PATIALA CENTRAL COOPERATIVE BANK

BRIEF HISTORY
The cooperative finance in Patiala was made available by a state owned bank viz. the
STATE BANK OF PATIALA. With taking over the assets and liabilities, the Patiala
Central Cooperative Bank Ltd., Patiala was registered on 28/09/1949 under the
Cooperative Societies Act, 1912. The Bank is presently serving in its 59th year.

CONSTITUTION AND MANAGEMENT

The Bank is managed by a Board of Directors (8 elected by the member Cooperative
Societies and 3 nominated by the Government being member of the Bank having
contributed a handsome amount of Rs. 90 lacs as share capital.

BRANCHES
Apart from its Head Office at Patiala, the Bank has a network of its 43 branches spread
all over the district. 16 out of the 43 branches of the Bank, are working at the Focal
Points- a scheme started by the Government of Punjab in the year 1978.

BUSINESS TURN OVER

The business turn over of the bank for the year 2008-09 was Rs.804067.55 lacs.

RESOURCES
The Bank raises its resources with the collection of share capital, owned funds, deposits
and borrowings.

DEPOSITS
There are various schemes of deposits namely- current deposits, savings bank deposits,
fixed deposits, recurring deposits.

ADVANCES
The Bank advances both in farm and non-farm sector. Total loans outstanding as on
31/03/2009 stood at Rs.71457.74 lacs.

FARMERS CLUB
There are 11 Farmers Clubs working in the district adopted by this bank out of which 3
farmers clubs are newly framed.

OBJECTIVES OF RESEARCH
This research has been conducted
To evaluate the working of Cooperative Banks in the various districts of Punjab. In
this research the financial position of these banks have been analysed.
To evaluate the sources from which the cooperative banks acquire capital for lending
to agriculture and cost of acquisition of funds
To study the progress made in share capital.
To analyse the profitability of the banks

METHODOLOGY
There are two types of data generally collected during a research process Primary data
and Secondary data. In this study secondary data is being used. The time reference of the
study is five years spanning the period 2004-2008. This period enables us to have a
comparative picture of growth of cooperative banks in Punjab.
The secondary data pertaining to financial position, membership, working of
cooperatives, capital structure, lending and borrowings have been collected from
published as well as unpublished sources. RBI publications, statistical statements, annual
reports, records of the bank, various websites, editorials, journals have been referred to
for the purpose.

Wherever required graphs have been used in the report. The simple percentage of growth
rates is calculated. The formula used for calculating percentage change over last year in
2008 is as follows:
(Total of year 2008 - Total of year 2007) / Total of year 2008
For example, In case of total investment of SAS Nagar, percentage change over last year
is calculated as
(Total investment in 2008 total investment in 2007)/ total investment in 2008
i.e. (Rs.11031.99 lacs Rs.11620.00 lacs) / Rs.11031.99 lacs = - 5.33

SAMPLE SIZE
Sample size refers to the number of items to be selected from the set of objects to
constitute a sample (i.e. a part of population that represents the whole population).
Sample size has to be decided while collecting primary data and in this project report
since all the data collected is secondary data therefore no sample size have been taken

INTRODUCTION TO BANKS
A Bank is a financial institution licensed by a government. Its primary activities include
borrowing and lending money. Many other financial activities were allowed over time.
For example banks are important players in financial markets and offer financial services
such as investment funds. The level of government regulation of the banking industry
varies widely, with countries.

DEFINITION
The definition of a bank varies from country to country.
Examples of statutory definitions:
"banking business" means the business of receiving money on current or deposit
account, paying and collecting cheques drawn by or paid in by customers, the making
of advances to customers, and includes such other business as the Authority may
prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2,
Interpretation).
"banking business" means the business of either or both of the following:

receiving from the general public money on current, deposit, savings or other
similar account repayable on demand or within less than 3 months ... or with a
period of call or notice of less than that period;

paying or collecting cheques drawn by or paid in by customers

WIDER COMMERCIAL ROLE

The commercial role of banks is not limited to banking, and includes:
issue of banknotes (promissory notes issued by a banker and payable to bearer on
demand)
processing of payments by way of telegraphic transfer, EFTPOS, internet banking or
other means.
issuing bank drafts and bank cheques
accepting money on term deposit
lending money by way of overdraft, installment loan or otherwise
providing documentary and standby letters of credit (trade finance), guarantees,
performance bonds, securities underwriting commitments and other forms of offbalance sheet exposures
safekeeping of documents and other items in safe deposit boxes
currency exchange
acting as a 'financial supermarket' for the sale, distribution or brokerage, with or
without advice, of insurance, unit trusts and similar financial products

ECONOMIC FUNCTIONS
The economic functions of banks include:
Issue of money, in the form of banknotes and current accounts subject to cheque or
payment at the customer's order. These claims on banks can act as money because
they are negotiable and/or repayable on demand, and hence valued at par. They are
effectively transferable by mere delivery, in the case of banknotes, or by drawing a
cheque that the payee may bank or cash.
Netting and settlement of payments banks act as both collection and paying
agents for customers, participating in interbank clearing and settlement systems to
collect, present, be presented with, and pay payment instruments. This enables banks

to economize on reserves held for settlement of payments, since inward and outward
payments offset each other. It also enables the offsetting of payment flows between
geographical areas, reducing the cost of settlement between them.
Credit intermediation banks borrow and lend back-to-back on their own account
as middle men
Credit quality improvement banks lend money to ordinary commercial and
personal borrowers (ordinary credit quality), but are high quality borrowers. The
improvement comes from diversification of the bank's assets and capital which
provides a buffer to absorb losses without defaulting on its obligations. However,
banknotes and deposits are generally unsecured; if the bank gets into difficulty and
pledges assets as security, to raise the funding it needs to continue to operate, this puts
the note holders and depositors in an economically subordinated position.
Maturity transformation banks borrow more on demand debt and short term debt,
but provide more long term loans. In other words, they borrow short and lend long.
With a stronger credit quality than most other borrowers, banks can do this by
aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions
(e.g. withdrawals and redemptions of banknotes), maintaining reserves of cash,
investing in marketable securities that can be readily converted to cash if needed, and
raising replacement funding as needed from various sources (e.g. wholesale cash
markets and securities markets).
BANKING CHANNELS
Banks offer many different channels to access their banking and other services:
A branch, banking centre or financial centre is a retail location where a bank or financial
institution offers a wide array of face-to-face service to its customers.
ATM is a computerized telecommunications device that provides a financial institution's
customers a method of financial transactions in a public space without the need for a
human clerk or bank teller. Most banks now have more ATMs than branches, and ATMs

are providing a wider range of services to a wider range of users. Also, most ATMs
enable card holders from other banks to get their account balance and withdraw cash,
even if the card is issued by a foreign bank.
Mail is part of the postal system which itself is a system wherein written documents
typically enclosed in envelopes, and also small packages containing other matter, are
delivered to destinations around the world. This can be used to deposit cheques and to
send orders to the bank to pay money to third parties. Banks also normally use mail to
deliver periodic account statements to customers.
Telephone banking is a service provided by a financial institution which allows its
customers to perform transactions over the telephone. This normally includes bill
payments for bills from major billers (e.g. for electricity).
Online banking is a term used for performing transactions, payments etc. over the
Internet through a bank, credit union or building society's secure website.
Mobile banking is a method of using one's mobile phone to conduct simple banking
transactions by remotely linking into a banking network.
Video banking is a term used for performing banking transactions or professional
banking consultations via a remote video and audio connection. Video banking can be
performed via purpose built banking transaction machines (similar to an Automated teller
machine), or via a videoconference enabled bank branch.

TYPES OF BANKS
Banks' activities can be divided into:Retail banking, dealing directly with individuals and small businesses;
Business banking, providing services to mid-market business; corporate banking,
directed at large business entities;

Private banking, providing wealth management services to high net worth individuals
and families;
Investment banking, relating to activities on the financial markets. Most banks are
profit-making, private enterprises. However, some are owned by government, or are nonprofit organizations.
Central banks are normally government-owned and charged with quasi-regulatory
responsibilities, such as supervising commercial banks, or controlling the cash interest
rate. They generally provide liquidity to the banking system and act as the lender of last
resort in event of a crisis.

TYPES OF RETAIL BANKS

Commercial bank: the term used for a normal bank to distinguish it from an investment
bank.
Community Banks: locally operated financial institutions that empower employees to
make local decisions to serve their customers and the partners.
Community development banks: regulated banks that provide financial services and
credit to under-served markets or populations.
Postal savings banks: savings banks associated with national postal systems.
Private banks: banks that manage the assets of high net worth individuals.
Offshore banks: banks located in jurisdictions with low taxation and regulation. Many
offshore banks are essentially private banks.
Savings bank: in Europe, savings banks take their roots in the 19th or sometimes even
18th century. Their original objective was to provide easily accessible savings products to
all strata of the population. In some countries, savings banks were created on public
initiative; in others, socially committed individuals created foundations to put in place the
necessary infrastructure. Nowadays, European savings banks have kept their focus on

retail banking: payments, savings products, credits and insurances for individuals or
small and medium-sized enterprises. Apart from this retail focus, they also differ from
commercial banks by their broadly decentralized distribution network, providing local
and regional outreachand by their socially responsible approach to business and
society.
Building societies and Landsbanks: institutions that conduct retail banking.
Ethical banks: banks that prioritize the transparency of all operations and make only
what they consider to be socially-responsible investments.
Islamic banks: Banks that transact according to Islamic principles.

TYPES OF INVESTMENT BANKS

Investment banks "underwrite" (guarantee the sale of) stock and bond issues, trade for
their own accounts, make markets, and advise corporations on capital market activities
such as mergers and acquisitions.
Merchant banks were traditionally banks which engaged in trade finance. The modern
definition, however, refers to banks which provide capital to firms in the form of shares
rather than loans. Unlike venture capital firms, they tend not to invest in new companies.

BOTH COMBINED
Universal banks, more commonly known as financial services companies, engage in
several of these activities. These big banks are very diversified groups that, among other
services, also distribute insurance hence the term bancassurance, a portmanteau word
combining "banque or bank" and "assurance", signifying that both banking and insurance
are provided by the same corporate entity.

OTHER TYPES OF BANKS

Islamic banks adhere to the concepts of Islamic law. This form of banking revolves
around several well-established principles based on Islamic canons. All banking activities
must avoid interest, a concept that is forbidden in Islam. Instead, the bank earns profit
(markup) and fees on the financing facilities that it extends to customers.

IMPORTANCE OF A BANK
SAFETY OF MONEY:
The money with the bank remains in safe custody there is always risk in keeping cash
with ones own self. It may be lost or stolen. Business man like to keep money with a
bank to avoid risks of money the customer need not keep large some of money.
IT CULTIVATES HABIT OF SAVING:
Banks cultivates the habit of saving in the Bank on the one hand are safe and on the
other earned interest for the depositor who prompted to safe and deposit money in
their banks accounts.
FINANCIAL HELP TO CUSTOMER:
Banks allows overdraft facilities to their customer so whenever a customer needs
money he can even withdraw more money then the balance in his account. Bank also
grants loans and credit facilities to their customers.
SAFE CUSTODY OF VALUABLE ARTICLES :
Valuable articles deals security etc. can also be deposited in the bank for safe custody.
Safe deposit vaults are provided by bank storing for these valuables.
OTHER INFORMATION:
By opening an account with a bank, the customers may also take advantages of
various other services providing by the banks, such a purchase and sale of securities,
travelers cheque etc.

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BANKER-CUSTOMER RELATIONSHIP
Instead of secondary functions banks gave some other important services to his
customers. The main function of banker & customer is as Debtor & Creditor. Banker
works as an agent & also a trustee of his customer.

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INTRODUCTION TO COOPERATIVE BANKING

Cooperative banking is retail and commercial banking organized on a cooperative basis.
Cooperative banking institutions take deposits and lend money in most parts of the world.
The Cooperative banks have a history of almost 100 years. The Cooperative banks are an
important constituent of the Indian Financial System, judged by the role assigned to
them, the expectations they are supposed to fulfill, their number, and the number of
offices they operate. The cooperative movement originated in the West, but the
importance that such banks have assumed in India is rarely paralleled anywhere else in
the world. Their role in rural financing continues to be important even today, and their
business in the urban areas also has increased phenomenally in recent years mainly due to
the sharp increase in the number of primary cooperative banks. While the cooperative
banks in rural areas mainly finance agricultural based activities including farming, cattle,
milk, hatchery, personal finance etc. along with some small scale industries and selfemployment driven activities, the co-operative banks in urban areas mainly finance
various categories of people for self-employment, industries, small scale units, home
finance, consumer finance, personal finance, etc.

DEFINITION
A cooperative bank is a financial entity which belongs to its members, who are at the
same time the owners and the customers of their bank. Cooperative banks are often
created by persons belonging to the same local or professional community or sharing a
common interest. Cooperative banks generally provide their members with a wide range
of banking and financial services (loans, deposits, banking accounts. Even if their
organizational rules can vary according to their respective national legislations,
Cooperative Banks share some common features:

Customer-owned entities: In a cooperative bank, the needs of the customers meet

the needs of the owners, as cooperative bank members are both (customers and
owners). As a consequence, the first aim of a co-operative bank is not to maximize

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profit but to provide the best possible products and services to its members. Some
cooperative banks only operate with their members but most of them also admit nonmember clients to benefit from their banking and financial services.

Democratic member control: Cooperative banks are owned and controlled by their
members, who democratically elect the board of directors. Members usually have
equal voting rights, according to the cooperative principle of one person, one vote.

Profit allocation: In a cooperative bank, a significant part of the yearly profit,

benefits or surplus is usually allocated to constitute reserves. A part of this profit can
also be distributed to the cooperative members, with legal or statutory limitations in
most cases. Profit is usually allocated to members either through a patronage dividend
(which is related to the use of the cooperatives products and services by each
member), or through an interest or a dividend (which is related to the number of
shares subscribed by each member).

FEATURES OF COOPERATIVE BANKS

Cooperative Banks are organised and managed on the principal of co-operation,

self-help, and mutual help. They function with the rule of "one member, one
vote". function on "no profit, no loss" basis.

Cooperative banks, as a principle, do not pursue the goal of profit maximization .

Cooperative bank performs all the main banking functions of deposit

mobilization, supply of credit and provision of remittance facilities. Cooperative
Banks provide limited banking products and are functionally specialists in
agriculture related products. However, cooperative banks now provide housing
loans also.

UCBs provide working capital loans and term loan as well. The State Cooperative
Banks (SCBs), Central Co-operative Banks (CCBs) and Urban Cooperative Banks
(UCBs) can normally extend housing loans upto Rs 1 lakh to an individual.

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The scheduled UCBs, however, can lend upto Rs.3lakh for housing purposes. The
UCBs can provide advances against shares and debentures also.

Cooperative bank do banking business mainly in the agriculture and rural sector.
However, UCBs, SCBs, and CCBs operate in semi urban, urban, and metropolitan
areas also. The urban and non-agricultural business of these banks has grown over
the years.

The cooperative banks demonstrate a shift from rural to urban, while the
commercial banks, from urban to rural.

Cooperative banks are perhaps the first government sponsored, governmentsupported, and government-subsidized financial agency in India. They get
financial and other help from the Reserve Bank of India NABARD, central
government and state governments. They constitute the "most favoured" banking
sector with risk of nationalization. For commercial banks, the Reserve Bank of
India is lender of last resort, but co-operative banks it is the lender of first resort
which provides financial resources in the form of contribution to the initial capital
(through state government), working capital, refinance.

Cooperative Banks belong to the money market as well as to the capital market.

Primary agricultural credit societies provide short term and medium term loans.

Land Development Banks (LDBs) provide long-term loans. SCBs and CCBs also
provide both short term and term loans.

Cooperative banks are financial intermediaries only partially. The sources of their
funds (resources) are:
(a) Central and state government,
(b) The Reserve Bank of India and NABARD,
(c) Other co-operative institutions,
(d) Ownership funds and,
(e) Deposits or debenture issues.

It is interesting to note that intra-sectoral flows of funds are much greater in

cooperative banking than in commercial banking. Inter-bank deposits,

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borrowings, and credit from a significant part of assets and liabilities of

cooperative banks. This means that intra-sectoral competition is absent and intrasectoral integration is high for cooperative bank.

Some cooperative banks are scheduled banks, while others are non-scheduled
banks. For instance, SCBs and some UCBs are scheduled banks but other
cooperative bank are non-scheduled banks. At present, 28 SCBs and 11 UCBs
with Demand and Time Liabilities over Rs.50crore each included in the Second
Schedule of the Reserve Bank of India Act.

Cooperative Banks are subject to CRR and liquidity requirements as other

scheduled and non-scheduled banks are. However, their requirements are less than
commercial banks.

Since 1966 the lending and deposit rate of commercial banks have been directly
regulated by the Reserve Bank of India.

Although the Reserve Bank of India had power to regulate the rate cooperative
bank but this have been exercised only after 1979 in respect of non-agricultural
advances they were free to charge any rates at their discretion. Although the main
aim of the cooperative bank is to provide cheaper credit to their members and not
to maximize profits, they may access the money market to improve their income
so as to remain viable.

TYPES OF COOPERATIVE BANKS

1) STATE COOPERATIVE BANKS (SCBs)
State cooperative banks are a federation of central cooperative banks and act as a
watchdog of the cooperative banking structure in the state. Its funds are obtained from
share capital, deposits, loans and overdrafts from the Reserve Bank of India. State
cooperative banks lend money to central cooperative banks and primary societies and not
directly to farmers.

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FEATURES OF SCBs

These are organized at a state level and are at the apex of three-tier cooperative credit
structure. It is through these banks that RBI provides credit to cooperatives. RBI
generally provides loans to SCB on interest rate, one or two percent lower than bank
rate. There were 28 SCBs, 14 of which were scheduled banks.

They operate as 'balancing centers' for central cooperative banks (CCBs) and raise
funds on their own to make them available to the CCBs and through them or directly
to primary societies in such districts were CCBs are not in operation.

Working capital derives largely from owned funds, deposits and borrowings from
RBI/NABARD.

The share capital in owned funds is raised largely (70%) from affiliated or member
cooperative societies, including CCBs, and practically the rest from the state
government concerned.

SCBs lend almost as short-term loans to cooperative societies for seasons agricultural
operation.

2) CENTRAL COOPERATIVE BANKS (CCBs)

Central cooperative banks are the federations of primary credit societies in a district and
are of two types those having a membership of primary societies only and those having
a membership of societies as well as individuals. The funds of the bank consist of share
capital, deposits, loans and overdrafts from state cooperative banks and joint stocks.
These banks finance member societies within the limits of the borrowing capacity of
societies.
FEATURES OF CCBs

These operate at district level and these are at the middle level in the three-tier
structure.

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Their main function is to lend money to primary societies. The duration of loan varies
from 1 to 3 years.

It can be divided into two parts:

Cooperative Bank Union: Members are only Cooperative societies
Mixed control Cooperative Bank: Members are cooperative societies and
individuals

Their working capital derives from deposits, borrowings and other liabilities and
owned funds.

The share capital is raised from affiliated cooperative societies and the rest from state
governments.

About 75% of the loans of CCBs are short-term and the rest medium-term and mostly
for agricultural purposes.

3) PRIMARY AGRICULTURAL CREDIT SOCIETIES (PACS)

Cooperatives have played a major role in the supply of finance to agricultural sector for
the development of land, irrigation system and for its mechanization. The agricultural
cooperative credit in Punjab is divided into two sectors mainly, one dealing with short
and medium-term credit and the other with the long-term credit. The long term credit is
awarded from the Punjab State Cooperative Land Mortgage Banks at the apex and the
Primary Cooperative Land Mortgage Banks at district/tehsil level.
FEATURES OF PACS

These operate at village level covering about 90% of villages and are in direct
contact with the borrowers.

Minimum 10 persons of the village can form a primary credit society. Their
membership covers about 65% population of the rural households. More than half of
the members of PACS are persons of small means- small farmers, agricultural
laborers and rural artisans and about 25% of them belong to the STs/SCs.

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PACS gives loan to ultimate borrowers and collect repayments of loans given.

These societies grant short-term loans (generally 1 year period) for productive
activities but this period may be extended to 3 years under special conditions.

PACS act mainly as distributional channels for funds mobilized elsewhere. They
suffer from a very high ratio (more than 40%) of over dues to loans outstanding/
demand.

Only members of a PACS are entitled to borrow from it. Most loans are for
agricultural purposes as sinking or repair of wells and purchase of machinery and
cattle.

To attract more deposits, these societies must be in a position to pay higher

interest rates on their deposits than offered by other institutions and must inspire
greater confidence regarding safety of deposits with them.

4) PRIMARY COOPERATIVE BANKS (PCBs)

They are non-agricultural societies. These are of two types:

1. Urban cooperative banks
2. Salary earners societies

Development of PCBs is looked after by the RBI. The RBI and IDBI offer them
concessional refinance facility on a selected basis.

They operate in urban and semi-urban areas. They provide housing finance and loans
and advances for various purposes such as petty trade and industry.

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REVIEW OF LITERATURE

Prof. Gursharan Singh Kainth (1996) carried on a survey regarding the

dynamics of cooperatives in Punjab. In this study, he said that cooperatives have
played an important role in the development and growth of rural Punjab. The only
need of the cooperatives is to be manned by the highly competent and motivated
people. According to his study the membership of the cooperative societies in Punjab
continued to increaseat the annual growth rate of 2.62% during the period1970 to
1996. During the study period share capital per society increased at the growth rate of
+9.67% per annum. As a result of growth in share capital as well as owned funds,
working capital per society showed an increase of +12.31% annually. The main cause
of failure of the un-successful societies was dishonest and inefficient management.
The only need of the cooperatives is to be manned by the highly competent and
motivated people. All that needs to be done is running of cooperatives on the basis of
business principles. The profits can then be channelised in whichever way as required
to meet the social goals.

Daman Prakash (1999) studied the contribution of cooperatives to social

development. He said that cooperative institutions as a vital component of civil
society with strong ties to local communities, form a particular important vehicle for
the development of marginalized sections of the society. They, however, suffer from
lack of both financial and human resources. Their effectiveness can be substantially
enhanced through personnel training, members education, the exchange of
experiences with counterparts in other countries, and access to regional and
international information sources in their fields of interest.

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Prof. N.K. Sinha states that cooperative bank serves the needs of the rural sector
in general and the agricultural sector in particular. The cooperative banks work on the
principles of cooperation that is the reason why cooperative banks get financial
assistance from RBI on concessional rate. Cooperative bank can operate its activities
only within a limited area and cannot open its branches in foreign countries. Despite
several organizational weaknesses, village level primary cooperative credit societies
are best suited to the socio-economic conditions of Indian Village.

According to Prof. L.M.Bhole cooperative banks suffer from many weaknesses,

for example,
They are too small in size to be economical and viable
With the expanding credit needs of the rural sector, commercial banks have come
in actively to meet the credit requirements of this sector
They suffer from infrastructural weaknesses and structural flaws
They suffer from too much officialisation and politicization
Prof.L.M.Bhole favors the recommendations made by Khusro Committee saying that
it rightly felt that cooperative banks must work as a total system and develop selfreliance. Prof. Bhole says that there is much scope for further improving deposit
mobilization and this is a key to self-reliance.

R.Ganesan in his article Procurement of agricultural and minor forest produceProblems and Prospects stated that the real progress of the cooperatives at the
grass-root level is not good. Hence, the marketing cooperatives have to formulate
new strategies to create employment opportunity in its area, by undertaking
processes by which they can arrest the migration of rural youth to urban areas.

Koeva (2003) examined a variety of financial indicators of banks and concluded

that ownership has a significant effect on some of the performance indicators and
deregulation has led intermediation costs and to lower profitability.

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Bhaumik and Dimova (2004) studied the presence of bank competition in Indian
states. They found that competition from foreign banks has been very small as
compared to the established presence of

public sector banks. Bhaumik and

Dimova, using profitability indicators in their analysis, have observed that for
cooperative banks during the period 1996 to 2000, size of the banks seem to
have had a negative impact overall on their performance.

Views of some famous personalities regarding cooperatives

Mr. Ivano Barberni, president, International Cooperative Alliance (ICA) said

that the cooperative principles can help corporates build up trust in the time of
economic crisis

Shri G.H.Amin, President, National Cooperative Union of India, said that in the
times of economic recession the cooperatives are strong enough to fulfill the
needs of the common man. He further added that liberalization of the cooperative
movement by providing greater autonomy to cooperatives would be the most
befitting tribute to the memory of late Mehta who was true architect of
cooperative movement.

Shri Sharad Pawar, Union Agriculture Minister, said that one of the serious
problems of the cooperative institutions is that there is too much government
interference.

Shri Krishna Lavekar, State Commissioner for Cooperation and Registrar,

Cooperative societies said The task force would serve as an advisory board and
would comprise of technical experts and professionals to monitor and ensure
transparency in the management and administration of cooperative societies. The

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task force would also serve as a think tank and provide inputs for the management
of the cooperatives.

Punjab Cooperation Minister, Captain Kanwaljit Singh said Rural cooperatives

have a collective bargaining power that individuals do not.

Punjab Chief Minister Shri Prakash Singh Badal stated,Professional

cooperative leaders could well be the answer to the ills being faced by the
cooperative movement which needed to be taken out of the control of
bureaucrats.

In the inaugural address Shri Vepa Kamesam, Deputy Governor, RBI, talked
about strengthening corporate governance in the cooperative banks of India.
Some of the highlights of his speech were as follows:
Corporate governance especially in the co-operative sector has come into
sharp focus because more and more co-operative banks in India, both in urban
and rural areas, have experienced grave problems in recent times which has in
a way threatened the profile and identity of the entire co-operative system.
These problems include mismanagement, financial impropriety, poor
investment decisions and the growing distance between members and their cooperative society.
Professionalism reflects the co-existence of high level of skills and standards
in performing duties entrusted to an individual. The absence of a proper
system of placement and skill upgradation inputs constrain professional
management in co-operative banks.
The cooperative banks should indeed work like professional organizations on
sound managerial systems in tune with the needs of the time taking care of
future projections of requirements to retain and improve their market share
and identity in the long run.

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 One of the areas which requires focused attention is greater transparency in

the balance sheets of co-operative banks
One prime component of the investment portfolio of the co-operative banks
which has attracted a lot of attention -unfortunately for all the wrong reasons is their transaction in government securities. So much so that it has even
triggered the holding of todays Convention.

The One important issue that has engaged much attention in the recent past is the
duality of control over co-operative banks. The core principles of supervision in
relation to co-operative banks have thus to be formulated and implemented by the
Reserve Bank in respect of UCBs and by NABARD in respect of SCBs and
DCCBs

Punjab State Cooperative Bank Chairman Jasjit Singh Bunny said that the
cooperative banks in Punjab would be soon interlinked through networking and
all its branches would be computerized soon. He was addressing a press
conference after taking over as the Chairman of the bank on December 20, 2007.

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BANKING IN INDIA
Without having sound and effective banking system India cannot have healthy economy.
The banking system of India should not only be hassle free but it should be able to meet
new challenges posed by the technology and any other external and internal factors.
Banking in India originated in the last decades of the 18th century. The oldest bank in
existence in India is the State Bank of India, a government-owned bank that traces its
origins back to June 1806 and that is the largest commercial bank in the country. Central
banking is the responsibility of the Reserve Bank of India, which in 1935 formally took
over these responsibilities from the then Imperial Bank of India, relegating it to
commercial banking functions. After India's independence in 1947, the Reserve Bank was
nationalized and given broader powers. In 1969 the government nationalized the 14
largest commercial banks; the government nationalized the six next largest in 1980.
Currently, India has 293 scheduled commercial banks (SCBs) - 27 public sector banks
(that is with the Government of India holding a stake), 30 private banks (these do not
have government stake; they may be publicly listed and traded on stock exchanges) and
40 foreign banks.
The oldest bank in existence in India is the State Bank of India, which originated in the
Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal.
This was one of the three presidency banks, the other two being the Bank of Bombay and
the Bank of Madras, all three of which were established under charters from the British
East India Company. For many years the Presidency banks acted as quasi-central banks,
as did their successors. The three banks merged in 1925 to form the Imperial Bank of
India, which, upon India's independence, became the State Bank of India

24

STRUCTURE OF INDIAN BANKING

RESERVE BANK OF INDIA

(RBI)

SCHEDULED BANKS IN INDIA

COMMERCIAL BANKS

COOPERATIVE BANKS

URBAN
COOPERATIVES (52)

REGIONAL
RURAL
BANKS (196)

PRIVATE
SECTOR
BANKS (30)

PUBLIC
SECTOR
BANKS (27)

FOREIGN
BANKS
(40)

NATONALIZED
BANKS (19)
OLD
(22)

STATE
COOPERATIVES(16)

SBI AND ASSOCIATE

BANKS (8)

NEW
(8)

25

EARLY HISTORY
The period between 1906 and 1911, saw the establishment of banks inspired by the
Swadeshi movement. The Swadeshi movement inspired local businessmen and political
figures to found banks of and for the Indian community. A number of banks established
then have survived to the present such as Bank of India, Corporation Bank, Indian Bank,
Bank of Baroda, Canara Bank and Central Bank of India.

FROM WORLD WAR 1 TO INDEPENDENCE (1914-1947)

The period during the First World War (1914-1918) through the end of the Second World
War (1939-1945), and two years thereafter until the independence of India were
challenging for Indian banking. At least 94 banks in India failed between 1913 and 1918
as indicated in the following table:
Table 1
Number of

Authorized

banks

capital

that failed

(Rs. Lakhs)

1913

12

274

35

1914

42

710

109

1915

11

56

1916

13

231

1917

76

25

1918

209

Years

Paid-up Capital
(Rs. Lakhs)

POST-INDEPENDENCE
The partition of India in 1947 adversely impacted the economies of Punjab and West
Bengal. The Government of India initiated measures to play an active role in the

26

economic life of the nation, and the Industrial Policy Resolution adopted by the
government in 1948 envisaged a mixed economy. The major steps to regulate banking
included:
In 1948, the Reserve Bank of India, India's central banking authority, was nationalized,
and it became an institution owned by the Government of India.
In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of
India (RBI) "to regulate, control, and inspect the banks in India."
The Banking Regulation Act also provided that no new bank or branch of an existing
bank could be opened without a license from the RBI, and no two banks could have
common directors.

NATIONALISATION
By the 1960s, the Indian banking industry has become an important tool to facilitate the
development of the Indian economy. At the same time, it has emerged as a large
employer, and a debate has ensued about the possibility to nationalize the banking
industry.
In July 1969, 14 largest commercial banks were nationalized. Nationalization of 6 more
commercial banks followed in 1980. The stated reason for the nationalization was to give
the government more control of credit delivery.

LIBERALISATION
In the early 1990s, the then Narsimha Rao government embarked on a policy of
liberalization, licensing a small number of private banks which later amalgamated with
Oriental Bank of Commerce, Axis Bank (earlier as UTI Bank), ICICI Bank and HDFC
Bank. This move, along with the rapid growth in the economy of India, revitalized the
banking sector in India, which has seen rapid growth with strong contribution from all the
three sectors of banks, namely, government banks, private banks and foreign banks.

27

In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in
Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor
has been allowed to hold more than 5% in a private sector bank since the RBI announced
norms in 2005 that any stake exceeding 5% in the private sector banks would need to be
vetted by them.
Currently (2007), banking in India is generally fairly mature in terms of supply, product
range and reach-even though reach in rural India still remains a challenge for the private
sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks
are considered to have clean, strong and transparent balance sheets relative to other banks
in comparable economies in its region. The Reserve Bank of India is an autonomous
body, with minimal pressure from the government.

28

ORIGIN OF COOPERATIVE BANKS IN INDIA

The origins of the cooperative banking movement in India can be traced to the close of
nineteenth century when, inspired by the success of the experiments related to the
cooperative movement in Britain and the cooperative credit movement in Germany, such
societies were set up in India. Cooperative banks are an important constituent of the
Indian financial system. They are the primary financiers of agricultural activities, some
small-scale industries and self-employed workers. The Anyonya Cooperative Bank in
India is considered to have been the first cooperative bank in Asia.
Cooperative movement is quite well established in India. The first legislation on
cooperation was passed in 1904. In 1914 the Maclagen committee envisaged a three tier
structure for cooperative banking viz. Primary Agricultural Credit Societies (PACs) at the
grass root level, Central Cooperative Banks (CCBs) at the district level and State
Cooperative Banks (SCBs) at state level or Apex Level. The first urban cooperative bank
in India was formed nearly 100 years back in Baroda.
Cooperative Institutions are engaged in all kinds of activities namely production,
processing, marketing, distribution, servicing, and banking in India and have vast and
powerful superstructure. Cooperative Banks are important cogs in this structure.
In the beginning of 20th century, availability of credit in India, more particularly in rural
areas, was almost absent. Agricultural and related activities were starved of organized,
institutional credit. The rural folk had to depend entirely on the money lenders, who lent
often at usurious rates of interest.
The cooperative banks arrived in India in the beginning of 20th Century as an official
effort to create a new type of institution based on the principles of cooperative
organization and management, suitable for problems peculiar to Indian conditions. These
banks were conceived as substitutes for money lenders, to provide timely and adequate
short-term and long-term institutional credit at reasonable rates of interest. In the

29

formative stage Cooperative Banks were Urban Cooperative Societies run on community
basis and their lending activities were restricted to meeting the credit requirements of
their members. The concept of Urban Co-operative Bank was first spelt out by Mehta
Bhansali Committee in 1939 which defined on Urban Cooperative Bank. Provisions of
Section 5 (CCV) of Banking Regulation Act, 1949 (as applicable to Co-operative
Societies) defined an Urban Cooperative Bank as a Primary Co-operative Bank other than
a Primary Cooperative Society was made applicable in 1966.

STRUCTURE OF COOPERATIVE BANKING

RBI

NABARD

SCBs

SLDBs

CCBs

CLDBs

UCBs

PACS
PLDBs

SCBs:

BRANCHES OF SLDBs

State Cooperative Banks

SLDBs: State Land Development Banks

UCBs:

Urban Cooperative Banks

CCBs:

Central Cooperative Banks

CLDBs: Central Land Development Banks

30

PACS:

Primary Agricultural Credit Societies

PLDBs: Primary Land Development Banks

The Punjab State Cooperative Bank Ltd., Chandigarh

The Punjab State Cooperative Bank was established at Shimla in the year 1949 at Apex
of three tier short term Cooperative Credit structure as a principle financing institution of
the cooperative movement in Punjab. In 1951 its Head Office was shifted to Jalandhar
from where it moved in 1963 to its present building at Chandigarh. In the cooperative
Banking structure, the position of the Punjab State Cooperative Bank is extremely
important as the whole credit system revolves around it. It has 3 Divisional Offices at
Amritsar, Bhatinda and Jalandhar. It has 19 branches and 3 extensions counters operating
in the city of Chandigarh. Besides this, there are 20 District Central Cooperative Banks
having 805 branches and 23 extension counters in the State of Punjab affiliated with it.
The bank was established to help to provide timely and adequate flow of credit to the
farmers for agriculture and allied activities through PACS.
OBJECTS :
The objects for which the Bank is established are as under :1. To serve as a balancing center for cooperative societies (herein called the
society/societies) in the State of Punjab registered under the Act for the time being in
force.
2. To promote the economic interest of the members of the Bank and Cooperative
Societies in the State in accordance with cooperative principles and to facilitate the
development and funding of any Cooperative Society registered under the said Act.
3. To establish and support or aid in the establishment of and support to association,
institutions, funds, trusts and convenience designed to benefit the employees or exemployees of the Bank or the dependents or connections of such persons to grant
pensions and allowances and make payment toward insurance.

31

4. To provide long term loan for the maximum period of 15 years to the individuals,
Coop. House Building Societies, Federation of Coop. House Building Societies and
members of Group Housing Societies for purchase of house or construction thereof
by enrolling member/nominal members so as to read as 4.4. To carry on banking and
credit business not repugnant to the provisions of the Act and the Rules framed there
under for the time being in force and in particular to provide credit facilities to the
members. Providing Long Term Loan for the maximum period of 15 years to
individuals, Coop. House Building Societies and members of Group Housing
Societies for purchase of house or construction thereof by enrolling members/nominal
members.
5. To adopt such measures as are conducive to the spread of cooperative education and
training.
6. To promote and develop Cooperative Societies in the State.
7. To do all such other things as are incidental or conducive to the promotion or
advancement or objects of the Bank.
8. To solicit or procure insurance business as a Corporate Agent.
Main activities/functions of the bank
To accept deposits of money from the public for the purpose of lending and
investment.
Services provided by the Bank:
I. Deposits
1. Saving Bank Account
2. Current Account
3. Fixed Deposits
4. Long Term Deposits
5. Recurring Deposit
6. Collection of drafts, cheques and various other instruments.

32

II. Loans
Loans to Public:
i) Consumer durable loans
ii) Personal Loan to salary class
iii) Housing Loan
Loans to Central Cooperative Banks: (Re-finance)
i) Short term agriculture loan
ii) Medium term agriculture loan.
iii) Short term non-agriculture loan (Consumption Loan)
iv) Non farm sector loan
v) Rural and Urban Housing Loan
vi) Two wheeler loan
vii) Revolving cash credit limit to farmers (RCC)
viii)Cash Credit Fertilizer
ix) Cash Credit Limit to Cooperative Sugar Mills
Loans to other cooperative Apex Institutions:
i) To Housefed Pb.
ii) To IFFCO

ORGANISATIONAL STRUCTURE
The bank operates in the city of Chandigarh having 19 branches and 3 extension
counters. It has 3 Divisional Offices in Punjab at Amritsar, Jalandhar & Bathinda.
The organizational structure is as under:Divisional Offices

Amritsar

33

Jalandhar

Bathinda

District Central Cooperative Banks

1. Amritsar

1. Jalandhar

1. Bathinda

2. Tarantaran

2. Hoshiarpur

2. Fazilka

3. Gurdaspur

3. Kapurthala

3. Faridkot

4. Ferozepur

4. Ludhiana

4. Mansa

5. Moga

5. NawanShahar

5. Muktsar

6. Patiala

6. Sangrur

7. Ropar
8. Fatehgarh Sahib

COOPERATIVE CREDIT POLICY 2001-2006

The Cooperative Credit Institutions are distinctively structured to provide for short-term
and long-term credit needs of the farmers in the State. The Punjab State Cooperative
Bank (PSCB) and its constituent 20 Central Cooperative Banks (CCBs) and 4000
Primary Agricultural Cooperative Service Societies (PACS) direct and deliver short-term
production credit to the farmers. The Punjab State Cooperative Agricultural Development
Bank (PSADB) and its constituent 84 Primary Cooperative Agricultural Development
Banks (PADBs) cater to long term credit needs of the farmer. These institutions are
committed to promote and sustain economic interests of their members and customers in
keeping with the principals of self-help, self-responsibility and self-administration. They
facilitate development of their members by providing easy, timely, cost-effective and
quality services.
Short-term Cooperative Credit in the State has increased from Rs.7.60 crore in 1965
to Rs.2364.00 crore in 2000.

34

 Similarly, Long-term Cooperative Credit has increased from Rs.1.64 crore in 1965 to
Rs.375.00 crore in 2000.
Estimates indicate that nearly 70% of credit needs of the farmers are met by
Cooperative Financing Institutions. They have been able to do so with a very high
rate of recovery, which was 96.30% in case of PSCB, 90.7% in case of CCBs and
80% for PADBs in 1999-2000.

35

PERFORMANCE EVALUATION

Performance of PUNJAB STATE COOPERATIVE BANK

ACHIEVEMENTS & AWARDS
DEPOSITS
The deposits of Central Cooperative Banks have touched Rs.577784.57 lacs as on
31.03.2008, showing an increase of 13.17 over the last year upto this date. The deposits
of the State Coop. Bank have increased from Rs.138775.06 lacs as on 31.3.2007 to
Rs.156564.46 lacs upto 31.3.2008, showing a net increase of 12.82% .
AGRICULTURAL ADVANCES

Short Term Agricultural advances

During the year 2007-2008, the Punjab State Cooperative Bank has advanced loans of
Rs.1950.49 crore upto 31.12.2008 against the target of Rs.1550.00 crore for financing
agro-inputs for crop production.

Medium Term Agricultural advances

The Central Cooperative Banks have advanced Rs.6.80 crore as Medium-term
Agricultural advances in the State upto 31.10.2008. This loan is given to farmers for
undertaking activities allied to agriculture.

36

REVOLVING CASH CREDIT

Under the scheme, the Central Cooperative Banks have sanctioned credit limits of
Rs.655.55 crore to 69620 farmers upto 31 January 2001. The rate of interest is 15
15.5%.
NON-FARM SECTOR LOAN
The most important feature of the cooperative banks in the State is that they started
advances of Non-Farm Sector during the year 1993. The Central Cooperative Banks have
advanced Rs.5546.13 lacs in 2007-2008. These loans are mainly given to rural youth for
self-employment.
The Punjab State Cooperative Bank is providing non-agricultural loans to Sugar Mills,
Spinning Mills, HOUSEFED, MARKFED, MILKFED and Central Cooperative Banks.
Rs.321.65 crore have been sanctioned to these institutions.
LOANS FOR CONSUMER DURABLES TO SALARY EARNERS
With a view to provide credit facilities to their customers, the Cooperative Banks
introduced a scheme of loans for purchase of consumer durables. Under the scheme,
every Government/semi-Government employee is provided loan upto Rs.50000/repayable in 3-5 years in easy monthly installments. The loan can be utilized for purchase
of TV, Refrigerator, Scooter, Furniture etc. A significant section of the salaried class has
benefited from the scheme. More than Rs.174 crore have been advanced under the
scheme upto 2008.
CASH CREDIT TO BUSINESSMEN AND TRADERS
With a view to diversify and benefit the small retail traders/ businessmen, the
Cooperative Banks started a cash credit scheme in the year 1997. Under this scheme, a
Cash Credit Limit is sanctioned upto Rs.10.00 lakh to small businessmen and traders,

37

depending upon their business turnover on easy terms at a normal rate of interest. Small
shopkeepers and petty traders, who were earlier deprived of institutional finance, are
covered under the scheme, particularly, in rural and semi-urban areas where other banks
are not advancing such type of loans. During the current year, more than Rs.50.00 crore
have been advanced under the scheme.
COLLECTION OF ELECTRICITY BILLS
Keeping in view the difficulty faced by rural people in paying of electricity bills at far off
places and Cities, it has been decided that from 1 February 2001, all branches of CCBs in
the State will accept payment of Electricity Bills on behalf of Punjab State Electricity
Board.

38

PERFORMANCE OF DISTRICT CENTRAL COOPERATIVE BANKS

Share of Deposits in PUNJAB
Table 2
As on 31/03/2007

As on 31/03/2008

As on 31/03/2009

3.64

3.72

3.20

11.49

14.38

29.11

-5.44 Due to

16.30

11.16

% age share of Deposit

of CCB in district.
Growth rate to total
deposits in district
Growth rate of deposits
of CCB

Mohali

From the above table it is clear that growth rate of deposits of the central cooperative
banks have been decreasing since last year though it has shown an increase on
31/03/2008.
GRAPHICAL PRESENTATION OF SHARE OF DEPOSITS

%age share of deposit of CCB

Growth rate to total deposits
Growth rate of deposits of CCB

39

PERFORMANCE OF AMRITSAR CENTRAL COOPERATIVE BANK

The cooperative movement in the district was started after the enactment of the
Cooperative Societies Act, 1904, and the subsequent Act of 1912. The first two
cooperative Societies in the district were organized and registered in 1908 in the villages
of Pakharpura and Ramdewali, Tahsil Amritsar. The movement gained momentum with
the passage of the Acts of 1954 and 1961. Consequently, a number of co-operative
societies came into being at various places in the district.A Central Co-operative Bank
also functions at Amritsar, with branches at Rayya, Patti and Tarn Taran. Most of the
funds for industrial co-operative societies are available from co-operative banks. Credit
facilities are also given by private entrepreneurs. The co-operative societies also get
subsidies, grants-in-aid and loans from Government for the purchase of machinery,
equipment, raw materials, etc.
The total borrowings of the bank are increasing at a faster pace than the owned funds.
This is clear from the percentage change over last year for both the particulars i.e. total
borrowings change has been calculated as 43.39% as compared to 29.04% change for
owned funds. The profits of the bank are found to be decreasing. It was found that there
has been profits in negative terms since last two years i.e. a total loss of about 1400.42
[(-86.82) + (-1313.60)]. Total Advances Outstanding are increasing every year.

40

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 3
%AGE
AS ON

AS ON

AS ON

AS 0N

AS ON

CHANGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

31.3.2008

OVER
LAST
YR.

SHARE
CAPITAL
OWNED

331.85

335.99

362.30

411.72

482.53

17.20

FUNDS

1357.79

1612.14

2023.09

2137.49

2758.34

29.04

DEPOSITS
TOTAL

24617.46

24862.95

27199.06

29769.13

32687.71

9.80

BORROWINGS
TOTAL

8746.45

8543.94

8542.25

10232.57

14672.04

43.39

INVESTMENTS
TOTAL

7044.95

6518.98

7201.86

8528.49

10560.64

23.83

ADVANCES

25334.74

26691.86

28037.02

30877.40

36461.86

18.09

PROFITS

252.46

58.18

78.65

-86.82

-1313.60

--

LOSSES

--

--

--

--

1400.42

OUTSTANDING

PERFORMANCE OF BATHINDA CENTRAL COOPERATIVE BANK

41

Central Cooperative Bank at Bathinda has a network of 46 branches all over the district.
The main activity of the bank is raising of deposit of loans to its member cooperative
societies. There are 4 Primary Cooperative Land Mortgage Banks functioning in the
district one each at Bathinda, Mansa, Talwandi Sabo and Rampura Phul.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 4
%AGE
AS ON

AS ON

AS ON

AS 0N

AS ON

CHANGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

31.3.2008

OVER
LAST YR.

SHARE
CAPITAL
OWNED

540.92

544.53

588.25

619.59

700.77

13.10

FUNDS

1778.98

2195.71

2215.53

2578.50

2683.79

4.08

DEPOSITS
TOTAL

18067.51

20915.01

23014.75

24942.73

28805.60

15.48

BORROWINGS
TOTAL

9639.92

11370.30

13994.09

17872.21

21875.40

22.40

INVESTMENTS
TOTAL

4218.60

4563.02

5445.33

5862.97

7786.23

32.80

ADVANCES

21765.02

25717.47

30111.23

36316.74

42641.00

17.41

333.50
--

418.00
--

354.66
--

24.80
--

41.11
--

---

OUTSTANDING
PROFITS
LOSSES

The owned funds of the bank though increasing every year but at a very slow rate as
compared to total borrowings. If we see the change for last year then it is found that rate
of increase of owned funds (4.08%) is almost negligible in comparison to (22.40%)
increase in total borrowings. The profits of the bank for the year 2005 were observed to
be Rs.418 lacs and in 2008 this amount has fallen to Rs.41.11 lacs. No losses have been

42

faced by the bank as yet. The total advances have increased from 21765.02 in 2004 to
42641.00 in 2008.

PERFORMANCE OF FATEHGARH SAHIB CENTRAL COOPERATIVE

BANK
The progress made by cooperative institutions in the Fatehgarh Sahib District has been
impressive, they compete with the commercial banks in mobilizing savings and also
providing credit facilities to the agricultural sector. There is 1 Central Cooperative Bank
with 24 branches, 4 Primary Agricultural Development Banks in the district. The
Fatehgarh Sahib Central Cooperative Bank Ltd., Fatehgarh Sahib came into existence on
1 April 1993 after the formation of the Fatehgarh Sahib District, prior to that it was a
Primary Cooperative Bank.
The bank advances short and medium term loan to individual members through its
affiliated cooperative societies for seasonal agricultural purposes and for the marketing of
the crops. The working capital of the bank is derived mostly from the share capital
contributed by the cooperative societies and their deposits. The cooperative bank in turn
arranges finances to meet the requirements of the members of the cooperative societies.
The Fatehgarh Sahib Cooperative Bank has experienced highly fluctuating profits in last
five years. If it raised to Rs.418.99 lacs from Rs.331.86 lacs in 2005, in 2007 it decreased
to 23.98 and again increased to Rs.204.14 lacs in 2008.
In 2008 total borrowings have shown long jump from Rs.12162.57 lacs to Rs.17578.52
lacs with a percentage change over last year of 44.52%. The total advances outstanding
have been constantly increasing through these five years and a change of 28.88% was
seen over the last year in 2008. The deposits were increased from Rs.8751.89 lacs in
2004 to Rs.14176.31 lacs in 2008.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 5

43

%AGE
AS ON

AS ON

AS ON

AS 0N

AS ON

CHANGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

31.3.2008

OVER
LAST
YR.

SHARE
CAPITAL
OWNED

337.82

337.25

338.97

348.90

406.06

16.38

FUNDS

1517.85

1818.46

2129.82

2312.41

2985.23

29.09

DEPOSITS
TOTAL

8751.89

9169.02

11918.84

12970.14

14176.31

9.30

BORROWINGS
TOTAL

9694.24

10401.15

9713.56

12162.57

17578.52

44.52

INVESTMENTS
TOTAL

2405.57

2610.62

3186.87

3439.88

3654.86

6.25

ADVANCES

16481.39

17753.94

19474.52

22817.60

29407.69

28.88

PROFITS

331.86

418.99

363.25

23.98

204.14

--

LOSSES

--

--

--

--

--

--

OUTSTANDING

PERFORMANCE OF FAZILKA CENTRAL COOPERATIVE BANK

The Fazilka Central Co-operative Bank, Fazilka, came into existence in 1915. The
number of branches of the bank is 30 spread throughout the district. Out of these
branches one is found to be in loss. Since this district is located near the border its
working has been affected to a great extent.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 6
%AGE

AS ON

AS ON

AS ON

AS 0N

AS ON

CHANGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

31.3.2008

OVER

44

LAST YR.

SHARE
CAPITAL
OWNED

387.34

393.07

411.56

441.36

453.55

2.76

FUNDS

1811.33

2105.36

2356.10

2454.72

2543.12

3.60

DEPOSITS
TOTAL

9392.78

10279.15

11272.07

12743.44

15080.09

18.34

BORROWINGS 10341.48
TOTAL

9675.33

9881.64

13005.54

16126.21

23.99

INVESTMENT

2865.52

2894.73

2970.90

3533.47

3856.57

9.14

17828.72

17877.67

19126.09

23170.86

28873.43

24.65

PROFITS

306.30

318.67

250.58

5.69

8.72

--

LOSSES

--

--

--

--

--

--

S
TOTAL
ADVANCES
OUTSTANDING

As can be seen from the table the profits have been decreasing at a faster rate in last five
years, from Rs.306.30 lacs it has dropped to Rs.8.72 lacs in 2008. The owned funds have
increased but at a very low rate as compared to total advances outstanding and total
borrowings. The share capital increased at a negligible rate.

PERFORMANCE OF FEROZEPUR CENTRAL COOPERATIVE BANK

The Commission on Agriculture recommended the starting of the co-operative movement
and, consequently, the first Co-operative Societies Act was passed in 1904. Under this
Act, the first co-operative credit society in the District was registered on 4 October 1911,
in the village of Khilichi Qadim (Ferozepur Tehsil). The progress of co-operative

45

societies in the Punjab encouraged the Government to pass the Co-operative Societies
Act, 1912, which widened the scope and permitted the registration of secondary societies.
Thus there came into existence the Fazilka Central Co-operative Bank, Fazilka, in 1915,
followed by the Ferozepur Central Co-operative Bank, Ferozepur, in 1924.
Table 7

FINANCIAL STATISTICAL DATA OF 5 YEARS

%AGE

AS ON

AS ON

AS ON

AS 0N

AS ON

CHANGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

31.3.2008

OVER
LAST YR.

SHARE
CAPITAL
OWNED

430.95

427.50

424.24

442.65

480.88

8.63

FUNDS

1593.45

1743.49

1798.43

1703.18

1873.21

9.98

DEPOSITS
TOTAL

4844.20

4957.89

6023.85

7095.71

8719.39

22.88

BORROWINGS
TOTAL

10124.52

10854.21

12603.33

15699.88

19870.74

26.56

INVESTMENTS
TOTAL

1855.94

1939.78

1991.79

2109.84

2483.58

17.71

ADVANCES

14382.82

15178.45

17462.31

21449.59

26180.74

22.06

162.22
--

162.04
--

81.05
--

-99.72
--

6.23
93.49

---

OUTSTANDING
PROFITS
LOSSES

Total borrowings increased with a percentage change over last year of 26.56%. The
financial position of the bank is not at all satisfactory as it experienced a loss of Rs.93.49
lacs till 2008. The owned funds have increased last year at a rate of 9.98%

PERFORMANCE OF FARIDKOT CENTRAL COOPERATIVE BANK

46

Cooperatives have played a significant role in the economic development of the district.
The cooperative movement has really proved to be a boon for the industrial as well as
agricultural sectors of the district which have acquired a marvelous achievement in the
post green revolution period by availing the cooperative infrastructure. It has not only
created ample employment opportunities for the unemployed rural people but also have
encouraged the local enterprise which otherwise would not have been possible.
A very negligible increase in owned funds of the bank has been observed in last five
years. Profits have converted into losses in last two years. A total loss of Rs.186.80 lacs
have been faced by the bank till 2008.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 8
%AGE
AS ON

AS ON

AS ON

AS 0N

AS ON

CHANGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

31.3.2008

OVER
LAST YR.

SHARE
CAPITAL

245.13

256.50

278.13

292.50

313.23

7.08

47

OWNED
FUNDS

1476.94

1671.68

1692.16

1715.28

1746.65

1.83

DEPOSITS
TOTAL

6854.80

7513.28

8448.66

9264.14

11017.39

18.92

BORROWINGS
TOTAL

10817.75

7970.60

8536.59

10687.14

12193.36

14.09

INVESTMENTS
TOTAL

1836.81

2151.20

2233.63

2550.40

2793.23

9.52

ADVANCES

16498.50

14540.65

15710.84

18141.61

21134.74

16.50

PROFITS

181.78

201.27

18.21

-52.62

-134.18

--

LOSSES

--

--

--

--

186.80

--

OUTSTANDING

PERFORMANCE OF GURDASPUR CENTRAL COOPERATIVE BANK

The co-operative movement was introduced in the Gurdaspur District in 1906, when an
Agricultural Co-operative Credit Society was registered in the village Bhaini Milwan
(Tahsil Gurdaspur). Two Central Co-operatives Banks function at Gurdaspur and Batala,
with branches at different places in the district. The Central Co-operative Banks are the
main financing agencies for the co-operative marketing societies. These societies, like
other trading groups and agencies, undertake the marketing operation.
The bank is found to incur losses of about Rs.56.58 lacs during the period of 2007
2008. Advances outstanding increased slowly till 2007 but in 2008 the difference in
growth rate was 20.68%. The deposits increased by 22.13% between 2007 2008.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 9
%AGE
AS ON

AS ON

AS ON

AS 0N

CHANGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

OVER

48

LAST YR.

SHARE
CAPITAL
OWNED

379.54

379.26

384.12

424.52

9.49

FUNDS

2962.95

3309.00

3533.49

3689.82

3.37

DEPOSITS
TOTAL

21534.37

22554.49

22759.04

23908.20

22.13

BORROWINGS
TOTAL

14303.76

14041.14

14006.70

17194.28

16.93

INVESTMENTS
TOTAL

5025.99

5242.72

5510.92

6020.25

18.23

ADVANCES

30293.92

31506.87

32340.96

36311.90

20.68

356.83
--

307.95
--

306.09
--

19.45
56.58

---

OUTSTANDING
PROFITS
LOSSES

PERFORMANCE OF HOSHIARPUR CENTRAL COOPERATIVE BANK

Hoshiarpur district is known to have been the first to put the principles of cooperation
into practice. It was here that even before the passage of the first Cooperative Societies
Act,1904, the first Agricultural Credit Society was formed in the village Panjwar, the
then part of Hoshiarpur. Hoshiarpur central cooperative bank was established here in July
,1910. it could not fulfill the requirements of the people so it was converted into a fullfledged CCB after the enactment of Indian Cooperative Societies Act,1912. Central
Cooperative Bank functions at Hoshiarpur with 22 branches at different places in the
district.

49

The investments of the bank have been showing a negative growth over last five years.
The profits have been fluctuating but overall there is decrease in profits. The deposits of
the bank have increased from Rs.39860.88 lacs in 2004 to Rs.61964.55 lacs in 2008.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 10
%AGE
AS ON

AS ON

AS ON

AS 0N

AS ON

CHANGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

31.3.2008

OVER
LAST
YR.

SHARE
CAPITAL
OWNED

3758.88

392.38

411.09

458.08

496.19

8.32

FUNDS

4389.83

5054.54

5742.89

6015.90

6394.35

6.29

50

DEPOSITS
TOTAL

39860.88

43383.34

48329.42

54585.22

61964.55

13.52

BORROWINGS
TOTAL

627.39

679.99

437.40

5041.71

9605.06

90.51

INVESTMENTS
TOTAL

17241.10

18222.06

20584.68

29370.94

29056.79

-1.08

ADVANCES

24461.13

27528.80

30318.84

32744.85

45054.35

37.59

PROFITS

786.22

803.33

7131

270.40

346.76

--

LOSSES

--

--

--

--

--

--

OUTSTANDING

PERFORMANCE OF JALANDHAR CENTRAL COOPERATIVE BANK

The co-operative movement was launched in our country with the passage of the Cooperative Credit Societies Act, 1904. Since then, the progress made by these societies in
Jalandhar District was very impressive and this helps a lot in eliminating the malpractices
of private money landers. The money landers use to cheat the farmers by charging
exorbitant rate of interest and the using many malpractices.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 11
%AGE

AS ON

AS ON

AS ON

AS 0N

AS ON

CHANGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

31.3.2008

OVER

51

LAST YR.

SHARE
CAPITAL
OWNED

481.82

509.12

540.10

592.55

644.54

8.77

FUNDS

4739.39

6813.76

7449.44

8133.37

8890.03

9.30

DEPOSITS
TOTAL

57590.47

58615.13

61512.37

66588.51

74224.82

11.47

BORROWINGS
TOTAL

3989.09

2263.54

1537.16

6939.66

10468.57

50.85

INVESTMENTS
TOTAL

30021.13

36181.47

39567.02

45077.39

38508.30

-17.05

ADVANCES

34709.48

28965.43

27833.39

33533.73

50425.94

50.37

PROFITS

1276.56

889.61

667.65

675.55

759.30

--

LOSSES

--

--

--

--

--

--

OUTSTANDING

PERFORMANCE OF KAPURTHALA CENTRAL COOPERATIVE

BANK
With the most private and public sector banks having reduced the lending rates on retail
loans, UCBs are expected to follow their lead. The cooperative banks are expected to take
a decision on lending rates after the announcements of the RBIs credit policy later this
month. Most cooperative banks are small in size and it is difficult for them to lend at
lower rates of interest. However if these lower lending rates continue to remain low in the
market for a while, the cooperatives may be forced to reduce the rates to stop customers
from switching over to other banks.
Total investments though increased from Rs.15651.23 lacs in 2004 to Rs.29394.91 lacs in
2007 but it reduced to Rs.27061.87 lacs in 2008. Total advances outstanding increased

52

from Rs.13859.21 lacs in 2004 to Rs.33969.69 lacs in 2008. The borrowings are observed
to reduce from Rs.301.27 lacs during the period of 2004 -2006 to Rs.142.67 lacs but
suddenly increased in 2007-2008 to Rs.6195.20 lacs.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 12
%AGE
AS ON

AS ON

AS ON

31.3.2004

31.3.2005 31.3.2006

AS 0N

AS ON

CHANGE

31.3.2007

31.3.2008 OVER
LAST YR.

SHARE
CAPITAL
OWNED

235.01

249.19

278.29

299.60

346.12

15.52

FUNDS

4475.29

5302.09

5984.14

6397.07

7637.70

19.39

32496.80

36112.08

39736.89

45321.59

49852.68

10.00

227.56

142.67

3484.01

6195.20

77.82

DEPOSITS
TOTAL

BORROWINGS 301.27

53

TOTAL
INVESTMENTS
TOTAL

15651.23

20106.72

23089.88

29394.91

27061.87

-8.62

ADVANCES

13859.21

19936.94

24985.92

26010.00

33969.69

30.60

PROFITS

838.37

748.92

621.60

258.83

329.18

--

LOSSES

--

--

--

--

--

--

OUTSTANDING

PERFORMANCE OF LUDHIANA CENTRAL COOPERATIVE BANK

The co-operative movement in this distric twas started after the enactment of All India
Co-operative Societies Act, 1904, and the subsequent Act of 1912. The first co-operative
society in the district was organised and registered in 1910. The movement gradually
gained momentum and made much headway with passage of the Acts of 1954 and 1961.
The financial health of the bank is not strong as observed from data available for
financial analysis of the bank since profit of the bank has been continuously decreasing as
it was Rs.1280.95 lacs in 2004 to Rs.219.95 lacs in 2008. And total investments have
shown a negative percentage change in 2008 over last year. There have been very little
increase in owned funds as revealed from the data of last five years

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 13
%AGE
AS ON

AS ON

AS ON

AS ON

AS ON

CHANGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

31.3.2008

OVER
LAST
YEAR

SHARE
CAPITAL

714.91

728.92

762.10

805.31

897.64

11.46

54

OWNED
FUNDS

7837.09

8844.67

9444.74

9895.41

9958.03

0.63

DEPOSITS
TOTAL

28515.25

31351.57

37749.18

39358.81

41357.30

5.08

BORROWINGS
TOTAL

6123.02

3779.61

5114.65

13000.11

20089.79

54.54

INVESTMENTS
TOTAL

8984.58

11033.53

16861.06

22613.84

19242.64

-17.52

ADVANCES

31799.43

31271.84

33145.50

37891.84

50708.06

33.82

PROFITS

1280.95

1299.02

569.68

194.64

219.95

--

LOSSES

--

--

--

--

--

--

OUTSTANDING

PERFORMANCE OF MANSA CENTRAL COOPERATIVE BANK

The progress made by cooperative institutions in the Mansa District has been impressive,
they compete with the commercial banks in mobilizing savings and also providing credit
facilities to the agricultural sector. The cooperative credit institutions provide facilities for
short and medium-term credit under crop loan scheme for fertilizers, improved seeds,
agricultural implements, marketing storage, and extension of advanced agricultural
techniques.There were 1 Central Cooperative Bank with 22 branches, 3 Primary
Agricultural Development Banks and 8 Regional Rural Banks in the district. The Mansa
Central Cooperative Bank Ltd., Mansa came into existence on 25 February 1993. The
bank advances short and medium term loan to individual members through its affiliated
cooperative societies for seasonal agricultural purposes and for the marketing of the
crops. The working capital of the bank is derived mostly from the share capital
contributed by the cooperative societies and their deposits. The cooperative bank in turn
arranges finances to meet the requirements of the members of the cooperative societies.

55

Total borrowings of the though increased from Rs.8667.65 lacs to Rs.17242.52 lacs
during 2004 2008 but in 2008 the bank records have shown a negative percentage
change over last year. However, profits have been decreasing during these last years

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 14
%AGE
AS ON

AS ON

AS ON

AS ON

AS ON

CHANGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

31.3.2008

OVER
LAST YR

SHARE
CAPITAL
OWNED

320.56

319.04

321.19

334.77

366.20

9.38

FUNDS

1149.32

1369.09

1564.09

1643.08

1775.96

8.09

DEPOSITS
TOTAL

6017.52

6841.96

7399.68

6737.65

10528.69

56.27

BORROWINGS
TOTAL

8667.65

11175.08

13940.99

17312.85

17242.52

-0.40

INVESTMENTS
TOTAL

1740.16

2251.97

2193.44

1961.87

2529.03

28.91

ADVANCES

12522.62

15861.81

19423.24

22483.20

25221.15

12.18

56

OUTSTANDING

PROFITS

216.12

166.47

135.30
.

26.98

13.91

--

LOSSES

--

--

--

--

--

--

PERFORMANCE OF MOGA CENTRAL COOPERATIVE BANK

Moga District is the 17th District drawn on the map of Punjab State on 24th day of
November 1995. Before this, Moga was the sub-division of Faridkot District. Moga town
the head quarter of the District is situated on Ferozpur-Ludhiana road.
Share capital remained almost constant in five years period 2004 2008. The investments
of the central cooperative bank in moga have been raised upto Rs.27941.44 lacs till
31.03.2008.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 15
%AGE
AS ON

AS ON

AS ON

AS ON

AS ON

CHANGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

31.3.2008

OVER
LAST YR

SHARE
CAPITAL
OWNED

401.02

403.82

431.45

471.50

492.81

4.52

FUNDS

1854.98

2191.28

2457.46

2545.82

2727.49

7.14

57

DEPOSITS

13128.96

14054.95

16065.48

16324.40

19673.21

20.51

BORROWINGS
TOTAL

6332.19

8162.57

7997.44

10952.91

12978.28

18.49

INVESTMENTS
TOTAL

3880.69

4204.46

4430.24

4991.77

6106.96

22.34

ADVANCES

16491.65

19062.21

20770.20

23485.34

27941.44

18.97

PROFITS

329.93

366.19

222.62

19.68

24.26

--

LOSSES

--

--

--

--

--

--

TOTAL

OUTSTANDING

PERFORMANCE OF MUKTSAR CENTRAL COOPERATIVE BANK

The investments of the bank have been increasing till 2007 but in 2008 it has shown a
decline of 10.42%. On the other hand borrowings and advances outstanding have
increased continuously.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 16
%AGE
AS ON

AS ON

AS ON

AS ON

AS ON

CHANGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

31.3.2008

OVER
LAST YR

SHARE
CAPITAL
OWNED

367.75

385.18

403.11

425.11

432.02

1.62

FUNDS

2538.21

2884.94

3178.56

3409.26

3651.16

7.10

DEPOSITS
TOTAL

5293.79

5843.03

6209.15

7986.04

8361.46

4.70

BORROWINGS
TOTAL

11751.33

12115.42

13013.42

15466.47

17830.83

15.28

INVESTMENTS

1865.97

1895.04

1919.71

2432.48

2202.87

-10.42

58

TOTAL
ADVANCES

16197.72

17442.95

19934.35

23087.19

26569.41

15.08

PROFITS

339.71

391.58

289.78

38.72

42.74

--

LOSSES

--

--

--

--

--

--

OUTSTANDING

PERFORMANCE OF NAWANSHAHR CENTRAL COOPERATIVE BANK

Nawanshahr district was carved out of Hoshiarpur and Jalandhar districts of Punjab in
November 7, 1995 on the auspicious occasion of birthday of Sh. Guru Nanak Dev Ji as
the sixteenth district of Punjab State. District name has been derived from the headquarter town of Nawanshahr. The cooperative movement in the Nawashahr District was
started in 1934. The district has 153 Cooperative Credit Societies besides 1 Central
Cooperative Bank with 45 branches and 3 Primary Agricultural Development Banks.
Table 17

FINANCIAL STATISTICAL DATA OF 5 YEARS

%AGE
AS ON

AS ON

AS ON

AS ON

AS ON

CHANGE

31.3.2004 31.3.2005 31.3.2006 31.3.2007 31.3.2008 OVER

LAST YR
SHARE
CAPITAL
OWNED

241.80

250.48

321.11

381.86

437.30

14.52

FUNDS

9505.41

10548.94

11094.75

11820.55

12514.31

5.87

DEPOSITS
TOTAL

39109.92

41451.20

44176.51

50206.34

55285.56

10.12

BORROWINGS
TOTAL

4835.57

2086.45

1127.07

7551.12

7231.99

-4.23

INVESTMENTS

28036.19

34064.25

35439.68

46674.06

45229.92

-3.09

59

TOTAL
ADVANCES

23274.39

18054.04

19069.78

21124.37

27931.49

32.22

PROFITS

1322.82

1046.46

796.75

741.75

658.58

--

LOSSES

--

--

--

--

--

--

OUTSTANDING

Total advances outstanding were Rs.23274.39 lacs in 2004 which have increased to
Rs.27931.49 lacs in 2008 with 32.22% change over last year. Total borrowings of the
bank have been decreasing during the period 2004 2008 and has shown a negative
change in 2008 over last year indicating that the bank is financially strong enough to not
depend on borrowings from other financial institutions.

PERFORMANCE OF PATIALA CENTRAL COOPERATIVE BANK

With taking over the assets and liabilities of the then Patiala Cooperative Union, the
Patiala Central Cooperative Bank Ltd., Patiala was registered on 28/09/1949 under the
Cooperative Societies Act, 1912. The Bank is presently serving in its 59th year. There
exists imbalances between the loan outstanding towards PACS and loan outstanding
towards members amounting to Rs.1029.08 lacs.
The business turnover of the bank for the year 2008-09 was Rs.804067.55 lacs. There is a
network of its 43 branches spread all over the district. The investments of the bank have
been increasing at a very negligible rate of growth. Fluctuations were observed in getting
profits through these five years. The share capital was almost constant during the period
of 2004 2007 and suddenly increased by 7.70% in 2008.

60

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 18
%AGE
AS ON

AS ON

AS ON

AS ON

AS ON

CHANGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

31.3.2008

OVER
LAST YR

SHARE
CAPITAL
OWNED

859.47

863.65

871.21

897.10

966.23

7.70

FUNDS

2823.85

3602.15

4324.38

4524.04

5239.28

15.80

DEPOSITS
TOTAL

20250.47

20995.42

25407.81

24026.00

27943.61

16.30

BORROWINGS
TOTAL

21699.74

26585.47

28181.46

38173.38

42895.27

12.37

INVESTMENTS
TOTAL

5174.48

6005.00

6673.73

6993.22

7326.98

4.78

ADVANCES

37117.80

43072.40

48609.42

57525.58

66634.85

15.83

PROFITS

601.87

906.28

796.75

741.75

658.58

--

LOSSES

--

--

--

--

--

--

OUTSTANDING

61

PERFORMANCE OF ROPAR CENTRAL COOPERATIVE BANK

The Co-operative Movement took root in the Ropar District in 1920 with the formation of
thrift/credit co-operative society at Kharar. The Central Co-operative Bank, Ropar has 25
branches at different places in the district.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 19
%AGE
AS ON

AS ON

AS ON

AS ON

AS ON

CHANGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

31.3.2008

OVER
LAST YR

SHARE
CAPITAL
OWNED

288.11

305.62

316.51

224.60

265.18

18.06

FUNDS

4074.54

4912.95

5688.88

4883.30

5449.10

11.59

DEPOSITS
TOTAL

21990.15

24036.15

30748.21

18160.31

19625.28

8.07

BORROWINGS
TOTAL

3730.99

3426.84

3762.78

8491.41

8255.78

-2.77

INVESTMENTS
TOTAL

8586.32

10237.85

13205.55

12373.22

8403.00

-47.25

ADVANCES

19958.46

20629.79

24748.77

18157.08

23414.90

28.96

PROFITS

816.19

865.66

818.60

149.95

230.22

--

LOSSES

--

--

--

--

--

--

OUTSTANDING

62

The share capital of the bank has increased as on 31.03.2008 from Rs.224.60 lacs in 2007
to Rs.265.18 lacs with a growth rate of 18.06. In 2008, though a decrease in borrowings
of the bank has been seen but this decrease is very small as compared to decrease in
investments

PERFORMANCE OF SANGRUR CENTRAL COOPERATIVE BANK

The district of Sangrur was formed in 1948. The Balian Co-operative Credit Society in
village Balian (Tahsil Sangrur) was the first co-operative society registered in the District
in 1916. It has a membership of 15 and a share capital of Rs 150. Since this area
comprised a major portion of the Princely State of Jind, the movement did not make
much progress as the necessary laws could not be framed speedily. However, after the
independence, when this area became a part of the PEPSU, the Co-operative Movement
made a considerable progress. In 1956, with a merger of the PEPSU in the Punjab, the
area of present Sangrur District also became a part of the Punjab, and the Co-operative
Movement made further progress under the Five-Years Plans. The Central Co-operative
Bank functions at Sangrur with 30 branches at different places in the District.
Though profits have decreased a lot but growth is observed in 2008 as compared to year
2007 from Rs.51.71 lacs to 83.38 lacs a change of almost Rs.31.67 lacs.

63

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 20
%AGE
AS ON

AS ON

AS ON

AS ON

AS ON

CHANGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

31.3.2008

OVER
LAST YR

SHARE
CAPITAL
OWNED

842.60

865.85

888.34

1013.03

1130.98

11.64

FUNDS

2482.88

3327.13

3983.47

4309.39

4800.17

11.38

DEPOSITS
TOTAL

21960.42

23178.11

26507.47

28943.37

32772.38

13.23

BORROWINGS
TOTAL

24332.13

24907.07

27903.96

38341.09

40232.49

4.93

INVESTMENTS
TOTAL

7177.20

6847.68

7143.44

7622.92

8971.61

17.69

ADVANCES

38532.39

42071.98

48287.35

61496.18

66403.41

7.98

PROFITS

551.80

573.83

353.87

51.71

83.38

--

LOSSES

--

--

--

--

--

--

OUTSTANDING

PERFORMANCE OF TARN TARAN CENTRAL COOPERATIVE BANK

64

Central Cooperative Bank was established at Tarn Taran, violating the guidelines of the
RBI. Funds worth Rs 5 crore were diverted from the state Cooperative Bank to the Tarn
Taran Bank. However, as it was not opened with due approval, it was unable to secure
loans at cheaper rates from the National Bank for Agriculture and Rural Development.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 21
AS ON

AS ON

AS ON

AS ON

AS ON

%AGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

31.3.2008

CHANGE
OVER
LAST YR

SHARE
CAPITAL
OWNED

365.49

367.72

371.84

370.00

384.65

3.96

FUNDS

2338.14

2844.46

3132.26

3158.6

3236.76

2.47

DEPOSITS
TOTAL

11526.65

11794.13

12507.79

13628.9

15845.37

16.26

BORROWINGS
TOTAL

11249.37

11509.92

13126.86

13294.32

16034.80

20.61

INVESTMENTS
TOTAL

3080.88

3198.68

3319.37

3762.74

3995.89

6.20

ADVANCES

21465.99

22232.26

23698.70

25353.23

29713.11

17.20

PROFITS

197.46

406.99

70.00

22.30

44.04

--

LOSSES

403.78

--

--

--

--

--

OUTSTANDING

Profits of the bank have been reduced in four years but last year an increased was noticed
from Rs.22.30 lacs to Rs.44.04 lacs i.e. an increase of Rs.21.74 lacs. The bank faced the
loss of Rs.403.78 lacs in 2004 and in the following years this loss was overcome by the

65

bank. Deposits of the bank have shown a constant growth in last five years, though
owned funds and share capital have been increasing at a slower rate

PERFORMANCE OF SAS NAGAR CENTRAL COOPERATIVE BANK

Mohali district is one of the twenty districts in the state of Punjab in north-west India. It
is the most currently created district of Punjab introduced in 2006. the cooperative bank
in this district is named as SAS NAGAR COOPERATIVE BANK.
Since SAS Nagar Cooperative bank has been recently formed only two years data was
available for the study. Though recently created its progress as compared to already
existing banks have been satisfactory. This bank mainly lacks behind in investments. The
percentage change for owned funds of the bank over last year has been found to be
greater than the borrowings.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 22

66

%AGE
AS ON

AS ON

AS ON

AS ON

AS ON

CHANGE

31.3.2004

31.3.2005

31.3.2006

31.3.2007

31.3.2008

OVER
LAST YR

SHARE
CAPITAL
OWNED

--

--

--

138.54

147.33

6.34

FUNDS

--

--

--

1780.85

2316.39

30.07

DEPOSITS
TOTAL

--

--

--

17953.81

20664.97

15.10

BORROWINGS
TOTAL

--

--

--

2450.00

3015.00

23.06

INVESTMENTS
TOTAL

--

--

--

11620.00

11031.99

- 5.33

ADVANCES

--

--

--

9528.30

13872.80

45.59

PROFITS

--

--

--

85.72

257.54

--

LOSSES

--

--

--

--

--

--

OUTSTANDING

PERFORMANCE OF COOPERATIVE BANKS IN PUNJAB

The consumption loan available to non-agriculturist members in the state through
cooperatives has been increased from Rs.10000 to Rs.25000.
The revolving cash credit limit had been enhanced to Rs.6 lakhs.

67

 The union agricultural debt waiver scheme could provide only marginal relief to
Punjab farmers.
The number of credit societies has been decreased due to the reorganization of
Primary Cooperative Agricultural Credit Societies into Agricultural Credit Societies.
Refinancing of 5 District Central Cooperative Banks has been started which was
stopped due to creation of new district.
Due to non release of 40% share of NABARD in advancements made by District
Cooperative Banks, they are compelled to provide crop loan at the rate of 7% either
out of their own resources or loan raised from Punjab State Cooperative Bank which
costs more than the rate of interest being charged.
The immediate problem is not that of access to credit, but the unbearable burden of
payment of interest and repayment of loans. The Government of Punjab has reduced
interest on co-operative loans from 14.5% to 7% and has also offered OTS for settling
sticky loans. We also propose to enact a law for providing relief from rural
indebtedness. No debt relief on the basis of Vaidyanathan Committee Report or
Vidharaba like Package has been given to farmers of Punjab. Therefore, a special
package for debt relief to Punjabi Farmers is proposed. A sum of Rs.544 crore has
been requested from the Union Government - Rs.211 crore for OTS for Cooperative
Loans, Rs.199 crore for Losses of Cooperative Banks and Rs.134 crore for financial
support to District CCBs for providing crop loans at the reduced rate of 7% during the
next five years. Aggregate Deposits and Gross Bank Credit of State and District
Central Co-operative Banks till March 2007 is as under:

Table 23

1
2
3

STATE/DISTRICT CCBs
STATE COOPERATIVE BANK
DISTRICT CENTRAL COOPERATIVE BANKS
Amritsar
Bhatinda
Faridkot

DEPOSITS
1,38,775

CREDIT
3,40,391

29,648
24,443
9,264

30,859
36,316
18,142

68

4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

Fatehgarh Sahib
Fazilka
Ferozpur
Gurudaspur
Hoshiarpur
Jalandar
Kapurthala
Ludhiana
Mansa
Moga
Muktsar
Nawanshahar
Patiala
Ropar
Sangrur
Tarn Taran
TOTAL

12,970
12,625
7,096
24,774
54,585
66,589
45,322
39,359
6,738
16,324
7,923
49,919
24,027
18,160
28,943
13,629
4,92,338

22,818
23,184
21,450
36,312
32,745
33,534
26,010
37,892
22,483
23,485
23,087
21,124
57,526
18,157
61,496
25,270
5,71,890

GRAPHICAL PRESENTATION OF PROFITS OF DISTRICT

COOPERATIVE BANKS

69

Performance of the PUNJAB STATE COOPERATIVE

AGRICULTURAL DEVELOPMENT BANK LTD
ACHIEVEMENTS

70

There are number of factors which led to the making of tremendous business progress &
winning of prestigious Awards, continuously for the last many years by the Punjab State
Cooperative Agricultural Development Bank Limited, Chandigarh. Briefly, the quality
lending, excellent recovery consistent profits, simplification of loaning procedures for the
benefit of the borrowers etc. are some of the important aspects enabling the long term
cooperative credit structure in Punjab , to achieve these prestigious awards.
The Long Term Cooperative Structure in Punjab is a Federal structure consisting of the
Punjab State Cooperative Agricultural Development Bank Ltd., (SADB) at Apex level,
with its member Primary Cooperative Agricultural Development Banks (PADBs), at the
base level, which meet the Long Term credit requirements of the farmers in the State. The
bank was established in the year, 1958. The federal structure , however, started its
functioning in 1962, when 14 PADBs were set up at District Headquarters. Subsequently,
the PADBs were further brought to the level of Tehsil Headquarters and thereafter to the
Sub- tehsil level in some of the areas with objective to serve the farmers easily and
nearest to their door-steps. The number of PADBs were consequently increased to 82 as
on 31.3.2000. This had ultimately resulted in the increase of membership of the bank at
the base level, which was very small in 1962. The individual membership at the PADBs
level as on 31.3.2008 is as under:Total Membership

689000

Borrowing members

445000

Non-borrowing members

244000

It may be pertinent to mention here that the geographical area of Punjab State is only
1.5%, whereas

its advancement of long-term loans, amongst the Cooperative

Agricultural Development

Banks

in

the

country

is

nearly

15%.

The

sizeable flow of credit has helped the State in contributing nearly 40% of the food
production of the country and also in ushering white revolution in the State. Besides the
factors like availing of free flow of credit from NABARD, there are various other internal
and external factors also to which the success of the bank is attributed.

71

INTERNAL FACTORS
RECOVERY: The success of any Institution and its future advancement is mainly
dependent on the better recovery of the loans. In the sphere of recovery of loans, the
bank

has

always

been particular

excellent. It is pertinent to
causing

and

its recovery results have generally been

mention here that inspite of various natural calamities

large scale damage to the crops, the bank had been able to

maintain

its

recovery of 100% at the State level and 83.0% at PADBs level in the State
BUSINESS PLANNING & MONITORING: In the sphere of advancement and
recovery of loans the targets are fixed in a planned way, purpose-wise, keeping in view
the potential for each purpose. These targets are conveyed to the PADBs generally at the
start of the year with specific instructions to achieve the same in a phased manner in
accordance with the quarter-wise percentage fixed by the SADB. While conveying
these targets, the District Managers appointed at the District Headquarters and the
Regional Officers posted at Division level are also advised to ensure the achievement of
targets by the PADBs in the phased manner. Monitoring of the progress in this regard is
also made by the Head office in review meetings, being held with the Managers, District
Managers and Regional Officers

on

regular

basis. During

such meetings, the

purpose-wise progress made by the PADBs, is also reviewed.

PROMOTION / PUBLICITY: The publicity
schemes

being

implemented by

community/unemployed persons,

the

on large

bank

for the

scale is

made about the

benefits of the farming

through advertisements in

the

Press and by

publishing and distributing free of cost pamphlets etc.

DELEGATION OF POWERS: Powers of sanction of loans have been decentralized
and under such decentralization all loans are finally sanctioned and disbursed by the
PADBs.

72

TRAINING TO STAFF: The staff is given regular training to enlighten them with the
latest techniques and benefits of the schemes who in turn inform the members of the
PADB / farming community.
SIMPLIFICATION OF LOAN POLICY AND PROCEDURE: Since the borrowers
look forward to higher standards of customers service and that the PADBs are directly
positioned

against the Commercial Banks etc. the bank has taken steps to

ensure

timely and more easy flow of credit to the farmers.

EXTERNAL FACTORS
The success of the bank in the fulfillment of its objectives can predominantly be
attributed to the appreciable role being played by NABARD, which in fact treats the bank
as its extended arm. All the required technical help in the formulation of the scheme is
extended

by

NABARD. To

facilitate the formulation and

the implementation

of the scheme, the potential linked credit plan is prepared by NABARD and discussed in
the State Credit Plan Seminar which is convened by it every year with the participation of
all the concerned departments of the State Government. This helps the bank in identifying
the potential pockets for various activities.

CONCLUSION

Indiscipline and lack of commitment in these banks make peoples trust in the
cooperative sector a casualty.

73

The Cooperative Credit Policy, both for short-term and long term requirements of
the farmers, needs to be restructured.

Some of the co-operative banks are quite forward looking and have developed
sufficient core competencies to challenge state and private sector banks.

There is shortage of staff in some of the cooperative banks which is affecting the
business and customer services.

The supervision over the working of the various branches of the CCBs in the State
is not proper.

The overall performance of the cooperative banks in Punjab is not satisfactory.

Though there are some banks that have shown growth in their financial position,
some others are showing losses.

The cooperative banks are highly dependent on borrowings from NABARD and
other financial institutions.

People are still unaware of the services provided by the Cooperative Banks.

SUGGESTIONS
1. There is also an urgent need for clarity in defining the roles of various control
institutions by streamlining processes, procedures, etc. for removing overlapping of

74

controls over cooperative banks presently vested with State Governments, the
Reserve Bank and NABARD, as the may be.
2. There is a need to analyse and pick up early warning signals, if any, in respect of any
such irregularities in the investment portfolio of these banks from the periodic review
reports on such transactions which are received from them.
3. A change is needed today in the co-operative banks which is built on confidence in
human capital - the most important of all resources - in commitment, creativity and
innovation brought about by proactive management, membership and employees.
Strong corporate governance that takes its obligations seriously can truly be a source
of strength to the management. The ability to capture knowledge and wisdom gives
co-operative banks their competitive advantage. A prerequisite is that participants
from all parts of a co-operative organisation know and understand its purpose, core
values and visions.
4. Banks have also been advised to have proper internal control measures for monitoring
the transactions in government securities.
5. More Branches should be opened in the Rural and Urban Areas to achieve the targets.
Samana sub-division is neglected in this Area as only Samana and Gajewas Branches
are functioning.
6. Since 1980 no recruitment made in this Bank. Staff should be recruited for smooth
working.
7. Branches may be computerized.
8. Rate of interest may be reviewed periodically.
9. 11 Single men Branches are functioning so, there is a great operation risk in the Bank.
10. Individual Loans overdue are increasing in the Loan Portfolio N.F.S/C.C.T./
Consumer Loan.
11. ATM may be installed, locker facility is provided in all the Branches.
12. The Banks should strictly follow the rules and regulations of the RBI and the
government.

75

LIMITATIONS
Time for research was limited.
There was not much literature available on the similar kind of study for guidance.
A single person has conducted the research

76

 All the districts could not be visited

Data for the period 2008-09 was not available

BIBLIOGRAPHY
BOOKS
Bhaumik, S.K. and Dimova R. (2004); How important is Ownership in a Market
with Level Playing Field? The Indian Banking Sector Revisited, Journal of
Comparative Economic, pp. 165-180.

77

 Ganesan R., Procurement of Agricultural and Minor Forest Produce-Problems and

Prospects ; Indian Cooperative Review, Vol. XXXVII,No.1, pp.32-37
Ghuman,B.S., Monga, A., Department of Public Administration, Punjab University,
Chandigarh, India., Indian Cooperative Review
Kainth Gursharan Singh, Dynamics of Cooperatives in Punjab; Indian Cooperative
Review, Vol. XXXVII, No.1,pp. 38-52.
Prakash Daman, The Contribution of Cooperatives to Social Development, Indian
Cooperative Review; Vol. XXXVI, No.3, pp.183-192.
Sinha N.K., MONEY, BANKING AND FINANCE; Kalyani Publishers, pp.104109.

EDITORIAL
THE COOPERATOR

SEARCH ENGINES
WWW.GOOGLE.COM
WWW.YAHOO.COM
WWW.WIKIPEDIA.COM

INTERNET SITES
www.punjabrevenue.nic.in
www.banknetindia.com/html/free reg.html.
http:// en.wikipedia.org/wiki/banking_in_India #cite_note_2
http:// en.wikipedia.org/wiki/bank
http:// en.wikipedia.org/wiki/The_Cooperative_Bank
http://pbcooperatives.gov.in/Pscadb_achiev.html

78