31 which increase by 23.76% of base year in 2004-05. In 2005-06 the ADVANCES & OURTSTANDING LOANS further increase and stays about 26.20 % of the base year. in the financial year 2006-07 ADVANCES & OURTSTANDING LOANS increases by large value and become more than base year by 72.86% ,and in the financial year 2007-08 the ADVANCES & OURTSTANDING LOANS increase to the double of the base year And stays at 100.43% more than the base year.

IV.

Different types of deposits during 2003-04 to 2007-08.

FINANCIAL YEAR 2003-2004 2004-05 2005-06 2006-07 2007-08

fixed deposits Amount (in lacks) %age 114078.03 100.00 127209.77 111.51 143534.19 125.82 164930.65 144.58 256182.00 224.57

saving bank deposits Amount (in lacks) %age 46645.40 100.00 54935.85 117.77 60909.66 130.58 69191.63 148.34 82225.30 176.28

current deposits Amount (in lacks) %age 4067.97 100 3414.42 83.93 7097.22 174.46 6647.34 163.40 4163.67 102.35

INFRENCE: STARTING FROM THE financial year 2003-04 the H.P. State Cooperative Bank has the fixed deposits of RS. 114078.03 lack,
the saving bank deposit was about 4665.40 lack and the current deposits was about 4067.97 lacks. In the financial year 2004- 05 the FD increase by 11.5%, SBD increase by 17.77% and there is a fall in the current deposits . In next financial year the FD increase up to 25% , SBD increases up to 30% , CD increase by almost 95% is at 74.46% more respect to the base year. In financial year 2006-07 FD increases slightly more and stays at 44.58% more than base year in case of SBD the increase stands at 48.34% of base year and in case of CD there is decrease in the deposits from last year but stands more than the base year. This means that the trust of the peoples is continually increasing on the bank. V.
FINANCIAL YEAR 2003-2004 2004-05 2005-06 2006-07 2007-08

Borrowing and investment of bank during 2003-04 to 2007-08
borrowings Amount (in lacks) %age 23052.11 23782.36 24218.82 24645.00 18310.21 Investments Amount (in lacks) %age 108196.98 103839.60 105087.78 102774.24 110210.80

100.00 103.17 105.06 106.91 79.43

100.00 95.97 97.13 94.99 101.86

INFRENCE: in the financial year 2003-04 the
borrowings of the bank was about Rs. 23052.11

lacks, the investment of the bank is Rs. 108196.98 lack. In financial year 2004-05 the borrowings increases the bank by 3.17% and the investment of the bank was decreased by 4.03%. in the next financial year the borrowings stays at 5.06% more than the base year and the investment stays at 2.87% less than the base %age . In next year the borrowing increase slightly by 1.85% then last year and the investment further decreases by5.01% than base %age. In the financial year 2007-08 the borrowing decrease positively by 20.57%, the investment increase by 6.87% than previous year which is more than the base year by 1.86%. Thus the income of the bank on investment increases and the expenditure on borrowing decreases effectively. VI. Other liabilities and other assets of bank during 2003-04 to 2007-08
other liabilities Amount (in lacks) %age 2560.01 3950.16 5337.07 5840.05 8819.45 other assets Amount (in lacks) %age 5429.01 7100.40 9231.92 4986.82 7121.47

FINANCIAL YEAR 2003-2004 2004-05 2005-06 2006-07 2007-08

100.00 154.30 208.48 228.13 344.51

100.00 130.79 170.05 91.86 131.17

INFRENCE: - in the financial year 2003-04 the other small liabilities of the bank was about 2560.01 lacks which increases by 54.30% in
next financial year. In financial year 05-06 the liabilities become almost the double of the base year. And in financial year 07-08 the other liabilities of bank become more than 3 times the base year. In case of the assets there is an continues increase in the assets till 2005-06 by 70.05 % and then in 2006-06 there is huge decrease in the other assets about 80% of last year , but in 2007-08 the other assets stays at 31.17% more than the base year . I.e. there is a growth in the bank other assets. it is clear the other liabilities of the bank increases at the higher rate than the increase in the other asset.

2.) RATIO

ANALYSIS :- the ratio analysis of the service sector is slightly different from the production sector . in term of service sector

the ratio analysis depends on certain different aspects. In case of Banking sector we calculate the sum of all liabilities and assets as below( the values are calculated on the bases of average of every month)

LIABILITIES Owned Funds Deposits Borrowing Other Liabilities Total

Amount ( In Lakhs) 38261 273547 22015 12782 346605

ASSETS Cash In hand Loans & Adv. Investments Other assets Total

Amount ( In Lakhs) 13176 108079 211072 14278 346605

Then we find the %age of relative share, interest paid, weighted cost by the following formulas for %of relative share = amount x 100/total , rate per 100 = int. paid / % of relative share x 100, For weighted cost = rate per 100 x %of relative share/100

Cost Of Funds Amount % of Relative Liability ( In Lakhs) Share RESERVES 38261 11.04 i)ACSF 7906 2.28 ii)OTHERS 30355 8.76 DEPOSITS 273547 78.92 YIELD ON ASSETS BORROWING 22015 6.35 Amount % of Relative Intt. Recd. Rate per I)DCCB 7336 2.12 ( In Lakhs) Share 100 ii)Apex Bank 14679 4.24 13176 3.80 Total of 295562 85.27 108079 Deposit 31.18 100743 & Borrowing 29.07 10267.32 10.19 Other Liability 12782 3.69 7336 2.12 TOTAL 346605 100.00 211072 60.90 20325.45 9.63 14278 4.12 346605 100.00 Intt. Paid 201.47 0 19006.14 Weighted Yield 969.76 Rate per 100 2.55 6.95 Weighted Cost 0.06 5.48

ASSETS Cash & Bank Bal. Loan & Adv. Apex Bank DCCB's Investments Other Assets TOTAL

6.61

0.28

2.96 5.82 5.86 8.83

Expenditure Intt. on Deposits

P & L 31.3.2008 Amount ( In Lakhs) Income 19006.14 Interest on loan & adv.

Amount ( In Lakhs) 10267.32

Intt. on ACSF/CDF 201.47 Intt. on borrowing 969.76 Risk Cost (NPA Provision) 1480.55 Premium amortization Cost Of Management 812.54

Interest on investment (SLR and Non SLR) Income From Non Banking Assets Intt on Income Tax Refund Premium amortisation Excess provision written back

20325.45

1369.30

0

4677.64 Other Provisions 686.48 Branch Adjustments Net Profit TOTAL 241.96 4429.18 32505.72

112.72

Branch Adjustments Misc. income TOTAL 0 430.93 32505.72

After the completion of the P&L account the calculation of the financial margin is done as follows:-

CALCULATION OF FINANCIAL MARGIN
Weighted Yield 8.83

Weighted Cost Financial Margin Misc. expenditure as % to W.C. Misc. Inc. as % to W.C. Other Income as %age to WC Cost Of Management Risk Cost as % to W.C NET MARGIN NET PROFIT

5.82 3.00 0.50 0.16 0.40 1.35 0.43

1.28 4429.18 lacks

Financial margin = weighted yield – weighted cost After the calculation of this we reduce different misc. expenditure, inc, etc as % to weighted cost mainly which are not included in the earlier calculation of weighted cost

On the basis of these calculations the different interpretation are calculated these interpretations are based on the 1. Capital adequacy ratio 2. Net worth to average working funds ratio 6.deposit composition ratio 7. Asset compositions ratio

3. Borrowings to average working fund ratio 4. Borrowing to net worth ratio 5. Various Composition of capital ratio

8. Asset quality ratio 9. Profitability ratio 10. Other ratios

INTERPRETATION OF RATIOS SN 1 2 RATIO Capital Adequacy Ratio-Capital to total risk weighted assets Net worth to Average Working Fund INTERPRETATION Higher the capital ratio, higher the capacity of banks to bear risks This ratio shows the share of Net worth to the total working fund. It indicates the strength of the institution. Higher this ratio, better for the institution This ratio indicates the dependency level of the institution on outside support for doing its business. The interpretation of this ratio depends on the sources of borrowings. If the institution's borrowings largely comprised of high cost borrowings, higher the ratio, higher will be the cost of funds This ratio indicates how many times of its Net worth the institution is borrowing. This has to be seen with restrictions, if any, imposed by statute/ bye-laws/ Board on the borrowing powers of the institution and commented upon. 12.47 AS ON 31.3.2008

3

Borrowing to Average Working Fund

4.24

4

Borrowing to Net worth

33.97

5

Composition of Capital a Govt. Share Capital to Total Share Capital Higher the ratio, higher is the control of the Govt. over the institution. But, it also indicates the State's participation and interest evinced by it in strengthening the institution. This ratio may also be seen in the light of adoption of Model Cooperative Societies Act by the State concerned. Higher ratio indicates the higher level of participation of individuals. 30.11

b Share Capital of Individuals to Total Share Capital 6 Composition of Deposits a Current and Savings Deposits to Total Deposits

0.10

The ratio indicates the proportion of low cost deposits in the total deposits. Higher the ratio, better it is for the institution. This would help in keeping down the Financial Cost (FC)

29.08

b Term / Fixed Deposit to Total deposits

This ratio indicates proportion of high cost deposits in the total deposits. Higher ratio indicates higher cost of funds. Institutions should maintain proper mix of low and high cost deposits. Higher ratio indicates the stability of the deposit base of the bank. It has also a bearing on the cost of fund mobilized by the bank. Higher ratio helps in reducing the liquidity risk substantially.

70.92

c Ratio of Time Deposits to Total Deposits d Ratio of Customer deposits to Total assets ( Customer deposits refer to deposits of individuals only) e Ratio of Volatile Liabilities to Total 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.) 7 Asset Composition a Non-earning Assets to Total Assets (Nonearning assets to cash, current account balances, interest receivable, other fixed asset etc.) b Cash and current account balances to Total Demand Liabilities (TDL) c Prime Asset Ratio I.e. Prime assets to Total assets Prime Assets are Cash, Inter-Bank Placements (due within 30 days) and liquid securities d Total investments to TDL

53.79

Lower the ratio, better the liquidity

46.21

This ratio indicates proportion of non-earning assets to total assets. Higher the ratio, lower will be earning ability of the banks. Normally, banks should attempt to maintain non-earning assets at the minimum. Lower the ratio, better it for the bank. This indicates the cash management position of the bank Higher the ratio, better the liquidity

5.78

Higher the ratio, higher is the tendency of the bank for going for risk free earning. However, this ratio will have to be interpreted keeping in view the funds position of the bank, lending

opportunities etc.

e Non-SLR investments to The position is to be examined with reference to Total Investment availability of Non-SLR surplus funds and RBI/ NABARD guidelines in this regard. f Investment in share and debentures to Total Investments. g ST loans outstanding to Total loans outstanding This ratio has to be interpreted keeping in view the instructions issued by RBI /NABRD from time to time. These ratios indicate what proportion of loans and advances are of short-term and long term in nature. 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.

62.87

34.24

h L.T. loans outstanding to total loans outstanding I High yielding advances The ratio indicates the extent of high value to total advances advances in the total loan portfolio. Higher the outstanding ratio, better will be the earning ability of the bank. However, while interpreting this ratio, IO will have to study the extent of impaired assets in this category, appraisal capability of the bank, supervisory mechanism etc. j Ratio of Net loans to Primary deposits primary deposits refer to deposits other than Certificate of Deposits, Interbank Deposits etc. 8 Asset Quality a Standard assets to Total loan assets B Impaired assets to Total loans Higher the ratio, better is the quality of advances portfolio of the bank. Besides more standard assets means more earning capacity of the bank This ratio indicates the extent of poor quality loans. If it is more than 5% of the loan, portfolio, the IO is required to critically examine the impaired assets and their composition and suggest measures for improving the recovery position.

31.05

67.55

87.99

12.01

9

Profitability Ratios a Interest Income to Gross Income b Income from Commission, brokerage and exchange and other sources to Gross Income c Interest paid including interest due but not paid on deposits and borrowings to interest income The ratio indicates the proportion of interest income to the gross income. The ratio indicates the proportion of income from non-fund based business. Higher the ratio, better the profitability of the bank. Normally, this ratio will be around 10% This ratio indicates the proportion of interest income utilized for meeting the interest cost. It also indicates the spread available to the bank to meet the COM and other cost. Very high ratio would indicate serious problem in the bank as to asset liability miss-matches. The ratio indicates what part of the Gross Income goes to meet cost of management. This ratio will have to be compared with State average and peer group averages. The ratio indicates the proportion of interest cost in the total cost. A high level of interest cost indicates a poor level of internal resources position and heavy dependence on outside sources. This ratio indicates the proportion of staff cost in the total expenditure of the bank This ratio indicates at what cost the incremental business of the bank is built up. What is required to be examines is whether the bank is incurring higher incremental expenditure for generating Rs. 100 of additional business. This ratio indicates what portion of the gross income is available. This will have to be examined in relation to statutory restrictions. If any and as per NABARD's guidelines. 13.63 94.12 5.88

65.95

d Cost of Management (CoM) to Gross Income

14.39

e Interest on deposits and borrowings to Total expenditure

71.87

f Staff cost to Total expenditure g Incremental CoM to incremental business

16.66

h Net profit to Gross Income

i Dividend pay out ratio Dividend paid to Net profit

This ratio indicates the % of dividend declared by the bank. This will have to be examined in relation to statutory restrictions. If any and as per NABARD's guidelines.

j Net profit to owned fund k Net profit to average working funds

This ratio indicates return on owned funds The ratio indicates margin of profitability available to the bank

10.25 1.28

l Interest Cost (on deposits and borrowings ) to average Working Funds

This ratio gives the average cost of funds

5.82

m Interest Cost (on loans and advances plus investments ) to average Working Funds n Total provisions made towards impaired assets to Total provision required to be made

This ratio gives the average yield on WF

8.83

This ratio indicates the extent of provisions made by the bank. The bank is required to make full provision as per the prudential norms

o Total provisions required to be made to loans and advances outstanding

This ratio indicates degree of risk of loaning operations in the bank. This ratio should be compared with State, district as well as peer group averages and commented upon.

P Erosion in Assets to Total Assets 10 Other Ratios

This ratio indicates the quality of assets. A higher ratio reflects the poor quality of assets held by the bank.

(I) Net Worth to Total Outside Liabilities

Higher the ratio, better is the intrinsic strength of the bank. This also indicates risk bearing capability of the bank. The ratio indicates the level of staff productivity in the bank. This ratio will have to be compared with State, district and peer group level averages. This can also be compared with per staff breakeven level of business. 357.09

(ii) Business per staff

(iii Per Branch business )

This ratio indicates the level of branch productivity. As in the case of staff productivity, this ratio will have to be compared with that of State, District and peer groups.

2675.11

CHAPTER 4 KEY OPERATIONAL PROCESSES
As when we are in the banking sector or any financial sector there is a need to maintain the record of every monetary or nonmonetary transaction .when we talk about the banks it mainly deals with the cash flow the key operational processes of the bank starts after the time when the customer enters the bank 1st time and it is assumed in the financial institution if a person is your client then it is for life time. In case of the bank the following are the key processes which are the main part of working of the bank 1. Checking of Opening balance 2. Opening of new account 3. 4. Deposition/ Withdrawing of cash (by consumer) Sanctioning of loans

5. Internal process and transactions 6. Other processes 7. 8. Reports preparation Closing balance

Checking of Opening balance: when the day starts the cash in the locker of the bank is Opening of new account

tallied with the balance book of the bank. In the computerization system it is done with the help of check sum option in generated by the system last evening. in the computerized system the account opening system is very easy task. the person who wants to open his account has to fill a application form (attached in annexure) and has to submit a passport size photograph , residence proof , a garreteer, when he fulfill all the requirements his account is opened according to his wish .

The following types of account can be opened in this bank 1. Current t account 4. MlLD 2. Saving account 5. HPD 3. Fixed deposits 6. RD.

Then the operator or clerk after verifying everything opens his accounts by feeding his details into the system. he select the option OPERATIONS under operation select ACCOUNT then ACCOUNT OPEN. New account opening screen will appear . then all the details are filled which are asked by the system . when we save these details then account no. and customer ID is generated by the system itself. These information’s are written down by the operator on the AOF .the account will be confirmed after competent official authorizes the same .after the confirmation of account voucher posting is allowed .

Deposition/ Withdrawing of cash (by consumer): after the opening of account the
deposition and withdrawing is done. The following types of action is done while operating the account 1. Deposition (deposit of cash) 2. Withdrawing (withdrawing of cash ) 3. Transfer (transfer of money from one account to other). All these transactions are done with the vouchers which have to be posted into the system. And is done by selection the option VOUCHER TRANSACTION – VOUCHER. Voucher

posting screen will appear all the vouchers other than the outward clearing voucher can be posted through option While posting the voucher select Cr. for CREDITING, Dr. for DEBITING. and in transaction type select transaction type cash for CASH RELATED TRANSACTION , clg. For CLEARING , tfr for TRANSFER . Account no. in related column After the completion of voucher details, save the transaction. In case of any irregularity the system will display appropriate ‘MESSAGE’ on the screen . At the end of the transaction the system generate the Trn. Now this no. is written down on the front of the voucher in case of transfer after filling the entries in Dr. or Cr. Side of the tfr voucher press the forward arrow (>>) fill the opposite details and then save the some message may appear for the user to take note of the same . Transaction no. for each voucher and batch No. would appear for the user to note down the same. The transaction no. for voucher and batch No. is generated by system

.

Sanctioning of loans: in recent years many banks are providing loans to the customers according to their requirement at different interest rate. Every bank is providing loans according to their preference. The loans provided by state cooperative bank are
1. Personal loan 4. Education loans 7. Self helped group scheme 2. Home loan 5. Non agriculture loan 3. Vehicle loans 6. Minor irrigation

8. Self employed group scheme etc…

The person who wants to get a loan he has to fill the form for required type of loans along with the application form he has to submit the various documents insuring his ability of paying back the loans. Like voter id, copy of rashan card. Income statement, land etc. when the applicant is able to produce the all the required documents then it is on the bank authorities to evaluate that whether the applicant is eligible for getting the loan all the record related to the applicant is maintained in the loan file of applicant. While passing the loan it is

taken care that the after paying the installment and interest the person is able to get 35% amount of money to his home. If the applicant is able to fulfill these criteria then the bank passes his application and his loan s sanctioned after the sanctioning of loan the amount is transferred to the saving account of the applicant and a separate loan account is generated for the applicant and the interest is credited into his account. This loan account no. is then given to the file of the applicant and is maintained on the records. When sanctioned amount is transferred into saving account it is printed as “tfr from loan account”. This generally happen in case of personal loans, house loans etc where the person has to spend money himself. But in case of education loans or vehicle loans the payment is made to the third party as is required to the third party.

INTERNAL PROCESSES AND TRANSACTION: - internal processes involves
the lodging, bouncing, inward clearing, outward clearing, cheque book,
1.

INWARD CLEARING: - It is the process of debiting the cash into the account of
the individuals whose payment is done by the cheque of other banks. Once these cheques are received then are send to clearing house. After clearing these cheque comes to the branch if the issuer account has the enough amount to pay the written amount on the cheque, after the receiving of the inward clearing from the clearing house. the person dealing with the clearing follow this procedure Go to: operation > clearing> inward> entries (Dr.) and the screen will appear like

Then the selection of clearing type is done from the available drop down menu then the total amount is entered as per the clearing statement. under total Doc. Enter total no. of instruments. Then click on “ok” to save the document. Then go back to Voucher Posting Option and enter all the instruments under same clearing type. Returning are also to be entered in the system and through ‘REFER’ and ‘RETURN’ Options reasons for returning and Bank & branch where the instrument is required to be returned are to marked.

To authorize this transaction the authorizing officer has to select Authorization > Clearing > entering inward Clearing type wise: and then make insure that the tallying of two accounts i.e. the amount received from the clearing house and the amount entered in the system.

In the authorization screen the individual cheques are also to be authorized. Physical voucher are also prepared for the inward/outward clearing and returning as in case of manual operations. Posting of these voucher are not required as system itself take care of it.
2.

OUTWARD CLEARING:- It is the process in which the cheques which are
received from the customers are sent for the clearing to the clearing house, so that they are debited and credited in the respective ends. In order to enter the outward clearing the operating person has to select, Operations > Account transaction > Outward Clearing Entries and a screen will appears.

Then enter all the instruments to be sent for the clearing under respective clearing types. In accordance with the instruction of RBI to enter narration for clearing cheques, provision has been made to enter necessary details. Then it is necessary to authorize it before the “DAY ENDS” and lodge the instruments next day for credit to respective A\c’s.
3.

LODGING OF OUTWARD CLEARING:- it is the is the process on lodging
the cleared cheques into account when we select the lodging then the screen appears like

from this screen we can see the lodged cheques and verify them with the report in our hand if there is any outward clearing return then we select the

Clearing > outward > bounced document and the following screen will appear

Then press the detailed button see the details of bounced document if there is no any bounced document then set instrument/ doc equal to zero. Else select the instrument and press “ok” returning is marketed and after authorizing it the amount is reduced from the respective account head and Cr. impress voucher is generated. And then the physical voucher is prepared for the same.
4.

LODGING OF INWARD CLEARING RETURNS:- the screen open for
inward clearing is as in this the operator has to insert the date and then click ok

After authorization of outward bounced document the clearing is automatically released/cleared.

OTHER OPERATIONS:- these processes involves the other operations than normal

operations like issuing of drafts , paying of drafts , locker facilities. These facilities are provided to the customers on very low commission rate. For the issuing of the draft the person has to fill the form and the operating person has to open the draft formation screen in which he has to write the address of the person to whom the draft has to pay, the branch code, amount. Then print the document on the draft sheet which is to be authorized by the authorizing officer.

When the draft reaches the paying branch then the authorizing officer of the bank sanction the draft and are sent to cashier for the payment. In case of the locker facilities the customer has to fill the form for the facility of locker and then after adding locker facility to their account on a minor yearly charge. After the issue of locker to the customer one key of the locker is given to the customer and the other is kept by the bank, when the user wants to open his locker the record of his opening/ visit is kept in a locker book. One of the operating officers inserts the key and the user inserts its key after this user can keep what he wants to keep in that locker. If the user wants to close the locker then user needs to just clear the locker and inform the bank authorities about the matter.

REPORT PREPRARTION:- daily in the bank various types of reports are generated
as the major work portion of the bank. Some common reports are discussed here 1. Customer related report: - various reports related to customer’s viz. account statement, customer advice, balance and interest certificates are available under this option.

2. Day book report:- from this option various long books , transfer journals, clearing journal day book, cash journal etc. are available.

The user could view all the transactions made by him/her from the user transaction details register. And, from the transaction detail resister the user could view all the transactions made between the dates as entered. This is not dependent on the users. Cash journals arte categorized on user type, transaction type and date wise. To open any of the above mentioned report the user need to click on the report and then click on the open option. A sample cash journal for Dr. transaction only is being shown here

3. Control Reports :- various control options viz. detail account statement with transaction, exceptional transaction , rejected transactions, pending vouchers, audit summary, account deposits and interest rates, temporary OD report, reversal voucher report, system voucher report, account debit/ credit summery report, active user list, stop user list, expense comparison statement, transaction exceeding amount, head wise system voucher report, user wise transaction report. ALL reports are used to monitor the transaction of every day. 4. Balance report:- under this options various types of the reports are available like Dormant account list, inoperative and operative account list, daily balance report, Cr & Dr. balance reports, account ledger, summarized balance reports, unclaimed account list, balance above daily D.P., balance below closing amount, and category wise report for all accounts.

An operative account looks like

5. General common reports:- under this option various general common reports can be generated/seen like account related, ending reports, cheque/cheque book elated report, passbook reports, SI related reports, credit limit related report, voucher related report, ladder related and various MIS related report. Various MIS related reports are BSR reports, LBR reports, DCB reports, loans/NPA related reports, ALM reports, low cost deposits reports, analysis of expenses.

Sample

account

holder

list

of

saving

fund

head.

6. Registers: - various registers like open and close account registers, SI received register, lost/stopped cheques register, nomination registers, minor details register and access log register.

Sample lost or stopped register is shown here..

7. Interest Related Reports:- various interest related reports like detailed interest sheet, summarized interest sheet, interest rate change report, HO interest sheet, interest not posted report, etc are included under this option. 8. Clearing Related Reports:- various clearing related reports like Outward clearing, inward clearing, RBI clearing and inward cheque return memo reports are available under this option. There are various reports under each Head described above , like under outwards clearing report , the following reports are available general outward clearing register, lodged outward clearing register, outward clearing return receipt, status of document, summery reports, clearing house holiday report, work done on holiday reports, categories wise report for account holder, lodged document, summarized, authorized documents clearing, clearing extension reports. 9. User Related Reports:- various reports related to the user activities like user type reports, active user reports, all user reports, closed user reports, stopped user reports, revoked user report, one user report, user log report, account edited user wise details are available in this option. Sample user report is shown here

10. Parameter Related Reports: - various type of reports are available in the system to the parameters. These are like reports related to common parameters, account wise parameter, sign & photo parameter, remittances parameter, charges parameter, clearing parameters, locker parameters. Sample common parameter report is

11. HO RELATED REPORTS:- various reports related to HO could be viewed or printed from the following options

Main menu > HO reports Under this option the various types of report are size wise statement, apportionment report, annual return of deposit account.
Sample size wise report for saving fund account head

12. OTHER REPORTS:- various options available under this options are account details with the transaction details, account ledger, cash ledger, scroll ledger same, voucher summery of transaction, summery report, clearing report, day book and cash book. Sample voucher summery of account head saving funds

Under the reports option all the reports are available in English only and bilingual reports are not taken. Bilingual reports take more time during printing than the English printing, and as such some of the internal reports can be taken out from this menu.

CLOSING BALANCE:- after all the transaction in the bank of a particular day the

cashier has to count all the cash in the evening whether it is in the locker or in the hand of the cashier. After counting the amount the cashier tallies the amount with the day report that whether the amount he/she has is equal to the total amount in the bank when the two totals

matches cashier has to mention the record of the cash in the cash record book counting the no. of notes of each type and marking them in their respective rows. This closing balance acts as the opening balance for the next day and the whole process of account transaction to report preparation and then closing balance repeated again every day.

Chapter 5 Swot analysis
The overall evaluation of a business’s strengths, weaknesses, opportunities, and threats is called SWOT analysis. SWOT analysis consists of an analysis of the external and internal environments.

External Environment Analysis

In general, a business unit has to monitor key macroenvironment forces (demographic economic, technological, political-legal, and social-cultural) and microenvironment factors

(customers, competitors, distributors, and suppliers) that affect its ability to earn profits Then, for each trend or development, management needs to identify the associated marketing opportunities and threats. A marketing opportunity is an area of buyer need in which a company can perform profitably. Opportunities can be classified according to their attractiveness and their success probability. The company’s success probability depends on whether its business strengths not only match the key success requirements for operating in the target market, but also exceed those of its competitors. Mere competence does not constitute a competitive advantage. The best-performing company will be the one that can generate the greatest customer value and sustain it over time. An environmental threat is a challenge posed by an unfavorable external trend or development that would lead, in the absence of defensive marketing action, to deterioration in sales or profit. Threats should be classified according to seriousness and probability of occurrence. Minor threats can be ignored; somewhat more serious threats must be carefully monitored; and major threats require the development of contingency plans that spell out changes the company can make if necessary.

Internal Environment Analysis

It is one thing to discern attractive opportunities and another to have the competencies to succeed in these opportunities. Thus, each business needs to periodically evaluate its internal strengths and weaknesses in marketing, financial, manufacturing, and organizational competencies. Clearly, the business does not have to correct all of its weaknesses, nor should it gloat about all of its strengths. The big question is whether the business should limit itself to those opportunities in which it possesses the required strengths or consider better opportunities to acquire or develop certain strengths. Sometimes a business does poorly because its departments do not work together well as a team. It is therefore critically important to assess interdepartmental working relationships as part of the internal environmental audit. STRENGTH: -The strengths of the H.P. State Cooperative Bank depending on its external and internal environment are 1. The bank is spread into only 6 districts due to its limited area it is easy to monitor minor requirements of the customers which may else ignored by other banks. 2. The bank provides the easiest way to open a new account into any of its branch as the customers has to fill minimum requirements which are asked by other banks. 3. The bank has the branches in the remote areas where the branches of other banks are not yet opened which give the bank edge over the other banks.

4. As the bank is a cooperative bank thus bank gets the advantage of getting priority by the different cooperative societies for transactions and loans. 5. Due to the cooperative in nature peoples has faith in the bank. 6. Cooperative staff is the main strength of all the organization as in case of the bank its cooperative staff is the main strength of the bank. 7. Adherence to coop values and principles.

8. The H.P. State Cooperative Bank has well knit organizational structure. 9. The H.P. State Cooperative Bank has deep roots in the community. 10. The H.P. State Cooperative Bank deals the user as not only the customers but also the member of the bank. 11. It has great amount cooperation with other district cooperative banks( Kangra central cooperative bank, Jogindra central cooperative bank ). 12. The H.P. State Cooperative Bank focus on the person of limited means & the poorer section 13. The main priority of The H.P. State Cooperative Bank is member services rather than profit. 14. The H.P. State Cooperative Bank has the capacity to thrive in crisis. 15. The main emphasis of The H.P. State Cooperative Bank is on GLOCALISATION.

WEAKNESSES:1. The H.P. State Cooperative Bank has less resources’ as compared to the other nationalized and public banks. 2. The H.P. State Cooperative Bank staff lacks the professionalism. 3. Political pressures on the employees of the bank as compared to the other banks. 4. There is some sort of government control over the working of The H.P. State Cooperative Bank.
5. In The H.P. State Cooperative Bank dependence syndrome is there. Each person think

his work may be done by the other. 6. No internet banking and mobile banking. 7. ATM network is not well spread like other nationalized and public banks. 8. Most of the branches are not online however they are computerized. 9. Less advertisement is other weakness of The H.P. State Cooperative Bank. 10. Lack of time management. 11. Lack of knowledge about the many aspects of banking to the employees.

12. Due to the restricted area the total capital of The H.P. State Cooperative Bank is limited.

OPPORTUNITIES:1. Being the cooperative bank it has the opportunity to finance the government projects. 2. Providing ATM facilities may take bank a long way. 3. With the growth of axis bank in the term of customers and market share the growth of bank is also permote. 4. As it is a state cooperative bank this bank is bank in demand. 5. Being cooperative bank this bank gets priority over the other banks for cooperative societies. 6. Existence of bank in remote areas.

7. Bank may take the advantage of being cooperative bank by promoting itself.

THREATS:-

1. The main threat to The H.P. State Cooperative Bank is increasing steps/roots of the public banks. 2. Easy policies of the public banks. 3. Less documentation of the public banks for different types of loans. 4. Instant /one minute service provided by some banks. 5. Online banking and mobile banking facilities of other nationalized and public banks 6. Facilities like ZERO BALANCE ACCOUNT by some of public sector banks. 7. Increasing market share of the other bank threaten the H.P. State Cooperative Bank to lose its position in the market.
8. More significant brand image in public acceptance of product and services of public

and nationalized banks as compared to cooperative banks.

CONCLUSION
The present study on H.P. State Cooperative Bank may be concluded as 1. Total no. of branches of bank increased up to 175 in 2008.
2. The total deposits in the bank in 2008 are Rs. 343433 lacks.

3. The total investment of the bank in 2008 is Rs. 219421 lacks. 4. The total loans and advances of the bank in 2008 is Rs. 124765 lacks. 5. The total working capital of the bank for 2008 is Rs. 418300 lacks. 6. The H.P. State Cooperative Bank is working at the apex level in the state. 7. The H.P. State Cooperative Bank has alliance with the UTI for clearing and issuing the bank drafts. 8. The H.P. State Cooperative Bank is running various loans and deposits schemes for the customers. 9. The H.P. State Cooperative Bank has won various awards for its appreciable work done in rural areas. 10. The capital of the bank is increasing continually and is about Rs. 798 lacks, thus the bank has greater chance to bear risk is increasing.

11. The cash in hand or with other banks of The H.P. State Cooperative Bank is continusly increasing and is Rs. 44654.26 lacks.

12. In all the 3 deposits the rate of increasing of fixed deposit is maximum/highest. 13. The investment of the bank is more than the borrowings of the bank from recent years. 14. The average total liabilities/assets of the bank for the financial year 2007-08 are Rs. 346605 lacks. 15. The weighted cost for the liabilities is 5.82; the weighted yield for assets is 8.83. 16. Total average expenditure/income for the financial year 2007-08 is Rs.32505.72 lacks. 17. Ne t profit of the bank for the financial year 2007-08 is Rs. 4429.18 lacks. 18. The financial margin is 3.00, the net margin is 1.28.
19. The bank has higher the capital ratio, thus higher the capacity of banks to bear risks. 20. Net worth to Average Working Fund ratio is 12.47% thus higher the ratio better the

institution.
21. Borrowing to Average Working Fund ratio is 4.24% thus lower the ratio lower will be

the cost of funds.
22. Borrowing to Net worth ratio is 33.97 thus the bank is borrowing more than 33 time

of its net worth.
23. The Govt. Share Capital to Total Share Capital ratio is 30.11%, which means the

government has higher control over the bank as higher the ratio higher the control of the govt. over bank.
24. Share Capital of Individuals to Total Share Capital ratio is 0.10 %which means there

is low level of participations of individuals
25. Current and Savings Deposits to Total Deposits ratio is29.08% it means the bank is in

batter conditions.
26. Term / Fixed Deposit to Total deposits ratio is 70.92% it indicates the higher cost of

funds.

27. Ratio of Customer deposits to Total assets ( Customer deposits refer to deposits of

individuals only) is 53.79% , indicates that the bank has reduced liquidity risk
28. Ratio of Volatile Liabilities to Total 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.) is 46.21% which is on lower side thus the bank has better liquidity.
29. Non-earning Assets to Total Assets (Non-earning assets to cash, current account

balances, interest receivable, other fixed asset etc.) is only 5.78% which is defiantly on the lower side thus the bank has higher ability of earning.
30. The average Per Branch business of the bank is 2675.11 lacks 31. Net profit to Gross Income ratio is 13.63%, Net profit to owned fund ratio is 10.25%,

Net profit to average working funds ratio is 1.28%.
32. Ratio of Interest Cost (on deposits and borrowings) to average Working Funds is

5.82%, ratio of Interest Cost (on loans and advances plus investments) to average Working Funds is 8.83%.
33. The ratio of L.T. loans outstanding to total loans outstanding is 31.05%, ratio of ST

loans outstanding to Total loans outstanding is 34.24%
34. Standard assets to total assets ratio is 87.99%, means more earning capacity of bank.

Ratio of Impaired assets to Total loans is 12.01%.
35. Interest Income adds 94.12% to the gross income of the bank, Interest paid including

interest due but not paid on deposits and borrowings contributes 65.95% to the income through interest.
36. Interest on deposits and borrowings contributes 71.87% in total expenditure. 37. Business per staff ratio of the bank is 357.09 and tells about the productivity of bank

staff.

SUGGESTIONS AND RECOMMENDATIONS
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 H.P. State Cooperative Bank to stay in the competitive market if they adopt these. 1. In order to be competitive in the market, all three –segments of cooperative banks should jointly work out a coordinated strategy for establishing workable synergy to compliment and supplement each other. 2. Cooperative bank has to work out institution specific areas specific strategy keeping in view market, regulatory framework and cooperative values related factors. 3. Healthy relationship should be established with the customer. 4. More mass awareness campaigns should be organized in order to enhance market share of bank. 5. Customer’s satisfaction must be the top priority of the bank 6. More branches should be open at the remote areas of Himachal Pradesh.
7. Maximum practical exposure should be provided to the job trainees so that they may

handle the various enquiries of customer effectively. 8. Bank can provide the facility of ZERO BALANCE ACCOUNT to the students or the employees. 9. Loaning procedure should be simple; less documentation should be involved in the loan sanctioning procedure. 10. Functioning should be fast i.e. the time taken to do any work should be reduced efficiently. 11. Online banking should be provided to customers for their batter service. 12. Customer’s care center should be established.

13. Help line no. should be given to every customer. 14. 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. 15. Credit cards should be provided to the customers according to their reliability. 16. Staff should be more cooperative. 17. Banking timing should be increased from 8 AM to 8 PM. 18. Loaning criteria should be revised. 19. Bank should provide appropriate knowledge about their products. 20. All branches should be online. 21. No inter branch charges should be deduced 22. Commission on bank drafts should be reduced. 23. Proper use of machinery and the infrastructure, assets should done. 24. Usually there is a large time gap between transaction and printing or pass book which need to be reduced. 25. Run different schemas for the different types of customers. Like more interest for those who deposit more than one lack or other. 26. Special line of credit may be extended to rural credit cooperative financing rural women entrepreneurs at interest rate of 4%. 27. There is a need of upward revision of the interest subvention from the present 3% to at least 4.5% in order to meet the requirement of lending short term credit at 7%. 28. Banks should switch over to loan system instead of debentures for giving funds to ARDBs. 29. 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. 30. Bank should adopt the essential feature of good corporate governance i.e. efficiency, professionalization, transparency and accountability. 31. In order to compete at the market place, brand image is of great significance in public acceptance of product and services. 32. Roots should be more deepen into the community.

33. Cooperative bank has fewer resources than required which should be overcome.
34. 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. 35. Employees should be more professional. 36. Policies should be made for the less chances of the NPA. 37. Proper channel for the recovery of the loans should be established. 38. Time to time review of the customers should be done. 39. Transaction more than a particular amount should be made confirmed by the customer by telephonic conversation. 40. Intimation to the customers about the deposition of cheque into their account should be given to the customer by any communication medium. 41. Market status of the bank should be informed to the customers periodically. 42. Customers should be treated as family members. 43. Loans must be given at floating rate of interest to the customer. 44. Door to door campaign should be done. 45. Seminars on the working of the bank should be held time to time. 46. Refresher training to the employees should be given time to time. 47. Staff should be more supportive with the customers. 48. Supporting environment should be provided to the employees. 49. Mobile banking should be included in the future plane of the bank. 50. Bank may strengthen prudential norms and market discipline. 51. Bank should adopt international benchmarks as appropriate to situation. 52. Management of organizational changes and consolidation within the financial system should be done. 53. Website should be updated regularly and the details of the different policies and interest rates must be posted properly. 54. More and more information pamphlets should be provided to the customers. 55. Bank should upgrade the technological infrastructure of the financial system.

56. HRD department should be strengthen.

57. Bank may replace the government guarantee with rating as recommended by Vaidyanathan Task Force.
58. Bank should extend the credit facilities. 59. Bank may promote marketing facilities to the members to sell their produce at

remunerative prices.
60. Bank may provide consumer goods, especially essential commodities under P.D.S

program at reasonable prices.
61. 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.
62. 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, Labour & Construction, Dairy and Tourism etc.
63. Enrollment subsidy should be provided to newly enrolled member of IRD/Scheduled

caste/ Scheduled tribe families, equivalent to value of one share is provided to the beneficiaries to encourage them for becoming members of the co-operative societies.
64.

anagerial subsidy/Interest Subsidy and working capital subsidy being provided engaged in consumer/marketing under special central assistance for special component plant/Tribal area sub-plan.
M

65. Bank should encourage the un-employed educated youth, for organize tourism Co-

operative.

PERSONAL LEARNING
Working with the H.P. State Cooperative Bank as a part of summer training is an highly knowledgeable experience for me as it teaches me various lessons. H.P. State Cooperative Bank is an cooperative bank which is working at the apex level of all Central Cooperative Banks in Himachal Pradesh. While working with this bank I learn many things which are defiantly going to help me in future for my carrier as well as for my moral. The organization

of cooperative bank is different than the other nationalized banks, and thus helps me in having good knowledge of banking sector. It is not a easy work to conclude what I learn from the H.P State Cooperative Bank as what I learnt there is as much valuable as much the knowledge of books for a person. I learn their many valuable facts and some of them are… 1. What is the bank? Why we need a bank? What is the role of banking in our money market?
2.

Various reasons behind the establishment of banks in India.

3. Types of banks in India. 4. Meaning of cooperative bank, need of cooperative bank. 5. Different levels/types of cooperative banks. 6. Positional status, mission, vision, etc of H.P. State Cooperative Bank.
7. How the organization works i.e. organizational structure of H.P. State Cooperative

Bank. 8. Various departments of the bank and how they work.
9. How the research and development is done in H.P. State Cooperative Bank.

10. Leave procedure of the bank and how many leaves a person can take in 1 year. 11. How the recruitment and the transfers of the new/ old employees are done. 12. How the various orders/instructions/circulars are issued to different branches. 13. How they mention the records of all the documents related to anything like instruction issued to different branches or transfer orders or recruitment orders. 14. How the annual reports of the employees are made. 15. Different types of loans facilities provided by the bank to the customers. 16. How the interest is calculated on the loans. 17. Difference between floating rate of interest and fixed rate of interest. 18. What are the different documentation required for person to apply for different loans like for personal loan salary statement, for education loans fee structure of the institute, for vehicles loans the invoice of the dealer, etc...

19. The criteria set by the bank for a person to avail the loan (i.e. person can take his 35% net salary after all deduction of all installments.) 20. Why the bank need a grunter while sanctioning of loans. 21. Responsibilities of the grunter of the person applying for loans. 22. Restrictions on the branch for sanctioning of loans. 23. Procedure of repayment of loans i.e. the installments of loan payment. 24. Procedure of recovery of the loans if not paid at time. 25. Procedure of clearing the guarantee after the payment of loans. 26. Mode of payment of the loans to the customers. 27. How a new account of the person is opened. 28. Documentation involved in opening of new account. 29. What are the responsibilities of the cashier? 30. Different types of accounts in H.P. State Cooperative Bank provided to the customers. 31. Procedure of deposition and withdrawing from the account. 32. Difference between the transfer, deposit, withdrawing, draft forms. 33. How a cheque book is entered, enlisted, issued and destroyed by the bank. 34. Difference between cross cheque and normal cheque. 35. Necessity of authorization of any transaction. 36. How the authorization of the transactions is done by the higher authority. 37. How different types of vouchers are entered into the system. 38. What is inward clearing, why it is necessary? 39. What is clearing, procedure of clearing? 40. Difference between inward and outward clearing.

41. Procedure of outward clearing. 42. What is lodging and bouncing of clearing. 43. How the printing of passbook, drafts, FD is done and how they are authorized after printing. 44. How the day book is generated and printed and then got verified through vouchers. 45. How different types of reports like control report, balance report, general common report, registers, interest related report, clearing related reports, user related reports, parameter related reports and HO related reports are printed and monitored. 46. How to differentiate between the false currency and real currency. 47. Precautions taken by bank not to supply the false currency to the customers. 48. How the bank analyses its market positions. 49. All the figures of the bank are on average basis. 50. Provide Motivation: Job training provides motivation to learn. 51. It provide feel of actual job. 52. Learns the rules & regulations: It help to learn the rules, regulation and procedure by observing their day –to-day application. 53. Teaching of knowledge and skill. Job training relatively short period. 54. Economical Method: This method is very economical because no additional space, equipment, personnel or other facilities are required for training. 55. Teaching of knowledge and skill in short time period: It is appropriate for teaching knowledge and skills which can be learned in short period of time. 56. Practice: Practice makes a Man Perfect .The skills practice on the job training are better learned and less easily for gotten. is the best method for teaching

knowledge and skill which can be acquired through personal observation in a

57. Feedback: On the job training provides information on how much we have learned and how well we are doing. 58. Make possible to feel like part of organization: Summer training make trainees to feel as the part of organization 59. Teach how to work in an organization: it gives practical experience of work in an organization. It teaches how to follow the senior officers and to obey their orders. It helps in understanding how to build healthy relationships within organization. 60. It helps in understanding the competitors & their strategies: This training is useful in knowing the competitors and their different strategies to deal with. 61. The net profit of the bank is 4429.18 lacks

REFERENCES
1. www.hpscb.com

2. www.nabard.com 3. www.google.com 4. www.rbi.com 5. www.bankmate.com 6. Documents provided by the bank employees. 7. Various circulations issued by the bank itself, by RBI, by NABARD.

ANNEXURE I ACCOUNT OPENING FORM

ANNEXURE II MEMORANDUM

ANNEXURE III TRANSFER VOUCHER

ANNEXURTE IV WITHDRAWING FORM

ANNEXURE V DRAFT FORM

ANNEXURE VI DEPOSITION FORM

ANNEXURE VII FORM FOR DEPOSITION BY CHEQUE

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