CHAPTER – I

Industry Profile
1.1 General Introduction
Banking is one of the important financial pillars of the
financial sector, which plays a vital role in the functioning of an economy. A
bank is a financial institution whose purpose is to receive deposits and lend
money to individuals and businesses, disburse payments, invest funds in
securities for returns, and safeguard money. It is very important for
economic development of a country that its financing requirements of trade,
industry and agriculture are met with higher degree of commitment and
responsibility. Thus, the development of a country is integrally linked with
the development of banking. In a modern economy, banks are to be
considered not as dealers in money but as the leaders of development. They
play an important role in the mobilization of deposits and disbursement of
credit to various sectors of the economy. The strength of an economy
depends on the strength and efficiency of the financial system, which in turn
depends on a sound and solvent banking system. A sound banking system
efficiently mobilized savings in productive sectors and a solvent banking
system ensures that the bank is capable of meeting its obligation to the
depositors. In India, the banking sector is dominant as it accounts for more
than half the assets of the financial sector.

BANKING STRUCTURE IN INDIA :

Reserve Bank of India (RBI) :

The country had no central bank prior to the establishment of the RBI. The RBI
is the supreme monetary and banking authority in the country and controls the
banking system in India. It is called the Reserve Bank, as it keeps the reserves of
all commercial banks.
Commercial Banks:
Commercial banks mobilize the savings of general public and make them
available to large and small industrial and trading units mainly for working capital
requirements. Commercial banks in India are largely Indian-public sector and
private sector with a few foreign banks. The public sector banks account for more
than 92 percent of the entire banking business in India - occupying a dominant
position in the commercial banking. A public sector bank is a bank in which the
government holds a major portion of the shares. Government holdings are more
than 50% in public sector banks. There are a total of 27 public sector banks in
India. The State Bank of India and its 6 associate banks along with another 19
banks are the public sector banks. Private sector banks are owned by private
lenders. The private banks are managed and controlled by private promoters.
There are 20 private sector banks operational in India. These include 13 old
private sector banks and 7 new private sector banks.
Scheduled and Non-Scheduled Banks :
The scheduled banks are those which are enshrined in the second schedule of
the RBI Act, 1934. These banks have a paid-up capital and reserves of an
aggregate value of not less than Rs. 5L, they have to satisfy the RBI that their
affairs are carried out in the interest of their depositors. All commercial banks
(Indian and foreign), regional rural banks, and state cooperative banks are
scheduled banks. Non- scheduled banks are those which are not included in the
second schedule of the RBI Act, 1934. At present these are only three such banks
in the country.
Regional Rural Banks:
The Regional Rural Banks (RRBs) are the newest form of banks, came into
existence in the middle of 1970s with the objective of developing rural economy
by providing credit and deposit facilities for agriculture and other productive
activities of all kinds in rural areas. The emphasis is on providing such facilities to
small and marginal farmers, agricultural laborers, rural artisans and other small
entrepreneurs in rural areas.
Cooperative Banks:
Cooperative banks are so-called because they are organized under the
provisions of the Cooperative Credit Societies Act (1912) of the states. The major
beneficiary of the Cooperative Banking is the agricultural sector in particular and
the rural sector in general. The cooperative credit institutions operating in the
country are mainly of two kinds: agricultural (dominant) and non-agricultural.
 There are two separate cooperative agencies for the provision of agricultural
credit: one for short and medium and the other for long-term credit. The former
has three tier and federal structure. At the apex is the State Co-operative Bank
(SCB) (cooperation being a state subject in India), at the intermediate (district)
level are the Central Cooperative Banks (CCBs) and at the village level are
Primary Agricultural Credit Societies (PACs). Long-term agriculture credit is
provided by the Land Development Banks. The funds of the RBI meant for the
agriculture sector actually pass through SCBs and CCBs. Originally based in
rural sector, the cooperative credit movement has now spread to urban areas also
and there are many urban cooperative banks coming under SCBs.

From the given figure 1 : the structure of Indian banking system is classified
in detail.
1.2 Industrial Background

1.2.1 Origin of the Industry

The Cooperative Societies Act was passed in
1904, there was no provision for the formation of central bank. This was
organized in India to remedy the poverty of the small farmers and to save
them from the exploitation and clutches of moneylenders. A co-operative
bank is an institution wherein persons economically weak like farmers,
petty traders, agricultural labourers, artisans, salaried people, the people
of small means, professionals, etc., join together on the basis of equality
on democratic basis for the promotion of their economic interest. The
sponsors of the cooperative movement expected that the rural credit
societies would be able to attract substantial deposits from the members
and well to do sections of the village community and their savings would
be available to meet the needs of the needy in the villages. It was also
contemplated that any deficiency in the funds would be made good by
loans from the government. But these expectations of the promoters did
not materialize. The isolated and poorly managed societies failed, in the
first instance.
The Cooperative Societies Act was, therefore, amended in 1912
with a view to permitting registration of central societies. The first central
bank was registered in Uttar Pradesh in 1906 as a primary society. In
Rajasthan, the first central cooperative bank was started in 1910 at Ajmer.
But there was no provision for formation of central cooperative banks
prior to 1912. It was in the year 1912 that an Act, relating to cooperative
societies provided for the formation of central cooperative banks. The all
India Rural Credit Survey Committee endorsed the views expressed by
this Reserve Banks standing advisory committee on agricultural credit,
that there should be only one central bank for each district, but if,
however, other conditions, justified, the formation of a bank for a region
smaller than a district, there should be no objection to that. The
cooperative history in India may be traced back to year 1904, in which
Cooperative Societies Act was passed.
According to the Central Banking Enquiry Committee (1931), money
lending activity in India could be traced back to the Vedas period(2000-1400
BC). Kautilya Arthashastra dating back to 400 BC contained references to
creditors, lenders and lending rates. The first western bank of a joint stock
verity was Bank of Bombay in 1720. This was followed by Bank of
Hindustan in Calcutta, which was established in 1770 by an agency house
and liquidated in 1829–32; and the General Bank of India, established in
1786 but failed in 1791. The first Presidency Bank was the Bank of Bengal,
established in Calcutta on June 2, 1806 with a capital of Rs.50 Lakh. The
bank was given powers to issue notes in 1823. The Bank of Bombay was the
second Presidency bank set up in 1840 with a capital of Rs. 52 Lakh, and the
Bank of Madras was the third Presidency bank established in July 1843 with
a capital of Rs. 30 Lakh. The presidency banks were governed by Royal
charters. The presidency banks were amalgamated into a single bank, the
Imperial Bank of India, in 1921. Thus, during this phase, the Imperial Bank
of India performed three set of functions via commercial banking, central
banking and the banker to the government. The first Indian owned bank was
the Allahabad Bank set up in 1865, the second Punjab National Bank was set
up in 1895 in Lahore, and the third Bank of India was set up in 1906 in
Mumbai. All these banks were founded under private ownership and many
more Indian commercial banks such as Central Bank of India, Bank of
Baroda, Canara Bank, Indian Bank, and Bank of Mysore which all were
established between 1906 and 1913. By the end of December 1913, the total
number of reporting commercial banks in the country reached 56 comprising
3 Presidency banks, 18 Class A banks (with capital of greater than Rs.5
lakh), 23 Class B banks (with capital of Rs.1 lakh to 5 lakh) and 12 exchange
banks. Exchange banks were foreign owned banks that engaged mainly in
foreign exchange business. Class A and B were joint stock banks. By 1930,
the number of commercial banks increased to 107 with the Imperial Bank of
India still dominating the Indian banking sector. Besides, at the end of March
1929, 158 cooperative banks also existed. The number of co-operative banks
rose sharply (more than doubled) between 1922-23 to 1928-29(Table 1.1).
Although greater than commercial banks in number but the size of deposits
of co-operative banks was much smaller.
 Numbers of Co-operative Banks

Class A* Class B** Total

Capital Capital Capital

Year Number and Deposit Number and Deposit Number and Deposit
Reserves Reserves Reserves
1922-23 5 44 341 63 131 502 68 175 843
1925-26 10 91 538 104 203 930 114 294 1468

1928-29 18 163 901 140 277 1487 158 440 2388

1.2.2 Present Status of the Industry

As per the Reserve Bank of India (RBI), India’s banking

sector is sufficiently capitalized and well-regulated. The financial and
economic conditions in the country are far superior to any other country in
the world. Credit, market and liquidity risk studies suggest that Indian
banks are generally resilient and have withstood the global downturn well.
Indian banking industry has recently witnessed the roll out of innovative
banking models like payments and small finance banks. RBIs new
measures may go a long way in helping the restructuring of the domestic
banking industry. The Indian banking system consists of 27 public sector
banks, 26 private sector banks, 46 foreign banks, 56 regional rural banks,
1,574 urban cooperative banks and 93,913 rural cooperative banks, in
addition to cooperative credit institutions. Public-sector banks control
more than 70 per cent of the banking system assets, thereby leaving a
comparatively smaller share for its private peers. Banks are also
encouraging their customers to manage their finances using mobile
phones. ICRA estimates that credit growth in India’s banking sector
would be at 7-8 per cent in FY 2017-18.
When the country became independent in 1947, the India banking
was entirely in the private sector. In addition to the Imperial Banks, there
were five big banks, each holding public deposits aggregating Rs.100 Cr. At
the time of independence, the banking structure was domestic scheduled
 commercial banks. Non- scheduled banks, though large in number but
constituted a small share of the banking sector.(Table 1.2)

Number and Deposits of Indian Banks-End-December 1947

Deposits (Rs.
Category of Reporting Number Crore)
Banks
A Scheduled Banks 97 1090
Imperial Bank 1 287
Other Banks (A1 Banks) 81 623
-49.4
Exchange Banks* 51

The key investments and developments in India’s banking industry include:

The Reserve Bank of India (RBI) has proposed to allow banks to invest in real estate
investment trusts (REITs) and infrastructure investment trusts (InvITs) which is expected
to benefit both real estate and banking sector in diversifying investor base and investment
avenues respectively. The Insurance Regulatory and Development Authority of India
(IRDA) has allowed insurers to invest up to 10 per cent in additional tier 1 (AT1) bonds,
that are issued by banks to augment their tier 1 capital, in order to expand the pool of
eligible investors for the banks. India-Post has received the final license from RBI to start
its payment bank operations, thus becoming the third entity in India after Bharti Airtel and
Paytm to receive payment bank license from RBI. Finance Minister Mr.Arun Jaitley has
proposed various measures to quicken India's transition to a cashless economy, including a
ban on cash transactions over Rs 200,000 (US$ 3,100), tax incentives for creation of a
cashless infrastructure, promoting greater usage of non-cash modes of payments, and
making Aadhaar-based payments more widespread. Government of India has decided to
amend Section 35A of the Banking Regulation Act that will allow the Reserve Bank of
India to direct banks for the recovery of non-performing assets (NPAs). The Ministry of
Labour and Employment has successfully opened around 3,840,863 bank accounts as on
December 26, 2016, for workers especially in the unorganized sector, as part of its
campaign to promote and ensure cashless transfer of wages to workers. The National Bank
for Agriculture and Rural Development (NABARD) plans to provide around 200,000
point-of-sale (PoS) machines in 100,000 villages and distribute RuPay cards to over 34
million farmers across India, to enable farmers to undertake cashless transactions. The
Government of India’s indigenous digital payments application, BHIM (Bharat Interface
for Money), has recorded 18 million downloads since its launch on December 30, 2016,
according to Mr Amitabh Kant(CEO), NITI Aayog.

1.2.3 Growth and Development of the Industry

Although the banking system had made some progress in terms of

deposit growth in the 1950s and the 1960s, its spread was mainly
concentrated in the urban areas. It was felt that if bank funds had to be
channeled for rapid economic growth with social justice, then most of the
banks should be nationalized9. Accordingly, the Government nationalized
14 banks with deposits of over Rs.50 Cr. by the Banking Companies
(Acquisition and Transfer of Undertakings) Ordinance, 1969. These banks
were the Central Bank of India, Bank of Maharashtra, Dena Bank, Punjab
National Bank, Syndicate Bank, Canara Bank, Indian Overseas Bank, Indian
Bank, Bank of Baroda, Union Bank, Allahabad bank, United Bank of India,
UCO Bank and Bank of India. The main objectives behind the
nationalization of the banks were as follows:

 Reduction in the regional imbalance of economic activities.

 To make the banking system reaches in hand of rural and semi-urban people.

 The aim was to bring a large area of economic activity within the organized
banking system.

Although banks penetrated in rural areas, but amount of credit extended to

the weaker section of society was not satisfactory. In 1974 the Narasimham
Committee went into these problems and recommended the establishment of
regional Rural Banks (RRB) under the, Regional Rural Banks Act, 1975.
Banking in collaboration with central and State Governments, set up
Regional Rural Banks in selected regions where the co- operative system
was weak and where commercial banks were not very active. On April 15,
1980 six more private sector banks were nationalized, making the number of
public sector banks 27.
 Information technology (IT) has transformed the functioning of
businesses, all over the world. With the innovation in the IT, Indian banking
sector has benefited a lot by offering new products and services. Information
technology has helped the banking sector by opening newer delivery
channels to customers – ATMs networking in the form of shared payment
networks, internet banking, implementation of core Banking solutions,
mobile banking etc.

The RBI has played a proactive role in the implementation of IT in the

banking sector. According to RBI the two major advantages of
technological adoptions -

a. Reduction in banks operational cost.

b. Facilitating more efficient transactions among customers with in the

same network.

Over the year RBI has increase the role of technology in the day to day
operation of banks. The IT Vision Document, 2011-17 of the Reserve Banks
sets out the road map for implementation of key IT applications in banking
with special emphasis on seamless delivery of banking services through
effective implementation of Business Continuity Management (BCM).
Information Security policy, and Business process Re-engineering (BPR).
Public sector banks accounting for more than 60% of the total number of
ATMs as at end March 2012, while close to one third of the total ATMs were
attribute to the new private sector banks.

ATMs of Scheduled Commercial Banks

 Total
Bank Group On-site Off-site Number of
S.No ATMs ATMs ATMs
1 Public Sector 34012 24181 58193
banks
1.1 Nationalized 18277 12773 31050
Banks
1.2 SBI Group 15735 11408 27143
2 Private Sector 13249 22830 36079
Banks
2.1 Old Private 3342 2429 5771
Sector
Banks
2.2 New Private 9907 20401 30308
Sector
Banks
3 Foreign Banks 284 1130 1414
All SCBs 47545 48141 95686

1.2.4 Future of the Industry

The number of total bank accounts opened under Pradhan Mantra Jan Dhan
Yojana (PMJDY) reached 333.8 million as on November 28, 2018. To improve
infrastructure in villages, 204,000 Point of Sale (PoS) terminals have been sanctioned
from the Financial Inclusion Fund by National Bank for Agriculture and Rural
Development(NABARD). Enhanced spending on infrastructure, speedy
implementation of projects and continuation of reforms are expected to provide further
growth. India’s banking sector is also poised for robust growth as the rapidly growing
business would turn to banks for their credit needs. Also, the advancements in
technology have brought the mobile and internet banking services to the fore. The
banking sector is laying greater emphasis on providing improved services to their
clients and also upgrading their technology infrastructure, in order to enhance the
customer’s overall experience as well as give banks a competitive edge.

CHAPTER II
 Organizational Profile

2.1 ORIGIN OF THE ORGANIZATION

The Kancheepuram Central Co-operative Bank, was registered as a central

co-operative bank on 23.05.1915 and commenced on the same day under the second
co-operative societies act. The bank was registered at 10.05.1967 and was commenced
from 12.05.1967. The area of operation of the Bank extends to the Corporation Limits
of Chennai. As a District Central Cooperative Bank, it caters to the needs of the Primary
Cooperative Societies and Cooperative Wholesale Stores and other Cooperatives in
Chennai city. The Joint Registrar who covers the Kancheepuram Region. The Deputy
Registrar Circle covers through out the Chengelpet. The Bank belongs to the
jurisdiction of St.Thomas Mount. The Management Co-operative Sub Registrar /
Special Officer effect manages from 25.05.2001. Following are the main objectives of
the Kancheepuram central co-operative bank.

1. To finance co-operative societies registered under the Tamil Nadu Co-operative

Societies Act, 1983.

2.To carry on the business of Banking (‘banking means the accepting, for the purpose
of lending or investment, of deposits of money from the public, repayable on demand or
otherwise and withdraw-able by cheque, draft, order or otherwise as defined in the
Banking Regulation Act 1949).

3.To open, with the permission of the Registrar, branches at suitable places in the
District.

4.To develop, assist and co-ordinate the work of affiliated societies

5. To arrange for the supervision of societies;

6.To arrange for the holding of periodical Co-operative conferences and for taking
necessary action, pertaining to its own functions, on the resolution, passed at such
conference;

7.To maintain a library of co-operative literature;

8.To receive moneys from the Tamil Nadu State Co-operative Bank for purchasing
shares in affiliated societies;

9.To advance long term loans for the purchase and construction of building and issue of
medium term loans for purchase of vehicles for the employees of the bank;
10.In addition to the business of Banking, the Bank may engage in anyone or more of
the following forms of business, subject to the rules and regulations framed by the
Board of Directors from time to time.

The mobile Branch visited the areas in the City, where banking facilities were not
available and provided Banking services to the public in that area. Now the Bank has 48
Branches, one mobile unit and its Head Office located at Kancheepuram. At present the
Bank is transforming itself into modernization by computerizing all its operations in its
Branches and Head Office, thus preparing the platform for Core-Banking Business at a
later date. And the main Branches are at kamarajar salai, chrompet, tambaram,
guduvanchery, ambattur, avadi, mogappair, thiruvallur, porur and thiruporur. The
financing control of this bank are- NABARD, Tamil Nadu State Apex Co-operative
Bank and District Central Co-operative Bank. NABARD the apex institution providing
financial assistance to agriculture and other economic activities in rural areas came into
existence on July 12, 1982. The main functions of NABARD pertain lo policy
development, coordination, research, training, etc., relating to rural credit. It provides
refinance lo cooperatives, regional rural banks, etc. Moreover it makes loans and
advances to stale governments for a period not exceeding more than 20 years to enable
(hem lo subscribe directly or indirectly lo share the capital of cooperative credit
societies. The duties of citizen are- Every member should repay the dues to the
co-operative bank in time and Every member should exercise his vote for the selected
of Board Of Directors by the board of member.

2.2 STATUS OF THE ORGANIZATION

The members of the Chennai Co-operative Bank consist of ‘A’ class members and
‘B’ class members. All the district central co-operative banks in Tamil Nadu are 'A'
class members of the Chennai Co-operative bank. In a district where there is no central
co-operative bank, the nearby district central co-operative bank provides the services
for that district. The following districts have no central co-operative banks on
their own, and they are served by the nearby central co-operative banks. In accordance

with the 97th amendment made in Indian Constitution, the Tamil Nadu State
Co-operative Election Commission has conducted the elections to the board of the
Bank. The Managing Director is the Additional Registrar of Co-operative Societies,
deputed from the co-operative department of Government of Tamil Nadu.
 The following persons are eligible to become the members of the bank:

Any individual agricultural or non-agricultural member competent to contract

under Section 17 of the Tamil Nadu Co-operative Societies Act 1961 and Section 21 of
the Tamil Nadu Co-operative Societies Act 1983 and Section 11 of the individual
should reside within the area of operation or should have immovable property with the
jurisdiction. The Government of Tamil Nadu. The financing bank to which the bank is
Affiliated. Minors may be admitted as members in some cases. These persons are only
eligible to get surety loans on the society of immovable property. The business which
are dealt with the bank should be through their guardian as trustee.

Membership : From 31.03.2017 survey, the bank joined with 19 cooperative society
institution where the total members from these society are 846 members.

Owned funds : The Owned Funds of the Bank consists of paid-up Share Capital
plus Reserve Fund created out of the Net Profit. This is one of the indicators
of viability.

 Share Capital
 Reserve Fund

Share capital : Share capital is that part of the capital of a company received
from its owners (i.e. its members or shareholders) in return for shares. Every
company must commence with some share capital (a minimum of two shares). See
authorized share capital; called-up share capital; issued share capital; paid-up
share capital; reserve capital.

Reserve fund : An account set aside by an individual or business to meet any

unexpected costs that may arise in the future as well as the future costs of upkeep.
In most cases, the fund is simply a savings account or another highly liquid asset,
as it is impossible to predict when an unexpected cost may arise. However, if
the fund is set up to meet the costs of scheduled upgrades, less liquid assets may be
used. The Bank is required to create 20% of its Net Profit as a Reserve Fund to
meet the unforeseen losses arises in future. The Credit society is maintaining two
types of reserves. Statutory and Non-Statutory reserves. This fund is invested in
the Kancheepuram Central Co-operative Bank Ltd.
 OWNED FUNDS

S.NO YEAR (Rupees in Crores)

1 2012-2013 362.21

2 2013-2014 243.81

3 2014-2015 264.60

4 2015-2016 289.12

5 2016-2017 312.98

Borrowings:

The Borrowings are an important sources of Mobilizing Funds.

 Loan from Banks (KCCB)

 Deposits

Loan from bank : Financial Institutions offer business many types of short-term
loans. No matter what the type of loan, however, the cost to a borrower is usually
measured by the percent interest rate charged by the lender. The annual interest rate that
reflects amounts of interest paid divided by the amount borrowed is the effective
interest rate. The Kancheepuram central co-operative bank, borrows long term loans
from the Tamil Nadu state cooperative bank because it owned fund was not enough.

Deposits : Accepting deposits is one of the two major activities of the banks.
Banks are also called custodians of public money. Basically the money is accepted as
deposit for safe keeping. But since the Banks use this money to earn interest from
people who need money. Banks share a part of this interest with the depositors. The
quantum of interest depends upon the tenor-length of time for which the depositor
wishes to keep the money with the bank-and the ease of withdrawal. The thumb rule is
, longer the tenor, higher the rate of interest and lesser the restrictions on withdrawal,
lesser the interest. Exceptions however exists.
 DEPOSITS

S.NO YEAR (Rupees in Crores)

1 2012-2013 1189.32

2 2013-2014 1451.25

3 2014-2015 1475.46

4 2015-2016 1635.92

5 2016-2017 1754.09

Collection of Deposits : The bank is authorized to collect various types of

deposits. The Society gives 1% higher rate of interest that any other commercial banks
or societies. All the deposits are guaranteed by the Kancheepuram Central Co-operative
Bank.

Types Of Deposits:

Deposits may, at the discretion of the Special Officer or President be received at any
time from members and non-members. The bank collect the following types of
deposits.

1. Fixed Deposit
2. Cash Certificate
3. Savings Deposits
4. Recurring Deposits
5. Security Deposits

RATE OF INTEREST DETAILS FOR TYPES OF ACCOUNTS

 S.NO TYPES OF ACCOUNTS PERCENTAGE

1 SAVINGS ACCOUNT 4%

2 THULIR ACCOUNT 5%

3 CURRENT ACCOUNT 0%

4 FIXED DEPOSIT

15 Days to 45 Days 4.5%

46 Days to 90 Days 5%

91 Days to 180 Days 5.5%

181 Days to 364 Days 6%

1 Year to below 2 Year 6.75%

2 Years and Above 6%

5 RECURRING DEPOSIT

1 Year 8.5%

Above 2 Years 9%

6 To Senior Citizen Add 1 %

1) Fixed Deposits : Fixed Deposits is one which is made for a fixed period and for
fixed rate of interest for fixed amount. It is collected from the members and general
public. It is withdraw-able only at the time of maturity. Fixed Deposits can be made for
minimum period of 7 Days interest is payable monthly or annually.

2) Cash Certificate : The compound interest is given. This certificate is issued under
the joint signature of two authorized officers of the bank. The minimum period is one
year. At the time of maturity interest is calculated and paid along with the principle
amount.

3) Savings Deposits : It is collected from the members and the general public. It is
deposited by the members and public, whenever they had money. It is intended to tap
the saving of the middle income and low-income groups. It develops the habit of saving
among them. It is withdraw-able during the working hours of the bank.

4) Recurring Deposit : It is collected from the members and non-members. A fixed

amount usually in multiples of Rs.5/- to be deposited by the depositor every month for a
fixed period of 12,24,36,48 and 60 months. It is accepted for a minimum period of 12
months. Every depositor shall pay his monthly deposit before the end of the month of
which it relates, fraction there of compound interest is calculated.

Loans from Operation

A. ISSUE OF LOANS

B. RECOVERY OF LOANS

C. ACTION TAKEN AGAINST THE DEFAULTER.

A) Issue and recovery of loans :

Disbursing Loans to the needy members is the most important function of the credit
society.
Types of Loans

1. Short Term / Crop Loan (KISHAN)

2. Medium Term Loan.
3. Jewel Loan
4. Loan on Deposit
5. House Mortgage Loan
6. Consumer Loan
7. Micro Credit Loan

The above types are explained as below :

1) Short Term / Crop Loan (KISHAN) : Short term loan is a type of Loan issued for
a period of 12 months by the bank. This is issued to the members for the purpose of
purchasing fertilizers and pesticides and to meet the seasonal agricultural expenses.
Current period this loan called KISHAN Crop Loan is a credit facility sanctioned on the
basic of anticipated crop. It is sanctioned only to meet the seasonal agricultural needs.
The period of the loan is fixed according to the types of crop and the seasons. Generally
the period is 12 months. Seasonality is fixed by the agricultural Department. At first,
the Primary Agricultural Co-operative Credit Society prepares Annual Credit Limit
Statement for each and every “A” Class members. It contains full details of individuals
and his cultivable land. The Bank sends this statement to the Chengalpet Circle
Supervisor and Field Manager along with the signature of the President and Secretary.

2) Medium Term Loan : Medium Term Loans are given to the members for the
following purposes.

1. To effect semi permanent improvement on lands.

2. To increase production which is important to the growth of agriculture.
3. To put vegetables and fruit gardens in the land.
4. To arrange for proper irrigation facilities.
5. To purchase cattle's, implements, machinery, vehicles etc., for agriculture.
6. To purchase donkeys and mules.
 7. To construct and repair farmhouses, living house or stable for cattle's.
8. To repay prior debts.
9. To grow hens, fish, bees, silk moth and cattle's.
10. To purchase implements used in agriculture and to construct buildings, or to do
production works or to spend on their management.
11. To purchase shares in processing societies.
12. To purchase land.

3) Jewel Loan : The bank has issued Jewel Loan to members and non-members. It is
sanctioned on the security or the pledge of gold Jewel which belonging to the borrowers
and not to exceed 70% of the estimated market value of the Jewels. The main purpose
of giving Jewel Loan is to meet the family expenses of the borrowers. The period of the
loan is one year. The bank introduced this loan in the year 1987.

A member who wants to get jewel loan should first meet the secretary to get
application form. Before getting the application form, he should become the “B” class
members of the bank. “B” class share value is Rs.5/- and the entrance fee is Re.1/- only.
It is not refundable. The application form should be filled with full details. It is signed
by the borrowers and atleast two witnesses in the presence of the Secretary/President of
the society or Special Officer and he should submit it to the Secretary. The Secretary
and President will verify the application form. After verification of the application form
they will send it to the appraiser for valuation of the jewels. After verification of the
jewels he weighs it and the value is recorded. After knowing the exact value, he should
ask the member to give the application form and make the necessary entries in the form,
specifying the value, weight and the other essential details. He should put the signature
in the form to certify that, he has valued the jewel. And he sends it to the
Secretary/President. Appraiser, affixes his seal on the jewel packet and then, the banker
to seal it. Then the jewels are kept in the safe custody of the society. The Reserve Bank
of India fixes the rate of interest. Now the bank charges 13% as the rate of interest for
the jewel loan. If the borrowers fails to repay the loan on time 3% interest is collected
additionally as penalty interest.

4) Loan On Deposit : This Bank provides loan on deposits to the tune 80% of the
deposits amount of each depositor charging +2% margin as deposit interest rate.
5) House Mortgage Loan : The Kancheepuram Central Co-operative Bank has
introduced Housing Loan in the year 1992. The bank issues Housing Loans to “A”
Class members only. The loan is sanctioned with in the area of operation. To get the
Housing Loan the members should give full details about property namely plot.

1. Documents
2. Parent Documents
3. House Tax Receipts
4. Approved Plan
5. Tax Bill
6. Electricity Board Bill
7. Encumbrance Certificate
8. Family Ration Card (Xerox)
9. Passport Size Photos three copies
10. Electricity Board Card (Xerox)
11. Maximum loan amount Rs.5 lakhs in the year with agreement. The rate of
interest is 14%.

6) Consumer Loan : The Bank has issued Consumer Loan for its member. Salary
certificate will be produced for it. Maximum Rs.25,000 is issued as loan amount for
buying TV, Two Wheeler, Washing Machine. Period is for 2 years and its rate of
interest is 16%.

7) Micro Credit Loan : The Bank has issued Micro Credit Loan to member. It is
sanctioned for ladies also from Rs.500 to Rs.5000 only for flower shops, fish shops,
street vendors. Period is for 4 months. Rate of Interest 5%.
 RATE OF INTEREST DETAILS FOR LOANS:

S.NO TYPES OF LOANSY PERCENTAGETAGE

1 PADDY 7%

2 JEWEL LOAN 14%

3 CONSUMER LOAN 12%

4 N.F.S 14%

5 S.H.G LOAN 12.5%

Action taken from defaulter :

This KCCB takes all possible steps initially to recover the loan issued. However, is
a member does not repay the loan installment continuously for 3months, the society
institutes action against such defaulters only after informing the defaulter by registered
post. Even after all these steps were taken, if the member does not pay attention, the
concerned individuals file will be handed over to the arbitration for further action.

2.3 GROWTH AND DEVELOPMENT

A central bank should cover as large an area as it is compatible with

convenience and efficiency. Although it may commence on a large scale, it cannot
expect ultimately to work at a profit unless it has a considerable capital either at once or
with in reasonable times, with at least 200-250 societies. Subject to the above
considerations, it is always well to adhere as far as possible to administrative divisions
and to avoid the creation of banks intended permanently to deal with any area
exceeding a district. The membership of DCCB consists of:

PACS and other type of Co-operatives viz., weavers societies, cooperative urban
banks, employees thrift and credit societies, marketing cooperatives, consumer
cooperatives, milk production cooperatives, cooperative sugar factories, cooperative
spinning mills, etc working in the district. Government and individuals. In the initial
stage individuals were admitted as members. At present many State Co-operative
Societies Act do not permit the individuals to become members in the federal
cooperatives like SCBs and DCCBs.

As per section 22 of the BR act, 1949, every central cooperative bank shall hold
license issued by the RBI. All the existing cooperative banks (except few central
cooperative bank which are started on revenue district after 1966) started their function
between 1913 and 1920s. They have been brought under the BR Act 1949, only on
01.03.1966 . Hence they were asked by the RBI to apply and obtain license for carry on
banking business. Accordingly the KCCB has applied for the license and obtained the
same on 05.05.1995 . Locker facility will be provided to Bank Customers on nominal
rent are The Locker will be provided to customer. Provided to known customers / SB
A/c holder. Key advance to be paid. Rent has to be paid as annual basis and Locker can
be operated during business hours by the Locker holder only. Newly Launched RTGS /
NEFT Facilities in our Bank :

- NEFT up to 2.0 Lakhs

- RTGS above 2.0 Lakhs.

The newly upcoming facility are Mobile Banking Services and getting fully fledged
in ATM facility and SMS Alert.

2.4 FUTURE PROSPECTS AND PLANS OF THE

ORGANIZATION
 ATM’s will be installed in few more branches shortly.
 Ru-pay cards will be issued shortly.
 BBPS (Bharath Bill Payment System) anywhere anytime bill payment will be
introduced shortly.
 KYC (Know Your Customer) scheme has been introduced to make the identification
of customers easy.
2.5 ORGANIZATION STRUCTURE AND ORGANIZATION
CHART

In some of the States, the Managing Directors (MDs) are appointed either
by the Registrar of Co-operative Societies or by the Board of Management.
The chief executive and look into the interest of cooperative department and
the bank as per the concerned State Cooperative Societies Act, Rules and
Bye-laws. In Tamil Nadu, in addition to the MD, a CEO at the cadre of Deputy
Registrar is appointed in each DCCB. They will look in to the recovery of
loans with the assistance of Field Level Officers working under his control.
The following administration set up is followed normally by the DCCBs in the
country :

All managers are assisted by Deputy\Assistant Managers in the Head

Office. In some of the States like TN and Kerala DCCBs are having Assistant
General Managers (AGMs) for the above wings and working under the control
of the GM. Superintendent for loan section, banking section, etc., are also
working in HO. They are assisted by Accountant, Senior and Junior
Assistants, Typist, Peon, etc.
 CHAPTER III

Learning from Internship

3.1 SWOT ANALYSIS OF THE ORGANIZATION

STRENGTHS:

They have responsibility for the economic upliftment of the weaker sections of the
community. Major strength of KCC bank is the affordability of interest rate as the bank
offers loans at reasonable interest rates. The bank focuses on the development of their
members since the business is among the members. Trust within the members is the key
factor for effective functioning. Sustaining of their members by being a best service
provider. They are self–reliant in financial with less risk in operations. Leaders are
elected by the members of the cooperative society who work alongside the employed
professionals. Cooperatives are required to maintain lower reserve requirements i.e. 3%
and 25% of their time and demand liabilities towards CRR and SLR respectively. This
provides a greater liquidity to cooperatives.

WEAKNESSES:

Lack of professionalism, it is due to the lack of right training and educations that is
necessary for customer satisfaction. Shortage of manpower leads to inefficiency, as
there are maximum senior employees who are not adaptive to the upgrading
technologies and services. The banks lack in implementation of latest technology such
as ATMs and system facilities. Lack of initiative and innovation among the staff and
members. The bank concentrate more on jewel loan than meeting the other
requirements. Ineffective supervision over branches and poor inspection. Their
inadequate knowledge leads to inefficiency. The process of computerization is rather
slow. Though computers have been installed, trained staff is not available. The bank
operates only in limited area.

OPPORTUNITIES:

Large untapped area for expansion, as in India the major part of the population lives in
villages. Scope in rural market. Trust in cooperatives, better understanding among the
member and the rural customer. Direct connection with RBI and other cooperatives.
The government offers subsidies to the required banking requirements. On account of
their proximity to their members and their firms, they have a good scope for enlarging
the membership. Collective efforts not only enhance the chances of success but also
increase the economy of scale by reducing the per capita cost of operation and increase
productivity.

THREATS:

Increasing focus of commercial banks towards untapped rural sector. Increasing

incidence of frauds and misappropriation. Increasing inflation and liquidity fluctuation
results in rise in interest rate by the RBI. Smaller network for operation, unlike
commercials banks, the co-operatives banks operates in a limited area. Changes in
technology. Failure of the Government to honor its guarantees when invoked.
Increasing litigation between management and employees. External pressure to finance
ineligible borrowers.

3.2 FUNCTIONAL ANALYSIS

3.2.1 Finance Department

 The audited financial statement of The Kancheepuram Central
Co-operative Bank Ltd, which comprises the Comparative Balance sheet as at 31st
March 2018 for the year ended, a summary of significant accounting policies and other
explanatory information. The Bank’s Board of Directors is responsible for the matters
stated in Section 34(5) act with respect to the preparation of these financial statements
that give a true and fair view of the financial position, financial performance and cash
flows of the bank in accordance with specified under institute of chartered accountants
of India and provisions of Section 29 of the Banking Regulation Act, 1949 and circulars
and guidelines issued by RBI and NABARD from time to time. The responsibility also
includes maintenance of adequate records in accordance with the provisions of the act
for safeguarding the assets of the bank and for preventing and detecting frauds and
other irregularities; selection and application of appropriate accounting policies,
making judgments an estimates that are reasonable and prudent; and the design,
implementation and maintenance of internal financial controls, that operate effectively
for ensuring the accuracy and completeness of the accounting records, relevant to the
preparation and presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.

An auditor’s responsibility is to perform procedures to obtain audit evidence about

the amounts and disclosures in the financial statement. The procedures selected depend
on the auditor’s judgement, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraudulent. In making those
risk assessments, the auditor considers internal control relevant to the bank’s
preparation of the financial statements in order to design audit procedures that are
appropriate in the circumstances. By the audit evidence obtained should be sufficient
and appropriate to provide a basis for audit opinion.
3.2.2 Personnel Department
 Section 78 of Tamil Nadu Co-operative Society Act provides for the recruitment
of staff of societies for its smooth functioning. Section 74 of TN Co-operative Society
Act provides for the formation of State Level Recruitment Board(SRB) and District
Level Recruitment Board(DRB) upon the notification by the state government. The
staff strength in each cadre is approved by the Registrar of Co-operative societies
according to the volume of business of each bank. The SRB\DRB is calling for the
vacancy position from all types of co-operative societies in state wide\ district
concerned wide then and there. Recruitment is done on the basis of written test,
interview and medical. With a view to improve the functioning of the institutions,
working under the Short Term co – operative credit structure (STCCS), training
programme are been conducted regularly, for the personnel belonging to the institution
on various subjects of ACSTI.

3.3 Suggestions for Organizational Development

In the light of the study, some important suggestions for the improvement in
Kancheepuram Central Co-operative Bank’s performance are described below:

 Advertisement is needed, to make an effective turning profit for benefiting

more customers in the bank.
 Government of Tamil Nadu have to provide sufficient funds.
 Need little more improvement in advanced technologies for the growth of the
organization.
 To increase the number of employees and recruit well trained employees.
 Improvement is needed in the Public Distribution Shops.
 To improve infrastructure facility in some branches.

CHAPTER - IV
CONCLUSION
Through this internship training, I have secured a deep practical and theoretical
knowledge about managerial functions of Kancheepuram Central Co- Operative Bank
and experience of knowing about how to deal with customers. Also I have learned from
my company that handling with a service is not important but in what way it has the
social responsibilities and how do the credit society members to attain benefit by
satisfaction on their services. The mere motive of this bank is only service to the
customers and not aiming for the huge profits.