“INTERNSHIP REPORT BASED ON FINANCIAL STATEMENT

ANALYSIS STUDY WITH REFERENCE TO SERVICE CO

CO-
OPERATIVE BANK, KOLKKALAM”

Submitted By,
IRFANA K (Reg.No: 37119055)

Under the Guidance of,

DR. SANTHOSH KUMAR P K

In partial fulfillment of the requirements for the award of

The Master’s Degree of Business Administration

SCHOOL OF MANAGEMENT STUDIES

COCHIN UNIVERSITY OF SCIENCE AND TECHNOLOGY,KOCHI

2019 – 2021

1
 DECLARATION

I hereby declare that the internship report entitled “FINANCIAL STATEMENT ANALYSIS
STUDY WITH REFERENCE TO SERVICE CO-OPERATIVE BANK, KOLKKALAM”
submitted in partial fulfillment of the requirements for the award of Master of Business
Administration is a record of the internship done by me under the supervision and guidance of
DR. SANTHOSH KUMAR P K (Assistant Professor, School of Management Studies) and
MRS AYISHAKUTTY (Secretary, kolkkalam service cooperative bank.), and no part of this
report has not formed the basis for the award of any Degree/Diploma/Fellowship or similar
title to any candidate of this or other university.

PLACE:KOCHI
DATE:13/08/2020 IRFANA K

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 ACKNOWLEDGEMENT

The gratification and elation of the internship would not be completed without mentioning
each and every one who has assisted the task in each phase of its development.

I would like to express our sincere gratitude and thanks to MRS. AYISHAKUTTY (Secretary
of kolkkalam service Co-operative Bank) for extending her valuable time and co-operation. I
would also like to thank all the staff of the organization for extending their co-operation.

I am thankful to our Director Dr. D. MAVOOTHU, School of Management Studies, Cochin

University of Science and Technology for his valuable guidance and encouragement to
execute the internship as per university requirements.

As a student it is always a great privilege to work under the staffs that are so committed in the
work of students like our faculty guide for took consistent care and pains towards a successful
completion of this work. Our sincere and heartfelt thanks to our faculty guide Dr.
SANTHOSH KUMAR P K , I am also grateful to all my faculty members for their valuable
guidance and suggestions throughout our entire study.

I express my sincere thanks to my parents and my dear friends for their moral support, prayers
and good wishes which helped me in every stage of this project.

IRFANA K

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 CONTENTS

CHAPTER TITLE PAGE NO

1 INTRODUCTION 5

2 INDUSTRY PROFILE 14

3 COMPANY PROFILE 28

4 ORGANISATION STRUCTURE 32

5 SWOT ANALYSIS 38

6 A STUDY ON FINACIAL 40
STATEMENT

7 FINDINGS 58

8 CONCLUSION 60

9 BIBLIOGRAPHY 61

10 CERTIFICATES 62

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 CHAPTER 1

INTRODUCTION

5
1.1. INTRODUCTION

The word bank is derived from the Italian word "Banca" and the French word "Banque"
describes the table or the exchange rate table. In ancient times, those who lend or exchange
money in Europe used to offer a large number of coins from other countries for loans.
Finance is the blood of commerce and industry. In the current scenario, the banking sector is
the backbone of modern business. The development of all countries depends largely on the
banking system.

The history of banking began with the first prototype banks which were the merchants of the
world, who gave grain loans to farmers and traders who carried goods between cities. This
was around 2000 BC in Assyria, India and Sumeria. Later, in ancient Greece and during the
Roman Empire, lenders based in temples gave loans, while accepting deposits and performing
the change of money.

Evolution of Banks in India

The system of Banks in India is divided into two phases:

o Before Independence phase (1786-1947)

o After independence phase (from 1947 to the present)

The post-independence phase is divided into three periods:

o Before the nationalization phase (1947-1969)

o The post-nationalization phase (1969-1991)
o Liberalization stage (1991 to present)

Before – Independence phase (1786 to 1947)

The Indian banking system can be tracked with the founding of Calcutta Bank in 1786. The
Indian banking system has existed for the last decades of the 18th century with the
establishment of British institutions in Bombay and Calcutta.

 There are three Presidential Banks: Bengal Bank, Bombay Bank and Madras Bank, which
were created in the 19th century by the British East India Company.

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 Three presidential banks merged and in 1935 a new bank called the Imperial Bank of
India was born.
 Then the Imperial Bank of India will change its name later to State Bank of India.
 The Bank of Allahabad was founded in Allahabad in 1865.
 The National Bank of Punjab was founded in 1895.
 Indian Bank established in Bombay in 1906.
 In 1906 and 1913, many commercial banks such as Canara Bank, Indian Bank, Indian
Central Bank, Baroda Bank and Mysore Bank were established under Indian control.
 The Reserve Bank of India was created in 1935 in accordance with the recommendations
of the Young Hilton Council.
 Prior to independence, the banking system targeted only urban and rural populations and
agriculture was completely neglected.

After – Independence phase (1947 to present)

During the independence period, the total banking sector was privately owned. Rural people in
the country relied on small lenders to support themselves. To overcome these problems and to
improve national economic development, the Indian government nationalized the Reserve
Bank of India in 1949.

 The Imperial Bank of India was designated as a state-owned bank in 1955.

 The Banking Regulation Act came into force in 1949.

Nationalization period (1969 to 1991)

The Government of India nationalized 14 major banks in 1969 whose deposits are more than
50 crores.

 The Indian banking system has grown rapidly since nationalization, but the rural and
weak sectors are not included in this system.
 The Narasimham Committee recommended the establishment of Regional Credit Banks
(RRBs) in 1974 to address these issues. RRB (Regional Rural Banks) was established on
October 2, 1975 to provide credit to rural areas. Social

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  In 1980, six other banks were nationalized. Due to the second nationalization, the loan
target for the priority sector also increased to 40%.

Liberalization phase (1991 to present)

The Government of India has formed a committee under Shri. M. Narasimhan to improve the
financial stability and profitability of public sector banks. The committee recommended
several easures to reform the country's banking system.

• The objective of the recommendation was to make banks more competitive and sound and
to ensure the stability of the financial system.
• A committee chaired by Shri. Narasimhan suggested no more proposed nationalization.
• India allowed foreign banks to open branches with subsidiaries or subsidiaries.
• The bank stressed that it should be motivated to abandon conservative and traditional
banking systems and adopt gradual functions such as merchant banking, takeover and
retail financing.

1.2. OBJECTIVES OF THE STUDY

• To get acquainted with the real environment of the organization.

• To know analyze the strength and weakness of the organization and the forthcoming
opportunities and threats for it.
• To develop necessary interpersonal and managerial skills.
• To know the organizational policy, procedures and practices.
• To get practical exposure of the organization.
• To analyze the financial performance in terms of profitability.
• To evaluate the short-term and long-term financial position.
• To examine the growth of loans and deposits during the period of study.

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1.3. SOURCE OF DATA COLLECTION:

1.3.1. Primary Data

Primary data are collected through observation, discussion and direct personal interview with
the mangers of concerned department, staff and workers of the organization.

1.3.2. Secondary Data

Secondary sources of data include:

1. Bank Records

2. Annual reports

3. Official website of the bank.

4. Organizational manuals

5. Newspapers, magazines.

1.4. SCOPE OF THE STUDY

This project is to study the development of the organization and its structure in order to
achieve the prime objective of the organization. Also the projects intents to make a detail
study of the different department and workings and finding the problem areas to give proposal
solution.

• The scope of the study is restricted to only for kolkkalam co-operative bank.

• The findings and suggestions are restricted to kolkkalam co-operative bank.

1.5. LIMITATION OF THE STUDY

 Various department and their functions are explained briefly.

 Primary data is collected as per knowledge and information given by the executives and
employees of the bank.

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 Some financial information is kept confidential by finance department of the kolkkalam
cooperative bank.

1.6. DURATION

The study was conducted during the period from 20th MAY to 30th of June, 2020

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 CHAPTER 2

INDUSTRIAL PROFILE

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2.1. INDUSTRY PROFILE

2.1.1. Definitions Of Co-Operation

The term co-operation, as generally understood today, is a term, which like philosophy and
religion defies exact definition and description. The concept and meaning of co-operation has
been given by utopian socialists, religious thinkers, sociologists, economists and reformists in
their own way in their respective countries. Some of the important definitions of co-operation
are given below:
According to C.R. Fay “a co-operative society is an association for the purpose of joint
trading, originating among the weak, and conducted always in an unselfish spirit on such
terms that all who are prepared to assume the duties of membership may share in its rewards,
in proportion to the degree in which they make use of their association”.

Sir Horace Plunkett’s definition of co-operation is “Self-help made effective by

organization”. He summed up the theory and practice of co-operation in three famous maxims;
“Better Farming, Better Business and Better Living”. This definition reflects the spirit of co-
operative enterprises. It however, lays over-emphasis on the principle of self-help; which is no
doubt an important principle of co-operation but the only one.

Mr. Henry Calvert, an authority of Indian co-operation, defined co operation as “a form of

organization, where in persons voluntarily associate together as human beings, on the basis of
equality, for the promotion of economic interests of themselves”. The essentials of this
definition are:-

1. A co-operative society is a voluntary form of organization.

2. It is an association of human beings.
3. It is organized on the basis of equality .
4. Its objective is the economic interest of members.

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Calvert’s definition is most widely quoted and is generally accepted as the best definition of
co-operation, but its main weakness is that it does not recognize co-operative organizations for
the promotion of interests other than economic. Again a co-operative society is not entirely
formed for the promotion of the economic interests of the members only.

2.2. CO-OPERATIVE BANK HISTORY

Co-operative banks are a part of the vast and powerful superstructure of co-operative
institutions which are engaged in the tasks of production, processing, marketing, distribution,
servicing and Banking in India. The beginning of co-operative banking in this country dates
back to about 1904 when official efforts were initiated to create a new type of institution based
on the principles of Co-operative organization and management which were considered to be
suitable for solving the problems peculiar to Indian conditions. In rural areas, as far as
agricultural and related activities were concerned, the supply of credit, particularly
institutional credit, was woefully inadequate, and unorganized money market agencies, such
as money lenders, were providing credit often at exploitatively high rates of interest. The co-
operative banks were conceived in order to substitute such agencies, provide adequate short-
term and long-term institutional credit at reasonable rates of interest, and to bring about
integration of the unorganized and organized segments of the Indian money market.

When the national economic planning began in India, co-operative banks were made an
integral part of the institutional framework of community development and extension services,
which was assigned the important role of delivering the fruits of economic planning at
grassroots levels. In other words, they became a part of the arrangements for decentralized
plan formulation and implementation for the purpose of rural development in general and
agricultural development in particular. Today co-operative banks continue to be part of a set of
institutions which are engaged in financing rural and agricultural development. This set-up
comprises the RBI, NABARD, commercial banks, regional rural banks, and co-operative
banks. The relative importance of co-operative banks in financing agricultural and rural
development has undergone some changes over the years. Till 1969, they increasingly
substituted the informal sector lenders. After the nationalization of banks and the creation of
RBI and NABARD, however, their relative share has somewhat declined. All the institutional

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Sources contributed about 4 percent of the total rural credit till 1954. The contribution
increased to 62 percent by 1990. The share of co-operative banks in this institutional lending
has declined from 80 percent in 1969 to about 42 percent at present. The percentage of rural
population covered by the agricultural credit co-operatives was 7.8 in 1951, 36 in 1961, and
about 65 percent at present.

Co-operative Movement in Kerala

Co-operative Movement in Kerala started even before the formation of Kerala state. There
were three administrative units in the erstwhile Kerala- viz, Travancore, Cochin and Malabar.
In 1949, Travancore and Cochin merged in to a single state known as Travancore- Cochin
State. Kerala state was formed in 1956 by merging all the three units.

Co-operative Movement in Travancore

In Travancore the first co-operative society registered under the Travancore Co operative
Societies Act, 1914 was Trivandrum Central Co-operative Bank. Then it was formed as the
present Kerala State Co-operative Bank. A Central Bank was also formed for financing
primary co-operative credit societies. The societies were registered with unlimited liability.
But recovery of loans became a problem and a number of societies were liquidated because of
excess liability over assets. Then the liability of the societies was changed in to ‘limited’ from
1918 onwards. Land Mortgage Bank was formed in 1932 to provide long-term loans for a
period of 10 to 20 years on the security of land. In 1963 it was renamed as Land
Development Bank.

Co-operative Movement in Cochin

The Cochin Co-operative Societies Act was enacted in 1913. The first co operative society
registered under this Act was ‘Advanced Co-operative Society’. It was a credit society with
unlimited liability. The Cochin Central Co-operative Bank was formed in 1918; it was based
on British co-operative movement. The long term loans were supplied by Cochin Central Co-
operative and Mortgage Bank. The area of operation was limited to Cochin.

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Co-operative Movement in Malabar
Malabar district and Kasargod Taluk was governed by Madras Co-operative Societies Act of
1932. In Malabar, there were producers and consumers co operative societies having large
share capital. The Malabar Co-operative Central Bank registered in 1917 at Calicut rendered
much service in providing loans to primary co-operatives

Travancore-Cochin Co-operative Societies Act of 1951

Travancore-Cochin state came into existence in 1949. It was found necessary to have a
uniform co-operative law applicable in the entire Travancore-Cochin area. In 1951,
Travancore-Cochin Co-operative Societies Act was passed. This Act was in force till Kerala
Co-operative Societies Act came into force in 1969.

Kerala Co-operative Societies Act of 1969

All states in India have its own Acts on Co-operation. All laws are written on the basis of
Indian Co-operative Societies Act 1904 and 1912. When Travancore, Kochi and Malabar were
integrated to form the Kerala state, a common co operative Law became inevitable.
Accordingly, The Kerala Co-operative Societies Act came into existence on 15 th May 1969.
Thereafter, the Co operative Act in Kerala was revised and modified on various stages.

2.3. CHARACTERISTICS OF CO-OPERATIVE SOCIETY

A co-operative society is a special type of business organization different from other forms of
organization,

1. Open membership: The membership of a Co-operative Society is open to all those who
have a common interest. A minimum of ten members are required to form a co-operative
society. The Co–operative society Act does not specify the maximum number of members
for any co-operative society. However, after the formation of the society, the member may
specify the maximum number of members.

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2. Voluntary Association: Members join the co-operative society voluntarily that is by
choice. A member can join the society as and when he likes, continue for as long as he likes
and leave the society at will.

3. State control: To protect the interest of members, co-operative societies are placed under
state control. While getting registered, a society has to submit details about the members and
the business it is to undertake. It has to maintain books of accounts, which are to be audited by
government auditors.

4. Sources of Finance: In a co-operative society capital is contributed by all the members.

However, it can easily raise loans and secure grants from government after its registration.

5. Democratic Management: Co-operative societies are managed on democratic lines. The

society is managed by a group known as “Board of Directors”. The members of the board of
directors are the elected representatives of the society. Each member has a single vote,
irrespective of the number of shares held. For example, In a village credit society the small
farmer having one share has equal voting right as that of a landlord having 20 shares.

6. Service motive: Co-operatives are not formed to maximize profit like other forms of
business organization. The main purpose of a Co-operative Society is to provide service to
its members. For example, In a Consumer Co-operative Store, goods are sold to its
members at a reasonable price by retaining a small margin of profit. It also provides better
quality goods to its members and the general public.

7. Separate Legal Entity: A Co-operative Society is registered under the Co-operative

Societies Act. After registration a society becomes a separate legal entity, with limited
liability of its members. Death, insolvency or lunacy of a member does not affect the
existence of a society. It can enter into agreements with others and can purchase or sell
properties in its own name.

8. Distribution of Surplus: Every co-operative society in addition to providing services to

its Members also generates some profit while conducting business. Profits are not earned at
the cost of its members. Profit generated is distributed to its members not on the basis of the
shares held by the members (like the company form of business), but on the basis of members

16
participation in the business of the society. For example, In a consumer cooperative store only
a small part of the profit is distributed to members as dividend on their
shares; a major part of the profit is paid as purchase bonus to members on the basis of goods
purchased by each member from the society.

9. Self-help through mutual co-operation: Co-operative Societies thrive on the principle

of mutual help. They are the organizations of financially weaker sections of society.
Cooperative Societies convert the weakness of members into strength by adopting the
principle of self-help through mutual co-operation. It is only by working jointly on the
principle of“Each for all and all for each”, the members can fight exploitation and secure a
place in society.

2.4. PRINCIPLES OF CO-OPERATIVE SECTOR

1. Legal Status:
A co-operative Society is a body corporate registered under the applicable state Act with
perpetual succession having a common seal. It can acquire hold and dispose of
properties, enter into contracts and it can sue and it can be sued.
2. Voluntary Association:
Co-operative Society is essentially an organization or an association of persons who have
come together for the common purpose of economic development or for mutual help.
3. Self Help And Mutual Help:
The Co-operative Societies office bearers/executive committee is elected as per democratic
election procedure. The Co-operative Society function under the principle of self help and
mutual help which means each will help for themselves and all will help others.
4. Democratic Controls:
The Control of Co-operative enterprise is not in the hand of capitalists can corner the share
capital and control the interest in any undertaking which would be a private
undertaking.
5. Equality:
In co-operative Sector, the principle of “One man one Vote” Is provided in the statute so as to
ensure that the capital does not dominate the administration of co- operatives society.

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6. Open Membership:
Any person can apply for the membership of the Society without any discrimination.
The membership is open for all.
7. Social Approach / No Profit Motive:
As the Society is working on democratic principle and the office bearers of the Society will be
functioning like trustees for the better management of the society and there is no separate
benefit to the executive committee members. Service is the main motto and
the profit is not the main concern in co-operative societies.
8. Profits And Returns To The Members:
Co-operative Society is an association of members and certain percentage profits earned by
the society, as decided in the meeting of the General body will be distributed in the form of
dividend to the members.
9. Limited Interest On Shares:
Irrespective of the shareholding, each member has only one vote in the decision making in the
General body meeting or at the time of election of the committee for management. The shares
are not traded in the stock exchange. The State Co-op. Act also prescribes the maximum
amount, which member can hold as a share capital in any society. Under M.C.S. Act, 1960 as
per Section 28 other than Government or other societies shall not hold more than 1/5 of the
total capital or interest in shares or exceeding Rs. 20,000/- which the State Government power
to change by way of notification.
10. Personal Participation:
The shareholders have to personally attend the meeting or for voting. They are not
allowed to appoint proxies for attending the general body or for voting in the resolution to
be passed.

2.5. ORGANIZATION OF CO-OPERATIVE BANKS

Co-operative banks may be organized in two ways

 On the bases of the principals of Raiffesen

 On the bases of principals of schedule delittze. It is important to remember that Raiffesen
and Schulze Delittze were the pioneers of banks movement in Germany.

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Raiffesisen bank

In the organization of banks in the rural areas the principals of Raiffesen are adopted.
Therefore they are called Raiffesen bank. They are organized on the following principals.

 Ten or more person can form such a bank.

 Shares are not issued but capital is obtained by barrowings from the members on their
join responsibility.
 The liability of the members is unlimited.
 Members belong to the same village.
 There is no entrance fee.
 Loans are granted on personal security only for productive purpose.

Schulze delittze bank

The banking organized in urban areas are based on the principals of Hulze delittze
and hence. They are called schulze delittze bank. The following are the principals:


Membership is very large.

Office bearers are paid salaries.

Dividends are paid to the members on their paid-up share capital.

General banking business is conduct by the bank.
 Entrance fee is charged.

Membership is open only to those who earn an income.

The aim of such a bank is more materialistic than human Italian.

The liability of the members is limited.

2.6. IMPORTANCE OF CO-OPERATIVE BANKING

Co-operative bank forms an integral part of banking system in India. This bank
operates mainly for the benefit of rural area, particularly the agricultural sector. Cooperative

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bank mobilize deposits and supply agricultural and rural credit with the wider
outreach. They are the main source for the institutional credit to farmers. They are chiefly
responsible for breaking the monopoly of moneylenders in providing credit to agriculturists.
Co-operative bank has also been an important instrument for various development schemes,
particularly subsidy-based programmes for the poor. Co-operative banks operate for
nonagricultural sector also but their role is small. Though much smaller as compared to
scheduled commercial banks, co-operative banks constitute an important segment of the
Indian banking system. They have extensive branch network and reach out to people in remote
areas. They have traditionally played an important role in creating banking habits among the
lower and middle income groups and in strengthening the rural credit delivery system.

2.7. CLASSIFICATION OF CO OPERATIVE SOCIETY:

The Co-operative banking structure in India comprises of:

1. Urban Co-operative Banks

2. Rural Co-operatives

Some co-operative banks are scheduled banks, while others are nonscheduled banks.
For instance, State Co-operative banks and some Urban Co-operative banks are scheduled banks
but other co-operative banks are non-scheduled banks. Scheduled banks are those banks which
have been included in the second schedule of the Reserve bank of India act of 1934.

The banks included in this schedule list should fulfill two conditions :

1. The paid capital and collected funds of bank should not be less than Rs. 5 lakh.
2. Any activity of the bank will not adversely affect the interests of depositors.

Every Scheduled bank enjoys the following facilities.:

1. Such bank becomes eligible for debts/loans on bank rate from the RBI
2. Such bank automatically acquire the membership of clearing house.

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Urban Co-operative Banks:

Urban Co-operative Banks is also referred as Primary Co-operative banks by the

Reserve Bank of India. Among the non-agricultural credit societies urban co-operative
banks occupy an important place. This bank is started in India with the object of catering to
the banking and credit requirements of the urban middle classes.
The RBI defines Urban Co-operative banks as “small sized co-operatively organized
banking units which operate in metropolitan, urban and semi-urban centers to cater mainly
to the needs of small borrowers, viz. owners of small scale industrial units, retail traders,
professional and salaries classes.”

Urban Co-operative banks mobilize savings from the middle and lower income
groups and purvey credit to small borrowers, including weaker sections of the society.
These banks organize on a limited liability basis, generally extend their area of operation
over a town. The main functions of these banks are to promote thrift by attracting deposits
from members and non-members and to advance loans to the members. It is registered
under Co-operatives Societies Act of the respective state Governments. Prior to 1966, Urban
Co-operative banks were exclusively under the purview of State Government. From
March 1, 1966 certain provisions of Banking Regulation Act have been made applicable to
these banks. Consequently, the RBI became the regulatory an supervisory authority of
Urban Co-operative Banks for their related operations. Managerial aspects of such banks
continue to remain with State Governments under the respective Co-operative Societies Act.
These banks with multi-presence are regulated by the Central Governments and registered
under Multi-State Co-operative Societies Act. The RBI extends refinance to Urban
Cooperative Banks at bank ate against their advances to tiny and cottage industrial units.
These
banks grants sizeable loans and advances under priority sector for lending to small business
enterprises, retail trade, road and water transport operators and professional and selfemployed
persons. Urban Co-operative banks are mostly located in towns and cities and
cater to the credit requirement of the urban clientele.

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The objectives and functions of the Urban Co-operative banks:

 To raise funds for lending money to its members.

 To attract deposits from members as well as non-members.
 To encourage thrift, self-help and mutual aid among members.
 To draw, make, accept, discount, buy, sell, collect and deal in bills of exchange, drafts,
certificates and other securities.
 To provide safe-deposit vaults

Area of Operation :

The area of operation of these banks are usually restricted by its byelaws to a municipal area
or a town. In some occasions it exceeds this limit. The study group on Credit Co-operatives in
Non-Agricultural Sectors has recommended that normally, it would be advisable for an urban
cooperative bank to restrict its area of operation to the municipality or the taluk town where it
operates.

Rural Co-operatives:

Rural Cooperative Banking plays an important role in meeting the growing credit
needs of rural population of India. It provides institutional credit to the agricultural and rural
sector. The inadequacy of rural credit engaged the attention of RBI and Government
throughout the 1950s and 1960s. One important feature of providing agriculture credit in
India has been the existence of a widespread network of rural financial institutions. The
rural credit structure consists of many types of financial institutions as large scale branch
expansion was undertaken to create a strong institution based in rural area. It has served as
an important instrument of credit delivery in rural and agricultural areas. The separate
structure of rural Co-operative sector for long-term and short-term loans has enabled these
institutions to develop a specialized institution for rural credit delivery. The volume of
credit flowing through these institution has increased. The Rural Co-operative structure has
traditionally been bifurcated into two parallel wings, i.e.

I. Short-term Rural Co-operatives,

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II. Long-term Rural Co-operatives.

There is a larger network of co-operative banks in the rural sector, consisting of 29

State Co-operative Banks and 367 District Central Cooperative Banks, with 13,025
branches. In addition, there are 92,000 Primary Agricultural Co-operative Credit Societies
19 State Land Development Banks and 745 Primary Land Development Banks, along with
1,847 branches, which are not strictly banks as they are not covered under the Banking
Regulation Act, 1949. The RBI Governor's proposals should therefore, encompass the entire
Co-operative banking system.
Short-Term Rural Co-Operatives

The short-term rural co-operatives provide crop and other working capital loans to
farmers and rural artisans primarily for short-term purpose. These institutions have federal
three-tier structure.At the Apex of the system is a State Co-operative bank in each state.
At the middle (or district) level, there are Central Co-operative Banks also known as
District Co-operative banks. At the lowest (or village) level, are the Primary Agricultural
Credit Societies.

i. State Co-operative Banks:

State Co-operative Banks are the apex of the three-tier Co-operative structure
dispensing mainly short/medium term credit. It is the principal society in a State which is
registered or deemed to be registered under the Government Societies Act, 1912, or any
other law for the time being in force in India relating to co-operative societies and the
primary object of which is the financing of the other societies in the State which are
registered or deemed to be registered. The State Co-operative Banks receive current and
fixed deposits from its constituent banks as well as savings, current and fixed deposits from
the general public and from local boards, other local authorities, etc. Further, they receive
loans from the RBI and NABARD. NABARD is the supervisory authority for State
Cooperative Banks. The state government contributes the certain portion of their working
capital. The principal function of State Co-operative Banks is to assist the Central Cooperative
Banks and to balance excesses and deficiencies in the resources of Central Cooperative Banks.

23
It also act as the “balancing centre” for Central Co-operative Banks in the
sense that surplus fund of some of these banks are made available to other needy banks. It also
serves the link between RBI and the Central Co-operative Banks and Primary
Agriculture Credit Societies. But the connection between the State Co-operative Banks and
Primary Co-operative Societies is not direct. The Central Co-operative Banks are acting as
intermediaries between the State Co-operative Banks and Primary societies.
ii. Central Co-operative Banks:

Central Co-operative Banks form the middle tier of Cooperative credit institutions.
These are the independent units in as much as the State Co-operative Banks have control to
control or supervise their affairs. They are of two kinds i.e. ‘pure’ and ‘mixed’. Those banks
are the membership of which is confined to co-operative organizations only are included in
‘pure’ type, while those banks the membership of which is open to co-operative
organizations as well as to the individuals are included in ‘mixed’ type. The pure type of
Central Banks can be seen in Kerala, Bombay, Orissa, etc., while the mixed type can be
seen in Andhra Pradesh, Assam, Tamil Nadu, etc. The pure type of banks is based on strict
cooperative principles. However, the mixed type has an advantage over the pure type in so
far as they can draw their funds from the non-agricultural sector too.

The Central Co-operative Banks draw their funds from share capital, deposits, loans
from the State C-operative Banks and where State Banks do not exist from the RBI,
NABARD and commercial banks. NABARD is the supervisory authority for Central
Cooperative Banks. Deposits constitute the major component of sources of funds, followed by
borrowings. The main function of Central Co-operative Banks is to finance the primary
credit societies. In addition they carry on Commercial banking activities like acceptance of
deposits, granting of loans and advances on the security of first class guilt-edged securities,
fixed deposit receipts, gold, bullion, goods and documents of title to goods, collection of
bills, cheques, etc., safe custody of valuables and agency services. They are expected to
attract deposits from the general public. They also act as ‘balancing centres’, making
available access funds of one primary to another which is in need of them.
The central co-operative banks are located at the district headquarters or some

24
prominent town of the district. These banks have a few private individuals also who provide
both finance and management. The central cooperative banks have three sources of funds,

 Their own share capital and reserves

 Deposits from the public and
 Loans from the state co-operative banks

iii. Primary Agriculture Credit Societies :

Primary Agricultural Credit Societies is the foundation of the co-operative credit

system on which the superstructure of the shortterm co-operative credit system rests. It
deals directly with individual farmers, provide short and medium term credit, supply
agricultural inputs, distribute consume articles and also arrange for the marketing of
products of its members through a co-operative marketing societies. These societies form
the basic unit of co-operative credit system in India. These voluntary societies based on
principle of one man one vote has posed challenge to exploitative practices of the village
moneylenders. The farmers and other small-time borrowers come in direct contact with these
societies. The success of the co-operative credit movement depend largely on the
strength of these village level societies.

The major objective of Primary agricultural Credit Societies is to serve the need of
weaker sections of these society. For this purpose, the people with limited means,
particularly with schedules castes and scheduled tribes, are encouraged to become members
of these societies. So, they must function effectively as well-managed and multi-purpose
institutions mobilizing the savings of the rural people and providing the package of services
including credit, supply of agricultural inputs and implements, consumer goods, marketing
services and technical guidance with focus on weaker sections. Government has promoted
multi-purpose societies in tribal areas for the benefit of people living there.

II. Long-term Rural Co-operatives :

The long-term rural co-operative provide typically medium and long-term loans for
making investments in agriculture, rural industries and in the recent period, housing.
Generally, these co-operatives have two tiers, i.e. State Co-operative Agriculture and

25
Development Banks (SCARBDs) at the state level and Primary Co-operative Agriculture
and Rural Development Banks (PCARDBs) at the taluka or tehsil level. However, some
States have a unitary structure with the state level banks operating through their own branches.

i. State Co-operative Agriculture and Development Banks (SCARBDs):

State Co-operative Agriculture and Development Banks constitute the upper-tier of

long term co-operative credit structure. Though long term credit co-operatives have been
allowed to access public deposits under certain conditions, such deposits constitute a
relatively small proportion of their total liabilities. They are mostly dependent on
borrowings for on-lending. The main objective of the Co-operative State Agriculture and
Rural Development bank is to finance primary agriculture and rural development banks. The
bank undertakes the following functions to achieve the above objectives:-

(a) Floatation of Debentures;

(b) Receiving Deposits;

(c) Grant of loans to primary co-operative agriculture and rural development banks for
purposes approved by the National Bank for Agricultural and Rural Development
and Registrar of Co-operative Societies;

(d) To function as the agent of any co-operative bank subject to such conditions as the
Registrar may specify;

(e) To develop, assist and co-ordinate the work of affiliated primary co-operative
agriculture and rural development banks.The bank issues long term and medium term loans
towards agricultural and allied activities like construction of godowns, cattle shed, farm house,
purchase of lands etc., and for minor irrigation purposes like construction of new wells,
deepening of existing wells etc., In addition, long term loans are also sanctioned for animal
husbandry, fisheries, plantation, farm mechanization, non-farm sector and other non-minor
irrigation schemes.

26
ii. Primary Co-operative Agriculture and Rural Development Banks
(PCARDBs):

Primary Co-operative Agriculture and Rural Development Banks are the lowest
layer of long term credit co-operatives. It is primarily dependent on the borrowings for their
lending business. They provide credit for developmental purposes like minor irrigation,
cultivation of plantation crops and for diversified purposes like poultry, dairying and
sericulture on schematic basis. They get requisite financial assistance from the Co-operative
State Agriculture and Rural Development Bank. In order to widen their scope of lending to
compete with other financial agencies, the primary co-operative agriculture and rural
development banks have been permitted to finance artisans, craftmen and small scale
entrepreneurs. They have also been permitted to issue loans to small road transport operators
in rural areas for purchase of goods carriers and passenger vehicles. As a result, during 2007-
08, the Primary Co-operative Agriculture and Rural Development Banks have again started
lending for the Non-Farm Sector including Jewel Loans.

27
 CHAPTER 3

COMPANY PROFILE

28
3.1. INTRODUCTION

The cooperative history in India started in the year 1904, in which Cooperative Societies Act
was established. For the formation of central bank there were no provisions. The co-operative
bank's promoters expected the rural credit community to be able to draw deposits from its
members and the communities of affluent and use savings to meet the needs of the poor in the
village. They thought that if the funds were not enough, they would be offset by government
loans. However, the proposer's expectations were not realized. However, some companies
have failed. For example, it lacks management improvements. They cannot increase their
capital by increasing members' savings and mutual aid, thereby increasing their capital. As the
cooperative movement became popular, society grew to leaps and bounds. Financial
arrangements did not make enough money to cope with growing needs. The cooperative law
was passed in 1912 to allow the central agency to register. Before the revision, some central
banks were created to meet the financial needs of major corporations. The first central
cooperative bank was created in Ajmer in 1910.

However, this bill was amended to promote the growth of central funding agencies, and many
years later many of these banks were created. From 1906 to 1918, it was called the origin of
the central bank in many parts of the world. From 1919 to 1929, after the end of the first war,
it lasted for about 79 years until the beginning of global depression, characterized by the
expansion of the cooperative system. The number of central cooperative banks increased
between 1919-20 and 1929-30, with increased membership and working capital. The war
period revitalized the cooperative banks in India. The funds they hold and the working capital
of these banks have increased significantly. Therefore, the cooperative credit societies in India
are very important ecause they accepted three-tire structure of cooperative credit societies.

The original scheme of cooperation provided for organization of primary agricultural credit
societies at the village level aim is to reduce the exploitation for poor peasants by the private
money-lenders. It did not contemplate the organization of federal societies to function as
financing agencies for the village primaries, which in most cases could not mobilize adequate
financial resources through share capital from members, and thus failed to meet the even

29
increasing demand for agricultural credit by farmers. However, this did not prove to be a
healthy and conductive arrangement for primary cooperative societies which did not have any
say in the management of such banks except having the relationship of a borrower and lender
primaries in surplus areas having excess thrift deposits could not find proper channel for
proper utilization of surplus resources to meet the demands of societies in deficit areas. Hence,
there was the need for a balancing centre. Having failed to get proper financial support and
guidance from appropriate agency, they felt the necessity of having their own arrangements
with a right to participate in the shares and the management of their financing agency etc. All
problems, facing the primaries the central government passed another cooperative Act of
1912The deposits of these banks were continuously raising positive trends during the period
1950-51 to 1989-90.

On an average percentage of over dues to outstanding loans of these banks was only 0.94
percent, which, is good sign of efficient management of district central cooperative banks. The
district central cooperative banks in India was found that a positive growth in all parameters of
their growth during 1950-51 to 1989-90. During the period, the share capital, reserve,
borrowing, loans & advances, deposits, owned funds and working capital has been shown
continuous positive trends during the study period from 1950-51 to 1989-90 and the recovery
of district central cooperative banks in India was found satisfactory during the period from
1950-51 to 1989-90.

3.2.VISION

To provide financial assistance to farmers for the social and for development of economic of
the country. Helping the farmers to improve quality of life.

3.3. MISSION

 Serving as friend and guiding all kind of cooperatives.

 Providing service and assistance for the improvement of the cooperative association.
 To receive steps to check whether the genuine cooperatives are organized and managed
properly.

30
3.4. PRODUCTS /SERVICES PROFILE

Savings bank account

It is an account for individual and non-trading organizations, etc.

Minimum amount to be maintained

Rs. 250 (without cheque book facility)Rs. 1,000 (with cheque book facilities)
Interest 3.5% quarterly credit.

Operations
Individual or jointlyPass book, pass sheet and nominations, standing instruction and cheque
collection facility available.

 Current accounts

Current account is the most important type of bank account. They are generally opened
by trading and industrial concern, public authorities. Current account customers can lend
any amount of money and at any number of times. Current deposits are repayable on
demand. It is reason, they are called demand deposits or demand liabilities.

Minimum amount to be maintained

Minimum balance- 5000

Maximum balance- no ceiling Pass book, pass sheet available.
Products/ Service profile of DCC Bank

 Savings Account
 Current Account
 Fixed Deposit Account
 Lending
 Kissan credit cards
 Recovery
 Social security schemes
 Financial literacy Centre

31
 CHAPTER 4

ORGANISATION STRUCTURE

32
4.1. BOARD OF DIRECTORS:

SL.NO NAMES DESIGNATION

1 K.UMMER MASTER PRESIDENT

2 A.N.HAMZA VICE PRESIDENT

3 YOUSUF VILLAN DIRECTOR

4 K.NARAYANAN KUTTY DIRECTOR

5 T.T.SASEEDNRAN DIRECTOR

6 MOHAMMED MUSTAFA DIRECTOR

7 T.MOHAMMED RAFI DIRECTOR

8 BASHER .T DIRECTOR

9 KUNHADI.E.K DIRECTOR

10 MAYMOONATH .P DIRECTOR

4.2. SOURCES OF FUNDS

Mobilization of resources from internally as well as externally is a pre-requisite on the part of

cooperative banks to be said effective. The former is essentially
mobilized from individual members and primary societies including from the
State Government which normally participates. The latter is provided by the
external agencies like NABARD, Apex bank and commercial banks. The
cooperative banks also mobilize deposits of various types from varied individuals
of myriad savings and member-cooperative societies. In view of the former which
renders services to the people in their jurisdiction who become members,
resources mobilization is still greater significance. The quality of services to be

33
rendered to people who became members is attributed to the capacity of
cooperative banks to mobilize resources through various means.
The funds of cooperative banks are grouped into:
 Owned funds
 Borrowed funds

OWNED FUNDS

In cooperative bank, share capital, reserves and other reserves form the owned funds while
deposits and borrowings constitute the borrowed funds of them. The share capital is
subscribed by the affiliating societies and individual-members. The affiliating societies must
subscribe towards the shares of cooperative banks in proportion to their borrowings in the
ratio of 1:10. The face value of share varies from Rs 50 to Rs100.

The origination of cooperative credit institutions in India has completed 109 years with the
passing of Cooperative Credit Societies Act, 1904; the efforts started
officially to eradicate the problem of peasantry and also financing the credit needs of common
public. The face and pace of cooperative credit institutions has changed drastically in the
society due to the ever increasing competition from the commercial banks and undue political
interference. The success of financial system lies on the effective operation of components in
the system with cooperation among the employees. The principles and practices of cooperative
system are guiding the spirit of management production and economic resources.In the three-
tier structure of single window system in Kerala, the cooperative banks operate in the
middle/district level by deploying credit to the primary cooperative societies accepting of their
deposits and other needy services of banking. Mobilization of resources is a pre-requisite to
conduct business operations in an effective way for achieving the anticipated results in the
scenario of the banking arena. The quality services of cooperative bank should be such that
ensure and enhance the capacity to mobilize resources strategically. The adequacy of
resources must be in terms of their operating requirements as well as their needs. Mobilization
of funds by the cooperative banks is of two sources namely (i) internal and (ii)
external.Internal source refers to share capital of members, reserves and accumulated

34
saving as profit External source refers to the finance facility provided by NABARD, State
Cooperative Banks and commercial banks.
BORROWINGS
The second source of resources the cooperative banks is borrowings also called
refinance from the higher-tier institution or the bank at the State level and the
NABARD. Usually such credit facilities are provided for a specific purpose with
a fixed tenor.Hence, unlike deposits this in normal course would have a rising trend, while
deploying the borrowings it is essential to match the tenor of credit given to that
of borrowings so that by the time borrowings become due for repayment, the
credit has come back.The cooperative banks get refinance from NABARD through apex
cooperative banks at the State level. The borrow of funds play a significant role in the funds
management of apart from asset liquidation. Refinancing institutes also enable
cooperative banks to compete for funds so as to expand their earning assets. Rather than
relying solely on deposits, all the cooperative banks borrow funds from time to time or in one
time or other to meet the deficiencies resource. The cooperative banks could not utilize their
borrowings capacity fully. According to Reserve Bank of India policy, every cooperative bank
can borrow six-times of its owned funds. It came into force in 1977-78 and previously it was
only four-and-half times of the owned funds. The cooperative bank which borrows funds from
Reserve Bank of India extent, the cooperative bank must transferred mortgaged or charge
properties and its other assets to the State Cooperative bank.

Cost of Borrowings: The average cost of borrowings of cooperative bank is

calculated with formula given below as:

Int. paid on borrowings

Cost of Borrowing (per Rs 100) = ------------------------------- x 100

Average borrowings

35
 CHAPTER 5

SWOT ANALYSIS

36
STRENGTHS

 It focuses on rural development.

 Dedicated strong committed staff.
 Well experienced planning team.
 Good relation with its customer, which also helps for popularizing deposits, loan
disbursement and recovery of the same.
 Bank sanction loans at reasonable time after receiving all the necessary documents
 Bank gives subsidies to the Farmers loans.
 Bank provides loans at lower interests.
 Bank provides loan sanction, cheque discounting, bill discounting and other services
quickly.
 Cooperative societies have branch facilities in the rural areas.

WEAKNESS

 Lack of well developed infrastructure facility.

 Tedious procedures have to be followed before advancing loans, causing inconvenience to
customers.
 Absence of E-banking facility.
 The Management information system and customer relationship management should be
updated to handle more customers.
 Appoint more staff with different skills.
 Need to update the risk management for expansion of planned one into new agriculture
commodities.
 They should use modern technology for better customer service.

OPPORTUNITIES

 Government and sponsored bank support.

 New schemes can be introduced.
 Through value chain partners to finance farmers we can minimize costs and sales risk.

37
 Bank can offer more services to more farmers.
 There is an opportunity in growth of dairy, poultry and horticulture.

THREATS

 Commercial banks are more concentrating toward rural area so they are facing tough
competition.
 Up-gradation of technology in other small banks which are still well behind.
 Possibility of increasing in the level of cash reserve ratio (CRR)
and statutory liquidity ratio (SLR) which blocks working funds of the bank.
 Our value chain partners may not want to share in risk of financing their suppliers.

38
 CHAPTER 6
A STUDY ON FINANCIAL STATEMENT
ANALYSIS OF KOLKKALAM SERVICE
COOPERATIVE BANK

39
6.1. INTRODUCTION

Finance is lifeblood and never contours of business just as circulation of blood necessary in
human body maintaining life. Finance is very essential for smooth running of business
financial management involves managerial activities concerned with procurement and
utilization of fund for Business purposes. The finance function does with

the procurement of money at the time it is needed and its effective utilization in enterprise.
Money is lifeblood of any enterprise as it is required to purchase machinery and materials. To
pay wages and salaries to employee and to allow credit facilities to customers. An important
requirement for success of any business organization in the provision of sufficient amount of
founder capital it can't work unless it has got sufficient amount to its disposal to purchase
machine and materials, building premises, meet day to day expenses and other purposes.

The present study deals with analysis of the financial statement analysis of cooperative bank.

6.2. NEED AND SIGNIFICANCE OF THE STUDY

Due to certain changes in the banking sector and new economic policies, the co-operative
sectors underwent a crisis. At the same time the failure of some good Schedule Banks and
Urban Banks has also attracted the attention of the people and raised the question of security
of their funds. So that need to the find actual financial stability of the Co-operative banks and
assure investors about the operational as well as financial efficiency of the Co-operative
banks. Distinctive feature of the Co-operative Banks as compared to other banks have
motivated the researcher to undertake research on the financial position of the CBs.

6.3. STATEMENT OF THE PROBLEM

The Co-operative credit institutions have been facing innumerable prominent problems. Huge
administrative expenses and lack of management skill of the employee are the major problems
of the co-operative banks in India. This is because of lack of training and education to the
employees. They are expected to provide better services on par with the nationalized banks
and even better than them. Competition is another force that makes the problem more acute.
Emergence of the private banks including the foreign banks made the accesses to banking

40
services easier than before especially to the urban people. It makes the competition stiffer than
before at least to retain the people who have been banking with the co-operative banks.
However co-operative banks have had an edge over others in terms of their nearness with the
customers. It is necessary for them to provide efficient services and also to win the confidence
of the shareholders, depositors and the common public by making their financial position
lucrative. But the prevailing situation reveals a different condition. Poor performance is
recovery of loans and sanction of loans without proper security, changing government policies
relating to the sanction and recovery of loans given to the people attitude of the debtors also
pose a major hurdle to the growth and development of cooperative banking system in India.

The present study is conducted to identify the performance of the Bank in the current year as
well as the previous years by finding out the liquidity, solvency, financial position and
profitability of financial activities and also to determine the effectiveness of the working of the
Bank.

6.4. OBJECTIVE OF THE STUDY

 To analysis the trend of Achievements of cooperative bank 

 To study the financial position of the bank
 To study the liquidity position of kolkkalam cooperative bank
 To study the profitability and solvency of the bank
 To study the operating efficiency of the bank
 To suggest to improve efficiency of Co-operative Banks

6.5. SCOPE OF THE STUDY

The study focuses mainly on the financial performance and various trends at kolkkalam
cooperative bank.

6.6.LIMITATIONS

1. Comparative statements are generally calculated on past financial statements and thus
forecast for the future is based on past.

2. Financial Statement data is recorded by conventional procedures followed over the years.

41
3. The balance sheet reflects the position of the concern on the given data. However the real
position of the concern will change from day-to-day. Hence the balance sheet is a static
document.

4. The Study is confined only to kolkkalam branch only.

6.7. FINANCIAL STATEMENTS

Financial statements evolved from the system of accounting and its principles. Accounting is
the process of identifying, measuring and communicating economic information to permit
informed judgments and decisions by users’ information. It involves recording, classifying and
summarizing various business transactions.

6.8. MEANING OF FINANCIAL STATEMENTS

A financial statement is a collection of data organized according to logical and consistent

accounting procedures. Its purpose is to convey an understanding of some financial aspects of
a business firm. It may show a position at a moment in time, as in the case of balance sheet or
may reveal a series of activities over a given period of time, as in the case of an income
statement:

 The position statement or the balance sheet, and

 The incomes statement or the profit and loss account.

These statements are used to convey to management and other interested outsiders the
profitability and financial position of a firm.

6.9. DEFINITION OF FINANCIAL STATEMENTS

“Financial statements are the outcome of summarizing process of accounting.”

In the words of John N Myer, “the financial statements provide a summary of the accounts of
a business enterprise, the balance sheet reflecting the assets, liabilities and capital as on the
date and the income statement showing the results of operations during a certain period.

42
Financial statements are prepared as an end result of financial accounting and are the major
sources of financial information of an enterprise.

6.10. NATURE OF FINANCIAL STATEMNTS

The financial statements are prepared on the basis of recorded facts. The recorded facts are
those which can be expressed in monetary terms. The statements are prepared for a particular
period, generally one year. The transactions are recorded in a chronological order, as and
when the events happen. The accounting records and financial statements prepared from these
records are based on historical costs. The financial statements, by nature are summaries of the
items recorded in business and these statements are prepared periodically, generally for the
accounting period.

The American Institute of Certified Public Accountants states the nature of financial
statements as “Financial Statements are prepared for the purpose of presenting a periodical
review of report on progress by the managements and deal with status of investment in the
business and the results achieved during the period under review. They reflect a combination
of recorded facts, accounting principles and personal judgments.”

6.11. OBJECTIVES OF FINANCIAL STATEMENTS

Financial statements are the sources of information on the basis of which conclusions are
drawn about the profitability and financial position of a concern. They are the major means
employed by firms to present their financial situation of owners, creditors and the general
public.The primary objective of financial statements is to assist in decision making. The
Accounting Principles Board of America (APB) states the following objectives of financial
statements:-
1. To provide reliable financial information about economic resources and obligation of a
business firm.

2. To provide other needed information about changes in net resources (resource in

obligations) arising out of business activities.

43
3. To provide reliable information about changes in such economic resources and
obligations.
4. To provide financial information that assists in estimating the earning potentials of
business.
5.To disclose, to extent possible, other information related to financial statements, that is
relevant to the needs of the users of these statements.

6.12. TYPES OF FINANCIAL STATEMENTS

There are four basic financial statements:
1. Balance Sheet:
it is also referred to as statement of financial position or condition, reports on a company’s
assets, liabilities and net equity as of a given point in time.
2. Income Statement:
It is also referred to as Profit and Loss Statement (or “P&L”), reports on a
company’s results of operations over a period of time.
3. Statement of Retained Earnings:
It explains the changes in a company’s retained earnings over the reporting
period.
4. Statement of Cash Flows:
It reports on a company’s cash flow activities; particularly it’s operating, investing
and financing activities.

6.13. LIMITATIONS OF FINANCIAL STATEMENTS

1. Financial statements are essentially interim reports.
2. Lack of precision and definiteness
3. Lack of objective judgment
4. Records only monetary facts
5. Historical in nature
6. Artificial view
7. Scope of manipulations
8. Inadequate information

44
6.14. STEPS INVOLVED IN THE ANLYSIS OF FINANCIAL
STATEMENTS:
From the study of the meaning of analysis of the financial statements, it is clear that the work
of analysis of financial statements involves three steps or processes, they are:-
1. Analysis
2. Comparison
3. Interpretation

1. Analysis:
The data shown in the financial statements are either the balance of individual accounts
or groups of balance of many accounts. As a result, they lack homogenizing and uniformity.
They are not of much help o analyst, who requires homogenize and comparable data (i.e.
interconnected data) for judging the profitability and the financial position of a concern. So, to
obtain the desired homogenous and comparable data the figures founding the financial
statements have to be analyzed.
2. Comparison:
Mere splitting up or regrouping of the figures found in the financial statements into the
desired component parts is not sufficient for judging the profitability and the financial status
of an enterprise. After the figures contained in the financial statements are dissected or split
onto the required comparable compound parts, the comparable component parts (i.e. inter-
connected data) must be compared with each other and their relative magnitudes (i.e. their
relationship must be measured).
3.Interpretation:
After the financial statements are analyzed or dissected into comparable component
parts and the relative magnitude of the comparable component parts (i.ie. the relationship of
the inter-connected component parts) is measured through comparison, the results must be
interpreted.
6.15. TYPES OF FINANCIAL ANALYSIS
We can classify various types of financial analysis into different categories depending upon .
 The material used and

45
  The method of operation followed in the analysis.

1. ON THE BASIS OF MATERIAL USED:

a. External Analysis:
It is made by those persons who are not connected with the enterprise. They do
not have access to the detailed record of the company and have to depend mostly on
published statements; such type of analysis is made by investors, credit agencies,
government agencies and research scholars.
b. Internal Analysis:
The internal analysis is made by those persons who have access to the books of
accounts, they are member of the organization. Analysis of financial statements or other
financial data for managerial purpose is the internal type of analysis. This internal analyst
can give more reliable result than an external analyst can, because every type of
information is at his disposal.
2. ON THE BASIS OF MODUS OPERATIONS:
a. Horizontal (or Dynamic) Analysis:
This analysis is made to review and analyze financial statements of a number of years
and therefore based on financial day taken from several years. This is very useful for

46
long-term trend analysis and planning. Comparative financial statement is an example of
this type of analysis.
b. Vertical (or Static) Analysis:
This analysis is made to review and analyze the financial statement of one particular year
only. Ratio analysis of the financial year relating to a particular accounting year is an
example of this type of analysis.

6.16. METHODS OR TOOLS OF FINANCIAL STATEMENT ANALYSIS:

The analysis and interpretation of financial statement is used to determine the financial
position and results of operations as well. A number of method or tools are used to study the
relationship between different statements. An effort is made to use those devices which clearly
analyses the position of the enterprise.
The following methods of analysis are generally used:
1) Comparative Statement Analysis
2) Common Size Statement Analysis
3) Fund Flow Statement Analysis
4) Cash Flow Statement Analysis
5) Statement of Changes in Working Capital
6) Ratio analysis
7) Cost Volume Profit Analysis
8) Trend Percentage analysis

1. COMPARATIVE STATEMENT ANALYSIS:

These statements are prepared in a way so as to provide time perspective to the
consideration of various elements of finance position embodied in such statements. This
is done to make the financial data more meaningful. The statements of two or more years
are prepared to show absolute data of two or more years increase or decrease in absolute
data in value and in terms of percentages.Comparative Statements can be prepared for both
 Income Statement or Profit and Loss Account, as well as
 Position Statement or Balance Sheet

47
2. RATIO ANALYSIS:
A ratio explains the relationship between two numbers. In the context of ratio derived
from financial statement, various balance sheet and profit and loss accounts. Considering
that there are many items in a balance sheet and profit and loss accounts, it would be
possible to relate virtually any two items in the form of ratio. Ratio analysis is a powerful tool
of financial analysis. A ratio is defined as "the indicated quotient of two mathematical
expressions" and as "the relationship between two or more things."1 In financial analysis, a
ratio is used as a benchmark for evaluating the financial position and performance of a firm.
The relationship between two accounting figures, expressed mathematically, is known as a
financial ratio (or simply as a ratio).

3. TREND ANALYSIS:
Trend Analysis is the practice of collecting information and attempting to spot a pattern, or
trend, in the information. In some fields of study, the term "trend analysis" has more formally
defined meanings.

Definition Of 'Trend Analysis'

An aspect of technical analysis that tries to predict the future movement of a stock based on
past data. Trend analysis is based on the idea that what has happened in the past gives traders
an idea of what will happen in the future. Although trend analysis is often used to predict
future events, it could be used to estimate uncertain events in the past, such as how many
ancient kings probably ruled between two dates,based on data such as the average years which
other known kings reigned.
1. Trend analysis calculates the percentage change for one account over a period of time of
two years or more.
2. Calculate the amount of the increase (decrease) for the period by subtracting the earlier
year from the later year. If the difference is negative, the change is a decrease and if the
difference is positive, it is an increase.

6.17. DATA ANALYSIS AND INTERPRETATION

BALANCE SHEET FOR TREND ANALYSIS OF KOLKKALAM COOPERATIVE BANK(2014-2015, 2016-2017, 2018-2019)

48
PARTICULARS 2014-2015 2016-2017 2018-2019
AMOUNT AMOUNT AMOUNT
1.FIXED ASSETS:
Land and buildings 19,00,221.00 24,58,464.65 31,40,891.62
Furniture and fixtures 27,57,387.00 44,16,093.40 63,11,145.63
Computer and
8,01,548.00 7,29,995.90 11,01,489.62
Software
Electricals and
16,99,051.00 32,54,724.00 35,45,170.97
Machineries
Vehicles Account 84,608.00 1,76,131.00 1,49,711.35
TOTAL FIXED
1,42,48,409.19 72,42,815.00 1,10,35,408.95
ASSETS
11.INVESTMENTS:
15,46,74,892.3
Investments 6,28,14,235.63 18,82,97,792.75
2
Fund Investments NIL 1,03,47,261.14 2,18,28,614.54
TOTAL 16,50,22,153.4
21,01,26,407.29 6,28,14,235.63
INVESTMENTS
111.Current assets:
Cash in Hand 42,61,268.00 91,03,504.00 88,39,629.00
Borrowings From
Other 53,865.47 25,507.00 NIL
Banks
Balance with other
banks 3,03,32,847.91 2,64,08,401.09 2,66,46,574.11

43,21,65,564.1
Loans and Advances 35,28,84,428.15 64,67,47,230.19
Other assets 10,33,854.27 27,12,052.60 18,13,722.42
Advances & Security
13,65,609.00 22,91,200.00 19,83,065.00
Deposits
Shares & Memberships 57,210.00 58,235.00 8,235.00
14,24,28,377.6
Head Office 4,84,72,798.71 15,50,19,704.44
Branch Accounts 1,19,87,856.13 21,01,258.58 1,63,08,942.92
TOTAL CURRENT 62,12,18,546.9
85,71,28,930.06 44,67,63,463.84
ASSETS
1,08,15,03,746.5 79,72,76,109.3
TOTAL ASSETS 51,68,20,514.47
1.SHARE HOLDERS
FUNDS:
Share capital 58,01,550.00 1,00,49,000.00 1,54,26,800.00
Reserves & surplus 64,78,827.16 1,05,37,278.13 2,21,39,816.53
Net profit 58,08,344.97 1,18,31,745.40 1,39,46,222.50
111.CURRENT
LIABILITES:

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 14,45,29,636.2
Branch Accounts 6,04,60,654.84 17,13,28,647.36
1
Borrowings From
925 - 1,24,94,006.00
OtherBanks
Chit Liabilities NIL 5,93,575.00 5,44,140.00
Other liabilities 1,24,06,064.00 1,78,91,222.00 2,27,71,446.00
Dividends 5,22,838.00 5,63,981.00 5,94,961.00
Provisions 8,00,000.00 25,69,194.00 37,30,955.00
TOTAL CUURENT 16,61,48,533.2
21,14,64,155.36 7,41,90,481.84
LIABILITES 1
TOTAL
1,08,15,03,746.5 51,68,20,514.47 79,72,76,109.3
LIABILITES

INTERPRETATION:
SHARE HOLDERS FUNDS

It shows an increase in shareholders fund by 79.22% from 2014-2015to 2015-2016 which

indicates that the bank has issued an additional shares.

DEPOSITS
Bank deposits has been increased to 41.02% when compared to 2014-15 this shows more
sources of fund and the bank can issue loans from this deposited and earn profits

CURRENT LIABILITIES

It shows that there is an increase in current liability by 54.26% when compared to 2014-2015
which is not a good sign. The bank should put-in some extra efforts to efficiently control its
liabilities.

FIXED ASSETS

Fixed assets have been increased by 49.67% when compared to 2014-2015 which indicates
that the bank is having sufficient fixed assets during the year.

INVESTMENTS
Bank investments are increased by 162.71 % when compared to 2014-2015 which is good sign
of business. The bank can expect a good return on its investments.

CURRENT ASSETS

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Current assets have been increased by 16.83% when compared to previous year that shows the
company can meet its working capital needs.

Overall financial position is satisfactory in 2015-2016 when compared to 2014-2015.

6.18. TOTAL ASSETS

YEARS 2014-15 2015-16 2016-17

AMOUNT 516820514 797276109.32 1081503746.54
PERCENTAGE 100 154.26 135.65

ANALYSIS AND INTERPRETATIONS:

For the year 2014 is the base percentage is 100% and it is increased to 154.26%,
135.65% for the study period 2014-15 to 2015-16. In the table shows and fluctuating trend in
total assets.In the above table depicts the maximum percentage of assets recorded at 154.26%
for the year 2015-2016. The minimum has recorded in the year 2014-15 at 100% and 135.65%
inthe year 2016-2017 For the entire study period it showed and fluctuating Trend.
It further tells that the first gradually increased and later it starts fluctuating because of huge
Investment made in Total Assets.

6.19. TOTAL EQUITY

YEARS 2014-15 2015-16 2016-17

AMOUNT 5801550 10049000 15426800
PERCENTAGE 100 173.21 265.9

ANALYSIS AND INTERPRETATION:

For the year 2014-2015 base percentages is 100% and increased to 173.21%, and 265.9%for
the study period 2014-15 to 2015-16 respectively. In the above table it shows the Increasing
trend in the value of the Total Equity every year.In the above table it depicts the maximum
percentage of the Value of Total Equity was recorded at 265.9% for the year 2013-14. The
minimum Percentage in the value of the total equity was recorded in the year 2014-15 i.e the
Base Year.The Reason for change is Lot of Inflow in the amount of Equity. It was made for
the purpose of Increase in the productivity.

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6.20. NET PROFIT

YEARS 2014-15 2015-16 2016-17

AMOUNT 5808344.97 11831745.40 13946222.50

PERCENTAGE
100 203.70 117.87
INCREASE

ANALYSIS AND INTERPRETATION:

For the year 2014-15 base percentages is 100% and increased to 203.70%, 117.87% in the
subsequent years and then there was a decline in the concluding year 2015-16 (117.87%). In
the above table it shows that there is a slight fluctuation in the value of Net Profit in the
Concluding Year as a whole.In the above table it depicts the maximum percentage of Net
Profit was recorded in the year 2015-16 (564%) and the minimum percentage was recorded in
the year 2014-15 @ 100% which was the year.To sum up due to increase in financial cost and
other operating cost, the profit had decreased to 117.87% in the concluding year.

6.21.NET PROFIT TO TOTAL ASSET

YEARS 2014-2015 2015-16 2016-17

NET PROFIT
5808344.97 11831745.40 13946222.50
AMOUNT
TOTAL ASSET 516820514.74 797276109.32 1081503746.54
PERCENTAGE 1.12 1.48 1.28

SHOWING NET PROFIT TO TOTAL ASSETS ANALYSIS AND

INTERPRETATION:

In the above table we analyze that there was a fluctuating trend in the values of net
profit to total assets i.e. starting from the year 2014-15 to 2015-16, 1.12% 1.48% and 1.28%
respectively. This table clearly implies that there were a lot of fluctuations in the value in the
last 3 years. The reason for fluctuation was due to frequent changes in the interest rates and

52
other expenses. During the study period there was better performance in utilizing the available
resources, but in the concluding year.

6.22. NET PROFIT TO TOTAL ASSETS

YEARS 2014-2015 2015-16 2016-17

NET PROFIT
5808344.97 11831745.40 13946222.50
AMOUNT
TOTAL EQUITY
5801550 10049000 15426800
AMOUNT
PERCENTAGE 100 117.74 90.40

ANALYSIS AND INTERPRETATION:

In the above there is a clear depiction of fluctuation in the value of net profit to total
equity. Right from the year 2014-15 to 2015-16 the values were 100% 117.74% and
90.40%respectively.In the above table it depicts that the maximum percentage in the value of
net profit to total equity was in the year 2015-16 at 117..74% and the minimum percentage in
the value was recorded in the year 2016-17 at 90.40% respectively.
In a nut shell, it predicts that the sources were effectively distributed among the profitable
investments.

6.23. TOTAL DEPOSITS TO NET LOANS

YEARS 2014-2015 2015-16 2016-17

NET LOAN 3528000 4321000.65 6467000

TOTAL
425000 5987000.10 8185000
DEPOSITS
PERCENTAGE 83.11 72.19 79.01

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ANALYSIS AND INTERPRETATION:
The above table depicts that there was lot of fluctuations in the value net loans to deposits
every year. Starting from the year 2014-15 to 2015-16 the rates were differing every year i.e
%,83.11%, 72.19%and 79.01% respectively.In the above table it depicts that the maximum
percentage in the value of net loans to total deposits was recorded at 83.11% for the year
2014-15 and the minimum percentage was recorded at 72.19%% for the year 2014-15
respectively.The above table has maintained standard liquidity ratio through the entire study
period. On anaverage the bank has maintained the required Statutory Liquidity ratio.
6.24. LIQUID ASSETS TO TOTAL ASSETS

YEARS 2014-2015 2015-16 2016-17

LIQUID ASSETS 4261268 9103504 88,39,629

TOTAL ASSETS 516820514.74 797276109.32 1081503746.54
PERCENTAGE .82 1.14 .81

ANALYSIS AND INTERPRETATION:

The above table depicts that the values of the Liquid assets to total assets were
fluctuating every year and there is increase and decreasing trend in this values. As we can
clearly notice that the values the years 2014-15 to 2015-16 differing at rates of 0.82%, 1.14%,
0.81%,respectively.In the above table the maximum percentage in the value of liquid assets to
total assets was recorded in the year 2015-16 at 1.14% and the minimum value was recorded
in the year 2016-17 at 0.81% respectively.The above table clearly represents that the liquid
assets are contributing to the fluctuating margin on the total assets.

6.25. SHOWING RETURN ON TOTAL ASSETS

YEARS 2014-2015 2015-16 2016-17

NET PROFIT
5808344.97 11831745.40 13946222.50
AMOUNT
TOTAL ASSETS
516820514.74 797276109.32 1081503746.54
AMOUNT
PERCENTAGE 1.12 1.48 1.29

54
ANALYSIS AND INTERPRETATION:

In the above table the return on total assets shows a fluctuating trend its values every year.
Right from the initial years taken 2014-15 to 2015-16, it shows increasing and decreasing
trend in its values i.e. at the rates of 1.12%, 1.48%, and 1.29% respectively as a whole.
In the above table, it clearly depicts that the maximum percentage in the value of return
on total assets was in the year 2014-15 at 1.48% and the least percentage was recorded in the
year 2014-15 at 1.12% respectively.Since it is a service sector the return on total assets will be
a negligible percentage. It recorded an average of 1.29% for the entire study period.

6.26. INTEREST EARNED SHOWING

YEARS 2014-15 2015-16 2016-17

INTEREST ON
35810213.00 62363390.75 71731344.64
LOANS
NET LOANS 352884428.15 432165564.19 646747230.19
PERCENTAGE 10.14 14.43 11.09

ANALYSIS AND INTERPRETATION:

From the above we clearly analyze that there is an fluctuating trend in the values of
interest earned every year apart from the lone year where there was a decrease of 2014-15 at
10.14% respectively in the year. Apart from that there is an increase in the other years 2015 -
16 at 14.43%, respectively. In the above table it clearly shows that the maximum percentage
was recorded in the year 2015-1 at the rate of 14.43% and the minimum percentage that was
recorded was at 10.14% for the year 2014-15 respectively. For the entire study period the
interest earned on its loans and advances showed a fluctuations’ in the returns. As it is the
major source of revenue it should be carefully analyzed. In the year 2014-15 there was a fall in
the interest rate due to high fluctuations in the bank rates.

6.27. INTEREST PAID

YEARS 2011-12 2012-13 2013-14
INTEREST ON
25854371.50 47038848 60037452
DEPOSITS
TOTAL DEPOSITS 424541310.50 598710477.58 818526752.15
PERCENTAGE 6.09 7.86 7.33

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ANALYSIS AND INTERPRETATION:
From the above table, we can notice that there is a slight fluctuation in the values of
interest paid every year. Right from the starting year 2014-15 to 2015-16 at 6.09%, 7.86%,
and 7.33%, respectively.In the above table, the maximum percentage was recorded in the year
2015-16 at the rate of 7.86% and the minimum percentage was recorded in the year was 2014-
15 at the rate of 6.09% respectively.For the study period the borrowing rate were in the limit
of the internal policies. On an average it recorded 7.33% for the entire study period which let a
major gap between the interest earned and interest paid.
6.28. CASH ASSETS TO TOTAL DEPOSITS
YEARS 2014-15 2015-16 2016-17
CASH ASSETS 4261268 9103504 8839629
TOTAL
424541310.50 598710477.58 818526752.15
DEPOSITS
PERCENTAGE 1.00 1.52 1.07

ANALYSIS AND INTERPRETATION:

In the above table, it depicts that there is systematic decrease in the values of the
percentages of cash assets to total deposits. Right from the year 2014-15 to 2015-16 i.e. 1%
1.52% and 1.07% respectively.The above table depicts that the maximum percentage of the
value of cash assets to total deposits was recorded in the year 2015-16at the rate of 1.52% and
the minimum percentage was recorded in the year 2014-15 at 1.07% respectively.

56
CHAPTER 7

FINDINGS

57
FINDINGS
This study is an attempt to analyze the financial statement analysis of kolkkalam cooperative
bank for the past five years. The analysis is done on the basis of data collected from the annual
report and other statements of the company. From the analysis it is found that the financial
performance of the organization is satisfactory.
 For the year 2014-15 base percentages is 100% and total assets has increased to
154.26%,& 135.65% for the study period 2011-12 to 2013-14. In the above table
shows an fluctuating trend in total assets.
 For the year 2014-15 base percentages is 100% and total equity has increased to
173.21%, and 265.9% for the study period 2014-15to 2016-17 respectively. In the
above table it shows the Increasing trend in the value of the Total Equity every year.
 For the year 2014-15 base percentages is 100% and increased to 203.70%, % the
subsequent years and then there was a decline in the concluding year 2013-14
(117.87%).In the above table it shows that there is a slight fluctuation in the value of
Net Profit in the Concluding Year as a whole.
 We analyse that there was a fluctuating trend in the values of net profit to total assets
i.e starting from the year 2014-15 to 2016-17, 1.12%, 1.48%, and 1.28% respectively.
This table clearly implies that there were a lot of fluctuations in the value in the last
3years.
 There is a clear depiction of fluctuation in the value of net profit to total equity. Right
from the year 2014-15 to 2016-17 the values were 100%, 117.74%, and 90.40%
respectively.
 There is an increasing trend in the value of total equity to net loan. Right from the year
2014-15 to 2016-17 the values were 164.44%, 232.56%, and 238.54% respectively.
 There was lot of fluctuations in the value net loans to deposits every year. Starting
from the year 2014-15 to 2016-17 the rates were differing every year i.e 83.11%,
72.19%, and79.01% respectively.
 The values of the Liquid assets to total assets were fluctuating every year and there is
increase and decreasing trend in their values. As we can clearly notice that the values
theyears 2014-15 to 2016-17 differing at rates of 0.82%, 1.14% and 0.81% Respectively.

58
 There is an increasing trend in the value of the total equity to total liabilities every
year.As we can notice that the value was 1.12% in the year 2014-15 and continues to
improvement thereafter. The values were 1.26% and 5.5% respectively in the
subsequent years.
 The return on total assets shows a fluctuating trend its values every year. Right from
the initial years taken 2014-15 to 2016-17, it shows increasing and decreasing trend in
its values i.e. at the rates of 1.12%, 1.48%, and 1.29% respectively as a whole.
 We can clearly analyze that there is an increase trend in the values of interest earned
every year apart from the loan year where there was a decrease of 10.14% in the year
2014-15 respectively. Apart from that there is an increase in the other years 2016-17 at
14.43%, 2014-15 at 10.14%, 2014-15 at 14.43% and 2016-17 at 11.09% respectively.
 We can notice that there is a slight fluctuation in the values of interest paid every year.
Right from the starting year 2014-15 to 2016-17 at 6.09%, 7.86%, and 7.33%,
respectively.
 It depicts that there is systematic decrease in the values of the percentages of cash
assets to total deposits. Right from the year 2014-15 to 2016-17 i.e.1.00 %, 1.52%, and
1.07% respectively.

59
CONCLUSIONS
This project report is prepared for the kolkkalam cooperative bank to assess their overall
financial position. The tools used for analysis are Tend analysis, Common size Statements and
comparative.Trend analysis is immensely helpful to us in analyzing the change in financial
function and operating efficiency between the times periods that is 2014 to 2016 selected. By
studying the trends of each item we can know the direction of changes whether upward or
downward and based on the changes the opinions can be found. Comparative analysis
statements have been analyzed and this helps to know the financial position. This study helps
in identifying financial strengths and weakness of the bank by properly establishing
relationships between the items of balance sheet and profit and loss account. Common size
statements express assets and liabilities of three years as percentages. This highlights the
relative changes in assets and liabilities. The bank’s investments in the current year have
increased, so, it should try to maintain its investments. Increase in investment will increase the
funds received as interest which may be utilized in productive purposes. Further the bank can
improve its financial performance if it is maintaining the same level of favorable working
capital. Concerned to above information, it can be concluded that the bank has good financial
planning and as a result it has a good financial position in spite of heavy competition.

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BIBLIOGRAPHY

The following were few books and its authors which held my hands in the completion of the
internship:
1. books:

 Financial Management , Author: Reddy Appanaiah

 Cost And Financial Analysis , Author: Jawahar Lal

 Analysis Of Financial Statement, T.S.Grewal’s

 Cost And Financial Analysis ,Author: S.P. Jain, K. L. Narang

2.Websites:
Google.Com
Wikipedia.Com
Investopedia.Com

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