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(KORAPUT CENTRAL CO-OPERATIVE BANK LTD.) {In Partial Fulfillment Of The Requirement For The Award Of Master Degree In Business Administration Of Biju Pattanaik University Of Technology(BPUT), Rourkela} Submitted By Manoj Kumar Sahu Registration No:-0706277026 Session:-2007-2009

Under the Guidance Of


Mr. Biswajit Prasad chattoi Faculty, CENTRE FOR MANAGEMENT STUDIES,OEC BHUBANESWAR Mr.Lakshmidhar Sukla Administrative Inspector Koraput Central CoOperative Bank Ltd. Jeypore

CENTRE FOR MANAGEMENT STUDIES, OEC Nabajyoti Vihar, Nijigarh Kurki, Jatni-752050 ORISSA

DECLARATION
I do here by declare that the project entitled FINANCEING AND RECOVERY OF LOANS IN KORAPUT CENTRAL CO OPERATIVE BANK being submitted by me to Biju Pattnaik University Of Technology for the partial fulfillment of course Curriculum of M.B.A represents my own

contribution and effortand has not be submitted or Published by me or any other in part or full to anywhere before for the said agree.

DATE:- 15-Aug-2008 PLACE:-Bhubaneswar

Signature

ACKNOWLEDGEMENT
This is to acknowledgement that I Manoj Kumar sahu, a bonafide student of Centre For Management Studies (CMS), OEC wish to thank Koraput Central Co-Operative Bank Ltd. jeypore for giving me a chance to do my summer project in such a reputed organization. I am grateful to Mr. Biswajit Prasad Chhatoi, faculity of Centre For Management Studies (CMS), OEC for her assistance and advice before and during the course of this project. I am also grateful to Mr. Lakhmidhar Sukla Administrative Inspector of Koraput Central Co-Operative Bank (KCCB.) for spending his valuable time & invaluable guidance and

encouragement given by him during the course of this project.

-Manoj Kumar Sahu

II

PERFACE
It is said that only theoretical knowledge about a subject is not sufficient but when we go for practical aspect of that we can gain deep knowledge about the subject matter and can able know what actually happened. Because there is some difference between theory and practice. My six week practical training in Koraput Central Co-Operative Bank Ltd. Jeypore provided me with precisely such an experience, giving me the opportunity to access the concept of theory against the drops of practicality.

Though there is the scope to go through each and every function such as Finance Marketing, Administration and Production but as a student of Finance entire connection was made only on Financing and recovery management of the bank with the help of past five years data.

The information is gathered through the help of the reports of the bank, personnel discussion with the official and books& magazines. All the information is interpreted in this project report in a simple form and in such a manner so that even a layman can understand the Financing And Recovery Management of Koraput Central Co-Operative Bank Ltd. Jeypore.

Aug. 15, 2008

-Manoj Kumar Sahu mk_2248667@yahoo.in

III

CONTENTS
Chap. Pages About The Topic About The Co-Operative Society Need For The Study Objective Of The study Method Of The study Limitations

1. INTRODUCTION

5-9

2. KORAPUT CENTRAL CO-OPERATIVE BANK -THE PROFILE


Origin & History Branch Network Membership Share Capital Management Unique Achievements Key personals

10-16

3. RESULTS OF THE STUDY


Financing Management Of K.C.C.B Recovery Management Of K.C.C.B

17-28

4. DISCUSSION AND CONCLUSION


Analysis & Interpretation Summary & Suggestions

29-35

BIBLIOGRAPHY ABBREVIATIONS

XXXVII XXXVIII

IV

CHAPTER.1 INTRODUCTION
ABOUT THE TOPIC:
The literal meaning of loan is lending of some money and return of which earn something extra i.e. interest. The loan is given for a stipulated period and at a fixed rate of interest. In this process there are two people the lender and borrower. The lender is the person who gives

the money and borrower is the person who takes money. After the stipulated period the lender ask for return back his money with interest. So the lending of money is known as Financing ask for return back of money is known as Recovery. This whole process is not new to our society. In the old days the Jamindars lends money to the farmers at a very high rate of interest. And at the time of recovery when they are not able to pay their dues all the properties are taken by the Jamindar in lieu of interest; as because at the time of lend ling the Jamindars mortgage their property. But the technique applied by the Jamindars is illegal and the farmers not happy with this. So the role of Jamindars in money lending is going on diminishing and after independence they are totally disappeared. Now the role of Jamindars performed by CoOperative banks with a service motive rather not to earn profit. So before move to our study we should aware about the co-operative society.

ABOUT THE CO-OPERATIVE SOCIETY:


The Co-operative movement introduced in our country by the British Government in 1904 was by and large confined to organization of Co-operative society. The subsequent legislations have facilitated organization of District Central Co-operative Banks and State Co-operative Banks to support the lending activities of Primary Agricultural Co-operative Societies. In order to garner resources, these organizations mobilized deposits from public. In spite of all these developments the co-operative credit institutions are kept out of the preview of control by the Central Banking Authority i.e., Reserve Bank of India until March 1966. Only after the amendment of Banking Regulation Act 1965, some important provisions of these act has been extended to the Cooperative banks engaged in mobilization of deposits of money from the public. In pursuance of the relevant provisions of the act, the Reserve Bank of India assumed sweeping powers to control the -5-

functionality of the Co-operative banks in respect of deposits, loans and advances. Thereafter, circulars and directives have been issued by the Central Bank to streamline the functioning of these banks in the interest of the stakeholders. Development financial institutions like the erstwhile Agriculture Refinance and Development Corporation (ARDC) and the National Bank for Agriculture and Rural Development (NABARD) were set up and delegated powers under the Banking Regulation Act to issue circulars relating to the loans and advances. With the introduction of financial sector reforms in 1991, interest on deposits and loans were deregulated and the management of concerned banks has been asked to decide on the interest rates deposits and loans basing on the market conditions. Pursuant to these reform measures, the Orissa State Cooperative Banks has also issued certain instructions in respect of loans and advances, supervision of District Central Co-operative Banks at District level and Primary Agricultural Cooperative society at grass root level from time to time. Where as Reserve Bank of India has been issuing directives for maintenance of deposit accounts the NABARD has issued various circulars concerning their policy on reference for Short-term Agriculture Loans, investment credit, financing of Handloom Weavers co-operative societies etc. Orissa State Co-operative Bank has also issued a number of circulars on interest rates on loans, deposits, supervisions of DCCB and PACs. The general structure of co-operative bank in India is as follows,

RESEARVE BANK OF INDIA NABARD

SHORT-TERM

LONG-TERM

SCBs SCARDNS DCCBs PCARDBs PACs

No. of Outlets
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NEED FOR A STUDY:


To understand about Co-operative Banking, Co-operative movement, co-operative role as well as the meaning of Co-operative and its origin in India, need for such type of study is vital and enormous which is followed by the following statements. The Co-operative movement has an illustrious past In India. Farmers Co-operative, sugar and cotton mills in the Co-operative sector have been around for a few decades. The movement was started with a view to encouraging and empowering groups of individuals to form a society; which could take care of the needs of its members. It was on the line that the concept of Co-operative Banking was introduced to look after the financial and credit needs of the members of such Cooperative societies. Today, the geographical landmass of the country is well connected by a large number of Co-operative banks. Co-operative Banks are important constituents of the Indian financial system, judging by the role assigned to them; the expectations they are supposed to fulfill, their number and numbers of offices they are operate. The Co-operative movement originated in the west, but the importance that such banks have assumed in India is rarely paralleled anywhere else in the world. Their role in rural financing continues to be important even today and their business in Urban areas also has increased in recent years mainly due to the sharp increase in the number of primary Co-operative banks are in an immediate position between the institutions just mentioned on the one hand and the Co-operative banks on the other. The State Co-operative Banks co-ordinates and regulate the working of CCBs. They act as custodians of surplus funds of the central Co-operative Banks and supplement them by attractive deposits and by obtaining loans from the Reserve Bank of India. The Central Co-operative Banks mobilize resources in the districts to finance their members and they also canalize funds from the State Co-operative Banks (SCB) to Primary Credit Societies, the PACs at the village level from the base of the Co-operative Banking. Although they are expected to be multi-purpose societies, they mostly deal in credit. The slogan of Co-operative Banking may be EACH FOR ALL AND ALL FOR EACH.

OBJECTIVES:
The Financing and recovery of loans in a co-operative bank is a important task and a big challenge to its members. So the research must summarize the objectives of this study in brief. i. To understand about various financing schemes of Koraput Central Co-operative Banks Ltd., Jeypore. -7-

ii. iii. iv. v.

To aware about the different income groups and earning capacity of the people belonging to the undivided Koraput district covering area of 17 branches in the Rayagada, Malkanagiri, Nabarangapur, and the Koraput revenue district. To interact with the tribal and people bellow poverty line to understand them about the financing scheme, subsidary an -other financial amenities provided from time to time. To extend its microfinance operation through self-help group, continuous interaction with people at grassroots level to make them adamant with group formation with desired destination.

vi. vii. viii. ix. x.

To reach at every have not only to encourage the individuals to garner deposits but to preserve the market share in banking industry. To comply with various recovery criteria of the bank. To motivate the loanee for early recovery by awaring the reward / punishment associated with such recovery. Interaction with young unemployed to participate with the financial packages granted not only for general business but also for small-scale industry purposes. Interaction with the 17 branch heads, through Branch Inspection Programme, for early recovery, action on defaulters / activation of execution preceding files by initiating DRCS, Jeypore Division fro smooth regulation of authority.

xi. xii.

Arrangement of loan fairs for increasing trend not only in financing, but also in early recovery. Finally to reduce the level of Non Performing Assets / maintain the necessary Cash Reserve Ratio, initiation with branch heads to keep regular co-ordination with Secretary KCCB Ltd. (Head Office), and DRCS, Department of Co-operation for Government Administration.

METHODOLOGY:
Research Methodology is the systematic design, collection, and analysis of data and reporting of information and finding relevant to a specific marketing situation facing the company. After deciding upon the research objectives, next step was collection of data. There are two types of sources available for collection of data i.e. Primary & Secondary source. In this research study both types of data are used.

-8-

Primary data: Bank Officials and members were personally visited and interviewed and the data was collected with help of a Questionnaire. The questionnaires were so designed so as to contain appropriate number of question and to satisfy all research objectives. The questionnaire contained both open-ended and close-ended questions. Special care was taken to ensure that question were simple. So personnel interview method was adopted for data collection. Secondary Data: Secondary data was collected from various files, records, books, journals, and from other printed materials supplied by the Bank during research study.(Refer:Bibilography)

LIMITATIONS:
There are some difficulties faces by me during survey which cause main limitations for my research study. The limitations are as follows, 1) Absence of some branch heads during inspection programme, caused difficulties in getting proper data. 2) Nepotism of Bank Official to become pragmatic in maintaining their day-to-day obligation which leads in data insufficiency for the preparation of the project. 3) During conduction of SHG programme, people hesitated to communicate their motives in a precise manner. 4) We did not get sufficient time to visit all the branches of KCCB Ltd. Because lack of time. 5) Only two months is not sufficient to get knowledge on every aspect of Co-operative societies. 6) Overly the lack of time of Bank officials also creates some limitations on preparing the project.

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CHAPTER.2
KORAPUT CENTRAL CO-OPERATIVE BANK -THE PROFILE
ORIGIN & HISTORY:
The Koraput Central Co-Operative Bank Ltd. Jeypore Came into the existence in the year 1950 and started its functioning w.e.f march 1950 and completed 58 years of service to the people of undivided Koraput district as central co-operative credit agencies for S.T co-op credit structure. The bank bears the Registration No.K-15 dated 15/03/1950.The area of operation of the Bank is confined to four Revenue district namely Koraput, Nabarangapur, Rayageda and Malk-angeri, in the state with the sole motive of catering to the needs of the small and marginal Farmers for their overall socio-economic development. It also undertake to fulfill the needs of rural artisian,land less labor as well as needy person with an aim to cause of co-operation.

BRANCH NETWORK:The bank having 17 branches at various places covering 54 lamps and 1 MPCS (at Rayagada) under undivded Koraput district. The name of the CCBs and number of lamps/Mini banks coveered by each branch is given below, SL. Name of The Dist./Branch NO. (A) 1 2 3 4 5 6 7 Sadar Branch,Jeypore Main Branch,Jeypore Mahila Branch,Jeypore Evening Branch,Jeypore Borigumma Branch Koraput Branch Semiliguda Branch No. Of LAMPS/ Societies 4 3 4 5 - 10 No. Of Mini Banks Under the Societies Remarks/ Defunct Closed

KORAPUT DISTRICT: 3 2 2 4 1 1

8 (B) 9 10 11 (C) 12 13 14 (D) 15 16 17

Laxmipur Branch Total: Nabarangpur Branch Papadahandi Branch Umerekote Branch Total: Ryagada Branch Muniguda Branch Gunupur Branch Total: Malkangiri Branch Balimela Branch M V 79 Branch Total: Grand Total(A+B+C+D)

4 20 4 4 5 13 RAYAGADA DISTRICT: 6 4 4 14 3 3 2 8 55 MALKANGRERI DIST:

3 14 2 2 5 9 3 1 4 8 3 3 2 8 39

1 3 1 1 4

NABARAGGPUR DISTRICT

{Table No. 2.1}

MEMBERSHIP:The membership position of the bank which was stood at 3554 as on 31/03/2003 has been increased to 7073 by 31/03/2007. The growth in membership is tabulated as follows, Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 (31.12.07)
{Table No. 2.2}

Government 1 1 1 1 1 1

Societies 207 205 207 211 213 213

Individuals 3346 4959 5544 6456 7049 7537

Total 3554 5165 5752 6668 7263 7751

% Of Growth Over Previous Year 18.51% 45.53% 11.37% 15.93% 8.92% 6.72%

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SHARE CAPITAL:The paid up share capital of the bank as on 31/03/2007 gone up to Rs.1574.20 lakhs from Rs.1441.96 of corresponding period of last year. The growth over last year records 9.17%.The Shares of the co-operative bank is not issued to general public rather the loonies are only the Share holders of the bank.

MANAGEMENT:As per provision u/s28,clause 2 ,sub clause (1)and u/s 31 of OCS Act 1962, the management of the bank shall rest with a committee consisting of directors out of which 15 shall be elected from different constitute and Deputy Registrar Of CO-Operative Societies Jeypore has been nominated by Registrar of Co-Op societies Orissa, Bhubaneswar vide letter No.5194 dated 27/02/2008 as government representative .The following persons were elected to the committee of management of the bank. 1. Smt. Indira Nanda 2. Sri Hemant Kumar Nayak 3. Sri Ramakanta Raul 4. Sri Binod Chandra Patra 5. Sri Jhadeswar Khadanga 6. Sri Hemant Kumar Sadangi 7. Sri Arun Kumar Bhattamishara 8. Smt. Bijuli Patra 9.Smt. Ritarani Gouda 10.Smt. Basanti Harijan 11. Smt. Malati Majhi 12 Sri Jogendra Swain 13.Sri B.Tripathi 14.Sri Raj Kishore Nayak 15. SriJadu Gorada 16 Deputy Registrar of Co-Op society, Jeypore. -President -Vice-President - Member - Member - Member - Member - Member -Member - Member - Member - Member - Member - Member - Member - Member
-Member

UNIQUE ACHIVEMENTS:The main objective of the bank is to mobilize deposits and to provide credit support to its affiliated societies inclusive of individuals through KCC, SHG, SGSY and other government sponsored programme for development of Agriculture, Allied to Agriculture, Non-agriculture - 12 -

sector. The detail achievement and working result of the bank under various important parameters for last some year is given as follows,

1. DAP/M.O.U. FOR LAST 3YEARS:


(Rs.In Lakhs) sl no . Particulers Target 2004-05 Achieve ment LIABILITY 1 2 3 4 Own Fund Deposits Borrowing Other Liability Total: 2791.6 10440.0 6612.0 1371.3 21215.0 3037.1 10763.6 6211.3 1957.8 21969.8 108.7 103.1 93.9 142.7 103.5 3210.37 12006.0 7273.2 1907.6 24397.2 3431.1 12515.8 7788.3 1771.2 25506.5 106.8 104.2 107.8 90.8 104.5 3491.9 13806.9 8145.9 2612.4 28056.8 3896.1 12801.5 8371.1 2090.7 27159.5 111.5 92.7 102.7 80.0 96.8 % Target 2005-06 Achiev ement % Target 2006-07 Achieve ment %

ASSETS 1 2 3 4 Cash/Bank Advances Investment Other Assets Total: 600.1 12528.0 5800.0 2286.9 21215.0 1412.6 12203.1 6382.4 1971.6 21969.8 235.3 97.4 110.1 86.2 103.5 660.2 14407.2 6670.0 2659.8 24397.2 1027.5 15062.7 7413.5 2002.75 25506.5 155.6 104.5 111. 75.3 104.5 693.2 16568.2 7670.5 3124.8 28056.8 1452.9 17542.3 5956.8 2207.5 27159.5 209.5 105.8 77.6 70.6 96.8

{Table No. 2.3}

2. Deposit Position Of The Bank:- The deposit position of the bank, which was stood at Rs.7624.49 Lakhs as on 31.03.2002, has been increased to Rs.12801.67 by 31.03.2007. The District wise and year wise position of deposit and its growth rate is given below for last five year for perusal, (Rs In Lakhs.) Year Koraput District Wise Position Nabarangapur Rayagada Malkangiri Grand Total % Of

Growth

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2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 (31.12.07)

3390.13 4335.79 4937.27 5679.48 5483.62 5190.54

1420.19 1712.43 2034.70 2227.91 2264.60 2153.68

1352.03 1703.31 2023.31 2303.03 2497.92 2232.33

1462.14 1668.88 1768.36 2305.42 2625.42 2704.22

7624.49 9420.41 10763.64 12515.84 12801.57 12280.77

20.31% 23.55% 14.26% 16.28% 2.28% -

{Table No. 2.4}

3. Maintenance Of C.R.R/S.L.R:-The bank has maintained CRR/SLR as per RBI norms stipulated for the Bank. The year ending maintenance position of CRR/SLR is given below, Year CRR To Be Actual Maintained Maintained Excess/ Deeficit SLR To Be Maintained 2002-03 2003-04 2004-05 2005-06 2006-07 232.86 247.27 285.35 305.98 384.16 576.58 388.31 1194.13 3027.15 1452.93 (+)343.73 (+)141.04 (+)908.78 (+)2721.77 (+)1068.77
{Table No. 2.5}

Actually Maintained

Excess/ Deficit

1940.53 2060.57 2377.95 2549.79 3201.30

3755.67 4256.60 6205.97 9280.28 5632.35

(+)1815.14 (+)2196.03 (+)3828.02 (+)6730.49 (+)2431.05

A. Cash Reserve Ratio The position of liquidity maintained by the bank is shows clearly that the bank has maintained the said reserve over and above the prescribed limit. This has resulted in income loss to the bank. The bank should invest the excess amount beyond CRR requirement in other profitable portfolios to earn more profit and to avoid idleness of borrowed capital. B. Statutory Liquid Reserve Maintenance of SLR also found in excess throughout the year. This is considered to be the idleness of resources for which the profitability of the bank has affected substantially. But the bank did not take any tangible action on this observation. For the interest of the bank, it is

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once again advised to take immediate remedial measures for judicious development of borrowed fund.

KEY PERSONALS:There are 33 officers including secretary working to implement the policies and programme and also to carry out day-to-day transaction of the bank. Simultaneously administration, supervision and follow up action are also being taken up by them. They are known as the key personnel of the bank. Their duties and responsibilities are out lined there under, A. Secretary:He is the Chief Executive of the Bank is fully responsible for day-to-day administration of the bank subject to the control of president. The secretary is authorized to handle the balances with other banks in joint signature of Manager (Accounts & Operation) / Manager (Loans & Supervision) and the Branch Manager of the head office counter. At present, Sri James Barla is acting as the secretary of the bank from 15-07-2008. B. Assistant Secretary:In absence of the secretary, the Assistant Secretary will remain in charge of the secretary and discharge his function. He is empowered to pass voucher up to Rs. 50.00 and vouchers exceeding Rs. 50.00 will be passed through him by the secretary for final pass order. He will be in charge of monitoring investment and collection of MTNA loan to salary earners societies. At present, Sri Purna Chandra Panigrahi promoted to the rank of Assistant Secretary and is working i.e. 02-12-2002 in the head office. C. Manager (Administration & Establishments):He is the group officer of the Establishment Section. At present, Sri Bijaya Ch.Sahu is acting as the Manager (Administration & Establishment) of the bank. D. Manager (Loans & Supervision):He is the group officer of loans and statistics section. He is responsible for submission of reports and returns and information to the concerned quarters. He is also to attend the meetings of loan sub-committee meetings. At present, Sri Hrusikesh Biswal is holding this post. E. Manager (Accounts & Operation):He is the group officer of accounts section of head office along with custodian of double lock of 10 of iron chest, strong rooms, safe deposits locker,cheque, securities and debentures etc. He - 15 -

is empowered to handle the amounts held in different bank up to 1 lakh with joint signature of branch manager (Loans & Supervision). He is also to see smooth mobilization of funds of the bank. At present, Sri Narasingh Moharana is holding this post. F. Manager (Recovery Cell):He is the group officer of recovery cell. He is responsible for correspondence with the affairs of LAMPS and other co-operative societies. At present, Sri Radhamohan Bisoye in the rank of manager is holding this post. G. Manager (Group VI):He is the group officer of cadre section of the bank. He is to attend the minutes of the appointment sub-committee meeting of the cadre scheme and its follow up action. At present, Sri Bijay Chandra Sahu (Establishment & Administration) is in charge of this section. H. Manager (Internal Audit Cell):He is the group officer of internal audit cell of the bank. He is to visit and inspect all branches and head office at regular intervals. At present, Sri Kamal Charan in the grade of branch manager is acting as manager of Internal Audit Cell.

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CHAPTER.3
RESULTS OF THE STUDY

FINANCEING MANGEMENT OF KCCB:


Koraput Central Co-Operative Bank is advancing all types of agricultural & Non-agricultural loans to its ultimate borrowers through various schemes.The required amount of financing is not totally fulfilled by NABARD rather only 30% of total financing KCCB approved from NABARD and another 30% is borrowed from OSCB and balance 40% met KCCB from its own resources. If a person taken a loan of Rs100 then Rs60 contributed by NABARD & OSCB Rs.40 by KCCB. The borrowing position of KCCB from OSCB for last 5 years is as follows. BORROWINGS % Of Growth Over Previous Year 9.23% 10.72% 20.12% 25.39% 7.48%

Year 2002-03 2003-04 2004-05 2005-06 2006-07

Achievement

4670.25 5170.82 6211.32 7788.31 8371.14


{Table No.3.1}

The rate of interest charged by NABARD to OSCB is 3.5% and from OSCB to KCCB it is 4% and from KCCB to LAMPS is 5.5%. So the margin retained at the level of SCB varies from scheme to scheme, ranging from 0.50% to 1%. In case of default in repayment of installment the penal interest @ 2% is charged in addition to the normal rates. The interest on such loan is payable by CCB to SCB at half yearly intervals ending with 30th September and 31stMarch. At last the rate of interest charged to ultimate borrowers as fixed by Government is 7%. This whole system of finance is known as confession finance. This system applicable to S.T (SAO) loans. But expect this loan other loans financed by KCCB is fully (100%) refinance by NABARD.

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Ways Of Financing:The KCCB may advance its loans in two ways; one way is through its LAMPS & another way is by direct financing. As direct financing may have problems of staff constraint, cost effective risk factor etc. For which major portion or almost all loans financed through LAMPS/PACS.In present situation up to 20% of total financing is done through direct financing and forwhich no difficulties faced by KCCB till now.

Objectives Of Financing:There are mainly two objectives available with KCCB regarding financing of loans. One is the main objective and the other one is diversified objective. Main Objective: - The main objective of financing in KCCB is to provide short term agriculture loan to the farmers for growing different crops which is shortly known as ST(SAO)i.e. short term seasonal agricultural operation. Here the bank is service motive. The loan may be sanctioned in cash component or in kind component. In former case loan amount is paid in cash and in later case loan issued in kind i.e. fertilizers pesticides, seed cost, etc should be issued. The crop loan is advanced as per scale of finance. The scale of finance per acre for different crops grown in the area are to be fixed at the District level by the technical committeformed for the purpose before the close of December each year. It is desirable to fix scale of finance for Cash and kind component loan in multiple of hundreds. The periodicity of lending and recovery of crop loan disbursed during Khariff and Rabi season at PACS/CCB level are given as under, Particulars of the Crops Loaning Period Due date fixed for recovery of loan at PACS level Khariff Rabi Sugar cane 1 April to 30 Sept. 1st October to 31st March Whole year
st th

CCB level 31st March 30th June 31st March

25 March 25th June 28th February


{Table No.3.2}

th

Diversified Objective: - To expand its business bank is undertaking other loaning operationlike medium term and long term loan for farming and non farming sector. Here the main motive is to get sufficient margin of profit sustain its expenditure.

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FINANCING Norms (Fixes By NABARD):The NABARD has fixed some rules and regulations as regards to advancing of loans to KCCB. The norms are as follows, (1) Total borrowing from OSCB/NABARD should be utilized in financing of loans and not used any other way. Along with that the bank may use 65%-70% of total deposit in financing loans. (2) The recovery must be 60% of total financing. If the bank unable to recover this much then refinancing from NABARD has stopped. (3) The third norm is default free from higher financing agency. (4) The ST (SAO) loan i.e. crop loan must be financed as per scale of finance and other then crop loan all other loans should be financed as per unit cost of the product,.

Financing Schemes:The KCCB has applied many schemes for financing loans to its ultimate borrowers in both farming and non-farming sectors. These schemes are as follows,

KISSAN CREDIT CARD


Credit plays a vital role for agricultural production. Many of the farmers are reluctant to avai lcredit from societies due to various factors like non-availability of adequate credit in time and cumbersome procedure for sanction and disbursement of loan. The Central Co-operative Banks are also facing lot of difficulties for frequent sanction of limits every yearcoming in batches from societies. In the above back drop, the Kissan Credit Card Scheme was introduced in the state during 1998-99 Rabi Season to simplify the loaning procedure considering its distinct advantages over the traditionally credit delivery system. The prime objective of KCC scheme is to ensure timeliness and adequacy in credit delivery at the ground level.Under the scheme, the PACS/LAMPS can provide better service to the farmers and enhance their credit business enabling them to attain financial viability. The credit management of farmers is left to their own wisdom and they are free to draw the credit at their own discretion at the time of need. So this card is also known as Any Time Operation Card. The year wise K.C.C issued position in Koraput Central Co-Operative Bank for last 5 year is as follows,

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Year

Target

Achievement

% Of Achievement

2002-03 2003-04 2004-05 2005-06 2006-07

120000 142000 190000 210000 240000

114300 150895 190000 212426 226799


{Table No.3.3}

95.25% 106.6% 100.81% 101.16% 94.50%

KALINGA KISAN GOLD CARD The OSCB has designed the unique Kalinga Kisan Gold Card scheme to recognize and reward farmers showing good repayment habit. A package of facilities are provided which includes interest incentives on all types of loans, free accident insurance of Rs.25000/-, annual lottlery, exposure visits, freedom to purchase fertilizer and pesticides from any retail outlets and schematic lending on a priority basis, educational loan for the children of the card holders. The KCCB has implemented this scheme w.e.f April -2001. The year wise position of Gold Card/consumption loan of the bank for last 5 years is as follows, Year Gold Card Issued No. 1639 2325 4659 6328 8145 Gold Card In Consumption Loan Issued Operation No. No. Amount 1588 480 15.39 2151 680 28.18 4333 1384 61.45 5768 1931 88.73 7301 2212 100.56
{Table No.3.4}

2002-03 2003-04 2004-05 2005-06 2006-07

Eligibility:-A farmer member of the PACS satisfying the following criteria shall be eligible to get a KALINGA KISSAN GOLD CARD. a) Member of the PACS for past 2 years. b) Should have availed loans from the PACS at least for a period of 2 years. c) Should not be a defaulter for the last 2 years. SWAROJAGAR CREDIT CARD In addition to introduction of KKCG to retain the existing clientele base among the farming community, the bank has been attaching considerable importance for implementation of the - 20 -

Swarojagar Credit Card scheme launched by the Union Government to provide hassle free credit to the small artisans, weavers, small businessmen and those who depend upon service sector for earning their livelihood. Under this scheme each individual get a loan of Rs.25000/only. The year wise position of Swarojagar Credit Card of the bank for last five years is as follows,
Year Application Received No. 2004-05 2005-06 2006-2007 2007-08 (31.12.2008)
{Table No.3.5}

Sanctioned No. 87 423 302 132 Amount 19.25 103.80 67.18 25.05

Loan Disbursed No. 71 423 282 106 Amount 13.80 103.80 56.90 23.80

Of Which Weavers No. 35 Amount 6.50 -

Amount 19.25 103.80 71.45 30.30

87 423 302 132

SELF HELP GROUPS In Orissa, the SHG programme was mostly implemented by the nationalized banks and the RRBs through NGOs till the year 2000. The participation of the DCCBs were almostinsignificant. The OSCB took the initiating by deputing one officer to study the functioning of SHGs organized by the District Central Co-operative Banks in West Bengal in North 24 Praganaand Hooghly Districts during the month of August, 2000. Basing on the study report, it was decided to replicate the model of West Bengal in Orissa with objective of enlarging the borro-wing membership of the PACS and to provide credit to the poorest of thepoor. Accordingly the guidelines were issued for the organization and linking of theSelfHelp Group by the DCCBs.The branch managers of District Central Co-operativeBanks may organize the Self Help Groups on the basis of common economics status, homogeneity and common economic interest. Selected Primary Agricultural Co-operative Societies (PACS) may also organize Self Help Groups. Besides, the oral lessees and sharecroppers can organize Self Help Groups exclusively for availing loans from DCCBs/PACS for seasonal agricultural operations. The overdue of availing this loan facility is mentioned in the Master Circular on Sanction of limit for Seasonal Agricultural Operations. In case of necessity, the DCCSs/ PACS may take the help of Non-Government Organizations(NGOs),Extensions Officers of the Blocks and District Development Manager of NABARD for mobilizing and organizing the groups. The group size

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shall be limited to 20 with a minimum number of 5. Under no circumstances, the minimum and maximum number of members should be divided. Eligibility:The Self Help Groups shall be eligible to get credit support only after 6 months from the date of organization and mobilization of savings on the basis of their ratings. After ascertaining the eligibility on the basis of the ratings, the proportion of savings to credit may be decided, which would vary from 1:1 to 1:4 depending on the assessment of the performance and need of the group members.This proportion is to be decided by the DCCB branch by their own prudence To start with, the financial support may be extended in the ratio 1:1 or 1:2, which would subsequently increase to 1:4, depending on the performance. In case of Self Help Groups organized by oral lessees/sharecroppers, the deposit credit ratio shall be 1:10. For this purpose the savings mobilized by the group should be taken as base and not the amount

deposited in the PACS/DCCB branches. To illustrate, if an SHG has mobilized Rs.5,000/- as deposit, lent Rs.3,000/- among its members and deposited the balance amount of Rs.2,000 in the PAC /LAMPS/FSS or Branch of DCCB, the credit support will be considered on the basis of Rs. 5,000/- and not on the basis of the amount of Rs2,000/- deposited by the group. Purpose Of The Loan:-The group members should democratically decide the income generating economic activities peruse after availing credit support. At the initial stage, the officials of the PACS and DCCB branch may guide the group in the decision make process. But, under no circumstances, they should force the group members to carry on any specific activities. Repayment Period:- The DCCBs may decide the repayment period of loans advanced to the groups subject to a minimum period of two years to a maximum period of ten years. The groups may decide the repayment period of loans advanced to their members at the initial stage, the repayment period from the members to the groups may be limited to a period of one to two years.

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RECOVERY MANAGEMENT OF KCCB:

The Short Term Co-operative Credit Structure in the state is playing a pivotal role in dispensing rural credit for agriculture and allied activities. More than 70% of the total corp loan disbursed in the State is being provided by the Co-Operative Credit Societies. Due to low level of recovery, the health of many of the primary societies and CCBs is deteriorating and they are finding it difficult to extend sufficient credit support to the farmers. The prime importance of recycling of funds need not be over emphasized. To attain sustainable growth in credit delivery, the recovery position should be at least 80% of the demand whereas it has remained at the level of 50% to 55% due to varies factors like natural calamities, willful defaulters not repaying in time and lack of adequate effort by the field machinery to recover the loans in time. NABARD is gradually moving towards fixing the rate of interest on refinance basing on the level of NPAs. In the above backdrop, the CCBs have to boost the recovery position and reduce the level of NPA to maintain their eligibility for availing concessional financial support from NABARD. The NPA position of the KCCB is as follows,

Year 2002-03 2003-04 2004-05 2005-06 2006-07

Total Loans & Advances 9413.23 10413.08 12203.15 15062.70 17542.31

Total N.P.A 1019.69 1157.09 1293.44 1364.63 1552.35

% To Loans Outstanding 10.83% 11.45% 10.60% 9.06% 8.85%

{Table No.3.6}

The KCCB has adopted following strategies much ahead of the peak harvesting and marketing season of crops to achieve better recovery performance.

STRATEGIES FOR RECOVERY


1. Preparation Of Demand List:The society shall prepare a village wise demand list of all the borrowers. The list shall contain the information of over dues at the beginning of the year i.e. 1st April; loans falling due for repayment are subsequent months up to March. The total demand for the year should be - 23 -

arrived at on basis of demand falling due in different months. The demand register shall be prepared by 30th November by the Secretary of the society which shall be test checked by the Supervisor in at least 10% cases.The list of defaulters shall be displayed in the notice board of the society, gram panchayat and at conspicuous places in the village for information of the borrowers. A copy of the list shall be supplied to the Area Directors and President of the society to pursue with the defaulting members for repayment. 2. Service Of Demand Notice:The demand notice to members shall be prepared by the Secretary and service of the notices on the members completed by 31st December. In case of KKGC and KKSC holders, the demand notice shall be served by the Bank Supervisor. As regards other members, the Secretary of the society shall personally have the notices and obtain the dated acknowledgement of the borrowers on the reverse of the duplicate copy. In case the borrower is absent from the village, the notice shall be served on his purpose or any adult member of the family. In no case the demand notice shall be allowed to be served on the borrowers through the Peon/Watchman of the society. 3. Fixation Of Target:Fortnightly target for recovery should be fixed for each society/branch month wise starting from December onwards and communicated to all concerned. Normally the target for recovery should be 15% of the demand by December, 20% in January 25% in February and 30% in March. The achievement against the target shall be monitored and reviewed every month in branch level meetings of PACS and branch Managers meeting at the Head Office of the CCBs. The shortfall in achievement during the month shall be added to the next months target. Fortnightly report of recovery of loans shall be submitted by the CCBs to OSCB in the prescribed format from January to March on the 3rd day of the succeeding fortnight to which it relates. 4. Recovery Squard :A recovery squard for each branch shall be formed with 2 to 3 staff comprising an officer from Head office, Field Officer of the branch who will attend recovery of loan and contact big defaulters of Rs. 5,000.00/- and above. In case of shortage of staff, a recovery squard may be formed to cover the loanees of 2 to 3 branches. The squard shall draw up programme in advance to visit specific areas/society on a definite date. The achievement in recovery of loans shall be reported to the Secretary of CCB on the subsequent day of visit. The squard shall be giving more attention for recovery of NPA loan accounts. The loan accounts likely to become - 24 -

NPA by end of the year shall be extracted by Dec. 3 and also pursued for recovery. The recovery squard shall also assist in execution of E.P. cases in the area. 5. Display Of Default List:The names of top 20 defaulters shall be displayed prominently by painting in black color on the wall in the branch/PACS premises. This should be updated twice a year i.e. in April and October. 6. Recovery Camp:Recovery camps shall be organized at strategic places for a cluster of societies. The detail schedule of holding such camps should be drawn up much in advance and communicated to all concerned. The senior officers of Head Office shall attend those camps unfailingly for which mobilization of the loanees should be done by the field staff of the Society/branch at least 2 weeks prior to the date of the camp. The District Collector and other senior officers like P.D., DRDA, DDA, DAO, DRCS, and BDO may be invited to attend such camps. The non-official Directors and President of societies may also be associated in recovery of loans. Other line department officers should also be invited to attend the recovery camps. The CEO of CCBs shall attend at least 15 recovery camps in a month during the recovery drive (January-March and May-June). 7. Supervise Of Field Movement:The CEOs/Senior Officers of CCB should contact surprise check on the movement of the field staff and take exemplary against the erring employees. The secretary of PACS shall display his tour programme on the notice board/wall of the society when leaving HQs. 8. Legal Action:All defaulted loan accounts of Rs. 2,000/- and above crop seasons shall be covered by disputes. In case of direct lending by KCCB, all NPA accounts shall also be covered under dispute. The dispute cases shall be prepared and filed by 31st August. The KCCB would arrange for holding camps at the branch level for preparation and filing of dispute cases in consultation with DRCS and Circle ARCS. In such camps the societies will attend the branch with relevant records and after scrutiny by Branch/Department Officer, the dispute cases will be filled before the appropriate authority in the camp itself. The decree copies already received shall also be covered by E.P. cases in in those camps. All dispute and E.P. cases should be routed through the branch managers to ensure that all required formalities are complied with before the case is filed. RCS (O) in his letter No. 4641 dated 27-03-2003 has issued instruction to the Circle ARCS to send a copy of the decree to concerned branch manager so as to enable - 25 -

them to ensure filing of E.P. cases with in 15 days from the date of award of decree. The Branch Manager should also keep close contact with the Principle Officer/Arbitrator/Sale Officer for expeditious disposal of cases filed. The progress of disposal of dispute and E.P. cases shall be reviewed in close coordination with the Divisional DRCS and Circles ARCS in the monthly meetings. Dispute cases filed by the societies pending for more than three months and E.P. cases more than one year should be identified and brought to the notice of concerned ARCS and DRCs with copy to RCS, Orissa and Managing Director, OSCB. Similarly in direct advance cases disputes pending for more than six months and E.P.S pending for more than one year should be identified and reported to proper quarter.

INCENTIVE SCHEME FOR RECOVERY OF LOANS:The expansion credit depends on effective credit disbursal as also on its recovery. Whereas mounting overdue in the Short Term Co-operative Credit structure in the state is one of the major reasons attributable to no-viable functioning of many of the PACS/LAMPS despite implementation of various loan and interest waiver schemes in the past, qualitative lending coupled with sustainable recovery performance at PACS/LAMPS/FSS are the twin measures, which would improve the situation. Keeping in view the above objective, the Short Term Credit Structure, at the instance of GOI and NABARD, has introduced Kissan Credit Card scheme for providing adequate and timely credit support to the farmers. Simultaneously, Orissa State Cooperative Bank has also introduced innovative schemes like Kalinga Kissan Gold Card providing a package of benefits to the borrowers to motivate them to remain default free and repay their dues regularly. Considering overall recovery scenario, it is considered expedient to introduce a suitable incentive scheme for the employees who are directly interacting with the borrowers of PACS/LAMPS for recovery of loans. An incentive scheme linking the recovery performance with the issue of KKGC and KKSC would ensure improved higher recovery on a sustained basis apart from creating a conductive climate for recovery by rewarding timely repayment of the good borrowers. SHORT TITLE AND COMMENCEMENT:The scheme shall be called as Incentive Scheme for Recovery of Co-operative Loan. The scheme will be applicable to the PACS/branches of CCBs and cover the following employees. However, the scheme will not be applicable to the PACS/LAMPS/FSS having annual demand of less than Rs. 5.00/- lakhs. i) Chief Executive of the PACS/LAMPS and Branch Managers of LAMPS. - 26 -

ii) iii) iv) v)

Employees of the PACS/LAMPS Administrative Inspectors/Supervisors of CCB Branch Managers of CCBs Staff of DCCB/Co-operation Department functioning as Sale Officers.

Norms Of Incentive & Amount:-The amount eligible for incentive shall be determined on the basis of the Gold Card / Silver Card issued by the Society up to the end of the year and its percentage to the borrowing members of the preceding year as per the details bellow.

Gold Card (% of KKGC holders to borrowing members) 5.00% 7.50% 10.00% 15.00%

Silver Card** (% of KKSC holders to borrowing members) 30% 40% 50% 60%

Amount of incentive (in Rupees) 3000.00 5000.00 6500.00 8500.00 3500.00 5500.00 7000.00 9000.00 4000.00 6000.00 7500.00 9500.00 5000.00 7000.00 8000.00 10,000.00

{Table No.3.7}

** The silver card was eliminated from previous year i.e. 2006-07 Eligibility:- Only the following categories of societies/CCB branch shall be eligible for the incentive. The amount of incentive shall be as per norms fixed above, a) The annual demand of the society under principal shall not be less than Rs. 5.00/lakhs. (April-March) b) The society/Branch of the CCB should have recovered and remitted minimum 60% of principal and 70% of interest demand during the year. c) The society/Branch of CCB should have been able to retain the Gold Card Holders not less than 95% of those covered during the preceding year.

Sharing Of Incentive:- The incentive amount shall be shared by the Chief Executive of theSCS and other staff at the rate of 70% and 30% respectively. If other staff is not engaged in recovery of dues and increasing the coverage of Silver / Gold card holders, entire incentive - 27 -

shall be awarded to the CEO of SCS. In case of more than one staff, the incentive shall be equally shared among them. In case of LAMPS, the incentive shall be shared as under: 1. Managing Director of LAMPS 2. Branch Manager / branch I/c 3. Other employees engaged in recovery 30% of the incentive 40% of the incentive 30% of the incentive

In case there are no branches, the entire incentive shall be awarded to the staff of LAMPS. Special Award:- In addition to the above, it has been decided to award special incentive of Rs. 15,000.00/- to the PACS/ LAMPS/ FSS which has recovered 80% of the principal and 90% of the interest demand for the year as well as covered 15% and 60% of the borrowing members of preceding year by issue of KKGC & KKSC respectively. The special award will be presented to the eligible PACS in the State Level Krushak Samabesh.

DIFFICULTY IN RECOVERY
After allowing various schemes for recovery also due to following causes recovery is not up to satisfaction level, I. Natural calamities II. Political Interference III. Debt Waiver/Relief IV. No Restriction against LAMPS V. Absent Of Post Disbursement Supervision (due to staff shortage)

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CHAPTER.4
DISCUSSION & CONCLUSION

-ANALYSIS AND INTERPRETATION Now all the necessary data available with us and by analyzing we need to make proper interpretation. We should make analysis both financing and recovery position individually. So lets starts with financing position

Loan Financing Position Analysis:The financing position of the bank can be analyzed from various point of view which are as follows,

Issue & Outstanding:The loan issued position of the bank is for last five years and up to date is as follows , Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 (31.12.07)
{Table No. 4.1}

Achivement 5612.99 6942.29 9459.20 11174.04 13339.94 6438.47

% of Growth Over Previous Year 23.68% 36.25% 24.48% 13.30% -

If we analyze the loan issued position of the bank for last five years then we will found that it has increased gradually. In the year 2002-03 which was stood at Rs.5612.99 lakhs has been increased to Rs.13339.94 lakhs by 31.03.2007 ,but the % increase is in a decreasing rate from the year 2004-05 onwards. Against which the loans outstanding position of the bank is in the same situation. It can easily traced from the under mentioned table, Year 2002-03 2003-04 2004-05 2005-06 Achievement 9413.23 10103.08 12203.15 15062.70 - 29 % Of Growth Over previous Year 19.57% 7.33% 20.79% 23.43%

2006-07 2007-08 (31.12.07)

17542.31 18870.90

16.46% 7.57%
{Table No. 4.2}

The achievement is in an increased position but the growth rate is changing randomly. In all together the loan issue and outstanding position of the bank is sound and at a satisfactory level.

Kissan Credit Card:If analyzed the Kissan Credit Card issued position from last five year records (Page No.17,Table No.3.3) then it maintain a very sound position from its year of implementation. Again from last three years (except 2006-07)the achievement is more then 100% which is a very good sign for the bank.

Khariff & Rabi Investment:The investment on Khariff & Rabi loan during last 5 years is as follows, (Rs In Lakhs)
Year
Target

KHARIFF
Achieve ment % Target

RABI
Achieve ment 92.42% 84.52% 115.3% 95.65% 97.59% 67.29% 1900.00 2000.00 3000.00 4000.00 4308.00 6300.00 1469.34 2236.65 2547.86 4150.48 4808.24 2419.59 77.33% 111.83% 84.93% 103.76% 111.61% 38.41% 4100.00 4400.00 5400.00 8000.00 8808.00 10100.00 % Target

TOTAL
Achieve ment 3502.54 4265.07 5314.67 7976.67 9199.80 6120.36 85.43% 96.93% 98.41% 99.70% 104.45% 60.60% %

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

2200.00 2400.00 2400.00 4000.00 4500.00 5500.00

2033.20 2028.42 2766.81 3826.19 4391.56 3700.77

{Table No.4.3}

If we analyzed Khariff and Rabi loan issued position individually then in khariff loan achievement against the target is more then 90% over all the year except in 2003-04 which was only 84.52%. And in the year 2004-05 it was more then 100%. Again the Rabi loan issued position is very sound as compared to khariff loan and in the last 2 years it has maintained more then 100% achievement, but in the current year(2007-08) the achievement is as low as 60.60% only because of target fixed i.e. the target included shortfall in khariff-2007 target. In all together the total Khariff & rabi Loan issue position of the bank has maintained more then 90% So the bank is, maintained a very sound position and able to meet its target.

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Kalinga Kissan Gold Card:If we analyzed Kaling Kissn Gold Card issued position from last 5 year records (Page No.18, Table No.3.4) then we will found that the number of issue has going on increasing and it is a good sign for the bank as because Gold card is issued to those person who has satisfied some stipulated condition and one of which is defaulted free .So it indicates the no. of defaulter is going on decreasing. But becoming a gold card holder is not so important rather maintaining that position is more important. So if we calculate the card is in operation as against issue % then on the very next year from its implementation it achieved highest percent and later on also it able to maintained more then 90%. But in the last 2 years it goes down to below 90%. Overly the card in operation position is sound and up to exception.

Loan To SHG:Year Cumulative SHG Formed & Deposit Tapped No. 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(31.12.07) 4344 6346 6967 7666 8461 9007 Amount 124.85 3130.29 379.12 437.61 513.45 637.66
{Table No.4.4}

(Rs In Lakhs) Credit Linkage Including Revolving Credit No. 1747 2763 3923 4741 5237 5472 Amount. 189.92 360.46 532.71 667.90 780.71 835.16

If we analyze the loan to SHG position of the bank for last 5 years records from the above table then we will found that the credit linkage as against the SHG formed and deposit tapped is becoming sound i.e. in an increasing trend. So the loan issue position to SHG is up to a satisfaction level. Overly the loan financing position of the bank is sound and maintains a satisfaction level. For which it get the certificate of A class bank.

Loans Recovery Position Analysis:Bank Vrs. PACs:The recovery position of the loan at the bank level during last 5 years is as follows, Year 2002-03 Demand 8893.81 Collection 4013.60 - 31 % Of collection 45.13%

2003-04 2004-05 2005-06 2006-07 2007-08(31.12.07)

11106.30 12785.71 14272.01 17744.20 17621.81

6082.69 7308.94 8796.16 10749.98 4929.54


{Table No. 4.5}

54.77% 57.16% 61.65% 60.585 27.97%

If we analyze the recovery position of loan at the bank level from the above table then we will found that the it is not so sound. The collection against demand has maintained between 50%to 60% only. But if we see it positively then we will found that the collection % going on increasing year by year and try to maintained the recovery norms as fixed by NABARD. But in the year 2007-08 the recovery % is very low i.e. only 27.97% as because there is a balance of 3 months and during those months only collection is more as compare to previous months. So it may accept that the same level of recovery is maintained this year also.

PACs Vrs. Members:The recovery position of loan at members level during last 5 years and up to date is as follows, Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08(31.12.07) Demand 6063..77 7431.02 8058.47 9108.80 10960.70 12086.53 Collection 3209.15 4962.86 5365.10 7024.43 8106.55 3845.60
{Table NO. 4.6}

% Of Collection 55.92% 66.79% 66.58% 77.12% 73.96% 31.82%

If we analyze the recovery position at members level from last 5 years records then we will found that collection is 65% to 75% as against demand overall all the year except in 200203.And in the year 2007-08 the collection is very low as because there is a balance of three months and that 3 months is on-season for recovery. But here one more thing can be pointed out that is recovery percent is more at member level as compare to bank level only because of imbalance in recovery. How we can easily understand from the following example, Suppose bank finance a loan of Rs.50,000 to PACs and the same financed by PACs its members .But at the time of recovery only Rs.35000 has recovered. So collection is 70% at members level. But at the time of recovery at bank level the PACs send onlyRs.30,000 and balance Rs.5,000 utilized otherwise and recovery is only 60% at bank level.

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So because of this imbalance only the collection is more at member level as compare to bank Level which is misappropriation of money and now the bank is try to minimize this as per as possible. So this is all about financing and recovery position of the Koraput Central CoOperative Bank. And by analysis it can be concluded that even though the financing position of the bank is in a satisfactory level but further improvement is required. Again the recovery position of the bank is not up to the satisfaction level and much improvement is required to cope up with the competitive world i.e. with other commercial banks.

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-SUMMARY & SUGGESTIONSummary:Since 1950 the bank has gone through several ups and downs and at present its financial condition is sound. In order to make the bank more active and better, it is imperative to reduce the gap of imbalance since the situation is in alarming stage. Surplus staff at PACS level be identified and terminated. Cost of management of PACS need to be reduced by adopting austerity measures. Business of PACS is augmented to a substantial extent. Vigorous drive need be taken up for realization of audit recoveries and misappropriation amount. The disciplinary procedures have been dealt in a very causal manner. Shortfall in achievement of projected targets under important portfolio like collection has posted problems in the profitability and operational efficiency of the bank. Both coercive and persuasive action should be taken for realization of O.D. loans. Potentially non-viable PACS are adopted by Senior Officers of the bank. Sincere endeavor be put into achieve viability by diversification of business adopting remedial measures. Many-fold improvements in major portfolios like strengthening share capital base, augmented investment with adequate and qualitative securities, improving collection and own fund can held to achieve all time viability and profitable.

SUGGESTIONS:i. Retention of heavy cash balance on many occasions beyond CRR limit are noticed at the branch level beyond insured limit as a result of which the bank is sustained income loss. This also indicates imprudent fund management. So necessary steps should be taken t invest that cash in a profitable manner. ii. Since imbalance is major factor of loss of the bank due care is not being taken to arrest the imbalance. The rising trend of imbalance is an immediate loss to the bank, the in action of bank is unfortunate. iii. Despite Successive comments, the bank has not taken any step for realization of advances and other un-productive assets, which affect the financial health of the bank. iv. The bank has not furnished the details of loss assets in the audit report, which need be furnished before next audit.

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v.

Steps need be taken to ensure proper fund flow analysis for justicious deployment of funds. During this year 15.14 of the deployable capital is invested under non-income generating sources which affect the profitability of the bank.

vi.

Due care need be taken for realization of loan outstanding under non-farm or nonagricultural sector as this contributes a major portion of NPA and O.D. interest.

vii.

Payment of Bonus/Ex-gratia to employees need be paid as per provisions of Staff service rule with due consideration of provisions under Minimum Bonus Act and OCS Act.

viii.

Austerity measures need be taken to keep the revenue expenditures with in 50% of real income.

ix. x.

All out steps also are made to cover all the defaulted loaners under legal action. Management need to ensure inters branch inspection at regular interval to plug the loopholes in right time.

xi. xii.

Internal control system need be strengthened. Proper credit appraisal and documentation be ensured for making any finance.

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BIBLIOGRAPHY & ABBRIVATIONS

xxxvi

BIBILIOGRAPHY
I. Financial Accounting, 2005, By S.P JAIN & K.L NARANG. II. Management Accounting, 2003, By R.K SHARMA & SHASHI K. GUPTA. III. Financial Management, 2005, By R.P RASTOGI. IV. Research Methodology, 2002, C.R KOTHARI. V. Final Audit Report- 2007-08, KCCB, Ltd. VI. Scale of Finance, 2007-08, KCCB Ltd. VII. Compendium Of Master Circular,2007 ,OSCB VIII. Annual Report 2006-07, OSCB

XXXVII

ABBREVIATIONS
i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii. xiii. xiv. xv. KCCB:-Koraput Central Co-Operative Bank DCCB:-District Central Co-Operative Bank OSCB:-Orissa State Co-Operative Bank NABARD:-National Bank For Agricultural And Rural Development SCARDBs:- State Co-Operative Agricultural Rural Development Banks PCARDBs:- Primary Co-Operative Agricultural And Rural Development Banks LAMPS:- Large Sized Multipurpose Co-Operative Societies PACS:-Primary Agriculture Co-Operative Societies MPCS:-Multi Purpose Co-Operative Societies ST (SAO):-Short Term(Seasonal Agricultural Operation) NPA:-Non Performing Assets DAP/M.O.U:-Development Action Plans/Memorandum Of Understanding K.C.C:- Kissan Credit Card K.K.G.C:- Kalinga Kissan Gold Card S.H.G:- Self Helf Group

XXXVIII