CD RATIO AND PROFITABILITY OF ORUMANAYUR SERVICE CO-OPERATIVE BANK

1.1INTRODUCTION

A co-operative bank. as Its name Indicates is an institution Consisting of a numbers of

individuals coho Join together to pool their surplus, savings for the Purpose of eliminating
the profit’s of the banking or money tenders with a view to distributing the some amongst
the depositors and borrowers.

The co-operative Banks Act of 2007 Let Act ) defines a co-operative bank as a Co-operative
Begietende as a co-operative bank in tens of the Act whose Members.
Are of similar occupation or profession on cuto ase employed by a conman employers o
who as employeel within the Same business district.
Have comes membership in an association on organisatie, inleiding a business reins Sorel,
co-operative labor
in educational group.
Have Common Membership in an association organisation including a
Business,religions,social
Reside within the some defined community or geographical area.

Co-operative Banks in india as registered uncles the co-operative Societies Act. The
Co-operative bank s also regulated by the RBI. They are governed by the Banking
Regulations Act 1949 and Banking Laws Act 1965,

A co-operative bank Is a financial entity which belongs to Its members, who are at the
same time the owners and the customers of their bank. Co-operative banks are otto
located by Persons Belgian to the Same local ord Partessinal community is shring a
common interest.
Co-operative bank gents provide their members with wide sung of banking and transit
services.

The eased it Deposit. Ratio (CD salio) gives the first indiation et the health of a bank. A
very high Too Is considered celerming because, in adulation to Indicating Pressure on
resources • It may also hint at Capital adequacy Issues forcing, banks to raise, more
Capital adequacy issues.forcing banks to raise more capital.
It Is the fraction of loan assets generated by banks from the deposits received, Higher the
ratio, the higher the loan assets are created Proofs the creepiest, hence leading to mes
income generation options. For the Banks. Popular eD ratio, Is the ratio of hour much a
bunk lends out of the deposits It has mobilised.RBI does mot slipeilete a minimum on
maximum level for the suite, but a very low route Indicates banks doe not making full use
of their Resources.

1.2 STATEMENTS OF PROBLEM

The co-operative sector is one of the main pastness of Indian Barking system, the banks
raise have mo reach to the rural indie. though their huge network of credit Societies in the
institutional credit Structure.This study is an attempt to examines the asset and liability
management to cooperative bank.

1.3 SCOPE OF STUDY

The Study provides enough inputs for hushed research The Study was concurred to know
the credit deposits ratio and profitability of orumanayur co-operate bank to get a fair dea
how the bank managers Its lending Practices. The Study Conducted was successful in
knowing the credit deposits ratio and profitability of the bank.

1.4 OBJECTIVES OF THE STUDY

  To know the lending practices of cooperative banks in India.
 To examine profitability of the bank.
 To know the different types of ratios and profitability.
 To measure the financial efficiency of the bank
 To evaluate the efficiency in the management of loan assets.
 To provide consumer goods to members at reasonable rates.

1.5 RESEARCH DESIGN

Research design indicates the method and Procedure of Conducting research study.In
pursuance of obsessive Stated above , the Following research design is used for
conducting the study.

1.6 NATURE OF THE STUDY

The present study adopts both analytical and descriptive study is used with the support of
secondary data.The co-operative banking refers to a small financial institution started by a
group of individuals to address the capital needs of their specific community.

1.7 SOURCE OF DATA

The study is based on secondary data. In this study secondary data is collected from the
annual reports of Thanniyam corporative bank in the form of reports, articles from journals.

1.8 PERIOD OF STUDY

The present study has gathered secondary sources of information for a period of 10 years.

1.9 TOOLS FOR DATA ANALYSIS

Ratio analysis is used for analysing the financial statements.

1.10 LIMITATIONS OF STUDY

 This study is limited to the customers of orumanayur service co-operative bank.

 The study is based on secondary data so there is chance of errors and omissions.
 The Study was concerned on a single company and no inter firm comparison is been
made.
 Time and money were limited.

2.REVIEW OF LITERATURE

2.1 Thomas (1995) In his thesis titels:" Performance Effectiveness of Nationalised Banks: A
case study of “Syndicate Bank” analysed the performance of syndicate Bank for a period of
ten ears Troon 1984 to 1994 using
EMEE model: performance effectiveness was studied on various aspects like development
and expansion of banking industry, change in capital adequacy , asset quality, profitability
Productivity’s,socials banking and customer services.

2.2 Das (1997) In his study on measurement of

Productivity efficiency nd its Decomposition in Indian banking industry"'. examined the
competence of 65 commercial banks using cross section data for Year 1995 on analysing
the data it was found that Indian banks are technically competent and there are no
significant differences in efficiency measures of Public and Private banks apart from the
scele of efficiency.
2.3 Athma (1997) In his thesis “performance of public sector commercial banks-A case
study of state bank of Hyderabad”
Studied the performance of state bank of Hyderabad (SBH) from year 1980 to 1994.The
study was conducted based on the parameters like advances,deposits ratio,interest
spread,employee productivity,profit to working funds and customer services etc.

2.4 Sarkas P.s And Abhiman Das (1997) Conducted study on “Development of composite
index of banking efficiency The Indian case examined the interbank efficiencies of bank
related to profitability productivity and financial management for each performance
criteria principal component analysis was employed and developed efficiency index basing
on 15 indicators.

2.5 Sharma Roy (1999) Conducted a study on policy and performance concludes that NPA
management is the most critical area which needs urgent and serious attention on all
concerns.

2.6 Taori K.J (1999) Conducted a study on NPA management non conventional vehicles is
the quality of loan assets is key reasons for the sustainability of banking system the
outcome of the study discuss the efficiency of non conventional measure for management.

2.7 Bhaskaran And Josh (2000) Stated that the recovery performance of cooperative banks
continue to be unsatisfactory which contribute to the growth of MBA even after the
Introduction of potential regulation they suggested legislative and policy prescriptions to
make cooperative banks more efficient productive and profitable organisation on fund with
competitive commercial banking.

2.8 Subramanian (2001) India book titled operational efficiency of banks banking in India in
the new millennium Issues challenges and strategies revealed that bank of Baroda From
public sector banks and industrial from private sector banks showed highest operating
profit per bank employee.

2.9 Gomathiayagam v (2002) Financial sector reforms and emerging scenario in Indian
banking industry conducted that the first phase of reforms envisaged Hu involvement of
government and RBI banking in the new Millennium will experience huge wants from
clients who are accomplished and have the specialised information in doing bank
transaction y online an Internet usage rather than brick and mortar banking.

2.10 Mishra T.P (2003) In the study managing non performing assets a professional
approach pointed out that the Skyscraper in GNPA&NPAN At an expansion rate gave a
signed is hat progress in downturn is negatively affecting the credit standards.

2.11 Suryan And Veluraj (2005) India study titled profitability analysis of title Pondicherry
state cooperative bank the studied profitability performance of the bank from 1999 to 2003
the cost of management and establishment expenses got reduced during the period of
study which further strengthens and profitability position of the bank.

2.12 Hess Heiko Cihak Martin (2007) Works on the role of cooperative banks in financial
stability they found that cooperative banks are more stable than commercial banks due to
the lower volatility of the cooperative banks returns which more than effects their lower
profitability and capitalisation.

2.13 Dutta Uttam And Basak Amit (2008) Appraisal of financial performance of urban
cooperative banks a case study suggested that cooperative bank should improve their
recovery performance adopt new system of computerised monitoring of loans implement
proper Potential norms and organise regular workshops to sustain in the competitive
banking environment.
2.14 Chander R And chandel J.K (2010) Studied financial viability of an apex cooperative
credit institutions study of the earths a HARCO bank analyst the financial efficiency and
liability of the HARCO bank and found that poor performance of the bank on capital and
adequacy liquidity And the management efficiency parameter.

2.15 R.K Patel And C.M Desai (2012) Financial performance of urban cooperative bank they
stated that the UCBS sector witnessed substantial growth possibility encouraged by the
liberalised policy environment in past reform.

3. COMPANY PROFILE

E cooperative bank is a cooperative organisation engaged in the banking functions of

acceptance of deposits and lending credits the cooperative bank and society is perform an
important role in meeting the requirements of people in the rural areas cooperative banks
and district entities by themselves with separate Jurisdictions An independent board of
directors the cooperative banks are organised on a cooperative basis and one governed by
their members according to the cooperative laws they are under the control of respective
state government certain professions banking regulation act also applied to cooperative
banks in India are federal In their structure.

Aims Of Co-operative Banks

 To promote savings among members and the by increase the supply of funds
 2tap outside sources for the supply of funds
 To promote the effective use Andre Duce the risk in the granting of credit
 To reduce the cost of management through the honorary services.

Cooperative banks in India are registered under the cooperative societies act the
cooperative bank is also regulated by the RBI they are governed by the banking regulations
act 1949 and banking laws cooperative societies act 1965 credit cooperatives are the
oldest and most numerous of all the types of cooperatives in India the cooperative credit
institutions in the country may be broadly classified into urban credit cooperative and rural
credit Co operative Datar about 2090 Urban credit Co operatives and these societies
together constitute for about 10% of the aggregate banking business and therefore regards
as an important segment of the banking system the urban credit cooperatives are also
popularly Known as urban cooperative banks.The cooperative movement was started in
India 1904 With the object of providing finance to agriculture for productive purpose at low
rates of interest and Dubai relieving them from the clutches Hosanna landos a large
number of agricultural credit societies were set up in the village under the cooperative
societies act of 1904 The cooperative societies act of 1912 contributed to the
establishment of central cooperative bank and the State Bank to providers finance to
primary credit societies which could not mobilise funds by their own efforts it gave
stimulation to the cooperative credit movement in India.

Orumanayoor Co-Operative Bank In Orumanayoor,Thrissur

Ban SAB authorised financial institutions that grant lansen accept deposits for checking
and service accounts individual retirement accounts IRS certificates of deposits CDs
currency exchange and safe deposit boxes areCM of the other services that customers can
avail depending on your needs you can visit a retail and commercial or investment bank
the financial institutions also offer a number of online services so that you can make
transactions on the go.

Orumanayoor Cooperative bank Orumanayoor,Thrissur Is one of the leading names in the

financial sector offering some of the best banking service.

There Are 4 Types Of Co-Operative Banks In India

  Central cooperative banks:These banks are organised and operated at the district
level and can be of 2 types of cooperative banking union mixed control cooperative
banks in the first the members of the banks are the cooperative societies only the
second number can be cooperative societies well as individuals the central
cooperative banks lending money mainly to the affiliated primary societies which
typically launch2 landing between one to 3 years.
 State to cooperative banks:These banks are organised and operated at the district
level and rest a At the top of the hierarchy In the Cooperate credit structure with
the help of state cooperative banks (SCBS) The RBI funds the cooperative
institutions these banks also get loans at an interest rate of one percentage to 2
percentage lower than the Standard Bank rate.
 Primary cooperative banks:These offer credit services in the urban and semi urban
regions they are not considered agricultural credit societies primary cooperative
banks receive concessional refinance services from RBI And IDBI from time to time.
 Land development banks:The land development banks are divided into 3types
which are primary state and central this offer credit services to the farmers for
developmental purposes they used to be regulated by the RBI as well as the state
government this responsibility was recently transferred to the National Bank for
agriculture and rural development.( NABARD)If you are looking forward to knowing
the career opportunities in banking and finance and have been interested in doing
professional banking course.

Industry profile

Co operative banks in India came into existence with the enhancement of the agricultural
credit cooperative societies act in 1904 Co operative bank from an integral Part of banking
system in India under the act of 1904A number of cooperative credit societies was
chartered knowing to them increasing demand of cooperative credit in new act was
passed in 1912 which was provided for establishment of cooperative central banks by
union of primary credit societies and individuals.

Cooperative banks in India are registered under the cooperative societies act
cooperative banks is also regulated by the RBI they are governed by the banking
regulations act 1949 and banking laws cooperative societies act 1965.

The rural credit cooperative maybe further dividend into short term credit cooperatives and
long term credit cooperatives with regard to short term credit cooperatives of the gross-
root Level there are around 92,000 primary agricultural credit societies (PACS)Dealing
directly with the individual borrowers at the central level district level district centre Co
operative banks (DCCB) function aise link between primary societies and state cooperative
apex bank(SCB)It may the mention that DCCB And SCB are the fielaral Cooperatives thus
objective is to serve the member cooperative.

Types Of Co-Operatives

1) Producer Co -Operatives: These refers do groups of people engaged in the

agriculture areas forming fishing and forestry. The cooperative member
Maybe farmers land owners or owner of fishing operations. The rise long
term of possible ways these groups may corporate. They may buy farm
input equipment insurance line managers and sale people market and
advertise together or operate or processing facilities or distribution
network.
2) Consumer Co-Operatives: These business are on and governed by people
who to buy from the cooperative consumers can create a cooperate you to
provide pretty much anything they want to buy their products may include
groceries electricity or telephone services housing healthcare or venture
The label of credit unions financial service.
 3) Worker Co-Operatives: These businesses are owned by some or all the
workers developing on the startup capital needed they can after workers a
chance to own their own company with very little financial investment.
4) Housing Co-Operatives: It are formed by the house who are interested in
acquiring resident property they undertake activities relating to purchase of
land obtaining government approvals development of decides construction
of houses or flats n allotment of houses flat to its members.
5) Financial Co-Operatives: It provide financial and insurance services to their
members it unions are popular financial cooperatives on a common need for
financial services credit union range from small community owned books to
large entities across the world.
6) New Generation Co-Operatives: It is not a specific legal structure rather the
term new generation cooperative is used to describe how a firm operates it
primary describe the relationship between the firm and its members and
how the firm is financed.

4:THEORETICAL FRAMEWORKS

Co-Operative Bank

Co operative bank isn't institution established on the cooperative basis and dealing in
ordinary banking business like other banks the cooperative banks are financed by
collecting funds through shares rise deposit and grant loans.

Features Of Co-Operative Banking In India

 Customer Owned Entities: Co operative bank members are both customer and
owner of their bank
 Democratic member control: Co operative banks are owned and controlled by the
members who democratically Meet a board of directors members usually have
equal voting rights according to the cooperative principles of “one person one
vote”.
 Profit Allocation: A significant part of the yearly profit benefits surplus is usually
allocated to constitute resource and part of this profit can also be distributed to the
cooperative members with legal and statutory limitations.
 Financial Inclusion: They have played a significant role in the financial inclusion of
unbanked rural masses.

History of cooperative bank

The historical roots of the cooperative movement in the world days back to days of Misery
and disasters In Europe faced by common people who had little or no access to credit to
find their basic needs,In uncertain times The idea spread when the continent was faced
with economic turmoil which let large populations to leave at substances level without any
economic security people were forced to poverty and deprivation. It was the idea of
Herman Schulze (1808-83) and friedrich wilhelm raiffcisen (1818-88) Which took shape as
cooperative banks of today across the world cooperative banks had overcome the vital
market imperfections and survival the poor largest of society cooperative credit societies
were set up under this act the cooperative societies act 1912 recognise the need for
establishing new organisations for supervision auditing and supply of cooperative credit
these organisations were (a) Union Consisting of primary societies (B) the central banks
and (C)provincial banks.

Co operative banks acts

An act to consolidate aim and unity the laws relating to cooperative societies in the state
of Kerala.

1. These act may be called the Kerala cooperative societies act 1969
2. It includes to whole of the state of Kerala

Indian corporative banks was also born out of distress prevalent in Indian society.

• atha cooperative credit societies act , 1904 led to the formation of cooperative credit
societies in both rural and urban areas. The act was based on recommendation of sir
Frederick Nicholson (1899) and sir Edward law(1901) . Their ideas in turn were based
on the pattern Of Raiffcisen and suchulze respectively.

• The cooperative societies act of 1912. Further gave recognition to the formation of
non credit societies and the central cooperative organisations.

• in independent india with the on set of planning, the cooperative organisation gained
more leverage and roll with the continued government support.

Co- operative movements in kerala

corporative movement in kerala started event before the formation of Kerala state.
There were 3 administrative units in the erstwhile kerala . Vis , Travancore cochin and the
malabar in 1949, travancore and cochin merged into a single stage known as Travancore
cochin state.

Corporative movements in Kerala is one of the most Vibrant people driven

movements in the country .it has an ideological base and the economic Gold with social
perspective with strong democratic legal framework and have an own corporate policy.
The corporates in Kerala has influence and transfer most areas of economic and social life
in both rural and urban areas. About 16256 cooperative societies are functioning under
the Administrative control of registrar of cooperative societies of which 4148 societies are
credit societies.

Ratio Analysis

Ratio analysis is referred to as the study or analysis of the line items present in the
financial statement of the company. It can be used to check various factors of a
business such as profitability, liquidity ,solvency and efficiency of the company or the
business.

1. Balance sheet Ratio

Debt to equity ratio= total liability

Total equity
2. Revenue statement ratio

To calculate the ratio =cost of revenue

Total revenue

3.profitability ratio

Net profit ratio= revenue – cost

Revenue
4.mixed or composite ratio
 Hey composition ratio or combined ratio combat 2 variables from 2 different
accounts. One is taken from the profit and loss account and the other from the
balance sheet.

5. Liquidity ratio

Currency ratio= current asset

Current liabilities

6. Long term solvency leverage ratio

Solvency ratio = total asset

Total debt