CERTIFICATE

This is to certify that the project work entitled

The Credit Management with reference to
Kendrapara Urban Co-operative Bank is a
original piece of work done by Mr.Susanta Rout
(Regd. No-0906227047), student of C.V.Raman
College of Engineering, under my guidance and
supervision for the partial fulfillment of the
requirement for the degree in MBA under BPUT.
To the best of my knowledge and belief, the
thesis embodies the work of the candidate
herself

and

Simultaneously,

has

been

the

duly

thesis

completed.
fulfills

the

requirements of the rules and regulations related

to the summer internship of the institute and I
am assured that the project is up to the standard
both in respect to the contents and language for
being referred to the examiner.

Ms Sanjita
Lenka
Faculty (HR),

Internal Guide,
C.V.Ram
an College of Engineering.

DECLARATION
I do here declare that this project is a study
on Credit Management with Reference To
The Kendrapara Urban Co-operative Bank
is a record of independent research work carried
out by me under the supervision of

Mr.Kailash

Chandra Samal (Head Clerk cum Cashier,)

Mr. Rajib Lochan Panda, Manager(Loan and
Recovery). This report is a partial fulfillment of
MBA in C.v Raman College of Engineering,
Bhubaneswar of my own and it is not submitted
to any other Institute or University or Published
elsewhere
Diploma.

or for any Award

of degree

or

Mr. Susanta Rout,

Regd
.No.-0906227047,
C V Raman
College of Engineering,BBSR

ACKNOWLEDGEMENT
I take this opportunity to offer my sincere
feelings of gratitude to the Co-operation and
advice given to me to bring up this project work.
In this regard I would like to thanks Prof. S.C
Sahoo, Honable HOD the Department of
Management for giving me permission to
undergo this training programme.

I am obliged to my guide, Mr.Kailasha

Chandra Samal, Mr.Rajib Lochan Panda and
other employees of the Kendrapara Urban Cooperative Bank for having given an opportunity
to undertake the project work in this field. I am
grateful to my uncle Mr.Babaji Charana
Pradhan (Branch Manager, Bank of Baroda)
for giving me valuable guidance to do project
work successfully.
I would like to express my thanks to Prof.
C.R Satapathy (Asst.Prof. Finance), Mr. S.C
Das (Faculty, Finance), Ms. Sanjita Lenka
(Faculty, HR) and other faculty members.

Mr. Susanta Rout

Regd.no0906227047
C.V Raman
College of Engineering, BBSR

CONTENTS
(1)CHAPTER 1:

INTRODUCTION

OBJECTIVES

NATURE AND SCOPE.

RESEARCH METHODOLOGY.

LITITATIONS.

(2)CHAPTER 2: ORGANISATION PROFILE

HISTORY OF THE ORGANISATION

FUNCTIONS OF THE BANK

BENEFICIAL SCHEMES PROVADED BY BANK

GROWTH AND DEVLOPMENT

(3)CHAPTER 3: DATA ANALYSIS, INTERPRETATION

TABLES,GRAPHS,ANALYSIS
INTERPRITATION
(4)CHAPTER 4: RESEARCH FINDINGS

CONCLUSION

SUGGESTIONS.
APPENDIX

AND

CHAPTER-1

INTRODUCTION
Credit management is a systematic and
objective collection of and analysis of data about
the faults in credit policy, collection procedure.
The credit management is to regulate the credit
in a proper way for the growth and expansion of
the organization.
The RBI being the central bank of the
country takes regular steps to control the
expansion of the credit so as to keep the money
supply and inflation within in control to the

desired extent. It also proper takes proper

measures to allocate the credit to the deserving
sectors at a reasonable cost so that the economy
goes in proper direction. The co-operative
association formulates some credit policy, rules,
terms to be followed by the co-operative banks,
which is in accordance with the central bank of
India.
In order to put banks and financial
institutions on guard against borrowers who have
defaulted in their installment dues to other
lending institutions, the Finance Minister
declared in his budget speech on 28.02.1994
that RBI would formulate a scheme to collect &
circulate the name of the defaulting borrowers.
To recover the NPA there also a Debt
Recovery Tribunals established by the central
bank. The recovery of debts due to Banks and
Financial institutions Act was enacted on 27th Aug
1993 and come in to effect with retrospective
effect from 24th day of June 1993.
It provides the establishment of tribunals
for the expeditious adjudications and recovery
debts of banks and financial institutions. A good
and planned credit policy is helps in reducing the
NPA and which leads the to achieve the
objective.

OBJECTIVES
The basic objective of the study to find out the
followings:
To know about the credit policy of the
Kendrapara Urban Cooperative Bank
To know about which documents are needed
the bank while a customer applied for loan at
Kendrapara Urban Cooperative Bank.
To know about the credit policy and recovery
process.
To know about the NPA of the bank and causes
of the NPA.
To study the work process of loan and recovery
sections and implementations.
SCOPE
The geographical study is conducted in the
Kendrapara area.
The study is conducted on the deposits, loans
and recovery sections of the bank.
METHODOLOGY

The data collected for the purpose of the study

are of the following sources :
Collection of the from primary sources is,
By personal interview and discussion with
employee of the organization.
Collection of data from secondary sources
Information relating to historical background,
type, size and growth of Kendrapara Urban
Cooperative Bank.
Annual administrative reports
Official records
Employee
of
the
Cooperative Bank.

Kendrapara

Urban

NEED FOR THE STUDY

The primary need for the study is to know deeply
the different types of loans and advances to
different sector, collection procedure, credit
policy and different types of deposits with bank.
Supplement to above primary needs there are
other secondary needs as well which are
furnished under,
To know about the Kendrapara Urban
Cooperative
Bank,
and
its
relevant
organizations and their functions.

 To
strengthen
relationship.

employee-employee

To know about its new future planning.

To examine the pattern of organization
structure
and
relationship
among
the
branches.
Customs and vigilance formalities.
To know about cooperative banks and its
societies.

LIMITATIONS
Due to work pressure my mentor in the
Kendrapara Urban Cooperative Bank was short of
time.
Some entries were restricted in some areas of
the organization which restrict me collect
some important information related to my
study.
Unwillingness
information.

of

the

respondent

to

give

 The bank is unable to provide the annual

report of 2009-2010 due to their audit starts at
late.

CHAPTER-2

HISTROY OF KENDRAPARA URBAN COOPERATIVE BANK

The Kendrapara Urban Co-operative Bank is a
big co-operative bank in our state Orissa. Now
the bank is a front line co-operative bank in our
state.
The Kendrapara Urban Co-operative bank
was registered on 26.09.1986 ,under the
president
ship
of
Honorable
minister
Sj. Bhagabat Prasad Mohanty. The starts
functioning from the 26.02.1988. The bank is

started with a aim of providing

customer and to the society .

service to the

Initially the bank started with the 423

individual members as share holders. Authorized
share capital of the bank is 20,00,000/- of one
lakh share of Rs 20/- each. Each share holders
contributing the share capital of Rs 166540/-. As
on 30.06.1987 the collected share capital of Rs
166540.00 from the individual members. Govt.
has not purchased any share in the year 19861987.
The bank was started at near old bus
stand, Kendrapara ,but now the bank is to near
Kendrapara College by constructing own building
to a very good location.
At the time of starting the area of
operation of the bank was confined within the
Kendrapara municipality area of 35 villages. The
first board meeting was helped by the Sj.
Bhagabat Prasad Mohanty as president of the
bank. The bank accounts are first audited by the
Sri B.C Mohapatra.
The bank started with the objective to
encourage thrift ,self help group and cooperation among members. To accept deposit of
money and to give loan and advances to public
to release money.

The bank is graded as A Grade in year 20082009. The reserve bank also inspected the bank
and graded as Grade II, so that the bank can be
secure grade -1 by take care of some minor
problems. After getting Grade-1 the bank can
provide ATM facilities to the customers.
The bank also provides the service during the
time of the flood, cyclone etc. The gets the prize
as one the great co-operative bank of Orissa in
56th Nikhila Bhart co-operative Union week by
the Honorable Minister Dr.Damodar Rout. And
also get the Great co-operative union on distritic
level. In this year the bank proposes to expand
their
branches
to
the
nearby
distritic
Jagasinghpur and Jajpur.
THE BRANCHES OF BANK
Main Branch-: Kendrapara town,
Near Kendrapara Auto College.
Old Bus stand Branch-:Kendrapara town,
Near Old Bus stand.
Marsaghai Branch-: Marsaghai,
Kendrapara.
Patamundai Branch-:Patamundai,
Kendrapara.
Aul Branch-:Aul ,

Kendrapara.
Chandol Branch-:Chandol,
Kendrapara.
DETAILS OF THE OF THE BANK
Name of the bank and address -: The Kendrapara
Urban Co-operative
Bank Ltd.
At/poKendrapara,
DistKendrapara,
Pin-754211,
ORISSA
Regd.No and date
26.09.1986

-:123/KE, dt-

Area of operation
Kendrapara distrait.

-: Whole

No. of directors

-:12.

No. of nominated directors

-:02.

Total no. of Employees

-:95.

No. of Branches

-:06

FUNCTIONS OF BANK

The functions of bank is mainly of two types

,such as
(1)Primary function.
(2)Secondary function.
The primary functions are ,
(a)accepting deposits.
(b)Granting loans and advances.
The secondary functions are ,
(a)Issuing letter of credit, cheques , circular
notes etc.
(b)Under self custody of valuable, important
documents and securities
by providing safe deposits or lockers.
Transfer of money from one place to another
and from one branch to
another branch.
(d)Collecting and supplying business information.
(e)Providing report on the creditworthiness of the
customer.

ORGANISATION STRUCTURE

BENIFICIAL SCHEME

FIXED DEPOSITS-:

Deposits accepted for fixed deposits. i.e for

a minimum period of 15 days and above at higher rates of
interest than toHer banks.
RECURRING DEPOSITS-:
Small saving accumulate in a big way. For
monthly installments Rs 10/- and its multiples for a period of
one year and
above. An attractive scheme for service
holder and businessmen.
PRAGATI REINVESTMENT SCHEME-:
A long term plan multiples your money by
reinvestmenting
maximum permissible interest governed by
the R.B.I ideal
investment for children, students for future
benefits.
BHAGYALAXMI DEPOSIT SCHEME-:
The bank at your door step.

The bank exclusively designed for the benefit

of businessmen, professionals and small savers.
The authorized agents of bank collect deposits
from the prospective depositors daily.

CHAPTER-3

CUSTOMERS ACCOUNTS WITH THE BANKER

The relationship between the banker and his
customer begins with the opening of an account
by the former in the name of the latter. Initially
all the accounts are opened with a deposit of
money by the customer and hence these
accounts are called deposit accounts. The bulk of
resources of a bank are mobilized by accepting
deposits from the public, which is one of the
essential functions of the banker, according to
the definition of Banking Regulation Act, 1949.
The banker solicits deposits from the
members of the public belonging to different
walks of life, engaged in numerous economic
activities and having different financial status.
Therefore the banks are introduced types of
accounts with various facilities and privileges.
That mainly includes the fixed deposits, the
current deposits, the savings bank deposits and
some other deposits. In recent year a few new
types of accounts have also introduced by banks
such as recurring deposits, students deposit
accounts, multi-purpose deposit scheme, super
saving scheme, janata deposit scheme, reinvestment plan, etc. These types of deposits are
included under the other types of deposits.

Types of deposits accounts are discussed

below.:(1)FIXED DEPOSIT ACCOUNTS
In this category are included the
deposits with the banks for a fixed period which
specified at the time of making the deposits.
Such deposits are ,therefore called Fixed
Deposits or Term Deposits. A fixed deposit is
repayable on the expiry of a spiced period of
time, chosen by the depositor at the time of
deposit.
The rate of interest and other terms and
conditions on which the banks accepted fixed
deposits were regulated by the Reserve bank of
India in exercise of the powers conferred upon it
by sections 21 and 35A of the banking regulation
Ac,1949. In1992 fixed deposits were classified in
to different categories with varying periods of
maturity starting from 46 days.
Since 1992 reserve bank of India
commenced the policy of gradual de-regulation
over deposit interest rates. Reserve Bank of India
permitted the banks to prescribes their own rates
of interest on fixed deposits of different
maturities, but the max.rate of interest was fixed
by it. This ceiling rate was revised several times.

In Oct.1997, the ceiling rate itself was

also withdrawn and thus
the deposit interest rates were totally freed from
Reserve Banks Regulations.Banks are now free to
fix their own rates of interest on fixed deposits of
different maturities.further,On Apr.29,1998,the
min.period of maturity of term deposits was
reduced from 30 days to 15 days. Hitherto a
restriction was imposed on the banks that they
must offer same rate on the deposits of the same
maturity irrespective of the size such deposits.
This restriction has also been removed since
April 29, 1998. Banks are now
The max rate of interest paid by the
Kendrapara Urban Co-operative Bank is 8.75%
whose maturity period is more than 5year less
than 10year and rate of interest is 4.00% whose
maturity period is 15 days to 45 days. The fixed
deposits of the Kendrapara Urban Co-operative
Bank of last years, from 2004-2005 to 20082009.
YEARS

FIXED DEPOSITS(Rs
in lacs)

20042005

855.31

20052006

843.32

20062007

839.05

20072008

919.71

20082009

4067.87

The fixed deposits in 2004-2005 is 855.31 which

is decreases in 2005-2006 and also in 20062007.After that the fixed deposit increases with a
increasing rate, which is a positive sign for the
banks growth in future.
(2)CURRENT DEPOSITS
A current account is a running and active
account which may be operated upon any
number of times during the working days. There
is no restriction on the number and the amount
of withdrawals from a current account. As the
banker under an obligation to repay these
deposits on demand, they are called demand
liabilities of a banker. To meet such liabilities the
banker keeps sufficient cash reserves against

such deposits vis--vis the saving and fixed

deposits. Current accounts suit the requirement
of big businessman, joint stock companies,
institutions, public authorities and public
corporations etc., whose banking tractions
happen to be numerous on every working days.
Special character of the current account is as
follows,
A current account is meant
convenience of his customers.

for

the

The banks not to pay any interest on the

credit balance in the current
account.

In case of unremunarative accounts

involving lot of work but without the
maintenance of sufficient balance, the banker
charges
incidental
expenses
from
the
customer.
A current account carries certain privileges
which are not given to a savings account
holder.

The current deposit amounts of the Kendrapara

Urban Co-operative Bank of last 5-years are
shown below.

YEARS

AMOUNTS(Rs
lacs)

20042005

57.09

20052006

75.45

20062007

125.48

20072008

185.89

20082009

180.75

in

The current deposits increases at a increasing

rate from 2004-2005 to 2007-2008, after that
there are small decreases in 2008-2009,because
of there is more increases in the fixed deposits in
that year. The current deposit is more in 20072008 and less in 2004-2005.
(3)SAVINGS BANK ACCOUNT
A savings bank account is meant for the
people of the lower and middle classes who wish
to save a part of their current income to meet
their future needs and also intend to earn an
income from the savings. The banks therefore
impose certain restrictions on the savings bank
account and also offer a reasonable rate of
interest. The need of keeping cash reserves
against such deposits is comparatively larger and
vice-versa the fixed deposits but smaller as
against the current deposits, because of the
restrictions on the no of withdraws. With the
extension of banking facilities during the last
decade and the growth of banking habit amongst
the people, the saving deposits of all scheduled
commercial banks have gone up substantially.

There are certain restrictions on the savings

account, such as
Restrictions on withdraws regarding the
number and amount of withdraws within a
specified period of time. The number of
withdraws over a period of six month is limited
to 50 times. A depositor cannot withdraws a
amount of Rs smaller than Rs 1, or any sum
which is not a multiple of RS 1.The amount of
cheque is Rs 5.
Bank restricts on minimum balance should
to be maintained in the account.
The rate of interest payable by the banks on
deposits maintained in savings accounts is
prescribed by the Reserve Bank of India.
The savings amount of the Kendrapara Urban Cooperative Bank of last five years, from 20042005 to 2008-2009.

YEARS

AMOUNTS(Rs in
lacs)

2004-2005 1095.08
2005-2006 1230.37
2006-2007 1400.21

2007-2008 1646.31
2008-2009 1674.33

The savings account of the bank increases with a

increasing rate from the year 2004-2005 to
2008-2009 ,which implies the sound growth of
the bank. It shows the growth of the with a
smoothen way.
(4)OTHER DEPOSITS
A variant of savings bank account is the re
recurring deposits or cumulative deposit
accounts introduced by banks in recent years.
This account is intended to inculcate the habit of
saving in a regular basis as an inducement is
offered in the form of comparatively higher rate
of interest.
The other deposits mainly includes recurring
deposits
,
students
deposit
account
,
multipurpose deposit scheme, reinvestment
plan, pigmy deposit scheme etc., The rate of

interest on this type of accounts is comparatively

same as with the savings account which is in
accordance with the Reserve Bank of India.
In case a depositor is compelled to close the
accounts before its maturity, the pays no interest
if the deposits made for a period of less than 3
month, interest at 1.5% is payable for deposits
made up to 6 months, 4% on deposits made up
to 12 months.
The recurring deposit account can be opened
by any person ,more than one person jointly or
severally, by minor in the name of guardian.
While opening a account the depositor is given a
pass book which is to be presented to the bank
at the time of monthly deposits and repayment
of the amounts.
The other deposits of the Kendrapara Urban Cooperative Bank for last five years from 20042005 to2008-2009 are shown below in table with
the graphical representation.
YEARS

AMOUNTS(Rs in
lacs)

2004-2005 1310.08
2005-2006 1697.70
2006-2007 1896.86

20072008

2287.03

2008-2009 25.69

The other deposits of the bank increases with

a increasing rate from 2004-2005 to 2007-2008
but due to there are more increases in the fixed
deposits, the other deposits affected heavily in
the year 2008-2009.
TOTAL DEPOSITS
The total deposits of the Kendrapara Urban
Co-operative bank is the sum total of the fixed
deposits, current deposit account, savings
account of the bank and the other deposits.
The total deposits for the last five year of
the Kendrapara Urban Co-operative Bank are
shown below in both tabular and graphical form.
(Rs in lacs)
YEA
RS

FIXED CURRE SAVING OTHER TOTAL

DEPOSI NT
S
DEPOSI DEPOSI

TS

DEPOSI DEPOSI TS
TS
TS

TS

2004 855.31 57.09

2005

1095.0 1310.0 3317.5

8
8
6

2005 843.32 75.45

2006

1230.3 1697.7 3846.8

7
0
4

2006 839.05 125.48 1400.2 1896.8 4216.6

1
6
0
2007
2007 919.71 185.89 1646.3 2287.0 5038.9
1
3
4
2008
2008 4067.8 180.75 1674.3 25.09
7
3
2009

5948.6
4

In the year 2004-2005 the other deposits of the

bank is most significant part of the total
deposits, in this year the savings bank deposit
also contribute the more to the bank. Where the
current deposit is very low in accordance with
the others. Fixed deposits contribute a moderate
amount to the bank.
In the year 2005-2006 there are the other
deposits of the bank increase

In the year 2005-2006 there are the other

deposits of the bank increases and also take
significant part of the total deposits. The
deposits of the bank in this year are goes
downward but the savings deposit and current
deposits of the bank with a increasing rate.
The current deposit of the bank in 2006-2007
is increases with a faster rate, where the other
deposit is more than the others. The savings
deposit of the bank is increases but the fixed
deposit of the bank is moves downward, which is
somehow affects the growth of the bank. In
2007-2008 the all types of deposits of the bank
are increases. The year 2008-2009 is the year of
the fixed depositors, in this year the fixed
deposits of the bank is increases with a very
faster rate than the previous year, which affects
the current deposits and the other deposits, the
current deposits of the bank falls with small

amount but the other deposit of bank affected

heavily. After the entire total deposits of the bank
moves forward smoothly with a
increasing rate. From this we conclude that it is
positive sign for bright future of the bank.
CREDIT MANAGEMENT
MEANING AND
MANAGEMENT

DEFINATION

OF

CREDIT

Credit management is term

used to identify accounting functions usually
conducted under the umbrella of accounts
receivables. Essentially this collection of process
involves the qualifying the of credit to a
customer, monitors the reception and logging of
payments on outstanding invoices, the initiation
of collection procedure s, and the resolution of
disputes or queries regarding charges on a
customer
invoice,
When
it
functioning
effectively ,credit management serves as an
excellent way for the business to remain
financially stable.
The process of credit
management begins with accurately assessing
the credit-worthiness of the customer base. This
is particularly important if the organization

chooses extent credit line or revolving to certain

customers.
Proper credit management is
calls for setting specific criteria that customer
must have before receiving the credit. As a part
of the evaluation process credit management is
also calls for determining the total credit line that
will be extended to a given customers.
DEFINATION
Credit management involves the
policies and practices followed by financial
organization for granting credit and receiving the
collections from the customers.
FACTORS AFFECTING CREDIT MANAGEMENT
There are several factors the credit management
in the to evaluate and qualify a customer for the
receipt of some form of commercial credit.
This includes gathering data on
customers current financial condition.

the

The current credit position of the customer.

The current ratio between the income and

outstanding financial obligations will also be
taken in to consideration.

The capacity of the creditor to invest or not.

 The demand of the sector in which the

creditor want to invest.
Competent management seeks to not only
to protect the vendor from possible losses , but
also protect the customer from creating more
debt obligations that cannot be settled in a
timely manner.
After establishing a credit limit for a
customer credit management focuses on
providing the client with accurate and timely
statements or invoices.
GOAL AND OBJECTIVES OF CREDIT
MANAGEMENT
Asses and assure credit risk and manage it
such a way that risks (losses ) are minimized
& return is optimized.
To achieve target lone recovery followed by
risk based return by managing a credit
portfolio.
Install a system and control measures for
periodic reviews.
CREDIT MANAGEMENT
Credit management is a process of managing
credit using following steps,

 Formulation of credit policy.

Credit intention.
Credit evaluation and risk assessment.
Credit monitoring and control.

CREDIT POLICY
Credit policy provides a brooder framework of
reference and uniform standards.
It should be flexible to meet various situations.
It should aim to provide guidance for what to
do, how to do.
Should contain
portfolio.
Should
consider
environment.

segmentation
legal

and

of

credit

regulatory

Should clearly specify certain parameters like

maximum amount of loan ,deposit and capital
etc.
Should clearly state the delegates authorized
for processing and approval of loan.

 Guideline for interest rate.

Quality of credit. Should put a good
administrative set up for credit administration.
CREDIT INTENTION
Target market planning is the most important
aspect of the credit intention.
Target market refers to business disciplines
and selectivity.
The target market (TM) process follow the
formulation of overall business strategy of the
bank.
Identifying
business
potential
,defining
desirable oppernuties and adhering to
resultant marketing objective.
TM identifies the acceptable and desirable
profile of customer and the product to be
offered.
Define risk acceptance criteria (RACs).
CREDIT EVALUATION OF RISK ASSES MENT
The 3cs of the credit.
Character.

 Capacity.
Collateral.
RISK ASSESMENT
Business risk.
Management risk.
Terms of loan.
Critical success factor.
Risk based charging of interest.
CREDIT MONITORING AND CONTROL
Periodic review.
Interim review.
Quarterly accounts.
Identification of early warning signs.
Classification of NPA.
Rehabitation of NPA. (Remedial management).

NON PERFORMING ASSET(NPA)

Definition

A loan or lease that is not meeting its stated

principal and interest payments. Banks usually
classify as nonperforming assets any commercial
loans which are more than 90 days overdue and
any consumer loans which are more than 180
days overdue. More generally, an asset which is
not producing income.
Conceptually an asset becomes
nonperforming, when it ceases to generate
income for the bank.
The RBI has given the following guide lines for
classification of advance account to NPAs.
I.LOAN ACCOUNTS
A loan account (term loan) is to be
classified as NPA when interest and installment
of principal remain overdue for a period of more
than 90 day.
An account will be classified as NPA, if the
charges during any quarter are not service fully
with in 90 day form the end of the quarter.
Similarly it also be classified as NPA if the
installment due is not serviced with in 90 day
from its due date.
II.CASH CREDIT OR OVERDRAFT ACCOUNT
A cash credit or over draft account is to be
classified as NPA when it remains out of order
for a period of more than 90 days.

A cash credit over draft account is treated as out

of order if the outstanding in the account
remains continuously in asses of the sanctioned
limit /drawing power.

III. Bill purchase/ bill discounted account

A bill purchased /bill discounted account will be
classified as a NPA if the bill remains over due for
a period of more than 90 days.
IV.AGRICULTURAL ADVANCES
A crop loan account for short duration cropped
will be classified as NPA if the principal or
interest there on remains overdue for two crop
seasons.
A crop loan account for long duration crops will
be classified as NPA if the principal or interest
there on remains overdue for one crop seasons.
A term loan given for agricultural purposed will
be classified as NPA if the principal or interest
over due for one crop season or two crop
seasons depending on the duration of crop raised
by the borrower/ agriculturist.

V .NPA DUE TO IRREGULARITY IN OPERATION OF

ACCUNT
In case of cash credit account, where the stock
statement has not been obtained for a
continuous period of more than 3 months as on
the date of the balance sheet, the account will be
classified as NPA.
An account where the limits have not been
reviewed or renewed for a period of more than
180 days from its due date or form the date of
adhoc will be treated as NPA.
VI. ORTHER POINTS ON NPA CLASSIFICATION
Consortiums advances: in case of Consortium
advance, the account will be classified as NPA
by a member bank depending on the record of
recovery in its own books irrespective of the
recovery status with the lead bank or any
other member bank.
NPA classification borrower wise
facility wise

and not

Exempted categories
Advances guarantees by govt.:
CLASSIFICATION
ASSETS (NPA)

OF

NON

PERFORMING

Based on the period for which the accounts have

remained none performing and also their
realisabity are required to classify all non
performing assets in to the following three
categories.
(a)
Sub-standard
asset,
(b)doubtful asset and (c)loss asset. Asset
which is performing will be classified as standard
asset.
A sub-standard asset is an account which has
remained in NPA category for a period of not
more than 12 months.
A doubtful asset is one which has remained
in NPA category for more than 12 months. In
other words, ounces an account becomes NPA, it
is classified as substandard asset and it remain
in this classification 12 months and unless
upgraded to standard asset, it is then classified
as doubtful asset.
A loss asset is one where loss has been
indtified by the bank or internal auditor or
external auditor or by RBI inspector but the
amount has not been written off wholly. It is an
asset which is considered uncollectable and is of
such little value that its continuance as a
bankable asset is not warranted although there
may be some salvage or recovery value.

PROFIT AND LOSS ACCOUNT FOR THE YEAR

2013-2014
EXPENDITURE
Previous
Sl Particulars
year
no
balance
103653238. 1 Interest on deposits
15
and
borrowings((annex-2)
246806.00 2 Salary
and
allowances
(annex-1)
2913064.00 3 Rent,Taxes,Insurance,
Lighting. (annex-3)
18065.00
4 Legal expenditure
153123.00

170000.00

1291752.00 7
605653.00

Postage,
Telegram,Telephone
(annex-4)
Audit fees paid
Depreciation
Repair
(annex-5)
Printining
Stationary,
advertisement.
(annex-6)

Amount(
Rs
in
lacs)
1189721
26.00
2606251
9.00
2215419
.00
57300.0
0
163816.
00

277000.
00
and 1879396
.00
and 571661.
00

0.00
9 O.T.S Loss
1816726.17 10 Other
Expenses(annex-7)
5944000.00 11 Prov.for
Bad
&
Doubtful Asset.(NPA)
387000.00 12 Prov. For Standrad
asset
1938456.00 13 Prov. For Recoveries.
50000.00
0.00
5264753.80
148771637.
12
1611015.00

3653738.80

Previous
Balance

0.00
1687676
.77
1667700
0.0
408000.
00
3456531
.00
14 Prov. For Election exp. 50000.0
0
15 Prov. For aeere D.A to 0.00
staff
16 Profit before Tax
3218382
.55
TOTAL Rs.
1756968
27.32
18 Income Tax Paid
1757169
.00
Net profit after tax 1461213
transferred
.55
20 Balance sheet
INCOME

Sl.n Particulars
o

Amount(Rs
)

145674803 1
.75

Int. and discount

(annex-8)

172862095
.92

1731326.8 2
7

Comm.Exchange&Bro 1425684.0
krage
6

39850.00

Commission from
insurance

37124.00

1325656.5 4
0

Other
incomes(annex-9)

1371923.3
4

148771637
.12

175696827
.32
By

Net profit b/d

BALANCE SHEET FOR THE YEAR 2013-2014

CAPITAL AND LIABILITIES
OPENING S. HEAD
OF
BALANCE N ACCOUNTS
AS
ON
01.04.08
1 PAID
UP
SHARE
CAPITAL
3735593
(a)Indivisual
0.00
Share Capital
16950.00
(b)Nominal
Share
0.00
(c)Govt. share
capital
2 RESERVE
FUND &OTHER
RESERVE

INNER
OUTER
COLUMN( COLUMN(
Rs)
Rs)

4018092
0.00
17935.00
100000.0 4029885
0
5.00

9499514.
33
3734673.
31
256065.8
0
0.00
1274.00
41057.46
138120.0
0
350000.0
0
700000.0
0
5664066.
00
1000000.
00

(a)Statutory
Reserve fund
(b)Building
fund
Dividend
equalization
fund
(d)Bad
debt
fund
(e)Flood and
famine fund
(f)Common
good fund
(g)Coop
education
fund
(h)Jubilee fund
(i)Investment
dep resev.
(j)building
Revaluation
Reserve
(Investment
Fluctuation
Reserve)

1041295
0.13
3734673.
31
256065.8
0
0.00
1274.00
8012.46
nill
350000.0
0
700000.0
0
5664066.
28
1000000.
00
2212704
1.98

3 PRINCIPAL/SU
BSIDIARY
FUND A/C FOR
SHARE

CAPITAL
(a)Central
coop. banks
(b)Other coop.
banks
4 DEPOSITS
2542073
i.Savings bank 2377774
45.06
deposit
08.67
ii.Fixed
deposits
9634993
(a)Indivisuals 1086021
09.00
824.00
iii.Current
deposit
2346855
(a)Individuals( 2954819
6.88
Annex-10)
0.30
(b)Money
at nill
5948635
cal l& short
83.05
notice
5 BORROWINGS
(a)From
SBI/state/club
(b)Short term
loan/OD which
secured
(c)Midterm
loan (secured)
(d)Govt. and
other
approved

100000.0
0
6

Nil
1806269 7
8.00
8
2760527 9
8.00
3673088. 1
55
0
4377597 1
4.25
1
2848200.
00
3841140
9.32

1
2
1
3

securities
(e)Other
tangible
securities(L.A.
T.D)
Bills
for
collection Bills
payable after
being
collection
Collection as
per contra
Interest
payable
on
deposits
Interest
payable
on
borrowings
Provi. For O.D.
Interest
reserve
Provi.
Accounts
(Annex-12)
Provi. For Bad
&
Doubtful
Asset
NPA
Reserve
Provi.
For
standard asset
Sundry
liabilities

Nil

Nil

Nil

Nil

1803456 1803456
6.00
6.00

3125262 3125262
9.00
9.00
3723088. 3723088.
55
55
6045297 6045297
4.25
4.25
3256200.
00
4461923.
32

3256200.
00
4461923.
32

78932.00
220800.0
0
2373626
0.00
2488700.
00
2451640.
00
3653738.
80
1432469
581.04

(Annex-11)
1 Suspense BLD 4221.00 4221.00
4
1 Audit
fees 284500.0 284500.0
5 payable
0
0
1 Pay order
1114666 1114666
6
7.00
7.00
1 Demand draft
Nil
Nil
7
1 U.D profit
5045793. 5045793.
8
00
00
1 Profit for year 1461213. 1461213.
9 2013-2014
55
55
GRAND TOTAL 1554897 1554897
095.62
095.62
PROPERTIES AND ASSETS

PREVIOU SL. HEAD

OF INNER
S YEAR NO ACCOUNTS
COLUMN
4015747 1
(a)Cash in hand 4363467
1.95
(annex-18)
9.00
187.00
(b)Postage
in 167.00
hand
2
2543915
1.37
2449802
.00
1522900

Balance
with
other bank
(a)Current
deposit (annex13)
(b)Savings
deposit
withCCCB LTD
(c)Fixed

OUTER
COLUMN
4363484
6.00

3416306
2.06
1759207
.00
1293464 1652687

44.55
3
4
7171250
0.00
2378442
94.00
Nil

1028240
7.00
5
50.00
101000.
00
6

deposits
(annex-17)
Money
at
short
call
notice
Investment
(a)Central and
State Govt.
(i)Held
to
maturity
(ii)Available for
Sale
(iii)Held
for
Trading
(b)Other
Securities
(c)Share
in
coop.
institutions
other than No.5
(d)Other
investment
(Reserve fund)
Investment out
of
principal
subsidy
(a)Central coop.
bank
(b)State coop.
bank
ADVANCES
i.Short
term

40.44

09.50

7548597
0.00
2527139
03.50
Nil

3281998
73.50

1057527 1057527
3.00
3.00

50.00
101000. 101050.
00
00

2177155
97.10
3367287
00.56

1015785
88.00
1619202
11.00

0.00
7

loan/cash
credit/O.D/bills/
discounted
which secured
against
(a)Cash Credit 2543726
53.60
(b)category of 3686111
loans
(Annex- 13.51
14)
ii.Other tangible
securities
of
advances
A/C due from
individuals i.e.
Loan
against 1077301
deposits(Annex- 93.00
15)
ii. Mid term loan
(a)Gold
1990243
ornament loan 78.00
(b)Govt.
&
other approved
securities
(c)Other
tangible
securities
(d)Receivable
0.00
9297383
from
38.11
G.O.I(DWDR)
INTREST
RECEIVABLE OF

2760527
8.00
2738824
7.00
0.00
Nil

8
9

4480947
.00
37526.0
0
4154709
.00

WHICH
(a)Intrest
on
loan & advance
(b)Intrest
on
investment
Intrest on HB
loans
(d)Intrest
on
G.O.I(DWDR)
Bills receivable
as per (contra)
LAND
AND
BUILDING
(a)Land

3125262
9.00
2551811
5.00
0.00
0.00

5677074
4.00
0.00

4480947
.00
(b)Boundary
37526.0
wall
0
Main building 3945097 8463570
.00
.00
10 SUNDRY
DEBTOR
(construction)
155558.
(a)Cycle stand 155558. 155558.
75
75
75
11 FURNITURE
AND
FIXTURE
AFTER
DEPRICIATION
3299806
(a)Dead stock
3474654
.35
.35
167767.
(b)Contigential 312866.
00
dead stock
00

2873.00

Book
and
library
168363.
(d)Electrical
00
fittings
5278180 12 Other
.00
Assets(Annex16)
299356. 13 Suspense Head
41
office
266990. 14 Vehicle
00
136320. 15 Sundry
00
Debtor(daily
collection
machaine)
807655. 16 Computer
00
1432469 17 GRAND TOTAL
581.04

3616.00
190758.
00
5712432
.00

3981894
.35
5712432
.00

801950.
41
213592.
00
130320.
00

801950.
41
213592.
00
130320.
00

1148944
.00
1554897
095.62

1148944
.00
1554897
095.62

Loans and investment for last 5 years (Rs

in lacs)
Sl.n Type of loan
o
1
Term
loan(gen)
2
Gold loan
3

200607
597.3
9
303.7
3
LATD/LAPC/LA 435.9
PR
1

200708
778.3
3
336.5
9
452.0
5

200809
889.2
5
466.4
2
507.6
0

200910
922.3
5
570.0
2
615.9
4

4
5
6
7

PERSONAL
LOAN/CD
LOAN
CASH CREDIT
LOAN
TRANSPORT
LOAN
STAFF
ADVANCE
TOTAL

36.47 53.54 71.33 79.24

862.6
4
632.1
4
162.0
5
3030.
33

1019.
35
612.6
1
182.0
2
3484.
49

(D.W.D.R)
Investment in SLR
Investment in NON-SLR

1242.
79
683.9
2
199.8
8
4061.
19
112.8
9
4174.
08
1343.
33
370.2
2

1414.
84
927.7
1
216.2
3
4746.
33
67.45
4813.
78
1993.
29
405.9
8

RECOVERY OF LOAN FOR LAST 5 YEARS (Rs

in lacs)

THE

YEA
R

DEM COLL BALA %OF

NPA
&
AND ECTI NCE COLLEC
ON
TION

2004 452. 363.7 89.1 80.32

84
4
0
2005
2005 3243 2892. 350. 89.23
.14 67
47
2006
2006 6607 6237. 370. 94.39%
.09 01
08
2007
2007 8162 7717. 455. 94.55%
.49 44
05
2008
2008 8914 8477. 436. 95.10%
.59 85
74
2009
2009 1092 1044 476. 95.63%
3.98 7.07 91
2010
(UNA
UDIT
ED)
PROGRESS IN COLLECTING NPA FOR THE
BANK FOR LAST FIVE YEAAS

YEA LOA INVE GROS PRO NET

RS NS STME S NPA VISI NPA
&
NT
ONS
ADV
FOR
ANC
NPA
ES
IN %
200 253 725.0 403.3 90.4 212.
5
8.49 0
4(15.9 9
85(1
%)
2.3
%)
200 272 725.0 446.4 105. 340.
6
1.81 0
2(16.4 84
58(1
%)
2.5
%)
200 303 725.0 443.8 126. 317
7
0.33 0
5(14.6 27
58(1
%)
0.5
%)
200 348 1395. 530.7 140. 390.
8
4.49 97
0(15.4 65
05(1
%)
1.2
%)
200 417 1713. 547.7 165. 382.
9
4.08 55
0(13.1 67
03(9
2%)
.35
%)
201 481 2399. 631.2 200. 430.
0
3.78 29
8(13.1 35
93(9
1%)
.34
(UN
%)
AU

From this we conclude that the cumulative

amount of the NPA increases and increases in a
up and down motion, but overall
we can say
the NPA amount increases, but the percentage of
NPA rate decreases from year to year. The NPA
rate in 2005 is 12.3% which is now in 2010 is
9.34%, it is less than the previous year 2009 is
9.53%. It shows the credit policy of the bank is
good which helps organization for move forward
in smooth rate for their growth and expansion.
The recovery rate of loans and advances
increases with a increasing rate from year to
year. In 2004-2005 the recovery percentage is
80.32% which increases to 89.23% in 20052006 . in the year 2009 the recovery percentage
increases up to the 95.10% which is the positive
points for organization to achieve the objectives
of the organization in future. It states that the
credit policy of the bank is good. There are need

the credit awareness, interim review, periodic

review, customer awareness to increase the
recovery rate.
There are the main important
causes of default in payment of installments is
due to the irregularity in the monsoon, natural
happenings such as cyclone, flood etc., which
affects the very much to the customers, because
most of the people taking loan for the agriculture
in the rural area. And also some other causes
which affects the people who taking loan for
doing business, the causes such as the price hike
in market index rate, at that time there are more
fund has been invested in purchasing and
holding goods, so that causes difficult to them
for the repayment of timely installments.

CHAPTER-4

CONCLUSION

The credit management is a most vital activity

of any bank. It is a very sensitive area in the field
of banking. Credit management includes the
cases on the credit policy, process of granting
loan, recovery practice, and how to minimize the
NPA.
From the study of the credit policy of the
Kendrapara

Urban

co-operative

bank,

it

is

conclude that the recovery of loan and advances

with a increasing from year to year. The present
credit management policy of the bank is good
but there is need some improvement to minimize
the NPA or zero NPA.
Overall the bank need to follow the proper
procedure for granting the loan and advances to
the

customer

and

should

make

good

co-

operation with other nationalized banks.

From the study I hope that once the time will
come when The Kendrapara Urban Co-operative
Bank will get a chance to show the Excellency in
management and create a new position among

the co-operative banks and can cope with

modern preference of the customer and will get a
specialty position.

SUGESSATIONS
The bank must have to improve its customer
service.
The bank must consider about the while take
fixed deposits and granting loans.
The

bank

must

to

satisfy

the

present

customer, which attract other.

The bank must to provide the service like
service provided by his competitors.
The bank must to provide the provide all the
facilities which is provided by other banks.

Appendix

BIBLIOGRAPHY
BOOKS
1. Varshney P.N (Ph.D), Banking Law and
Practice, New Delhi, Sultan Chand & Sons,
2003 Editation.

2. Sharma R.K.
and Gupta S.K. ,Financial
Managament, New Delhi, Kalyani Publishers,
2009 Editation.
3. Gordon and Natarajan, Financial Markets
and Services, Mumbai, Himalaya Publishing
House, 2007 Edition.
4. Dash S.K, TIT BITS OF General Advances &
Financial Services, Bhubaneswar, Bank House,
2008 Edition.
INTERNET SITES:1.
2.
3.
4.

www.scribd.com
www.iisi.com
www.management paradise.com
www.google.com