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Financial Statements contain a wealth of information. If properly analyzed
and interpreted, they can provide valuable insight into the firm’s performance.
Analysis of Financial statements is of vital interest to the lenders (short term
as well as long term), investors, security analysts, managers and others. The
relationships between various items in the financial statements are expressed by
means of ratios.
A Ratio is a simple arithmetical expression of the relationship of one number
to another. It may be defined as the indicated quotient of two mathematical
expressions. According to Accountant’s Handbook by Wixon, Kell and Bedford, a
ratio “is an expression of the quantitative relationship between two numbers.”
According to Kohier, a ratio is the relation, of the amount, a, to another, b,
expressed as the ratio of a to b; a: b (a is to b); or as a simple fraction, integer,
decimal, fraction or percentage.” In simple language ratio is one number expressed
in terms of another and can be worked out by dividing one number into the other.
Ratio analysis is a technique of analysis and interpretation of financial
statements. It is the process of establishing and interpreting various ratios for
helping in making certain decisions. However, ratio analysis is not an end in itself. It
is only a means of better understanding of financial strengths and weaknesses of a

The followings are the four steps involved in the ratio analysis:
 Selection of relevant data from the financial statements depending upon the
objective of the analysis.
 Calculation of appropriate ratios from the above data.
 Comparison of the calculated ratios with the ratios of the same firm in the
past, or the ratios developed from projected financial statements or the ratios
of some other banks or the comparison with ratios of the industry to which
the bank belongs.
 Interpretation of the ratios.
Interpretation of the Ratios
The interpretation of ratios is an important factor. Though
calculation of ratios is also important but it is only a clerical task whereas
interpretation needs skill, intelligence and farsightedness. 1 tic inherent limitations
of ratio analysis should be kept in mind while interpreting them. The impact of
factors such as price level changes, change in accounting policies, window dressing
etc., should be kept in mind when attempting to interpret ratios. The interpretation
of the ratios can be made in the following ways:
a) Single Absolute Ratio
b) Group of Ratios
c) Historical Comparison
d) Projected Ratios
e) Inter-bank comparison

Use and Significance of Ratio Analysis

The ratio analysis is one of the most powerful tools of financial analysis. It is
used as a device to analyze and interpret the financial health of enterprise. Just like
a doctor examines his patient by recording his body temperature, blood pressure,
etc. before making his conclusion regarding the illness and before giving his
treatment, a financial analyst analyses the financial statements with various tools of
analysis before commenting upon the financial health or weaknesses of an
enterprise. ‘A ratio is known as a symptom like blood pressure, the pulse rate or the
temperature of an individual.” It is with help of ratios that the financial statements
can be analyzed more clearly and decisions made from such analysis.
This methodology used to collect the required information or
data are discussed with different manager guided by them and visiting various dept.
of Balasore Bhadrak Central Co-operative Bank. Balasore.

The District Central Co-operative Bank, Balasore calculates several ratios for
knowing the overall performance and also the current financial position of the Bank.
These ratios are listed below.

a) Average Working fund.

b) Average Cost of fund.
c) Average Yield on Advances.
d) Average yield on Assets.
e) Transaction Cost.
f) Risk Cost.
g) Non-Interest Income.
h) Net Interest Income.
i) Operating Margin/Financial Margin.
j) Profitability/Net financial margin.
k) Credit Deposit Ratio.
l) Return on Assets.
m) Net NPA to Advances.
n) Capital Adequacy Ratio (CAR)
o) Per Employees Business.
p) Per Branch Productivity.
q) Solvency Ratio.
r) Factor Separation Analysis.
s) Break-even Level.
For the completion training has consulted the
secondary data which includes:

I) Book of the project

2) Published report relevant to the topic
3) Record of the bank
4) Periodicals &files
5) Commercial data &Brochures provide


 Secondary data: secondary data are those data which refer those form already
gathered and available data in contrast with the primary data there may be
internal sources within the firm. Externally these source may include in the
book or periodical, published report, data, services etc.

 Various methods or different ratios to be used to know the financial position of

Balasore B hadrak Central Co-operative Bank. Balasore.

The project objective consists of the business benefit that organization expects
to achieve as a result of spending time and exerting effort to complete a project.


The present study has been undertaken with the frilhowing specific objectives:

 To study the Financial analysis carried out by Balasore- l3hadrak central

cooperative bank.
 To study the products and services offered by the bank.
 To study the financial health of the bank in terms of its margin.
 And, to study the Capital Adequacy Ratio maintained by the bank.
The scope of the study is to get a true and clear understanding
of the financial analysis done in banks.

This study gives an impetus to analytically examine the changes being put
forward by the current changes in the present financial market.

 The study is limited to 5 years only.

 Majority of data are collected from secondary sources. However, some

important primary information is being collected from bank officials.

 Data’s have been analyzed in the report under some assumption such as total
working fund is assumed to be average working fund with lack of information.
In the general sense, the term “Co-operation” means, the idea of “Living
together and working together”. Co-operation is a form of business organization. It
is the only system of voluntarily organization suitable for poor people. In this
system, the persons voluntarily associate together as human beings on a basis of
equality, for the promotion of their economic interests.

Thus, the Co-operative Bank can be defined as “an institution established on

the Co-operative principles and engaged in the normal banking business of
accepting deposits from the public for the purpose of lending and repay it on
demand or otherwise”.



he Co-operative Movement in Indian Banking was started with the objective of

providing finance to the agriculturist and thus relieving him from the clutches of the
village money lenders, i.e., to solve the problem of rural indebtness by supplying
credit at low rates of interest. In India, the Cooperative Societies Act was passed in
1904. A new Co-operative Societies Act was passed in 1912. Though the movement
has completed more than 90 years, the progress has been slow.

From the chart, it can be seen that the organization of the Co-operative
Credit Society is pyramidal in nature. It has a three- tier structure.

1) Primary Credit Societies at the bottom.

2) Central Co-operative Bank at the middle.
3) State Co-operative Bank at the top.

That is, the primary societies are functioning in the various towns and
villages, the Central lianks at the district headquarters and the State Co-operative
Banks at the state capitals forming the apex of the system. The
Reserve Bank of India assist the co-operative structure by providing
concessional finance through NABARD in the form of General Lines of
Credit for lending to agricultural activities. Thus, the whole system is integrated
with the Banking structure of the country.

The Primary Agricultural Credit Societies

A primary society is an association of borrowers and non-borrowers residing
in a particular locality and taking interest in the business affairs of one another. As
membership is practically open to all inhabitants of a locality, people of different
status are brought together into the common organization. The affairs of those
organization are managed by honorary secretaries and presidents assisted by board
of directors, all these officials being elected from amongst the shareholders on the
principle of one man, one vote’. Most of the societies are organized and working on
the principles of unlimited liability. The society may be started with ten or more
persons of a village. In March 2001, nearly 10, 00, 00,000 (Ten Crore) as on that
date. Their deposit base is very poor at Rs. 13,481 crore as at end March 2001. Total
outstanding loans of all PACS are totally dependent on CCBs for their financial
needs. NABARD has also been extending funds to develop the infrastructure of PACs.

The primary society derives its funds from entrance fees1 share capital,
reserve funds deposit or loans from non- members, from central and provincial co-
operative banks and from the Government. The deposits of the society may be either
fixed, savings or recurring. Unfortunately, the deposits of primary societies are not
sufficiently large. The society provides short-term credit to its members ordinarily
on the personal security of the borrower with the personal surety or sureties of
other members. It may also lend on mortgages.

Central Co-operative Banks

A central co-operative Bank is a federation of primary societies in a specified
area. Where membership of a Central Co-operative Bank is restricted to primary
societies only, it is known as a banking union’. Now days, individuals are also
admitted as members of all Central Co-operative Banks. Central Co-operative Banks
are generally situated at the headquarters of district and have on their boards of
management, individuals of sufficient influence and business capacity
in addition to representatives of primary societies. The CCBs form an
important in the short-term structure of Cooperative Credit
institutions. As at March 200lthere were 367 district central co-operative Banks
with 12,580 branches in various states in India.

A Central Co-operative Bank obtains its funds from share capital, reserve
funds, deposits (current, savings, fixed, recurring) and loans from the State Co-
operative Bank or other joint stock banks. Sometimes primary societies deposit their
surplus funds with the Central Co-operative Banks to which they are affiliated and
this forms another source of funds for the Central Co-operative Banks.

State Co-operative Banks

At the top of the co-operative banking, there are State Co-operative Banks,
organized with the object attracting deposits from the rich urban classes. These
banks are also more suitably equipped to serve as channel between the co-operative
movement and the joint stock banks. There are at present 30 such banks. The
constitutions of banks differ from one another, but generally speaking, the
membership comprises representatives of Central Banks as well as individual
shareholders. A logical development of these banks would have been establishment
of all-india Co-operative Bank. But there is no such institution, although the Indian
State Co-operative Banks Association has been coordinating their activities and
performing certain serviêes to all these Banks. NABARD maintains contact with the
State Co-operative Banks. In addition to ofiiring them rediscount facilities, collect
and disseminate useful information regarding co-operative movement. As at the end
March 2002, there where 30 SCBs with 831 branches in India. The total deposits of
all SCBs as at end March 2001 aggregated to Rs. 32,626 crore as compared to Rs.
29,557 crore in March 2000. Among the states, Maharashtra mobilized maximum
deposits of Rs. 9,136 crore, followed by Tamil Nadu at Rs. 2,745 crore. Tamil Nadu
came third with Rs. 1,635 crore of deposits in March 19997 of the 30 SCBs in 2001,
23 made profits while 6 made losses during 2000-01.

Capital and operation of the Bank

The State Co-operative Banks attract deposits from the richer
urban classes and grant financial accommodation to Central Co-
operative Banks and through them to primary societies. They form
the only link between the co-operative organization on the on hand and the money
market and joint stock banks on the other. They are the balancing factors as
between Central Co-operative Banks; for the transfer the surplus funds available
with some Central Banks to the needy ones. The State Cooperative Banks derive their
funds from share capital, reserve fund, deposit from the public, loans from the State
Bank, joint stock banks, and deposits of Central Banks affiliated to them.

Generally speaking, it may be stated that the organization of the State Co-
operative Banks is very efficient and, in spite of competition from joint stock banks,
they do very good business. They are prohibited from transacting all types of
commercials banking business and so their funds are not at present being fully
employed. With the growth of Co-operative movement these funds may in due course
be more effectively and efficiently employed within the movement.

Co- operative Banks

Banks established under the co-operative system are called Co-operative
Banks. These are State Co-operative Banks, Central Co-operative Banks and primary
Co-operative Banks. SCB is an apex level bank for a state. CCBs are apex level banks
for each district. Primary Co-operative Banks are rural or Semi-Urban Level Co-
operative Banks.

Co-operative Credit Societies

These are financial institutions whose primary object is to provide credit
facilities, i.e., loans and advances to its members only. These societies are formed in
large organizations or Government Department or at certain regions. The members
are those working in the particular organization/region. They collect subscriptions,
deposits, etc., from members and loans from cooperative banks and extend credit
facilities to its members only.

Primary Agricultural Credit Societies

These are similar to credit societies, but these credit societies can extend loans
to its members only for the purpose of agriculture connected activities.
Credit Societies are not permitted to undertake all banking
business. In other words, they can’t provide cheque book facility to
members and they can’t deal with persons other than their members. While the Rl31
has overall control on all financial institutions, operational guidelines and control
over co-operative banks need to have a minimum paid-up capital of Rs. 1 Lakh only.


Agriculture, banking and co-operatives the main story of Rural India with its
vast chunk of farmers have made repaid strides in Balasore, the granary of Orissa.
And District Central Co-operative Bank (DCCB) has come a long way in combining
the three into one with a meager working capital of just about Twenty six thousand
rupees, the Balasore Central Co-operative Bank got registered in the February,l916
and was later amalgamated with Bhadrak Central Co-operative Bank in 1956 when
the working capital was a more Rs. 10 lakhs where as it is a whopping 633 crore
now. And the total advances to various sectors amazing.

Keeping pace with the changing times and emerging technologies, all its
Thirty Branches along with the Head office have been fully computerized and 97
PACS out of 38 are not way behind.

Way back in 1907, Co-operative movement made its presence felt in the
District of Balasore with the launching of its first ever Co-operative Society when the
province of Orissa was still a part of Bengal. Here in an extract from the first Annual
Report of the Balasore Co-operative Bank Ltd, Balasore for the year 191 6-17.

The first Co-operative Society in the District was started in the year 1907 in
the Sadder SubDivision long before the Co-operative movement was established in
the province, then a part of the province of Bengal . From 1907-1912 there was
mother society and in 1912, a society was started in the Khasmahals of Bhadrak
Division. Towards the middle or the year 1914, an informal conference of local
gentlemen was held under the Presidency of Raj Bahadur Monomohan Roy ( then
Babu M.M. Roy), then collector or the District for the purpose of discussing the
measures to be adopted for giving an impetus to the Co-operative
mcivement in the Sadder Sub-Division of the district.

The present Registrar, then Deputy Registrar also attended. It was then
decided that an honorary organizer should be appointed. In October 1914, Babu
Prafulla Chandra Patnaik was appointed honorary organizer Mr. Kilby had then
taken charge of the District. Before March, 1915 Seven Societies were organized
which were financed by the Honorable Raja of Kanika and Babu Upendra
Naraindutta Gupta.

However, it was felt towards the end of the year 1915 that when we had so
many villages in which the principle of joint and several liability had been worked so
long that the creation of a Central Bank would have to precede the consideration of
village societies.

Mr. Collins, Registrar of Co-operative Societies on leave now. After personally

visiting some of the Societies, advised the starting of a Co-operative Central Bank.
The Honorary Organizer then drew up the Bye-Laws and prospectus on the basis of
model Bye-Laws and prospectus and organized the Central Bank. An application for
its registration sent on the 12th January, 1916.

It was only registered as NO. 134 of 1915-16 under Act II or 1912 on the 19th
February 1916. Although the Bank had been registered, it didn’t commence to work
till the last or June 1916. The operations of Bank are confined to theSadder Sub-
Division of Balasore only. The report further signed it is too early yet to try to
observe anything on this point, but we believe the societies have been much
benefited by the facilities them for purchasing bullocks, by bringing into play the
spirit of fair and honest dealing between man and man, a spirit we are doing our
best to foster.

Rudiments of Co-operations are not unknown in the village communities

though the principle of joint credit is unfamiliar to the people of this part of the
country. The council or elders, even now exercise considerable power in the village.
It isn’t unnatural that Co-operative movement should spread in
the congenial soil and the popularity of the movement and the
appreciating by the villagers of the benefits and daily in evidence by the increasing
eagerness of village people sector to become members of exiting society or to open
nuances. Improvidence and illiteracy are the two be setting evils of the people and the
Co-operative movement by teaching thrift and punctuality, by giving impetus to
education and improvement in agriculture, by introducing systematized payment of
loans can contribute it. It will have amply justified its inauguration. And since then
there has been no looking back.


i) The Balasore Bhadrak Central Cooperative Bank Ltd. (formerly The Balasore
District Cooperative Central Bank Ltd.) is registered as ‘Cooperative Society”
under the Orissa Cooperative Societies Act’ 1962 (Orissa Act-2 of 1963) & its
address shall be At:-O.T. Road, Po:- Balasore ,Dist:- Balasore-756001.
ii) It may be referred in this Bye-laws briefly “THE CENTRAL BANK”

The area of operation of the bank shall extend the whole of Balasore and
Bhadrak Revenue Districts. It may open Branches h any part of these Districts with
prior sanctions of the Registrar, Co- Operative Societies, Orissa.

 To raise funds for financing Co-operative Societies registered or deemed to be
registered under the Act and duly affiliated to it, individuals and other body
corporate enrolled as nominal or associate members of the Bank subject to the
provisions of the Orissa Cooperative Societies Act, Rules framed and orders
issued there.

 To develop, assist and co-ordinate the work of the affiliated Societies and secure
for them financial help whenever, necessary, arrange for their supervision and
 To organize Co-operative Societies for the promotion of thrift, self help and
mutual aid among agriculturists and other persons for prOmotions of economic
interest of its members in accordance with Co-operative
 To organize Self Help Groups and to prqmote Micro finance
among the economical poors directly or through affiliated PACS and LAMPCS.
 To develop and strengthen Co-operative Movement in the Districts of l3alasore
and Bhadrak.
 To provide training facilities to its own employees and
employees/directors/members of affiliated Societies and to establish training
centre for the purpose.
 To arrange for supply of printing stationeries, books, forms, register iron chests
etc. as required by the affiliated Societies.
 To carry on general business of banking as defined in the Banking Regulation
 To carry on soliciting or procuring insurance business both for life and non-life
as referral agent to boost non-fund business of the Bank.

 Every Co-operative Society central or primary within the area of operation of
the Central Bank.
 All the members of the committee including Co-opted Members but excluding
the members nominated or appointed U/s 28(1-b), 31(1) or 32(1) of the Act of
the primary Societies affiliated to the Central Bank shall be deemed to be the
members of the Central Bank in term of section 16(1-a) of the Act so long as
they continue as members of the Managing Committee of their respective
 The State Government.
 The Central Government. /
 The Orissa State Co-operative Bank Ltd.
 Orissa Khadi & Village Industry Board.
 Anybody corporate as a nominal or associate member subject to compliance
of provisions under the O.C.S. Act and Rules.
 An individual including professionals like Chartered Accountant
& experts in the fields of the Banking, Agriculture, Co-operation
and Economics as nominal or associate members.
 Li) Self Help Groups as nominal members.
 Any Local Authority.
The Central Bank shall ordinarily obtain its funds from following sources:
 Share subscription.
 Deposits.
 Borrowings.
 Loans from Government.
 Other borrowings including debentures.
 Grant and subsidies from Government.
 Admission and other fees.
 Contribution towards cost of supervision and collection.
 Donation.
 Miscellaneous

The Authorized Share Capital of Central Bank shall be Rs. 100,00,00,000/-
(Rupees One hundred Crores) made up of 9,00,000(Nine lakh) shares of Rs.1000/-
each allotted to regular members and 1O.OO,000(ten lakh) shares of Rs.100/- each
allotted to nominal members.


 No members shall be permitted to transfer any share except in accordance
with the provisions of the Act and Rules.
 No member, shall any time be permitted to withdraw any share except for the
purpose of affiliating itself to another Central Bank or when it is liquidated or
with the written permission of the Registrar.

 The Bank pays different rates of interest depending upon the nature and term
 Hence, deposit costs depend upon deposit mix of Bank.

To meet the objects, the Central Bank may borrow money by
way of deposit and loan for such period and on such terms as fixed by
the Managing Committee! Financing Bank from time to time, up to 30
(thirty) times of paid up share capital plus free Reserves.

The funds of the Central Bank shall be utilized for the purpose of granting
loans for Agriculture, Non-Agriculture and Non-Farm Sector or any other sectors as
decided by the Committee.

(A)-To Co-operative Societies registered or deemed to have been registered under the
Act and affiliated to the Bank.

 To individuals, Private Limited Companies/Body Corporate who are nominal!
associate members of the Bank for different purposes against adequate and
proper securities within the ambit of the directives! orders of R.B.I./NABARD!
O.S.C.B. Ltd. and R.C.S. Orissa received from time to time observing alt
 The Central Bank may also invest its funds in the manner and schemes as
approved by NABARD/OSCB/ Government approved schemes and the
Committee from time to time.
 It shall be competent for the Bank to act as an agent for the disbursement of
any type of loans obtained from the Government or any other institution on
such terms and conditions as may be agreed upon with the approval of the
 Central Bank may investment funds beyond SLR in Government securities!
approved trust securities! Mutual fund and share market as per RBI/NABARD


 The Central Bank shall not lend to any society any sum which with the
society’s other indebt ness, will exceed the maximum borrowing power of that
society as fixed from time to time or determined by the
Registrar by a general order to any class of societies or by
specific orders to any society.


The rate of interest shall be charged on loans according to the decision of the
Managing Committee of the Bank from subject to guidelines issued by RBI from time
to Time.


 It shall be the duty of the committee or such sub-committee to which powers
have been delegated by the committee to deal with any application for loans
received from its members, to obtain full information if necessary from the
Registrar, regarding such societies and to see that loans are granted to them
with due care and caution.
 The Committee or Sub-Committee shall settle all terms in regard to the period
of repayment of loans granted by them, the installment of repayment and the
rate of interest etc. in conformity with the instruction issued by the R.B.1./
NABARD/ Registrar from time to time.
 The Committee or Sub-Committee can authorize Secretary or his sub-ordinate
Officer for sanction of loan with limit fixed for each.

The Committee shall power to extend from time to time the period fixed for
repayment of loans in case of Cooperative Societies and individuals subject to
approval of R.C.S. (0). However, the Committee may grant extension of time for
repayment of individual loans for the interest of the Bank on recommendation of the
Secretary as per Banking norms as and when required.

i) It shall be open to the borrower to repay a loan wholly or partly before the
due date according to its convenience.
ii) If the due date for repayment of loan or installment of a loan falls on a
holiday, the next working day shall be deemed to be the due date for repayment of
such loan or installment of loan and the member shall be treated to
have committed default on the following date of the due date.

To expedite disposal of loan application, the Managing Committee may form a
Loan Committee consisting of 5(flve) members. The President, the Secretary and
3(three) other members elected by the Committee will constitute the sub-Committee.
The Managing Committee may delegate its powers under clause (a)(xxi) of the
Central Bank to deal with the matters. 3(three) members will form the quorum for
the meeting of the Sub Committee. Ordinarily 3(three) clear days notice shall be
given to the members for holding this meeting. All proceedings by the Loan
Committee shall be placed before the Managing Committee for ratification. In case
of urgency where there may not be sufficient time to convene a meeting the business
may be circulating papers to the members of the loan committee. Any decision
arrived by the circulation shall be placed in the next meeting if the committee for

The General Body of the Central Bank shall consist of:
 Nominated member of the Committee.
 Members Societies as per the provision of the O.C.S. Act and Rules in this
regard and
 The members including co-opted members (but not nominated) of the
Committee of Primary Societies which are affiliated to the Central Bank.

The following among other matters shall be dealt with by the General Body.
 Consideration of Audit Report and Annual Report.
 Election of members of the Committee if any prescribed matter.
 Reviewing the loans advanced to the members of the committee or any of
their near relatives having common economic interest and if necessary to
direct action for recovery of such loan.
 Approval of the programmed of the activfties of the Central Bank prepared by
the Committee for the ensuring year.
 Disposal of net profit.
 Expulsion of member if any.
 Consideration of any other matter which may be brought
forward in accordance with the Bye-laws.
 The General Body of the Central Bank shall be held at least once
in every Cooperative tear being convened by the Committee.

The central Bank shall prepare statement of the Bank annually in such form
as may be prescribed as per B.R. Act, NABARD Act and the Registrar from time to
time and submit the same to proper quarters as required in time.
The Statement of Final Accounts prepared by the Central Bank shall be placed
before the Auditor General of Cooperative Societies, got to be audited and Audit
Report and Certificate to be issued by the A.G.C.S. in time every year.

 The Annual net profit of the Central Bank declared distribute by the Auditor
General, Cooperative Societies shall be disposed of in the following manner.
 Not less than 25% shall be carried to the Reserve Fund.
 Such portion profit as may be prescribed under the Act and Rules to the
Cooperative Education Fund.
 I5 (Fifteen) % shall be carried to the Agricultural Credit Stabilization Fund.
 The Reserve Fund shall belong to the bank as a whole. No members can claim
as share in it. It shall be invested in any of the securities specified in section-20
of the Indian Trust Act’ 1882(11 of 1882) and shall not be drawn up except
with the consent of the Registrar.


 The Central Bank can formulate One Time Settlements (O.T.S.) Scheme for
recovery NPA loan from the affiliated Societies and individuals as the case
may as per guideline fixed by the committee of Management subject to the
approval of the Govt./R.C.S.(O).
 If any sum belonging to the Central Bank is either stolen or otherwise lçst and
found irrecoverable or if any loan due to the Central Bank is found otherwise
irrecoverable either wholly or in part it shall be open to the General Body to
write off such amount against such sources or funds subject to
approval of the Auditor General of Cooperative Societies.

No amendment shall be made except at a meeting of the General Body. And
in accordance with Rules framed under the Act. The amendment shall not take effect
until it is registered by the authority i.e. the Deputy Registrar of Cooperative
Societies, Balasore.
All matters not specifically provided in these provided in rules of Business to
be framed under these Bye-law, shall be decided according to the terms of the Act
and Rules framed and orders issued there under.
Should any doubt arises as to the construction or meaning of the provisions of
the Act or any Rules framed under the Act or any order issued there under or any
Bye-laws of the Central Bank or its affiliated Societies in regard to any matter not
provided for in these Bye-laws or as to the validity or effect to the proceedings of a
meeting of the Executive Committee, the Managing Committee or the General Body,
the President shall refer the same to the Registrar Cooperative Societies, Orissa
whose decision shall be final.


 The Central Bank shall have the right to inspect the societies affiliated to it
and such Inspection may be done by deputing to any Officer of the Central
 The Central Bank have power to call for from Societies affiliated to it such
Societies for the purpose of such inspection.
 To inspect and to ascertain by enquiry if the Bye-laws are being properly
observed by the societies.
 To obtain and review periodical report on the working of such societies.
 To call for list of defaulting borrowers in Societies affiliated to it.
 To direct the Societies concerned to take proper action and to take steps to see
that such orders are carried out.
 To make subsidiary rules for regulating the work or supervision.
 To direct to take such legal action for recovery of it’s or the Central Bank dues.
 To direct for production of any Books or records of the book.

 In all Villages there must be S.H.G. & T.F.G. with Credit Linkage.
 At least one SBD passbook in each family in all villages.
 To make all PACS profit making vibrant co-operative institution.
 All agricultural family will be in co-operative fold.
 Dividend to all share holders.
 Total financial inclusion in Balasore and Bhadrak District.
 To provide state or Art core Banking service in all Branches having ATM
connectivity with major Bank or the country.
 To be a model scheduled Co-operative Bank in the country with sound
Corporate Governance System in place.



Particulars As on 31.03.14Particulars As on 31.03.14
1 Share Capital 9,776.66Cash & Bank Balances 8,647.87
Money at Call & Short
2 Reserve Fund 1,566.91 0.00
3 Other Reserve 2,805.33Investment 84,818.59
4 Deposit 104,034.27Loan & Advances 112,240.46
5 Borrowings 75,501.21Interest Receivable 3968.87
6 Bill for Collection 0.46Bill Receivable 0.46
7 Od. Interest Reserve 744.19Land & Building- 62.37
8 Interest Payable 7,461.22Furniture & Fittings 182.16
9 Other Liabilities 8488.95Other Assets 870.58,
10 Net Profit 412.16
Total 210,791.36 Total 210,791.36
Profit and Loss Account of the year 2013-14

As on
Sl. No. Particulars Particulars As on 31.03.14
Int. Paid on deposit & Int. on Loans & Advances
1 10,355.53 14071.22
borrowings & Investment
Commission, Exchanges
2 Salary & Allowances 1476.03 33.88
& Brokerage
3 Directors T.A Expenses 0.27Other Receipts 253.34
4 Rent. Tax & Insurances 113.65
5 Law Charges 2.80
6 Tel. Charges/POSTAGE 11.23
7 Audit Fee 2.63
8 Depreciation Repairs 68.39
9 Stationery & Printing 25.56
10 Other Expenditures 64.07
11 Provision for N.P.A 1495.23
12 Provision for Others 321.94
13 Provision for Tax 142.76
14 Net Profit 277.35
Total 14,358.44Total 14,358.44

Comparative Financial Position of Balasore Bhadrak Central Cooperative Bank

2012-13 (As
Sl. 2011-12 (As 0n
Particulars. 0n
No 31.03.2012) 2013-14 (As 0n
1 2 3 4
1 Share Capital (Total) 6375.72 7726.64 9776.66
2 Reserves. 1896.26 3438.69 4372.25
3 Own Funds ( 1+2) 8,271.98 11,165.33 14,148.91
4 Deposit (Total) 72,504.36 87,529.82 104,034.27
5 Borrowings 51,283.91 55,854.74 75,501.21
6 Loan issued (Total) 88,533.39 106,343.51 124,194.58
7 Loan outstanding (Total) 79,833.89 91,391.34 112,240.46
8 Investment 56,313.4 63,635.95 84,818.59
9 Cost of Management (Total) 1,838.59 1,728.62 1,765.63
10 Working Capital. 145,786.25 169,782.15 210,790.91
11 % of C.O.M. to W.C. 1.26% 1.02% 1.26%
12 Recovery %
a) Principal 89.28% 88.09% 88.01%
b) Interest. 93.21% 94.04% 92.01%
13 Total Members 448250 448964 448964
14 KCC issued. 413462 433558 439609
Indebted MembersSwarojgar Credit
15 246520 265155 315208
Card issued.
16 Swarajgar Credit scheme
a) Number 2282 2398 2465
b) Amount 695.17 668.55 672.08
17 a) SHG formed. 12737 10578 11907
b) Amt. of deposit mobilized. 1701.85 1639.34 1788.26

18 a)SHG Credit linkage. 11178 8741 9798

b) Amt. financed. 6488.81 7496.51 7154.68
19 a) No. of TFG organized. 1856 2108 2108
b) No. of TFG credit linkage 1204 1568 1602
c) Amount of credit linkage 475.2 727.58
20 Amount of N.P.A. 7432.79 7785.18 10484.32
Percentage of NPA to loan
21 9.23% 8.44% 9.28%
22 Net NPA to loan outstanding. 4.9% 4.14% 4.59%
23 Per Employee Business 604.52 860.2 1215.03
24 Per Branch Productivity 5077.94 5964.04 7209.16
25 Market Share of Deposit
26 Market Share of Loans &Advances
27 Market Share of Crop Loan
28 CD Ratio 104.41% 90.37%
CRAR 10.6% 11.00%
29 Crop Loan Finance
a) Member 178588 218322 225923
b) Amount 34762.14 50926.6 55031.08
30 Profit 1204.72. 224.6 277.35

Comparative Financial Position of Balasore Bhadrak Central Cooperative Bank

2011-12 2012-13 2013-14
Sl. % of % of % of
Particulars. (As on (As on (As on
No growth. growth. growth.
31.3.12) 31.3.13) 31.3.14)
1 2 3 4 5 6 7 8
1 Share Capital (Total) 6375.72 19.94% 7726.64 21.18% 9776.66 26.53%
2 Reserves. 1896.26 8.89% 4027.32 81.34% 4372.25 8.56%
3 Own Funds ( 1+2) 8271.98 17.21% 11165.33 34.98% 14148.91 26.72%
4 Deposit (Total) 72504.36 15.71% 87529.82 20.72%
104034.27 18.86%
5 Borrowings 51283.91 36.15% 55854.74 8.91% 75501.21 35.17%
6 Loan issued (Total) 88533.39 13.35% 106343.51 20.12% 124194.58 16.79%
7 Loan outstanding (Total) 79833.89 16.75% 91391.34 14.48% 112240.46 22.81%
8 Investment 56313.4 52.28% 63635.95 13.00% 84818.59 33.29%
Cost of Management
9 1,838.59 (-)4.13% 1728.62 -5.98% 1765.63 2.14%
10 Working Capital. 145786.25 22.6% 169782.15 16.46% 210790.91 24.15%
11 % of C.O.M. to W.C. 1.26% 1.02% 1.26% 23.53%
12 Recovery %
a) Principal 89.28% 10.52% 88.09% -1.33% 88.01%
b) Interest. 93.21% 1.10% 94.04% 0.89% 92.01%
13 Total Members 448250 -18.46% 448964 0.16% 448970 0%
14 KCC issued. 413462 -1.28% 433558 4.86% 439609 1.69%
15 MembersSwarojgar Credit 246520 4.47%
Card issued.
16 Swarajgar Credit scheme
a) Number 2282 19.98% 2398 5.08% 2465 2.79%
b) Amount 695.17 46.28% 668.55 -3.83% 675.12 0.98%
17 a) SHG formed. 12737 16.79% 10578 -16.95% 12709 20.14%
b) Amt. of deposit
mobilized. 11701.85 18.96% 1639.34 -3.67% 1824.36 11.28%

18 a)SHG Credit linkage. 11178 15.13% 8741 -21.80% 9836 12.53%

b) Amt. financed. 6488.81 29.27% 7496.51 15.53% 7176.18 -4.39%
19 a) No. of TFG organized. 1856 0.92% 2108 13.58% 2214 5.03%
b) No. of TFG credit linkage 1204 3.53% 1568 30.23% 1618 3.18%
c) Amount of credit linkage 475.2 3.09% 727.58 53.11% 724.36 -0.44%
20 Amount of N.P.A. 7432.79 10.08% 7785.18 4,74% 10,484.32 34.67%
Percentage of NPA to loan
21 9.23% -5.72% 8.44% -8.56%
9.28% 9.95%
Net NPA to loan
22 4.90% -10.58% 4.14% -15.51% 4.59% 0.11%
23 Per Employee Business 604.52 13.95% 860.2 42.24% 1215.03
24 Per Branch Productivity 5077.94 16.25% 5964.04 17.45% 7209.16 20.88%
25 CD Ratio 104.41% 90.37%
CRAR 8.96% 10.60% 11.00%
26 Crop Loan Finance
a) Member 178588 4.09% 218322 22.25% 232524 6.50%
b) Amount 34762.14 19.90% 50926.6 46.50% 66092.27 29.78%
27 Profit 204.72. 224.68 277.35


The Bank acting as financial intermediaries, mobilize saving of the society
and get their resources through borrowings for providing credit to the needy sector.
They have to pay salaries to their staff, pay interest on their deposit and borrowing
and of course incur overhead expenses in the business operation. Moreover they are
required to make provisions for any potential loss of their assets. Finally, they need
to pay a reasonable amount of dividend to their share holders, who are the real

Hence, Banks will have to earn profit and only a profit earning bank can
maximize the wealth of its stakeholders.


Profit is excess of income over expenditure during any accounting period,
where as profitability is a relative term which is expressed as percentage to average
working fund in case of banks.

The followings are some important factors that determine the profitability of
a Bank.
 Amount of working funds deployed
 Cost of funds
 Yield on funds
 IV, Management cost (Operating Cost)
 I’) Risk Cost

(i)-Amount of working funds deployed

Working funds are the fund deployed by a Bank. The amount of working fund
so deployed can be found out by subtracting the aggregate amount of contra items
from total liabilities of the Balance sheet.
Working Fund= Total Liabilities -Bills for collection and Bill Receivable as per
contra :
Contra items include = Bills collection, l.B. lodged, O.B. lodged,Branch Adjustment.
Year 2005-06 2006-07 2007-08 2008-09 2009-10
Working 4,751,85 5,703,40 6,333,12 6,904,240 8,506,59
Fund(avg.) 1 3 6 5

Average working fund is taken as total working fund.

By analyzing the working fund over a period of 5 years from 2005-06 to
2009-10. We found that amount of working fund deployed by the Bank had been
increased. This indicates that the deposit mobilization has been more. In fact the
financial position had become stronger.
(ii)-Cost of funds
Various sources of funds for this bank comprises of share capital and reserves
(Own funds), Deposit, Borrowings and other liabilities.
(a) Share Capital and Reserves (Own Funds)
Share Capital is contributed by share holders, and also by the members in Co-
operative Banks and may be treated as cost free for the purpose of analyzing
profitability. However, for a conservative analysis of profitability, dividend paid by
the bank may be taken as cost of funds.

In this case the Bank didn’t declare any dividend for the period under

Reserves being past profit retained in the business are cost iree.

Average Cost of Fund=Total Interest paid/Averagc’ Working Fund * 100

* Total mt. paid (as per p/I account) incIudes mt. paid on deposits & mt. paid in
III) Yield on Funds
The funds mobilized by a bank through diffrrent sources are
utilized for
 Compliance with Statutory Requirements relating to CRR and SLR
 Investment in Non SLR Avenue
 Granting Loans and Advances
 Deploying on other Assets
a) Cash in Hand: As Cash in hand yields no returns, the bank should maintain only
minimum cash balance required for day to day business. In fact, this will reduce
the security risk for the Bank. Similarly. current aJc kept with SB! and
subsidiaries, other notified commercial banks normally yield no income.
b) Investment: It includes all the fixed deposit with banks, short-term deposit,
investment in central & State Government Securities, Shares of Co-operative
institution etc. The Bank has to maintain some of its investment for the purpose
CRR/SLR. The return yield on this investment comprises of interest and dividend
actually received. For instance 2007-08 the average yield on investment is rs.7.
18 per rs. 100/-
c) Loans and Advances: These portfolio provides the most profitable avenue for
deployment of funds bythe Bank.

Average Yield on Advances= Interest received on advances (as per p.1

account)/Average outstanding advances
Including NPA *100
*NpAzzprovision, Provision against standard assets + Outstanding advances
(S.T. Loan & cash credits, M.T. Loan & cash credit, L.T. Loan & cash credit)
Year 2005- 2006- 2007- 2008- 2009-
06 07 08 09 10
Avg. Yield on 10.72 9.02 7.67 7.90 7.32

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Avg. Yield on 8.87 7.48 6.41 7.10 6.44
Average Yield on Assets & the rate of advances is a major indicator about the Banks
average return which Comprises of interest income as well as non-interest income.
Analyzing the Average Yield on Assets & Avg. Yield on advances from 2004-05 to
09. We found, it had been reduced. It means the share of non-interest earnings or
low interest earning assets will be more disbursement of loans Increased over this
period of time.
IV) Management Cost (Transaction Cost)
These are also called operating cost include all cost other than cost of funds and
Provision. In fact, transaction cost, risk cost, non-interest income etc. are some of the
factors which may affect the profitability of the Bank.
Transaction CosPE Total Transaction Cost/Average Working Fund *100
*Total Transaction Cost= Salary & Allowances + Rent, taxes, insurance, lighting
+Postage, telegrams + Stationary, printing & other expenses

Year 2005- 2006- 2007- 2008- 2009-

06 07 08 09 10
Transition 1.52 1.23 1.44 1.51 1.24

By analyzing transaction cost, we found it varies in a zigzag way over a period of 5
Years. This is mostly due to changes in the amount of other expenses over these

v) Risk Cost

It is calculated to estimate the likely Annual loss on assets as a ratio of rs. 100/- of
Average fund deployed. Risk Cost include provision made towards Bad & Doubtful
=Total of provision made in B/S towards NPA/Average Working Fund * 100
* Total Provision made towards NPA=Provisions, Provision against Standard Assets
Year 2005- 2006- 2007- 2008- 2009-
06 07 08 09 10
Risk 2.62 2.88 2.59 2.50 2.32
By analyzing Risk Cost, We found over a period of 5 years the amount of provision
made in Balance Sheet (other Liabilities) had been decreased. Risk Cost decreases
which indicates lower likely losses on assets.
VI) Financial Margin
Just as trading or manufacturing organization computes its gross profit to
assess its Activities; banks also ascertain their gross profit, which is called spread. It
is calculated as a difference between weighted average yield on assets and weighted
average cost of funds.

Year 2005- 2006-07 2007-08 2008-09 2009-

06 10
Financial Margin 2.06 1.73 1.77 2.55 1.90

In 2005-06 the Financial Margin is 2.06 which had reduced to 1.77 in the
year 2006-07 Part of reason, is that banks average yield on assets is reduced. (refer
to average yield on Assets, calculate as above). Beside this risk cost from 2005-06 to
2006-07 has been Increased, resulting in increased weighted average cost of fund. It
is as well as net jilt.


1) Analyzing Capital Adequacy Ratio (CAR) the figure is highest for the year
2004-05. That is 1 8.30% which is well above excepted norms for the bank.
2) Per employees & per branch productivity has increased from 2004-05 to
2008-09 for the banks.
3) Average cost of fund which is one of the parameter to judge the
banks profitability has reduced during the study period under

4) Yield on Advances mostly in case of banks depends upon the lending rate
which is again determined by the market forces. Average yield on advances
had reduced during the period under consideration in this case.


 The bank should try to increase the revenue from other assets (in the form of
non-interest income) as it may help the bank to cover the operating cost.
Moreover it helps the bank in this competitive scenario to attract more talents
by paying them higher compensation compare to its counterpart.
 As the bank is operating & registered under co-operative societies act, its
major thrust should be to work on the principle of co-operation & mutual
trust. In fact the bank is the medium to include a large segment of population
who remain excluded from the formal payment system & financial market.
Especially, when the financial market is developing
&globalizing. In other words the bank can play a lead role in
the Financial inclusion.
 The bank should try to create more credit for the priority sectors in the form
of micro-finance or through Primary Agriculture Credit Societies (PACS).
Simultaneously it must see that Net NPA position should decreased through
appropriate credit evaluation & better collection effort.
 IV) Management cost being one of the major indicators of the profitability of
bank is around 1.5% of the total working fund for the five year period, the
baik can decrease this cost with the implementation of MIS (Management
Information System) & Information Technology services.
 V) The banks should innovative liabilities product in order to attract more
funds from the supplier of funds.

The Bank has traditionally enjoyed various resources such as vast sources of
funds, skilled manpower, ever expanding branches, huge number of members
registered, number of societies affiliated etc.

However, organizational set up, local & rural focused culture & overall as a co-
operative kind of society makes the bank uncompetitive compared to its business
oriented commercial banks.

Hence, in order to stay ahead in the competition with commercial banks &
simultaneously to cater the rural needs as well, the bank should devise innovative
strategies to cut down the cost & to boost the profit in coming future years.

 Shekhar Lekshmy, Shekhar K.C, Banking Theory and Practice, Nineteenth

edition 2005, Vikas Publishing House Pvt. Ltd.

 Prasanna Chandra, Financial Management, Sixth edition 2004, TATA


 Sharma & Gupta, Financial Management, Second edition 2009, KALYAM


 Natarajan S. Parameswaran R, Indian Banking, Second edition 2004,