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Submitted in the partial fulfillment of the award of

degree in

Master of Business Administration (Agri-Business)



College of Horticulture
Dr. Yashwant Singh Parmar University of Horticulture & Forestry

Nauni, Solan (HP) 173230

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.


Date Vikas


Company profile/ Introduction

1.1 History and evolution
1. 1.2 Positional status
1.3 Mission & vision
1.4 Alliance and Joint Ventures.
1.5 Research & development
1.6 Present status
1.7 Awards & other recognitions

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

3. Analysis of annual report

4. Key operational process

5. SWOT Analysis
5.1 Strength
5.2 Weakness
5.3 Opportunity
5.4 Threat

6. Summary and conclusion.

7. Suggestions and recommendations

8. Personal Learning

9. References

10. Annexure
Chapter 1
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

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















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.
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

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.
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 1955 2006 2007 2008

No. of branches 10 154 160 175
Share capital (in lacks) 7.32 757.73 791 798.91
Deposits (in lacks) 41.14 212052 241273 343433
Loans & adv. (in lacks) 29.19 78564 107607 124765
Investment (in lacks) 8.25 170735 1815904 219421
Working capital (in 52.23 278129 312653 418300

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.
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

H.P. state cooperative Bank has various products for the customers like Deposits, Loans,
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
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
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%.
The organizational structure of the H.P. State Cooperative Bank Ltd. Is as shown below

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.
2. BOTH Kangra Central Cooperative Bank and Jogindra Central Cooperative Bank
from their members of board nominate 1 Director each.
3. H.P State Cooperative M&C Federation also nominated 1 director.
4. H.P State Cooperative Agriculture & Rural Development Bank also nominates 1
5. 1 director who represent the Weaver and Industrial Cooperative Societies nominated
by HP Handloom Weaver Apex Cooperative Society Kullu.
6. 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).
7. Registrar Cooperative Societies or its nominee
8. 2 directors (under rules 39 of HP Cooperative Societies rule 1971) are nominated by
the Registrar Cooperative Societies.
9. Managing director as Ex- officio director.
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

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


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

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
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


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”.


there are various methods of annual report analysis the following methods of analysis is
generally used

1. Comparative statement
2. Trend analysis
3. Common size statement
4. Funds flow analysis
5. Ratio analysis
6. Cost volume profit analysis
FINANCIAL YEAR Amount (in lacks) trend percentage
2003-2004 74868500.00 100.00
2004-2005 76198200.00 101.78
2005-2006 75773300.00 101.21
2006-2007 79120700.00 105.68 YEAR 2003-04 TO 2007-08
2007-2008 79891100.00 106.71

Particular 2003-2004(base year) 2004-05 2005-06 2006-07 2007-08

Capital 74868500.00 76198200.00 75773300.00 79120700.00 79891100.00
reserve funds and other funds 1784044114.67 1782884182.76 2009811367.15 2007214709.15 2561016783.94
fixed deposits 11407803231.99 12720977213.59 14353418535.22 16493064660.34 25618203646.98
saving bank deposits 4664540265.58 5493584952.32 6090965527.69 6919163118.36 8222530379.22
current deposits 406796873.58 341542003.46 709722064.79 664733958.72 416367640.71
Borrowings 2305211259.08 2378236712.08 2421882725.08 2464500264.08 1831021333.00
overdue interest revenue 101545736.66 98039421.09 94356053.29 155452173.39 161093725.46
interest payable 22670180.03 22881111.03 25258966.10 32707644.03 26462949.97
other liabilities 256001472.73 395016879.84 533707421.43 584005199.71 881945510.61
Provision 652890247.45 690232611.72 618778674.76 748274591.29 991255093.72
Profits 316641483.84 605758234.25 858676377.19 1152681197.15 1017820170.86

Cash 1032594439.08 660184826.48 63260437.31 1096016735.71 4465424294.39

balance with other banks 2289272341.02 4004907803.33 6770074259.74 7872977039.38 11804482166.93
Investments 10819697915.99 10383959790.50 10508778366.67 10277424381.20 11021080106.00
Advances 6225131399.29 7704446604.18 7856385765.56 10760522714.66 12476970459.87
interest receivable 669359342.01 531392255.53 441310420.58 457048686.73 721916427.51
branch adj 311957832.24 521386862.06 582498257.91 221475603.13 722184042.33
premises less depreciation 43387933.13 36549909.91 30958606.34 74089921.52 86421979.70
other assets 542901283.53 710040384.50 923191533.20 498682440.75 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 Amount (in lacks) %age INFRENCE: Starting from the financial year
2003-2004 10325.94 100.00 2003-04 the capital build up of the H.P. Sate
Cooperative Bank was Rs.74868500.00 which
2004-05 6601.85 63.93
increases by 1.7% of base year in 2004-05. In 2005-
2005-06 6326.20 61.27 06 the capital decreases and remains only about 1.2%
2006-07 10960.17 106.14 of the base year. But in the financial year 2006-07
2007-08 44654.24 432.45 capital increases by large value and become more
than base year by 5.6% ,and in the financial year
2007-08 the capital still increases than the base year and is more than the base year by 6.7%. thus the capital is increasing continually thus the
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. Advances and outstanding loans of the bank from 2003-04 to 2007-08.

FINANCIAL advances & outstanding loans

YEAR Amount (in lacks) %age
2003-2004 62251.31 100.00
2004-05 77044.47 123.76
2005-06 78563.86 126.20
2006-07 107605.23 172.86
2007-08 124769.70 200.43

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.

fixed deposits saving bank deposits current deposits
FINANCIAL Amount (in Amount (in Amount (in
YEAR lacks) %age lacks) %age lacks) %age
2003-2004 114078.03 100.00 46645.40 100.00 4067.97 100
2004-05 127209.77 111.51 54935.85 117.77 3414.42 83.93
2005-06 143534.19 125.82 60909.66 130.58 7097.22 174.46
2006-07 164930.65 144.58 69191.63 148.34 6647.34 163.40
2007-08 256182.00 224.57 82225.30 176.28 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. Borrowing and investment of bank during 2003-04 to 2007-08

borrowings Investments
FINANCIAL Amount (in
YEAR lacks) %age Amount (in lacks) %age
2003-2004 23052.11 100.00 108196.98 100.00
2004-05 23782.36 103.17 103839.60 95.97
2005-06 24218.82 105.06 105087.78 97.13
2006-07 24645.00 106.91 102774.24 94.99 INFRENCE: in the financial year 2003-04 the
2007-08 18310.21 79.43 110210.80 101.86 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 other assets

FINANCIAL Amount (in Amount (in
YEAR lacks) %age lacks) %age
2003-2004 2560.01 100.00 5429.01 100.00
2004-05 3950.16 154.30 7100.40 130.79
2005-06 5337.07 208.48 9231.92 170.05
2006-07 5840.05 228.13 4986.82 91.86
2007-08 8819.45 344.51 7121.47 131.17

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 Amount ( In Lakhs) ASSETS Amount ( In Lakhs)

Owned Funds 38261 Cash In hand 13176
Deposits 273547 Loans & Adv. 108079
Borrowing 22015 Investments 211072
Other Liabilities 12782 Other assets 14278
Total 346605 Total 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 Rate per Weighted
Liability ( In Lakhs) Share Intt. Paid 100 Cost
RESERVES 38261 11.04
i)ACSF 7906 2.28 201.47 2.55 0.06
ii)OTHERS 30355 8.76 0
DEPOSITS 273547 78.92 19006.14 6.95 5.48
22015 6.35
Amount % of Relative Intt. Recd. Rate per Weighted
( In Lakhs) Share 7336 2.12100 Yield
Cash & Bank 13176 ii)Apex Bank3.80 14679 4.24 969.76 6.61 0.28
Bal. Total of
Loan & Adv. 108079 Deposit 31.18 295562 85.27
Apex Bank 100743 & Borrowing 29.07 10267.32 10.19 2.96
DCCB's 7336 Other Liability
2.12 12782 3.69
TOTAL 346605 100.00 5.82
Investments 211072 60.90 20325.45 9.63 5.86
Other Assets 14278 4.12
TOTAL 346605 100.00 8.83

P & L 31.3.2008
Amount Amount
Expenditure ( In Lakhs) Income ( In Lakhs)

Intt. on Deposits 19006.14 Interest on loan & adv. 10267.32

Intt. on ACSF/CDF
Interest on investment
201.47 (SLR and Non SLR) 20325.45
Intt. on borrowing
Income From Non
969.76 Banking Assets 1369.30
Risk Cost (NPA Provision)
Intt on Income Tax
1480.55 Refund

Premium amortization 812.54 Premium amortisation 0

Cost Of Management
Excess provision
4677.64 written back 112.72
Other Provisions
Branch Adjustments Branch Adjustments
241.96 0
Net Profit 4429.18 Misc. income 430.93
TOTAL 32505.72 TOTAL 32505.72

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


Weighted Yield 8.83
Weighted Cost 5.82
Financial Margin 3.00

Misc. expenditure as % to W.C. 0.50

Misc. Inc. as % to W.C. 0.16

Other Income as %age to WC 0.40

Cost Of Management 1.35

Risk Cost as % to W.C 0.43

NET PROFIT 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 6.deposit composition ratio

2. Net worth to average working funds ratio 7. Asset compositions ratio

3. Borrowings to average working fund ratio 8. Asset quality ratio

4. Borrowing to net worth ratio 9. Profitability ratio

5. Various Composition of capital ratio 10. Other ratios

1 Capital Adequacy Higher the capital ratio, higher the capacity of
Ratio-Capital to total banks to bear risks
risk weighted assets
2 Net worth to Average This ratio shows the share of Net worth to the 12.47
Working Fund total working fund. It indicates the strength of
the institution. Higher this ratio, better for the
3 Borrowing to Average This ratio indicates the dependency level of the 4.24
Working Fund 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
4 Borrowing to Net This ratio indicates how many times of its Net 33.97
worth 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.
5 Composition of Capital
a Govt. Share Capital to Higher the ratio, higher is the control of the 30.11
Total Share Capital 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
b Share Capital of Higher ratio indicates the higher level of 0.10
Individuals to Total participation of individuals.
Share Capital
6 Composition of
a Current and Savings The ratio indicates the proportion of low cost 29.08
Deposits to Total deposits in the total deposits. Higher the ratio,
Deposits better it is for the institution. This would help in
keeping down the Financial Cost (FC)
b Term / Fixed Deposit to This ratio indicates proportion of high cost 70.92
Total deposits deposits in the total deposits. Higher ratio
indicates higher cost of funds. Institutions should
maintain proper mix of low and high cost
c Ratio of Time Deposits Higher ratio indicates the stability of the deposit
to Total Deposits base of the bank. It has also a bearing on the cost
of fund mobilized by the bank.
d Ratio of Customer Higher ratio helps in reducing the liquidity risk 53.79
deposits to Total assets ( substantially.
Customer deposits refer
to deposits of
individuals only)
e Ratio of Volatile Lower the ratio, better the liquidity 46.21
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 This ratio indicates proportion of non-earning 5.78
Total Assets (Non- assets to total assets. Higher the ratio, lower will
earning assets to cash, be earning ability of the banks. Normally, banks
current account should attempt to maintain non-earning assets at
balances, interest
receivable, other fixed the minimum. Lower the ratio, better it for the
asset etc.) bank.
b Cash and current This indicates the cash management position of
account balances to the bank
Total Demand
Liabilities (TDL)
c Prime Asset Ratio I.e. Higher the ratio, better the liquidity
Prime assets to Total
assets Prime Assets are
Cash, Inter-Bank
Placements (due within
30 days) and liquid
d Total investments to Higher the ratio, higher is the tendency of the
TDL 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 62.87

Total Investment availability of Non-SLR surplus funds and RBI/
NABARD guidelines in this regard.
f Investment in share and This ratio has to be interpreted keeping in view
debentures to Total the instructions issued by RBI /NABRD from
Investments. time to time.

g ST loans outstanding to These ratios indicate what proportion of loans 34.24

Total loans outstanding 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.
h L.T. loans outstanding to 31.05
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 67.55
Primary deposits
primary deposits refer to
deposits other than
Certificate of Deposits,
Interbank Deposits etc.
8 Asset Quality
a Standard assets to Total Higher the ratio, better is the quality of advances 87.99
loan assets portfolio of the bank. Besides more standard
assets means more earning capacity of the bank
B Impaired assets to Total This ratio indicates the extent of poor quality 12.01
loans 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
9 Profitability Ratios
a Interest Income to Gross The ratio indicates the proportion of interest 94.12
Income income to the gross income.
b Income from The ratio indicates the proportion of income 5.88
Commission, brokerage from non-fund based business. Higher the ratio,
and exchange and other better the profitability of the bank. Normally, this
sources to Gross Income ratio will be around 10%
c Interest paid including This ratio indicates the proportion of interest 65.95
interest due but not paid income utilized for meeting the interest cost. It
on deposits and also indicates the spread available to the bank to
borrowings to interest meet the COM and other cost. Very high ratio
would indicate serious problem in the bank as to
asset liability miss-matches.
d Cost of Management The ratio indicates what part of the Gross Income 14.39
(CoM) to Gross Income goes to meet cost of management. This ratio will
have to be compared with State average and peer
group averages.

e Interest on deposits and The ratio indicates the proportion of interest cost 71.87
borrowings to Total in the total cost. A high level of interest cost
expenditure indicates a poor level of internal resources
position and heavy dependence on outside

f Staff cost to Total This ratio indicates the proportion of staff cost in 16.66
expenditure the total expenditure of the bank
g Incremental CoM to This ratio indicates at what cost the incremental
incremental business 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.
h Net profit to Gross This ratio indicates what portion of the gross 13.63
Income income is available. This will have to be
examined in relation to statutory restrictions. If
any and as per NABARD's guidelines.

i Dividend pay out ratio This ratio indicates the % of dividend declared
Dividend paid to Net by the bank. This will have to be examined in
profit relation to statutory restrictions. If any and as per
NABARD's guidelines.
j Net profit to owned fund This ratio indicates return on owned funds 10.25
k Net profit to average The ratio indicates margin of profitability 1.28
working funds available to the bank

l Interest Cost (on This ratio gives the average cost of funds 5.82
deposits and
borrowings ) to average
Working Funds

m Interest Cost (on loans This ratio gives the average yield on WF 8.83
and advances plus
investments ) to average
Working Funds
n Total provisions made This ratio indicates the extent of provisions
towards impaired assets made by the bank. The bank is required to make
to Total provision full provision as per the prudential norms
required to be made

o Total provisions This ratio indicates degree of risk of loaning

required to be made to operations in the bank. This ratio should be
loans and advances compared with State, district as well as peer
outstanding group averages and commented upon.

P Erosion in Assets to This ratio indicates the quality of assets. A

Total Assets higher ratio reflects the poor quality of assets
held by the bank.
10 Other Ratios
(I) Net Worth to Total Higher the ratio, better is the intrinsic strength of
Outside Liabilities the bank. This also indicates risk bearing
capability of the bank.

(ii) Business per staff The ratio indicates the level of staff productivity 357.09
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 break-
even level of business.
(iii Per Branch business This ratio indicates the level of branch 2675.11
) productivity. As in the case of staff productivity,
this ratio will have to be compared with that of
State, District and peer groups.

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. Deposition/ Withdrawing of cash (by consumer)
4. Sanctioning of loans
5. Internal process and transactions
6. Other processes
7. Reports preparation
8. Closing balance
Checking of Opening balance: when the day starts the cash in the locker of the bank is
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.
Opening of new account 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 2. Saving account 3. Fixed deposits
4. MlLD 5. HPD 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 2. Home loan 3. Vehicle loans
4. Education loans 5. Non agriculture loan 6. Minor irrigation
7. Self helped group scheme 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

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.


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


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

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
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
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
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

13. The main priority of The H.P. State Cooperative Bank is member services rather than

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.

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


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

6. Existence of bank in remote areas.

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

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.
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

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

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

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
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
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

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

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

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

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. Managerial 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.

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

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

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

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

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

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 is the best method for teaching
knowledge and skill which can be acquired through personal observation in a
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.
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






6. Documents provided by the bank employees.

7. Various circulations issued by the bank itself, by RBI, by NABARD.