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INTRODUCTION
Recall the face of the poorest and the weakest man whom you may have been and ask yourself in the step you contemplate is going to be of any use to him. Will he gain anything by it? Will he restore him a control over his own life and destiny? In other words will it lead to Swaraj for the hungry and spiritually starving millions.

---- Mahatma Gandhi


Agriculture and allied activities in rural areas, being less profitable and risky due to their dependence on mainly on nature and persons involved are poor with merge means, are unable to draw the required finance from capital market. Rural people seek the help of money Lenders. Out of many a few come forward to finance them because of the risk involved in financing the rural people. They demand high rate of interest and impose such conditions which are detrimental to the interests of the borrowers. Thus, the rural people are exposed to exploitation by the village money Lenders. To release the exploited people from the clutches of money Lenders, much emphasis was laid on institutional financing. Banks also did not come forward to finance the rural people due to the risk involved. In such circumstances, there is no other way for the rural people except to cooperate with each other to better their economic lot. Thus, the co-operate finance paved the way institutional financing. Though the overall progress made by the co-operative credit system has been considerable in the field of agriculture finance but it was soon realized that cooperatives alone would not be able to meet effectively the credit needs of developing agriculture, particularly after the commencement of Green Revolution in Indian agriculture.

In 1996, the rural credit review committee was appointed by the Reserve Bank of India (RBI) , under the chairmanship of Sri. B.Venkatappiah to asses the performance of co-operative credit system . The committee submitted its report in July, 1969. The committee thoroughly examined the working of co-operative credit system and found various deficiencies in the system. The most important observations of the committee was that the small and marginal farmers were still unable to get their share of credit from co-operatives. Inspire of vigorous and continuous efforts by the Government to strengthen the co-operatives credit system it could not come up to the expectations and bulk of credit requirements was still met from sources other than co-operatives. The national credit council pointed out that there large credit gaps in the rural economy and underlined the need of not only mobilizing financial resources in rural areas but also to adopt the multi agency approach to meet the growing credit needs of agriculture and rural sectors of the economy. In the view of limitations of co-operatives and growing credit needs of developing agriculture and rural sector, the need for other institutional agencies in meeting credit requirements of rural sector of countrys economy was thus felt. Government, There fore decided to adopt multi agency approach to agriculture finance and directed the commercial banks to finance agriculture sector. The nationalization of 14 major commercial banks in July, 1969 was an important landmark in this direction. Since 1969 commercial banks have been actively engaged in providing rural finance as matter of policy. These banks have been directed to use an increasing portion of in their resources for lending to agriculture and the rural productive undertakings in the country and a definite role has been assigned to commercial banks in expanding banking facilities in rural areas of the country.

SCOPE OF THE STUDY:


Banking system is the backbone of a countrys financial system. Co-operative banks play vital role in rural development. The strength of any organization depends up on the policies it develop for successfully managing its business. Working capital management in financial institutions is a critical task. As the very success of a banking company depends up on a effective management of various components of working capital like receivables management and cash management etc. The structure functioning and the objectives with which a co-operative bank operates different from other financial institutions. It is natural that one may be interested in undertaking a study on receivables management which forms the important element of working capital management.

SIGNIFICANCE OF FINANCIAL MANAGEMENT:


Financial management occupies a significant place because it has an impact on all the activities of a firm. Its primary responsibility is to discharge the finance function successfully. No one can think of any business activity in isolation from its financial implications. The management may accept or reject a business proposition on the basis of financial variability. In other words, the live executives who are directly involved in the decision-making process should give supreme importance for financial consideration.

OBJECTIVES OF THE STUDY:


1.

To examine and review the present structure and performance of the

co- operative banks as a whole. 2.


3.

To analyze the existing problems of the co-operative credit banks in India. To evaluate the performance of West Godavari District Co-operative

Central Banks in relation to its objectives and actual achievements. 4. To comment on the short term, medium term and long term financing

Methods of the bank. 5. To analyze critically the recovery operations of the bank in the realm of

Credit.
6. To determine the efficiency and effectiveness of the management in each

segment of the Recovery Strategies

7.
8.

To evolve suitable suggestions for improving the performance of the bank.


To study the ability of short term financial obligations in DCCB ltd

METHODOLOGY OF THE STUDY


Methodology is a systematic procedure of collecting information in order to analyze and verify a phenomenon. The collection information is done two principal sources. There are as follows

1. 2.

Primary Data Secondary Data Chart No:1

Primary Data:
Personal interviews with the General Manager, Deputy General Manager, both administration and banking made a great help for the study of lending and recovery plan.

Secondary Data:
The Bye laws, administrations reports, journals, audit reports, registers, and other various records of the bank, the circulars or R.B.I., NABARD are the major sources consulted for judging the performance of the bank in the realm of lending and recovery.

LIMITATIONS OF THE STUDY


The Limitations that came across during the course of this work are listed below:

Comparison of co-operative central bank performance with any other Public or Private Banks Or not possible because the objectives of one kind of bank and other kind of bank and that of public sectors under takings is different from objectives of private sectors. Scope of the study is limited, since only one region was covered out of The other regions in the state. Time limitation of only two months for the study did not permit a Comprehensive study. The executives could not spend muck time due to their routine work lode. 1. The entire study is based on only financial data i.e. provided by the Company financial statements.

2.

These calculations may not be future indicators.

3.

The source of data is based on annual reports only.

INDUSTRY PROFILE

INTRODUCTION:

A bank is a financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money. It is an institution for receiving, keeping, and lending money. The first modern bank was founded in Italy in Genoa in 1406, [its name was Banco di San Giorgio (Bank of St. George). Many other financial activities were added over time. For example banks are important players in financial markets and offer financial services such as investment funds. In some countries such as Germany, banks are the primary owners of industrial corporations while in other countries such as the United States banks are prohibited from owning non-financial companies. In Japan, banks are usually the nexus of cross share holding entity known as zaibatsu. In France "Bancassurance" is highly present, as most banks offer insurance services (and now real estate services) to their clients.

History
Banks have influenced economies and politics for centuries. Historically, the primary purpose of a bank was to provide loans to trading companies. Banks provided funds to allow businesses to purchase inventory, and collected those funds back with interest when the goods were sold. For centuries, the banking industry only dealt with businesses, not consumers. Banking services have expanded to include services directed at individuals, and risks in these much smaller transactions are pooled.

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Definition: The definition of a bank varies from country to


country.
Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as:

conducting current accounts for his customers paying cheques drawn on him, and Collecting cheques for his customers.

In most English common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negotiable instruments, including cheques, and this Act contains a statutory definition of the term.

Origin of the word


The name bank derives from the Italian word banco "desk/bench", used during the Renaissance by Florentines bankers, who used to make their transactions above a desk covered by a green tablecloth. However, there are traces of banking activity even in ancient times. In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders would set up their stalls in the middle of enclosed courtyards called macella on a long bench called a bancu, from which the words banco and bank are derived. As a moneychanger, the merchant at the bancu did not so much invest money as merely convert the foreign currency into the only legal tender in Romethat of the Imperial Mint.

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Traditional banking activities


Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers' current accounts. Banks also enable customer payments via other payment methods such as telegraphic transfer, EFTPOS, and ATM. Banks borrow money by accepting funds deposited on current account, accepting term deposits and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances to customers on current account, by making installment loans, and by investing in marketable debt securities and other forms of money lending.

Banker:
Banker includes a body of persons, whether incorporated or not, who carry on the business of banking' (Section 2, Interpretation). Although this definition seems circular, it is actually functional, because it ensures that the legal basis for bank transactions such as cheques do not depend on how the bank is organized or regulated. "banking business" means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation).

"banking business" means the business of either or both of the following:

1. receiving from the general public money on current, deposit, savings or other similar account repayable on demand or within less than [3 months] ... or with a period of call or notice of less than that period;

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2. Paying or collecting cheques drawn by or paid in by customers. Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, direct debit and internet banking, the cheque has lost its primacy in most banking systems as a payment instrument. This has lead legal theorists to suggest that the cheque based definition should be broadened to include financial institutions that conduct current accounts for customers and enable customers to pay and be paid by third parties, even if they do not pay and collect cheques.

Wider commercial role


However the commercial role of banks is wider than banking, and includes:

issue of banknotes (promissory notes issued by a banker and payable to bearer on demand) processing of payments by way of telegraphic transfer, EFTPOS, internet banking or other means issuing bank drafts and bank cheques accepting money on term deposit lending money by way of overdraft, installment loan or otherwise providing documentary and standby letters of credit (trade finance), guarantees, performance bonds, securities underwriting commitments and other forms of off balance sheet exposures

safekeeping of documents and other items in safe deposit boxes currency exchange sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products as a 'financial supermarket'

Banking channels
Banks offer many different channels to access their banking and other services:

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A branch, banking centre or financial centre is a retail location where

a bank or financial institution offers a wide array of face-to-face service to its customers. ATM is a computerised telecommunications device that provides a financial institution's customers a method of financial transactions in a public space without the need for a human clerk or bank teller. Most banks now have more ATMs than branches, and ATMs are providing a wider range of services to a wider range of users. For example in Hong Kong, most ATMs enable anyone to deposit cash to any customer of the bank's account by feeding in the notes and entering the account number to be credited. Also, most ATMs enable card holders from other banks to get their account balance and withdraw cash, even if the card is issued by a foreign bank. Mail is part of the postal system which itself is a system wherein written documents typically enclosed in envelopes, and also small packages containing other matter, are delivered to destinations around the world. This can be used to deposit cheques and to send orders to the bank to pay money to third parties. Banks also normally use mail to deliver periodic account statements to customers. Telephone banking is a service provided by a financial institution which allows its customers to perform transactions over the telephone. This normally includes bill payments for bills from major billers (e.g. for electricity). Online banking is a term used for performing transactions, payments etc. over the Internet through a bank, credit union or building society's secure website.

Types of Banks
Banks' activities can be divided into retail banking, dealing directly with individuals and small businesses; business banking, providing services to mid-

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market business; corporate banking, directed at large business entities; private banking, providing wealth management services to high net worth individuals and families; and investment banking, relating to activities on the financial markets. Most banks are profit-making, private enterprises. However, some are owned by government, or are non-profits. Central banks are normally government owned banks, often charged with quasi-regulatory responsibilities, e.g. supervising commercial banks, or controlling the cash interest rate. They generally provide liquidity to the banking system and act as the lender of last resort in event of a crisis.

Types of investment banks

Investment banks underwrite (guarantee the sale of) stock and bond issues, trade for their own accounts, make markets, and advise corporations on capital markets activities such as mergers and acquisitions.

Merchant banks were traditionally banks which engaged in trade finance. The modern definition, however, refers to banks which provide capital to firms in the form of shares rather than loans. Unlike venture capital firms, they tend not to invest in new companies.

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Both combined
Universal banks, more commonly known as financial services companies, engage in several of these activities. For example, First Bank (a very large bank) is involved in commercial and retail lending, and its subsidiaries in tax-havens offer offshore banking services to customers in other countries. Other large financial institutions are similarly diversified and engage in multiple activities.

In Europe and Asia, big banks are very diversified groups that, among other services, also distribute insurance, hence the term bancassurance is the term used to describe the sale of insurance products in a bank. The word is a combination of "banque or bank" and "assurance" signifying that both banking and insurance are provided by the same corporate entity.

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Banks in the Economy


Worldwide assets of the largest 1,000 banks grew 16.3% in 2006/2007 to reach a record $74.2 trillion. This follows a 5.4% increase in the previous year. EU banks held the largest share, 53%, up from 43% a decade earlier. The growth in Europes share was mostly at the expense of Japanese banks whose share more than halved during this period from 21% to 10%. The share of US banks remained relatively stable at around 14%. Most of the remainder was from other Asian and European countries. . The US had by far the most banks (7,540 at end-2005) and branches (75,000) in the world. The large number of banks in the US is an indicator of its geography and regulatory structure, resulting in a large number of small to medium sized institutions in its banking system. Japan had 129 banks and 12,000 branches. In 2004, Germany, France, and Italy had more than 30,000 branches eachmore than double the 15,000 branches in the UK.

Bank Crisis
Banks are susceptible to many forms of risk which have triggered occasional systemic crises. Risks include liquidity risk (the risk that many depositors will request withdrawals beyond available funds), credit risk (the risk that those who owe money to the bank will not repay), and interest rate risk (the risk that the bank will become unprofitable if rising interest rates force it to pay relatively more on its deposits than it receives on its loans), among others. Banking crises have developed many times throughout history when one or more risks materialize for a banking sector as a whole. Prominent examples include the U.S. Savings and Loan crisis in 1980s and early 1990s the Japanese banking crisis during the 1990s, the bank run that occurred during the Great Depression, and the recent liquidation by the central Bank of Nigeria, where about 25 banks were liquidated.[

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Numerous banks have suffered as a result of the Subprime mortgage crisis, which has occurred on a global scale, affecting investment banks such as Lehman Brothers in the USA and retail banks such as Northern Rock in the UK. In January 2009, several major UK banks such as Lloyds TSB and Barclays Bank, suffered severe falls in their London stock exchange share prices as a result of a drop in investor confidence of the true asset values of those banks.

Banking in India
Originated in the last decades of the 18th century. The oldest bank in existence in India is the State Bank of India, a government-owned bank that

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traces its origins back to June 1806 and that is the largest commercial bank in the country. Central banking is the responsibility of the Reserve Bank of India, which in 1935 formally took over these responsibilities from the then Imperial Bank of India, relegating it to commercial banking functions. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers. In 1969 the government nationalized the 14 largest commercial banks; the government nationalized the six next largest in 1980. Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is with the Government of India holding a stake), 29 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively.

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Chart No:2
SOURCE: www.wikipedia.com

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PROFILE OF THE DISTRICT CO-OPERATIVE CENTRAL BANK Ltd, Eluru


The District Cooperative Central Bank Ltd., Eluru was registered on 1811-1918 and commenced its business from 30-11-1918. Single window credit delivery system was introduced in 1987 and 8 PADBs were merged with the DCCB. With 33 branches in the district, 258 PACS are affiliated to the bank with an average of 3 villages per PACS (state average is 12). About 4.68 lakhs people in the district are availing the services of bank and PACS (12.3% of the district population). There are 670 Coop. societies affiliated to the bank.

Mission
To cater to the Agricultural and non-agricultural credit needs of the farmers of the district for sustainable development of rural economy and also to render banking services to the rural as well as urban community. The steady growth in deposits is observed guaranteed by the Deposit Insurance and Credit Guarantee Corporation, which are being utilised within the district only for Agricultural and Rural development. The investments held by the bank rose stand at Rs.126.64 crores by 2006 07. For the current year, the bank advanced an amount of Rs. 21020.00 lakhs, out of which Rs.1055.00 lakhs for new members towards Seasonal Agricultural Operations i.e. Crop loans. The bank also finances to minor irrigation, farm mechanization, horticulture, diversified loaning and social forestry under long term loans category.

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The cash credits of 22 eligible weavers societies to a tune of Rs. 168.51 lakhs for the year 2007-08 has been renewed under revival package and it waived an over due of Rs. 68 lakhs from its own funds. During the year 2006-07, the bank financed the employees societies to a tune of Rs. 631.78 lakhs, keeping the outstanding at the end of the year as Rs. Rs. 919.39 lakhs for the 159 coop societies affiliated to the bank. Various type of loans are advanced under Non Farm Sector for economic growth of the community for small, tiny industries, transport vehicles, paddy harvesters, rice mills etc., business cash credits, Vidya Nidhi (education loan scheme), loans for two / four wheelers, loans for rural housing, house mortgage loans and Grameena Tatkal Loans. Integrated Co-operative Development Project is being implemented with Rs. 27.21 crores for the construction of godowns, banking counters, furniture and fixtures and margin money in form of share capital.

Special features of DCCB, Eluru:


The only DCCB notified by the Government of Andhra Pradesh for acceptance of Government deposits. Gold loan of Rs.2.00 lakhs maximum is being allowed to each individual. Earning profits since 1918 (inception year) and declaring dividends from inception. Computerisation of all 33 branches with friendly user financial accounting package. The Bank financed Rs. 875.37 lakhs to 1634 SHGs and Rs.236.71 lakhs to 367 RMGs.

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A Class Audit classification since 1975 (28 years continuously) Ranked No.1 in recovery almost every year. A magnificent 96.40 percent is recorded 2006 07. NABARD Best Performance award winner for three consecutive years 1999-2000, 2000-01 and 2003-04. First bank in the state to announce 0.50% additional interest on the deposits of women. To finance individuals, firms companies; etc for purposes approved by higher financing agencies and (or) and government form time to time either individually or jointly with other financing institutions. To raise funds by way of deposits, loans , cash credits , overdraft and advances from Apex bank , government and other financing agencies.

To open regional offices, branches or sub-offices with the prior permission of the registrar both for banking purposes and issue and recovery of short-term, middle term and long-term loans.

To guarantee the loans and advances to be made to the member societies by any other agency. To advice, develop, assist and co-ordinate and supervise and inspect the functioning of the primary agricultural credit societies and also to assist and supervise the functioning of other affiliated and indebted societies. To buy, sell or deal with securities, debentures or bonds or scripts or other forms of securities on its behalf or on behalf of members or other cooperative institutions. To act as an agent of Government or Apex bank or any institution on financing loans for agricultural and rural development and allied activities and to accept and administer any fund for such purposes. All such other things and acts as are necessary conducive and incidental to the attainment of the foregoing objects and generally to promote the cause of cooperation in the District.

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FINANCIAL ASPECTS:
Share capital: Share Capital shall be rupees forty five hundred(4,500/-) made up of forty-five lakes of A class share of rupees one hundred each. The value of each share shall be paid in one lump sum on admission. The shares area allotted to the co-operative societies and Sate Government. Every member except the Government shall pay an entrance fee of rupees two (2/-) per share subject to maximum of rupees five hundred (500/-) for all shares allotted. Transitory Provision for existing associate member or nominal members.

FUNDS:
The bank will ordinarily obtain funds form share capital, deposits, other borrowings form various sources, entrance fee and miscellaneous receipts, grants from Government and other agencies. The bank many accept deposits from members or other as per the interest rate directivities of the Reserve Bank of India or the National Bank for Agricultural and Rural Development form time to time.

Borrowings:
The bank may form time to time borrow money for the use of the bank from (APSCB) or form government. However, it is open to bank to raise funds form other sources including the commercial banks with the approval of the Registrar or Government. The maximum borrowing limit of bank shall be twenty five times the aggregate of paid up share capital and reserve fund or such other enhanced limit as may be permitted by the registrar.

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MANAGEMENT:
The management of bank shall vest in a aboard consisting of much number of members and with such composition of members as prescribed in APCS Act and rules. The registrar on behalf of the state government may nominate persons as directors on the board of management soon after the declaration of results to the boards is over as per the provisions of the Act. The term of the office of the committee shall be five years form the date of election of the members of the committee. All the members of the Board and president other than those nominated by Registrar shall be elected at one and same time.

EMPLOYEES:
Totally, there are four hundred and twenty one employees consisting both make and females. These four hundred and twenty one employees are working in thirty-three branches of the District cooperative central bank, West Godavari region.

CLASSIFICATION OF TOTAL EMPLOYEES: (CADER WISE)


There is only one general manager for every region and two deputy general managers. Three Assistant General Managers and twenty one Managers and forty six Assistant Manager are also working under this region.

There is two hundred and six teen staff Assistant working in thirty three branches of the region. Six Drivers and one hundred and twenty six Messengers are also working under the District cooperative central bank. Totally, the number of employees is four hundred and twenty one.

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General Manager Deputy General Manager Assistant General Manager Managers Assistant Managers Staff Assistants Drivers Messengers

1 2 3 21 46 216 6 126 421

The bank in Eluru in the main office for District cooperative Central Bank, West Godavari Region. There are thirty three branches under this main office and the total four hundred and twenty one employees are working in main office and branches by dividing. As the bank in Eluru is the head office, the salaries for all four hundred and twenty one employees will be distributed at the head office only and if employees.

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Table: 3.01 The 665 societies affiliated to the Bank are noted as under----Types of the society PACS(includes 53 LSCS & FSCS ) Weavers societies Employees Co-operative credit societies Co-operative urban banks Co-operative consumers stores Marketing society Others Government Total Number 267 31 170 7 26 1 162 1 665

S No 1 2 3 4 5 6 7 8

OBJECTIVES OF THE BANK:


i. Primary to finance PACS registered or deemed to have been registered under the A.P. Co-operative Societies Act 7 of 1964
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ii. iii.

Secondly to finance all other co-operative societies in the district To service members of erstwhile Pads including disbursement of second and subsequent installments of loans directly to such members and recovery of such loans of members till they are cleared and arrange for issue of fresh LT loans through PACS.

iv.

To finance individuals, firms, companies, corporations etc., by admitting them as B class members for purposes approved by higher financing agencies form time to time either individually or jointly with other financing institutions.

v. vi.

To raise funds by way of deposits, loans, cash credits, overdraft and advances form Apex Bank, Government and other fiancing agencies To open regional offices, branches or sub-offices with the prior permission of Registrar both for banking purposes and issue and recovery of ST, MT, & LT loans.

vii.
viii.

To guarantee the loans and advances to be made to member societies by any other Agency. To advice, develop assist and co-ordinate and supervise and inspect the functioning of PACS. To buy, sell or deal with securities, debentures or bonus or operative institutions. Scripps or other

ix.

forms of securities on its behalf or on behalf or members or other cox. xi. To maintain a library of co-operative and banking literature. To act as an agent of government or Ape Bank or any institution and to accept and administer and fund for such purposes. xii. All such other things and acts as are necessary conducive and incidental to the attainment of foregoing objects and generally to promote the cause of cooperation in the district. xiii. To carry on the gene all business of banking not repugnant to the provision of A.P. co-operative societies act of 1964 and the rules farmed there under or on financing loans for Agriculture and Rural development and allied activities

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the banking regulations act 1949 as applicable to co-operative societies and the rules made there under.

BEST PERFORMANCE AWARDS


Under the able and dynamic administration of the General Manager Sri. V.Giridhar and the chairman, the bank could able to get best performance award both for the year 1999-2000 & for the year 2004-2005 also with a trophy, award, cash of Rs. 1.50 lakhs. Everybody felt happy for that, and several members congratulated the bank members.

ORGANIZATION CHART OF DCCB

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Chart No:3
CHAIRMAN CHIEF EXECUTIVE OFFICER DGM (B) AGM (B) DGM (B) AGM (B) DGM (ADMN & LT) AGM (ADMN) AGM (LT)

MANAGER

MANAGE R

MANAGER

MAINTAN COM CE & ACCOUN BANKI PERSONAL & P PREMISS TS NG ESTT

ASST. MANAGE R

ASST. MANAGER

ASSISTANT MANAGER SA SA SA SA

A.M SA SA SA

LOANS AND ADVANCES:


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The Bank is providing all types of credit needs of farmers in the form of SAO, MT & LT loans.
1. SEASONAL AGRICULTURAL OPERATIONS LOANING:

SAO loans are the loans given to the members up to 9 months for the maintenance of crops. The SAO loans given by the bank for khariff and Rabi for 2007 up to 28,505.55. The Khariff crop loans were given up to 40,911.75 Lakhs.

2. MIDDLE TERM LOANING : The Bank is financing MT loans to small and marginal framers and weaver section in order to improve their economic status. The various purpose covered are diary securing machines, Trade cycles, wet grinders, purchases of mopeds, basket marketing and lace marketing etc., The out standing as on date is Rs. 3.02 lakhs. MT loans are borne form the own funds of the Bank.

3. LONG TERM LOANING : The bank is financing to minor irrigation farm mechanization, Horticulture, diversified loaning and social forestry purposes. Year wise long term loans for the year 2006-07 Rs. 1628.01 lakhs and for 2007-08 Rs. 1957.85 lakhs.

4. FINANCE OF PRIMARY WEAVER SOCIETIES:

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The bank is financing 31 weavers societies during the year the NABARD has restricted the limit to Rs. 51.40 lakhs to 17 weavers societies. The bank has extended the financial support to all the societies irrespective of NABARD sanction meeting from its own funds. The outstanding as on 31/08/07 is Rs. 226.34 lakhs.

OTHER TYPES OF LOANS:

1. GOLD LOANS :
Keeping in view of better customer services the bank has extended the individual gold loan to a tune of Rs. 1.00 lakhs to each borrower under jewel loans outstanding, as on 31.08.07 was Rs. 566 lakhs.

2. NON FARM SECTOR LOANS :


The bank is advancing non-farm sector loans to small, tiny industries, transport vehicles, paddy harvesters, rice mills etc., The loans outstanding as on date is Rs. 83.74 lakhs. The bank is also advance two wheeler and motor car loans the outstanding as on date is Rs. 3.72 lakhs. Recently a new scheme for extending financial assistance to students for higher studies is introduced with 1.00 lakhs for studies with in the country and Rs. 3.00 lakhs for education at abroad.

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3. HOUSE MORTGAGE LOANS :


The bank has diversified its lending and started issuing loans under this scheme. The loans outstanding is 759.40 lakhs the scheme very encouraging to both the bank and borrowers.

4. CMEY :
Special attention has been paid to the chief ministers empowerment of youth programme. Total achievement is sanctioned hereunder. For the year 2002-2003 bank has sanctioned 802 units with a loan of Rs. 73.84 lakhs and a subsidy margin with Rs. 531.63 lakhs. For the year 2003-2004 number of units allotted by SETWEI was 897 of which 693 units were sanctioned and disbursed by bank with a loan of Rs. 57.73 lakhs and with a subsidy margin of Rs. 405.88 lakhs.

5. COMMERCIAL AGRICULTURAL & TOBACCO TIE-UP

LOANS:
To help the farming community in the district, the bank is facilitating higher finance loans for FCU tobacco and sugarcane crops under tie up arrangement from out of banks own funds. The bank has extended the crop loans individual limit up to one lakh rupees under commercial agricultural cash credit purposes for all major crops irrigated in the district. The bank has issued higher financing loans to an amount of Rest. 2218.1 lakhs as at the end of august 2007.

OTHER SERVICES:
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1. CROP LOANS :
The bank is continuously extending the crop insurance facility to the loans for paddy, groundnut, sugarcane and banana ceiling of Rs. 10,000/- to each individual 1,30,000 member borrower from affiliated PACS are being benefited under the scheme ( paddy). Table: 3.02

YEAR 2004 khariff Rabi 2005 khariff

No.Of Farmers 8953 392 21009

Area in Hectors 10344.18 572 28419 39,335.18

Sum invested

Compensation Received 2,40,75,660.39 6,27,813.30 12,64,99,806.73 37,35,280.42

9,41,23,035 54,19,400 24,72,90,953 34,68,33,388

Total

30,354

2.JANATHA PERSONAL ACCIDENTAL INSURANCE SCHEME


The bank has introduced the said scheme with effect from 1/6/98 to cover the accidental risk benefit of borrowers of PACS for an amount of Rs. 1,00,000 duly tie up with oriental & United India Insurance companies @ 21% premium per individual. The claims settled in year 2005-06 are 62 for Rs. 6200,000. The claims in the year 2006-2007 are 20 for Rs. 20,00,000.

INTEREST RATE STRUCTURE:


All the interest rates have been revised by the bank because of the lessening of the loans taken by members. Table: 3.03

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Particulars Business Agriculture loans Fishes/Poultries loans Concurring loans Middle term loans Business cash loans to societies Middle term loans to employ associations 1) Loans to fish business (direct loans) Non form, house construction and house mortgage Upto Rs.25,000 From Rs.25,000 to Rs.2 lakhs Rs.2,00,000 above House repairs Rs.60,000 2) Individual business cash credit 3) For four wheelers vehicles 4) Loans on mortgage of gold 5) Educational loans 6) S.B.S.Y.S.C.S.T action plan Up to Rs.25,000 From Rs.25,000 to Rs.2 lakhs Above Rs.2 lakhs 7) S.H.G 8) R.M.G

Societies(%) 11 13 12 13 13 ......

Societies to members(%) 13.00 15.00 14.00 15.00 ........ 14.00

..... ..... ..... ..... ....... ..... ..... ....

11.50 13.00 13.50 13.00 15.00 13.00 10.50 10.00

.....

7.75 12.50

..... ..... .....

13.50 10.00 11.00

Table: 3.04 SOURCES OF DEPOSITS


S.NO 1 PARTICULARS Current deposits : a. individuals b. societies c. others savings deposits : a. individuals b. societies c. others Fixed deposits :
36

(in lakhs)
31.3.2007 2.69 3,052.91 289.74 2246.18 341.39 320.60 31.3.2008 10.92 3,038.03 500.98 2107.29 666.47 441.53

4 5 6 7 8 9 10 11 12 13 14 15

a. individuals b. societies c. others Call deposits Employees security deposits Societies reserve fund Societiesagricultur stabilization fund Societies savings deposits societies special bad debts reserve Societies bad debts reserve Weavers savings deposits Societies employees provident fund R.D ( individuals ) MFD a. I ( individuals ) b. S (Societies) Total

11,472.95 6,859.47 415.08 ...... 2.39 1505.94 0.50 217.35 90.42 10.10 0.15 33.79 168.22 27.98 8.17 27,016.00

11,781.45 7,008.40 395.39 95.00 2.27 1832.34 0.50 236.20 103.86 22.02 0.16 31.7 146.28 34.24 8.06 28,463.18

MOBILISATION OF DEPOSITS: The Deposits of the Bank are in good progress year to year. The deposits of bank have been guaranteed by deposit insurance & credit Guarantee Corporation & all deposits are secured. All the deposits are being utilized with in the district mainly towards Agriculture and Rural development. The bank conducts deposits mobilization campaign every year in order to improve banks internal resources.

PROFIT DISTRIBUTION AS PER BYLAW & ACT Table: 3.04

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PARTICULARS Reserve fund (25%) Agri culture stabilization Fund Doubtful /Bad debts Dividend (in net profit 35.22%) Dividend equalization fund (0.52%) Combined benefit fund (1.50%) Development fund (4.00%) Bonus (3.62%) Building fund (5.00%) Total

AMOUNT 1,70,94,673.15 1,02,56,803.89 68,37,869.00 2,40,85,000.00 3,92,720.00 10,25,680.00 25,95,011.58 26,72,000.00 34,18,935.00 6,83,78,692.62

RESERVES OF THE BANK :


The reserves will help the bank in necessary conditions. The bank has kept Rs. 10,90,41,254.63 in the form of reserve fund in the bank. Rs. 3,00,61,195.97 were kept as the bad debts reserve. The ACS funds of the bank was Rs. 7,53,73,521.67. for correcting the imbalances that occurs in the account Rs. 15,99,763.27 was kept under Dividend Equalization fund. Building fund was Rs. 2,22,71,417.88. Education fund for he education of the students and others was kept as 30,000.00 common good fund helps for the charities and old age homes and others was Rs. 21,67,887.15. Development fund was Rs.3,26,34,168.15. special bad debts reserves were

38

kept for the purpose of removing the imbalances and it ranges to Rs. 39,41,123.32.

MAINTENANCE OF SURPLUS CRR/SLR : CRR : The cash reserve ratio is the ration of the amount that has to be maintained in the bank for future purposes. The bank has maintained surplus balances than the optimum level. Table:3.06
At 6% optimum DATE Amount to maintain 539.52 Level 1079.04 Actually maintained 1282.07 Surplus 203.03

27/04/2007

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25/05/2007 29/06/2007 31/08/2007

546.12 569.33 643.7

1092.24 1138.66 1287.4

1474.65 2282.06 14060.39

382.41 1143.4 172.99

SLR:

Table:3.07
At 35% optimum DATE Amount to maintain 5053.5 5097.169 5313.76 5091.65 Level 6294.38 6371.46 6642.21 7377.06 Actually maintained 10440.2 10616 11350.63 11559.51 Surplus 4145.82 4244.94 4708.42 4182.45

27/04/2007 25/05/2007 29/06/2007 27/07/2007

SHARE CAPITAL:
Authorized share capital : 45,000/-

Share A class of Rs. 100/-each & 50, 00,000/Share B class of Rs.10/-each. PAID UP CAPTIAL: a. A class societies b. B class government c. B class individuals d. B class individuals 30, 87, 61,673.00 1, 02, 00,000.00 4, 66,138.00 43, 82,794.15 32,38,10,605.15

SHARE CAPITAL:

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a. The share capital of the bank shall be Rs.45.00 crore made up of forty five lakhs of A class share of Rs. 100/- each, Rs. 5.00 crores made up of 50 lakhs B class share of Rs. 10/- each. b. The value of each share shall be paid in one limp sum on admission. A share is allotted only to the co-operative societies and state Government. c. B class shares shall be allotted only to nominal members. d. Every member except the government shall pay on entrance fee of Rs. 2/- per share subject to members of erstwhile PADBs on their merger with the CCB. The CCB shall on application of the members shall transfer one share to the PACS having jurisdiction where the immovable properties of the erstwhile members of PADB are situated, by adjustment in case such member is not already a member of the PACS.

SHARE CERTIFICATE:
a. A share certificate duly signed by the president and general manager of the bank and with the seal of the bank shall be issued to every a class members for the share taken after the full value of such shares have been subscribed.

b.

If share certificate is either lost or destroyed a duplicate certificate may be issued after obtaining an indemnity bond in this behalf. If any certificate is worm out or damaged , certificate in lieu there of on surrendering the certificate so worn out or damaged. For every duplicated certificate issued under this byelaw, a free of Rs.5/- shall be collected.

TRANSFER & WITHDRAWL OF SHARE:

41

a. b.

No society shall be permitted to transfer any share held by it unless the transfer is a member and transfer is approved by the board. No A class member shall an time be permitted to withdraw any share or shares held by him, provided that with the sanction of the register any society may withdraw at any time the whole of its shares for the purpose of obtaining finance form another bank or when its affairs held by the state . government shall, however, be one such terms and conditions as may be laid down by the government form time to time shall be binding on the bank.

BEST PRACTICES ADOPTED BY THE BANK:


1. SINGLE WINDOW CREDIT DELIVERY SYSTEM: With intention to provide all types of credit needs and services to the former members of co-operatives at one single point, single window credit delivery system was introduced by merging 8 PADBs with the PACS thus forming 266 PACS which provide both ST7LT credit needs of members ever since, formation of single window the progress of co-operatives in lending other activities has increased manifold.

2. KISAN CREDIT CARDS CUM PASS BOOKS : The co-operative kisan credit card cum pass book system was implemented in the district through all the affiliated PACS with effect form 01.04.99. So far 2, 56,354 credit card cum pass books were issued.
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3. CO-OPERATIVE DEVELOPMENT FUND: The bank is encouraging the affiliated PACS to utilize the co-operative development fund assistance as formulated by NABARD in order to provide infrastructure facilities like cash counter iron safe etc., with an unit cost of Rs. 80,000/-. 19 PACS were so far extended financial assistance to a true of Rs. 15.20 lakhs under CDF.

4. MODEL PACS : APCOB + DCCB development fund is being at the rate of Rs. 50,000/to each PACS for infrastructure development like cash counted safe furniture the ratio of contribution by APCOB is 70% , DCCB is 20% & PACS is 10%. During the year 2006-2007, 24 PACS are selected under the scheme. The process of purchase submission of bills etc is going on.
5. COMPUTERISATION OF DCCBs :

The bank has implemented the back office DCCB computerization at HO & 6 branches. The software under the bank office computerization coves the loan modules including LT loans, ST loans CKCC & other lending areas of PACS, financial accounting etc., been implemented at HO & 6 branches. All the 6 branches & HO are on line. All the implementing staff has been trained by CMC in usage of computers. The bank has centralized computer lab with main server & 6 workstations of Pentium III processors.

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The DCCB was first in the state to complete the audit report before stipulated period and submit the reports to all concerned. The bank is allocated the sum 200 crores for DCCB computerization from out of under profits. For implementation of DCCB computerization the core committee of DCCB level comprising Dy. General manager, one manager & two staff assistants have been formed and they have been trained by CMC which has implementing agency in respect of all the modules of computerization.
6. DEVELPOING POLICIES RELATING TO ORGANI -SATIONAL MATTERS AND DEVELOPMENTAL ACTIVITIES OF PACS :

The bank has recognized the important role being played by PACS at the gross root level. The management of bank has therefore laid much stress on developing the PACS into a viable economic unit as also to serve the rural clientele as a mini bank keeping in view the changed competitive environment in the banking industry. Accordingly the bank has guided the PACS through its Nodal Officers in preparing business development plans (BDP) for a period of 4 years commencing from 2005-2006 to 2007-2008 keeping in view the business parameters and potential areas of all PACS. Emphasis has been made to ensure that the PACS become self reliant by raises resources on their own by way of rural savings from its own members and rural populace to enable them to diversifying their business operations. The reserve position of PACS has been considerable increased. About 125 PACS are doing banking business with total deposits of Rs.66.60 crores as on 31.03.2007. for the recovery at members level has been recognized on the cause for effecting the validity of PACS. A close watch is kept on the passing on of collection affected by the PACS to the DCCB branch by way of watching the daily cases, book extract of PACS , a copy of which has to sent to DCCB branch concerned with duplicates copies of receipts in respect of collections.

TRAINING OF STAFF, SECRETARIES OF PACS :

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Training is another important area where the bank has been given through the bank has been deputing its staff as also PACS secretaries regularly and of the annul calendar of programmers communicated by APCOB-CTI. The bank has also deputed its senior officers to training programmers at NABARD training center of Mangalore. During the year the bank has deputed 80 staff from various categories to various training programmers. A part from that the bank has organized sensitization program at all levels i.e., to board of directors , senior officers, BMs field supervisors, staff assts of DCCB & precedents and paid secretaries of PACS, on important topics viz., the fast changing scenario in the banking industry, challenges resource mobilization, managing NPAs funds management, loan diversification etc., 8. CREATION OF SPECIFIC FUND FOR ASSISTING PACS : The board of management of bank and general body have resolved to Crete a fund of Rs. 50 lakhs from out of net profit appropriation for the year 2006-2007 to wards subsidizing the cost of computerization at PACS besides provide any other assistance for the development of PACS in the area of resources mobilization, infrastructure development and other related aspects. The general body has authorized the board to decide the methodology for utilizing the PACS development fund towards infrastructure and development activities of the PACS.
9. STANDARDISATION OF MIS :

The bank has completely streamlined with MIS system and separate call is created with adequate staff members. With DCCB, HO computerization most of MIS formats have been standardization and important statutory reports are being computed to computers. The bank is in a position to maintain up to date MIS and is in position to furnish all statutory reports to all concerned. 10. OBSERVANCE OF DUE DATES, VARIOUS STATUTORY REPORTS:

45

A separate call with the overall in charge of assistant general manager ( B ) is monitoring the various statutory reports that are to be submitted which are desired and followed up regularly. With the computerization in progress these returns have been standardize and are going furnished regularly.
11. EXTENT OF DE-CENTRALISATION :

In order to ensure effective on prompt service to various category of client local bank particularly with a view to provide timely credit to the borrowing client. The board of management has decentralized the sanctioning process of various loans. The bank has given sanctioning powers to certain cutoff points to BMs, GMs, Chairman and PIC. This has resulted in sense of responsibility at various levels to ensure quick processing resulting in important loaning under diversified activities.

12. ACTION INTIATED AGAINST WILFUL DEFAULTERS:

The bank has made strategies for reduction of NPA levels by drawing of a effective recovery action plan every year. The NPA level is 6.57% as at the end of 2007-2008. The strategy is to reduce. NPA levels both at PACS and DCCB levels. As per the recovery action plan members wise PACS wise branch wise defaulters falling under the category of big, willful, tractor, poultry, fisheries, employees have been prepared and specified targets at all levels have been given to ensure 100% recovery under this category by way of aggressive recovery drive and effective level coverage with the assistance of the departmental sale officers. A part form this bank has listed out 10 top defaulters per society and special drive has been programmed to tackle these cases so that the recovery atmosphere is created among the defaulters with this plans. The bank intends to further reduce the NPA levels during the current recovery season. The bank has taken the assistance and execution of the over due cases on priority basis.

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13. RECONCILIATION OF ACCOUNTS :

Reconciliation of inters bank accounts with various banks by HO & all the 33 branches is up to date. This being reviewed at general manager levels at monthly BMs meeting. Similarly reconciliation of inter branch accounts is entrusted to a separate cell. This has also up to date. The reconciliation of various books of accounts at all branches is taken up on monthly basis, which is up to date and this has also being reviewed at monthly branch managers meeting. The internal audit is, being attended by auditors regularly. The defects noticed by Internal Audit of Departmental auditors are being attended to for rectification and then their basis.

14. AUDIT CLASSIFICATION :

The bank has running in profits since its inception and recorded all round progress in various parameters. The audit for the year 2007-2008 is completed well with in the stipulated time and was the first DCCB in the state to complete the audit. The bank posted net profits of 683.78 lakhs for the year 2007-2008. A part from this, the bank has been declaring dividend to its shareholders continuously. The dividend for the year 2007-2008 was 11.30%, which is a highest, recorded by any DCCB in the state. The profits and audit classification of the bank for the last 2 years are

Table: 3.08
S.NO 1 2 YEAR 2006-2007 2007-2008 AMOUNT 1167.61 683.78 AUDIT A A

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15. LOANING POLICY AND PROCEDURES :

The board of management reviews regularly the policy & procedures with regard to loaning and various portfolios based on NABARD & APCOB guidelines and also the needs of borrowings quantity as per the agenda that occur. The branch managers and field functionaries are apprised and provided detailed circular instructions, scrutiny , procedures, appraisals, documentation etc.,

HUMAN RESOURCE DEVELOPMENT 1. PROFESSIONALISATION OF MANAGEMENT: With a view to provide with up dated knowledge & training & increasing motivation levels to the staff, the bank has been deputing the staff under various categories to the APCOB training institute as per the calendar of training programmers designed well before the commencement of calendar year. During current year the bank has planned to depute personnel to 89 programmers with 89 participants against which bank has already deputed 80 no. Of staff of members 8 no. Of programmers a part from this the bank has been deputing for various workshop-training programs to NABARD, Mangalore. 2. ESTABLISHMENT OF VIGILENCE : Vigilance and legal call established headed by assistant manager and supporting staff which has looking after legal maters, misappropriation cases and vigilance aspects. The various cases pending are being reviewed regularly to dispose off the same.

48

3. SUPERVISION OVER PACS : A separate inspection cell headed by assistant general manager and supporting staff is created at H.O this cell closely monitoring the conduct of quarterly of PACS and following it of with rectification and compliance of defects pointed out in inspection reports. The cell is also attending to the monitoring and review of half yearly branch inspections APCOB & NABARD inspection rectification of defects and furnishing of compliance of the inspection etc. In order to ensure close monitoring control & supervision over the functioning of PACS the bank designated nodal officers from the category of Dy.general manager, assistant general manager numbering 9.each nodal officers is entrusted with 3 or 4 branches & the PACS jurisdiction. In these branches the nodal officers shall visit at least 1 PACS in a weak to submit the report over functioning of PACS.
FINANCIAL POSITION Table:3.09 SNO 1. 2. 3. deposits outstanding 4. 5. borrowing outstanding 272,26,76,644.36 bad & doubtful debts 35,73,06,000.00 loans : a. loans issued to societies 6. b. loans recovered from 248,27,30,080.75 218,80,11,233.29 229,64,85,068.70 244,55,69,610.34 29,74,29,000.00 228,30,29,410.77 217,73,81,586.42 214,07,58,548.01 PARTICLARS Authorized share capital Paid up share capital (including Rs.1,38,00,000contributed by govt.) reserve fund deposits reserve during the year 2007-2008 (Rs) 50,00,00,000.00 32,38,10,605.15 2006-2007 (Rs) 50,00,00,000.00 30,80,82,576.64

10,90,41,254.63 652,04,16,736.34

8,64,81,958.43 649,62,16,639.55

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societies 7. 8. 9. 10. 11. 12. a. principal b. interest 13. percentage of overdue to demand: 14. a. principal b. interest net profit 15. loans die from societies loans due from individuals cash credits due from societies loans and cash credits from liquidated societies over dues under pending:

378,29,29,018.54 31,93,36,112,92 32,84,32,519.62 22,79,494.47

348,20,27,171.08 26,18,40,371.21 21,34,25,202.23 22,79,494.47

40,09,11,309.84 45,99,30,005.26 5,44,67,245.04 5,48,29,028.14

16.95% 10.24% 9,64,71,946.88

17.75% 10.04% 9,02,37,184.79

As seen from the above statement there was an increases in business as reflected in receipt of share capital deposits received, deposit outstanding, loans issued, overdue both under principle and interest of the total overdue amount, sum of Rs. 4,64,41,046.44 under principle is pending for more than 3 years. NET PROFIT: The bank has earned a net profit of Rs. 9,64,71,946.88 for the year 20072008 of this 1. 25% of net profit earned amounting to Rs.2,41,42,9865.72 should be carried to reserve fund. 2. 15% amounting to Rs. 1,44,85,792.03 shall be credited to agricultural credit stabilization fund.
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3. The balance of net profit Rs. 5,79,43,168.13 is available for distribution in account with the provisions of the bye-laws of bank and other statutory requirements.

LENDING OF THE BANK

Among the various objective of the central bank, financing of societies is chief one. The very existence of central bank is warranted only, when it is able to meet the credit needs of member societies timely adequately and for diverse purpose. As such, the performance of central bank under study in relation to the objective is studied here.

A central bank is reservoir of funds for societies to drawn upon in times of needs. If finances PACS largely for production purpose marketing societies consumers societies industrial societies a and all other types of societies for their business purpose in the form of loans and cash credits. A review of literature on the subject market it clear that the major objective of PACS which constitute majority of members of central bank is to meet the agricultural production credit

51

requirements including the legitimate consumption needs of small farmers and tenants of the area. It is general tendency of banks whether CCB or other commercial banks to concentrate mostly on big farmers with guaranteed recovery rather than the small and marginal farmers with poor repaying capacity. Hence it would be better that co-operative bank are confined exclusively for financing priority sectors such as agriculture purposes as they provide credit at lower rates of interest.

S.A.O. CREDIT LIMITED: The special food grain products programme, integrated program for development, oil seeds products programme and sericulture under national sericulture programme. Are under implementation in district since the disbursement made by bank during previous year under oil processing programme is negligible. The amount of Rs.21,916.92 lakhs was allocated to this bank in districts credit plan for year 2008-2009 for disbursement of crop loans. A.P. state cooperative bank has target of Rs.200 crores for khariff and Rs.40 crores for rabi 2008-2009. During the year 2007-2008 an amount of Rs.1502.65 lakhs was disbursed in khariff season and an amount of Rs.2375.48 lakhs under rabi

52

season. As on 31/3/09 the total disbursement of loans from kharilff and rabi crops came to Rs.17,401.13 lakhs. Out of total demand of Rs.19955.76 lakhs for year 2006-2007 the bank has collected an amount Rs.17,776.44 lakhs which is worked out to 89.08%to total demand leaving balance Rs.2179.32 lakhs. For launching effective collection drive for current year, the bank is divided into 7 zones and 3 senior officer are entrusted with supervision of collection work in branches. For purpose of collection work branches targets were fixed form recovery of overdues. All senior officer form central office was also entrusted with recovery work in branches where there is heavy demand.

In the view of necessity some officers were deputed form APCOB zonal office & they are entrusted with collection work in pockets where there are chronic over dues. All officers, field staff, managers, sales officers are entrusted to move briskly so as to make recovery programme a grand success. The bank has taken up services of special cadre by deputy Register to work as officer on special duty. He is taking necessary steps for disposal of arbitrators and EPS expeditiously for recovery of dues form defaulters. SAO credit limit of Rs. 11000.00 lakhs was sanctioned to west Godavari district bank for the year 2007-2008 as against the said amount we have utilized Rs.11000.00 lakhs & disbursed SAO loans to a tune of Rs.17261.52 lakhs.

LENDINGS FOR THE WHOLE YEAR:


In the year 2007-2008 Rs.17483.01 lakhs were given to small and tiny farmers as short-term loans from the relating societies for the development of
53

weak sections, with the help of village Development Corporation Rs.25.60 lakhs were given as loans. For employing the weavers in the district Rs.68.23 lakhs were given through weavers societies during the year 2007-08. Rs.1,972.90 lakhs were disbursed to co-operatives sugar factories under various forms. For saving the4 farmers &members of the societies Rs.857.77lakhs were given under gold loans Rs,678.88 lakhs were given has loans to employee co-operative credit societies. Under village housing construction scheme Rs.252.19 lakhs were disbursed. Maximum loaning limit to individual was extended from Rs.20, 000/- to Rs.25000/-. For the benefit farmers not exceeding Rs.100, 000/- in during individual loaning with interest in agriculture loans was also introduced in the bank. Kisan credit cum passbooks was introduced from April 1999. Till now 2,75,354 cards were disbursed.

On non-farm sector gold loans & agriculture loans of long term loans interest for was lessened for the facility of farmers. An accident policy for Rs.50, 000/- was introduced to CKCC members in societies. They were helping to not only to the members of died family but also handicapped members from this schemes. For premium was 15/- as per the APCOB norms, members Rs.5/- bank Rs.4/- related societies Rs.4/-,APCOB Rs.2/- will be paid. A new scheme "self employment scheme" was introduced. From this scheme Rs.15.30 lakhs loans were given to 159 units. Jaipure sugars factory chagallu was financed upto Rs.5.95 crores from banks own funds under consortium finance. As per the APCOB guidelines Rs.22000/- were allotted to each unit for the purpose mopeds for the purpose of giving loans to more members. Under the

54

scheme Rs,9.08 lakhs loans were given to 44 units similarly purchase of cycles, education loans were given under non-agriculture loans.

ROLE OF OVERDUES IN CO-OPERATIVE CENTRAL BANKS:


The working of the co-operative movement in India shows that punctuality in repayment of loans has been conspicuous by its absence. The inevitable result has been a harp rise in the amount of overdues. The rise in over dues is not restricted to one region. There is a unmistakable trend of rising over dues in almost all states. Mounting of over dues, adversely affect the recycling of the credit for agricultural development. They erode the financial stability of co-operatives in several ways. Their capacity to borrow from higher agencies gets reduce, liquidity detonated and they become ultimately either non-viable or dormant units. Therefore, appropriate measures are to be devised to tackle the problem. The over dues of PACS as well as those of central banks which are part of co-operative credit structure have been rising steadily over the past years despite the stabilization arrangements which are designed to take care of situations arising out of crop failures caused by several natural calamities.

55

The step-wise, purpose-wise, classifications of over dues position as on 30-6-08 are here under--Table:3.10
(in lakhs) s.no Purpose Below 1 year 1-2 2-3 3-4 Above 4 Total

56

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

SAO DTP CAC Tie-up Total SAO MT agrl MTC MTR EMPCS Non-farm Others Total ST LT PACS LT PADB Total LT Integrated

574.03 240.53 63.63 662.19 0.45 0.31 2.04 43.52 0.11 173.97 882.59 417.64 11.82 426.64 1312.05

123.16 2.93 5.97 0.45 133.51 3.15 3.31 48.70 10.44 11.95 19.93 230.99 184.05 11.92 195.36 426.35

28.44 1.61 2.90 1.05 34.00 61.08 40.69 8.27 2.21 1.72 8.27 101.44 107.44 5.74 115.36 216.80

53.36 0.42 0 0 55.78 1.34 24.42 0.52 0.36 1.46 5.04 89.18 46.38 6.82 52.15 141.30

165.34 0.18 0 0 165.52 5.07 18.75 1.38 29.48 16.96 18.08 139.74 24.42 88.29 53.58 293.32

946.33 29.67 73.50 1.50 1051 16.04 57.48 60.91 86.01 225.49 1543.94 779.93 845.88 2389.82

RECOVERY STRATEGIES:
Recovery of over dues is programmed to be completed before 31st Jan 2009. In order to get good results defaulters are classified into 9 categories as under. 1) Big & willful defaulter 2) Tractor defaulters 3) Poultry, Fisheries, L.S.dairy defaulters 4) Employees defaulters of all departments.

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5) Defaulters under N.Fs housing, house mortgage, individual cash Credits etc.., 6) Employees societies default 7) Employees PADB loans 8) Others. The secretaries of PACS, circle supervisors, branch managers and senior officers and zonal officers are instructed to cover legal action an above defaulters. The sale officers are also given targets to execute the E.Ps in respect of above 9 categories so as to reduce N.P. As under D1, D2,D3 categories.

COVERAGE OF LEGAL ACTION UNDER ST &LT AND PROGRAMME FOR EXECUTION OF Eps.
Instructions have been issued to all the secretaries of PACS circle supervisors, branch managers to cover legal action on ester over the loans under ST&LT. Non-farm and on all rural estate loans by 31st December 2008. The bank has taken the services of one SCDR/OSD,9 CSRs & 4 sale officers in order of quick disposal of arbitration references and execution of Eps. The work of sale officer is being reviewed and monthly targets are being fixed to execute Eps. Against Big & Willful and other 8 categories of defaulters so as to reduce heavy amount under WPAS. Much concentration is being insisted with the sale officers by fixing monthly targets and monthly reviews.

The details of arbitration reference, Eps pending.


Total overdues as on 30/06/2008 Amount 6,609.34 Arbitrators Pending as on 31/10/2008 No. 827 Amount 91.74 Eps pending as on 31/10/2008 No. Amount 2,615 3,572.55 Target for all sale officers for every month. No. 3,507 Amount 440.98

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FIXATION OF RECOVERY TARGETS:


Monthly targets for recovery of arrear overdues commencing from 1st November, 2003 have been fixed to each circle supervisor, branch manager and also to zonal officers society wise and branch wise and furnished in annexure under ST&LT including EPADB loans. The branch managers will assure that the secretaries of PACS; supervisors of bank concerned shall contact each and every borrower defaulter in their respective areas and see that the entire overdues are cleared in the recovery season. All the staff are made responsible to achieve 98% of entire demand for 2008-09.

NON-FARM SECTOR LOANS, HOUSING AND HOUSEMORTGAGE LOANS:


The total over dues and current demand lists under non-farm sector housing loans, house mortgage loans, branch wise are furnished. Specific targets are given to each circle supervisors, branch manager concerned for recovery of arrear and current demand also under these loans.

EMPLOYEES CO - OPERATIVE CREDIT SOCIETIES:


The concerned circle supervisors and branch manager are given targets for recovery of the arrear demand by filling Eps issuing of notices to the pay disbursing officers concerned as per act.

INVOLVEMENT OF NON-OFFICIALS:
The branch managers have been advised to convince branch level review meeting on every 5th of the month with presidents of PACS secretaries of PACS circle supervisors sale officers of the respective branch. It is proposed to invite to involve the non officials such as precedents of PACS and also directors of the PACS besides the area of the bank to participate in the review meeting. The nodal officers will also associate in the review meeting to furnish review report to the GM.

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PERIODICAL MONTHLY MEETINGS:


The monthly review meeting of all the field staff (supervisors, BMs, sale officers, ADOs) and nodal officers will be conducted on 10th every month at H.O. by the GM of the bank to ensure close monitoring and to assess the recovery performance and to fix targets and to take steps whenever necessary in case wherever the poor performance is noticed and also to give necessary assistance to the concerned. Further necessary disciplinary action will also be initiated against the staff members who failed to achieve the targets.

GUIDELINES AND CALENDAR ACTIVITIES:


The detailed guidelines and calendar activities have been communicated to all the staff to be involved in the recovery performance i.e. secretaries of PACS, circle supervision, branch managers and also all the senior officers of the bank and also to all the sections in head office to follow strictly to achieve the maximum percentage of 98% under both ST&LT demand for 2008-2009 and to keep up percentage of the bank as usual.

RECOVERY MONITORING CELL:


Recovery monitoring cell has been attached to administrative section at head office Sri. P.Sambasiva rao, AGM (administration) has been designed as the "Laison office". All the branch managers shall report, the weekly/daily progress & monthly information to the administration section within the schedule time communicated to the branches. The administration section will consolidate * put-up to the G.M. to report to APCOB as & when required and also to review the progress.

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61

INTRODUCTION OF FINANCIAL MANAGEMENT:


Finance is an important function in any business as money is required to various activities. It has given birth to financial management as a separate subject. As a separate subject, financial management is of recent origin and has not acquired a body of knowledge of its own. It draws heavily on economic for its theoretical concepts. In the early half of the last century, the job of financial management was largely confined to the acquisition of funds. But as business

62

firms continued to expend their markets and they become larger and more diversified, greater control of financial operation become highly important.

MEANING OF FINANCIAL MANAGEMENT:


Finance is considered as the life-blood of any business. It is defined as the provision of money at the time it is needed. All the plans of a businessman would remain mere dreams unless adequate money is available to convert them into reality. Financial management is very important to every type of organisation. It refers to that part of managerial activity concerned with the procurement and utilization of funds for business purpose.

In the words of Howard and Upton:


Financial management involves the application of general management principles to financial operations. Finance is considered as the lifeblood of any business. It is defined as the provision of money at the time it is needed.

In the words of Howard and Upton:


Financial management involves the application of the general management principles to financial operations.

In the words of Ezra Solomon Prigle John


Financial management is concerned with the effective use of economic resources namely capital funds.

63

In the words of Joseph Massive,


Financial Management is the operational activity of a business that is responsible for obtaining the funds necessary for efficient operation.

Thus financial management is concerned with:


Estimation of the fixed and working capital requirements, Formulation of capital structure, Procurement of fixed and working capital , and Management of earnings.

NATURE OF FINANCIAL MANAGEMENT:


Financial management is that managerial activity which is concerned with the planning and controlling of the firms financial resources. It was branch of economics till 1890, and as a separate discipline, it is of recent origin. Still it has no unique body of knowledge of its own, and draws heavily on economics for its theoretical concepts even today. The subject of the financial management is of immense interest to both academicians and practicing managers. Practicing managers are interested in financial this subject because among the most crucial decisions of the firm are those which relate to finance, and an understanding of the theory of those decisions skillfully. management provides them with conceptual and analytical insights to make

Objectives of Financial Management:

64

Financial management is concerned with the efficient use of capital funds. It evaluates how funds are used and procured. In all cases, financial management involves sound judgment, combined with a logical approach to decision making. There can be many financial objectives. Two of them are notable because of wide support for them. These are:

2.1Profit maximization, and 2.2wealth maximization

Profit Maximization Approach:


Profit maximization means maximizing the rupee income of firms. As profit earnings is the main aim of every economic activity. A business being economic institutions must earn profit to cover its cost and provide funds for growth. Firms produce goods and services. They may function in a market economy, or in a government- controlled competitive market. Firms in the market economy are expected to produce goods and services desired by society as efficiently as possible. Price system is the most important organ of a market economy indicating what goods and services society wants. Price system directs managerial efforts.

Wealth Maximization:
The objective of shareholders wealth maximization is an appropriate and operationally financial actions. It feasible criterion to choose among the alternative provides an unambiguous measure of what financial

management should seek to maximize in making investment and financing decision on behalf of owners. Shareholders wealth maximization means maximizing the net present value of a course of action to shareholders the net present value of a course of action is the difference between the present
65

value of its benefits and the present value of its costs. Wealth maximization is the appropriate objectives of an enterprise. When the firm maximizes the stockholders wealth the individual stockholders can use this wealth to maximize individual utility. It means that by maximizing stockholders wealth the firms operating constantly towards the maximizing stockholders utility. Stockholders current wealth in the firms is the product of the product of the number of shares owned multiplied with the current stock price per share.

FUNCTIONS OF FINANCE:
The functions themselves can be readily identified the functions of raising funds investing them in assets and distributing returns earned from assets to share holders are respectively known as financing investment and dividend decisions. While performing these functions affirm attempts to balance cash in follows and out flows. functions are as follows (1) Investment or long term assets mixed decision (2) Financing or capital mix decision (3) Dividend or profit also capital decision This is called Liquidity decisions. Financial

INVESTMENT DECISION:
Investment decision or capital budgeting involves the decision of allocation of capital or commitment of funds to long term assets that would yield benefits sin the future. The important aspects of the investments decision. a) The evaluation of the prospective profitability of new investments.

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b) The measurement of a cut off rate against that the prospective return of new investment could be compared investment proposals should therefore be evaluated in terms of the both exported return & risk involves decision of recommitting funds when an asst becomes less productive or non profitable. The correct cut-off rate is the required rate of return or the opportunity cost of capital.

FINANCING DECISION:

In this when where and how to meet the firms investments needs. The debt & equity mix is known as the firms capital structure the market value of share maximized the capital structure considered as the optimum

DIVIDEND DICISION:
The firm distribution all the profits or retain the. Or distribute a portion and retain- the balance the debt policy should be determined in terms of its impact on the shareholders value. The pay out ration is equal to the percentage of dividends earnings available to share holders.

ORGANISATION OF FINANCE FUNCTION


The responsibilities for financial management are spread throughout the organization in the sense that financial management is, to an extent, an integral part of the job of mangers involved in planning, allocation of resources and control. Financial decisions are of crucial importance. It is, therefore, essential to set up an efficient organization for the financial management functions.

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The job of the chief financial executive does not cover only routine aspects of finance accounting. As a member of the top management, he is closely associated with the formulation of polices as well as decision making, under him are controllers and treasures, although they may be known by different designations in different firms. The tasks of financial management and allied areas like accounting are distributed between these two key financial officers.

PROCESS CHART OF FINANCIAL MANAGEMENT Chart No:4

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Receivables Management:
Receivables management refers to the decisions a business makes regarding its overall credit and collection policies and the evaluation of individual credit applicants. In formulating an optional credit policy, finance manager must analyze the marginal benefits and costs associated with the changes in credit standards, credit terms, collection efforts etc., receivables
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management proves for a firm, both an asset and a problem: an asset because of the promise of a future cash flow and a problem because of the need to obtain financing while waiting for the future cash flow.

RATIONALE FOR EXTENTION OF CREDIT: Financial Motive:


Sellers charge a higher price when selling on credit, generating a greater present value profit based on the implicit interest rate charged, sellers raise capital at lower rates than their customers & have cost advantages vig-a vis banks due to information gathered in selling process, similarity of operations etc,

Operation Motive:
Here suppliers respond to variable & uncertain demand by way in which they extend trade credit, instead of using more costly responses such as installing extra capacity, building or depleting inventories or forcing customers to wait in line.

Contracting Cost Motive:


Sales contracting cost between buyers & sellers are reduced for buyers because they can inspect the quantity & qualities of goods prior to payment reduce the payment in some goods are missing or defective & collection is not made at time of delivery, while the separation of collection & delivery allows sellers to achieve efficiency gains due to specialization of labor.

Pricing Motive:

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Sellers in certain industries are unable to alter their prices; perhaps because they are part of an oligopoly or due to governmental regulation, unpublished variations in credit policy allow these sellers to charge varying amounts to their customers. Financial market imperfections stand behind all these motives, which represent company responses to imperfections. In each case, trade is more economical & efficient than using other responses open to the companies. These motives are difficult to test in real world & it is very difficulty to say which of these motives are difficult to test real world & it is very difficulty to say which of these motives dominates as the rationale being most trade credit.

CREDIT ANALYSIS:
The traditional way organizing the credit information is to characterize the applicant along 5 dimensions. These dimensions are called 5c`s of credit, capital, character, collateral, capacity & conditions.

Capital:
The evolution of applicants capital refers to an analysis of applicant firm's financial position. To assess the capital dimension, the credit analyst considers the data obtained from the applicants financial statements. Total debt position tells the relationship between the applicants assets, equity & debt. The more debt & fewer assets, the lower will be the recoveries of individual creditors in such liquidations.

Character:
In order to make payments to trade suppliers, the applicant must have both the funds to pay the debts & willingness to pay the debts. The capital dimension involves the former, while character dimension involves to pay the debts. In assessing character, the credit analyst considers all information that relates to willingness so pay be the applicant's management.

Collateral:
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If the applicant experience financial difficulty, it many be forced to liquidate. In such a situation, the recoveries to trade creditors will depend on 1) the recoveries on assets sold 2) the amount of debt owed by firm & 3) the extent to which these debts are secured. If firm liquidates the recoveries on assets that are security for debts will go to the holders of that secured debt.

Capacity:
This dimension has two aspects. Management's capacity to run the business & the applicant firm's plant capacity, management capacity to run the business relates to competency of mgt personal in applicants operations. Physical capacity refers to the value & technology of applicants production or service facilities.

Conditions:
If there is a good deal of foreign & domestic compaction in applicants industry, the possibility of failure & default to trade creditors is larger, since profit margins are likely to be lower. once the credit analyst has gathered information on the profitability of product to be purchased the traditional approach requires that all this information by analyzed & synthesized. By this information, analyst makes analyzed judgment on overall credit worthiness of applicant.

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SHORT TERM LOANS: (in lakhs)


These loans were given by NABARD to DCCB through APCOB. These are as follows-

AGRICULTURAL PURPOSE:
PARTICULARS O/s at the beginning of the year 2004-05 18,835.42

Table: 5.01
2005-06 20,424.91 2006-07 20,560.89 2007-08 21,940.46 2008-09 25,915.18

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Amount given during the year Amount collected at the end of the year O/s at the end of the year
45,000.00 40,000.00 35,000.00 30,000.00 25,000.00 20,000.00 15,000.00 10,000.00 5,000.00 0.00 2004-05

18,776.65 17,187.16 20,424.91

20,286.34 20,150.36 20,560.89

20,314.98 18,935.41 21,940.46

28,505.55 24,530.83 25,915.18

40,911.75 39,476.95 27,349.98

O/s at the beginning of the year Amount given during the year Amount Collected at the end of the year O/s at end of the year

2005-06

2006-07

2007-08

2008-09

INTERPRETATION :
Loans disbursed are much more i.e.40,911.75 lakhs was more when compared to previous years. The outstanding at the end of the year were also increased form 25,915.18 lakhs to 27,349.98 lakhs. The collections are also increased. This data has belongs to in the year between 2007-08 and 2008-09.

MIDDLE TERM LOANS: (in lakhs) Table: 5.02


PARTICULARS O/s at the beginning of the year Amount given during the year Amount collected at 2004-05 25.60 0.59 14.19 2005-06 12.00 2.98 2.23 2006-07 12.75 6.57 12.97 2007-08 6.35 1.15 ..... 2008-09 7.50 73.49 2.19

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the end of the year O/s at the end of the year


80

12.00

12.75

6.35

7.50

78.80

70

60

50

40

30

20

10

0 2004-05 2005-06 2006-07 2007-08 2008-09

O/s at the beginning of the year Amount collected at the end of the year

INTERPRETATION :-

Amount given during the year O/s at the end of the year

The medium term loans the amount received was nothing in the past three years are 2005-06,2006-07,2007-08 outstanding are less when compared to previous year. As the past debts have been collected the outstanding are less.

LONG TERM LOANS : (in lakhs) Table:5.03


PARTICULARS O/s at beginning of the year Amount given 2004-05 19,234.78 4,578.37 2005-06 17,250.89 2,627.66 2006-07 15,140.18 1,647.66 2007-08 13,176.52 1,679.42 2008-09 11,212.86 1,711.18

during the year Amount collected at the end of the year

6,562.26

4,738.37

3,611.32

3,643.08

1,978.89

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O/s at the end of the year


20,000.00 18,000.00 16,000.00 14,000.00 12,000.00 10,000.00 8,000.00 6,000.00 4,000.00 2,000.00 0.00

17,250.89

15,140.18

13,176.52

11,212.86

10,945.15

2004-05

2005-06

2006-07

2007-08

2008-09

O/s at beginning of the year Amount given during the year Amount collected at the end of the year O/s at the end of the year

INTERPRETATION :Long term loans disbursed to PACS were more in the year 2008-2009 i.e.1711.18 than previous years. Collections were very less when compared to the last years i.e. 2006-07 & 2007-2008. the outstanding for the year 2008-09 were only Rs. 10,945.15 lakhs are less when compared to previous years.

OVER DRAFTS:AP state cooperative banks. (in lakhs) Table: 5.04


PARTICULARS O/s at beginning of the year amount during the year Amount collected at the end of the year O/s at the end of the year 2004-05 0.5 1.5 2005-06 1.5 4.71 2006-07 4.71 3.05 2007-08 3.05 4.81 2008-09 4.81 3.05

0.5

1.5

4.71

3.05

4.81

1.5

4.71

3.05

4.81

3.05

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5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 O/s at the beginning of the year Amount during the year Amount collected at the end of the year O/s at the end of the year

INTERPRETATION:A amount received as loans during the year 2004-2005 and 2005-2006 and 2006-2007 and 2007-2008 is more than the year 2008-2009 the collection have been improved much more from 0.52 to 4.81 lakhs. Outstanding are less when compare to the previous years. i.e only 3.05 lakhs were there for DCCB.

OVER DRAFTS:

Other banks:
Table: 5.05
PARTICULARS O/s at the beginning of the year Amount given during the year Amount collected at the end of the year 2004-05 0.10 0.6 2005-06 0.21 0.85 2006-07 0.34 1.26 2007-08 1.36 1.67 2008-09 1.77 1.68

0.49

0.72

0.24

1.26

1.60

77

O/s at the end of the year


2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2004-05

0.21

0.34

1.36

1.77

1.85

2005-06

O/s at the beginning of the year Amount given during the year Amount collected at the end of the year O/s at the end of the year

2006-07

2007-08

2008-09

INTERPRETATION :Over draft taken from other banks for the purpose for this year 2008-09 is more 1.68 lakhs then previous year 2007-08 i.e 1.26 and o.85 lakhs. The outstanding have been increased much more then the previous year. GOLD SECURITY LOANS: (in lakhs) Table: 5.06
PARTICULARS O/s at the beginning 3000 of the year 2500 Amount given during the year 2000 Amount collected at the end of the year 1500 O/s at end of the
1000

2004-05 569.50 1,052.66 930.20 691.96

2005-06 691.96 1,063.74 998.84 756.86

2006-07 756.86 1,120.83 1,110.42 767.27

2007-08 767.27 1,714.79 1,439.80 1,042.26

2008-09 1,042.26 2,796.16 2,121.57 1,716.85

year

500 0

2004-05

O/s at the beginning of the year 78 Amount given during the year Amount collected at the end of the year O/s at end of the year

2005-06

2006-07

2007-08

2008-09

INTERPRETATION :Loans given with gold security are Rs.2,796.16 lakhs while only 1,052.66 and 1,063.74 and 1,120.83 and 1,714.79 lakhs were disbursed in the year 20072008 collections were more when compared to previous years. Outstanding at end of the year was more than the previous year.

VEHICLES LOANS: (in lakhs) Table:5.07


PARTICULARS O/s at the beginning of the year Loans given during the 2004-05 12.36 8.59 7.08 13.87 2005-06 13.87 9.84 8.25 15.46 2006-07 15.46 4.27 14.36 5.37 2007-08 5.37 0.37 2.39 3.35 2008-09 3.35 9.48 2.34 10.49

16.00

year 14.00 Collections at the end


12.00 the year of 10.00

O/s at the end of the year

8.00 6.00 4.00 2.00 0.00 2004-05 2005-06 2006-07 2007-08 2008-09

79

O/s at the beginning of the year Collections at the end of the year

Loans given during the year O/s at the end of the year

INTERPRETATION:Vehicle loans were less consumed them past years. In the year 2004-2005 and 2005-2006 and 2006-2007 these years are better than to 2007-2008 and 2008-2009.

HOUSE LOANS: (in lakhs) Table:5.08


PARTICULARS O/s at the beginning of the year 300 Loans given during the year 250 Collection at end of the year 200 O/s at end of the year
150 100 50 0

2004-05 252.19 11.43 44.24 219.38

2005-06 219.38 8.54 61.34 166.58

2006-07 166.58 6.72 71.27 102.03

2007-08 102.03 7.82 27.25 82.60

2008-09 82.60 41.08 28.48 95.20

2004-05

2005-06

2006-07

2007-08

2008-09

O/s at the beginning of the year 80 Collection at end of the year

Loans given during the year O/s at end of the year

INTERPRETATION:Bank provide house loans very effectively. year 2008-2009 bank provided more loans compared past years. In year 2008-2009 bank collection was less than comparing to year 2006-2007 better than 2007-2008.

EMPLOYEES SOCITIES: (in lakhs) Table:5.09


PARTICULARS O/s at beginning of the year Loans given during the year Collection at the end 1000
900 of the year 800 O/s at the end of the

2004-05 999.43 662.86 663.21 999.08

2005-06 999.08 501.67 694.34 806.41

2006-07 806.41 491.76 619.63 678.54

2007-08 678.54 395.18 356.77 716.95

2008-09 716.95 631.78 429.33 919.40

year

700 600 500 400 300 200 100 0 2004-05

2005-06

81

2006-07

2007-08

2008-09

O/s at beginning of the year Collection at the end of the year

Loans given during the year O/s at the end of the year

INTERPRETATION:The loans were disbursed more and collections also more. In the year 2008-2009 the bank provided more loans compared to before years collections also more.

WEAVERS SOCITIES: (in lakhs) Table:5.10


PARTICULARS O/s at the beginning of the year Loans given uring the year Collection at the end of the year O/s 300.00 at end of the year
250.00 200.00 150.00 100.00 50.00 0.00

2004-05 231.43 26.84 15.24 243.03

2005-06 243.03 32.26 17.06 258.23

2006-07 258.23 38.64 29.74 267.13

2007-08 267.13 40.42 14.64 292.91

2008-09 292.91 80.36 207.32 165.95

2004-05

2005-06

2006-07

2007-08

2008-09

82 O/s at the beginning of the year Collection at the end of the year

Loans given during the year O/s at end of the year

INTERPRETATION:Loans given to weavers societies were more i.e. Rs.80.36 lakhs when compare to 2007-08. The collections as well as outstanding were also more when compared to previous year.

SUGER FACTORIES: (in lakhs) Table:5.11


PARTICULARS O/s at the beginning of the year Loans given during the year Collection at the end of the year O/s at 2,500.00end of the year
2,000.00

2004-05 2,037.70 1,885.17 1,613.24 2,309.63

2005-06 2,309.63 984.84 1,904.68 1,389.79

2006-07 1,389.79 552.00 1,259.65 682.14

2007-08 682.14 123.61 653.19 152.56

2008-09 152.56 921.78 507.73 566.61

1,500.00

1,000.00

500.00

0.00 2004-05 2005-06

83

2006-07

2007-08

2008-09

O/s at the beginning of the year Collection at the end of the year

Loans given during the year O/s at end of the year

INTERPRETATION:Loans giving at the beginning in year 2004-2005 was more than 20082009. Bank issued more loans in the year 2004-2005. In the year 2005-2006 collections were also more compared to past year. In the year 2008-2009 bank was given Rs.798.17 lakhs more compared to 2007-2008.

PROGRESS: (Growth between 2004-2009) in Cros Table:5.12


PARTICULARS Share capital Reserves Receives Investments 2004-05 33.66 47.48 77.54% 126.10 2005-06 35.74 56.84 78.67% 131.72 2006-07 37.62 72.48 87.05% 137.32 2007-08 38.34 81.12 92.03% 141.27 2008-09 40.30 9.02 96.00% 126.64

160.00 140.00 120.00 100.00 80.00 60.00 40.00 20.00 0.00 2004-05 2005-06 2006-07 2007-08 2008-09

Share capital

Reserves

Recives

Investments

84

INTERPRETATION:Every year bank growth was increased. Share capital was increased compare to 2007-08. Reserves and receives and investments are also increased.

BANK PROGES: 2004-2009 (in croes) Table:5.12


PARTICULARS Receives debts Business capital Paid debts 2004-05 215.66 304.50 238.37 2005-06 230.70 470.08 432.24 2006-07 255.56 576.60 450.70 2007-08 280.44 670.06 511.63 2008-09 314.40 653.02 550.65

700 600 500 400 300 200 100 0


2004-05 2005-06 2006-07 2007-08 2008-09

Receives debts
INTERPRETATION:-

Business capital

Paid debts

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The DCCB progress is better than past years. Receives debts increase year to year and Business capital and paid debts also increase. Business capital is in the year 2005-2006 Rs.470.08 and 2008-2009 Rs.653.02 cros. Paid debts is Rs.432.24 (2004-2005) and Rs.550.65 (2007-2008) cros.

DEPOSITS GROWTH: 2004-2009 (in cros) Table:5.13


Years 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 Amount 219.29 240.69 259.76 270.16 284.63

300 250 200 150 100 50 0 Amount 2004-05 2005-06 2006-07 2007-08 2008-09

INTERPRETATION:The bank deposits were increase every year. In year 2004-2005 Rs.240.69 cros deposits. The next year deposits were Rs. 21.40 cros increase. In the year

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2006-2007 and 2007-2008 the deposits are Rs.270.16 cros, 284.63. Cros In the year 2007-2008 Rs.14.47 cros deposits was increase. YEARS 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 PERCENTAGE 77.54 78.67 87.05 92.03 95.04

PERSENTAGE OF RECOVERY OF LOANS: Table:5.14

100 90 80 70 60 50 40 30 20 10 0

2004-05 2005-06 2006-07 2007-08 2008-09

PERCENTAGE

INTERPRETATION:The bank percentages of recovery of loans were increased every year. In


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the year 2005-2006 Rs.1.13 percentages increased. 2006-2007, 8.38 % increased. In 2007-2008 year 4.98% increased. In 2008-2009 year 3.01% increased.

THE CREDIT DETAILS OF DCCB YEAR 2004-2009: Table: 5.15


YEARS 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
600 500 400 300 200 100 0 2004-05 2005-06 Total debts 2006-07 2007-08

(incros).

Total debts 461 432 450 512 551

Short term loans 214 262 278 325 454

2008-09

Short term loans

INTERPRETATION:The bank gain Rs.683.79 lakhs profit in the year 2008-2009. Total debts of the bank Rs.551 cros in the year 2008-2009. The bank given short term loans
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Rs.454 cros. During present year the bank financial position is good then the backward years of 2007-08,2006-07,2006-05,2005-04

ESTIMATED DEMAND FOR 2009-2010 (UNDER ST & LT)


The total demand for 2008-2009 is estimated to be Rs.25219.01 lakhs. The details are furnished here under.

Table: 5.16
PARTICULARS ST LT TOTAL ARREAR 1,543.94 845.88 2,389.82 CURRENT 19,521.73 3,307.46 22,829.19 TOTAL 21.065.67 4,153.34 25,219.01

The total demand (including arrear demand) has been worked out to Rs. 21,065.67 lakhs under ST (i.e. SAO, MT, MTC, MTR, EMPLOYEES, NONFARMS, HOUSING & HOUSE MORTGAGE & OTHER TYPES also) & Rs.4153.34 lakhs under LT including arrear demand for the year 2008-2009. Keeping in view of recovery performance in the previous year and also as per guidelines received from APCOB a circular was issued communicating the guidelines and calendar activities. The branch wise, PACS-wise targets have been fixed against the balance demand as on 31-10-2008 (excluding collections) to the extent of 100% Bank is in hopeful position that the recovery percentage will be achieved at least the extent of 98% as envisaged in the memorandum of understanding. A statement showing the branch wise and PACS wise monthly recovery targets is appended in the recovery action plan. The bank has made recovery arrangement as per the guidelines and calendar activities communicated by APCOB. The bank has allotted all the 33 branches among the nodal officers

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9(AGMs, ZDOs, ADOs) of the bank duly divided into 9 zones of bank for recovery and monitoring at frequent intervals at branches and PACS level also.

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SUMMARY:
Credit is the basic component of co-operative system in India. The cooperative banking in India has grown in size & volume. Co-operative central banks occupy a pivotal position in co-operative banking system around which all co-operative activities in a district rotate. The nationalization of 14 major commercial banks in July, 1969 was an important landmark in this direction. Since 1969 commercial banks have been actively engaged in providing rural finance as matter of policy. These banks have been directed to use an increasing portion of in their resources for lending to agriculture and the rural productive undertakings in the country and a definite role has been assigned to commercial banks in expanding banking facilities in rural areas of the country. The bulk of our rural population including small and marginal farmers and land less labor and other workers have not benefited much from the facility of institutional credit. Against this background, the banking commission recommended the establishment of specialized credit agency called Regional Rural Banks [ RRB s ] combining the resources orientation of commercial banks and rural orientation of the co-operatives to provide credit. Among the various objective of the central bank, financing of societies is chief one. The very existence of central bank is warranted only, when it is able to meet the credit needs of member societies timely adequately and for diverse purpose. As such, the performance of central bank under study in relation to the objective is studied here. A central bank is reservoir of funds for societies to drawn upon in times of needs. If finances PACS largely for production purpose marketing societies consumers societies industrial societies a and all other types of societies for their business purpose in the form of loans and cash credits. A review of literature on the subject market it clear that the major objective of PACS which constitute majority of members of central bank is to meet the agricultural production credit

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requirements including the legitimate consumption needs of small farmers and tenants of the area. It is general tendency of banks whether CCB or other commercial banks to concentrate mostly on big farmers with guaranteed recovery rather than the small and marginal farmers with poor repaying capacity. Hence it would be better that co-operative bank are confined exclusively for financing priority sectors such as agriculture purposes as they provide credit at lower rates of interest. The success and survival of bank depends upon the performance of recovery of loans advanced. In other words to ability in serving as an active agent in the channel of credit is mainly determined by its timely and adequate recovery of loans from societies. Hence an evaluation of performance of west Godavari district co- operative central bank under study in respect of recovery of loans is attempted in this chapter. In the 3-tier credit structure a central bank shoulders more responsibility for curbing the over dues at the primary levels. The statutory and non-statutory power in respects of supervision and control over the societies and kits leadership with local standing land knowledge of local condition are supposed to help in recovery of loans. One of the important limitation of federal to character of co-operative structure is that the weakness at one level of structure under mine the capacity of organization at the immediate higher level to work actively to accomplish the goal of recovery. it happens in the field of short-term cooperative credit. The central bank are best suited to supervision and control the societies for encoring prompt and adequate recovery of loans from the recovery performance of the bank under study is evaluated in relation to the goals adequacy and timeliness in recovery in this chapter. Through 100% recovery is not possible for several reasons, the bank should strive to effect adequate recoveries in time to maintain credit flow to societies. In the recovery aspects adequacy implies that the bank should cover the loans advanced at least to such an extent to claim eligibility to secure limit from the NABARD.

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FINDINGS
1. In certain branches, o/s in respect of deferent Accounts such as current deposits, institutions, due by, due to etc., were not tallied up to 31-3-2009. 2. There were heavy over dues to the tune of Rs.56.02 lakhs at the end of the year in 338 cases. 3. Work relating to the branch inspections was badly neglected. 4. The bank did not follow the norms in issue of loans to a minimum of 15% of members belonging to scheduled castes & 6% to scheduled tribes as per the circular instructions. 5. The bank maintained heavy cash balance of sRs.1462.35 lakhs &Rs.1554.49 lakhs in the head office, its branches as on 3/3/2007 respectively as against insurance coverage of Rs.3 corers which was contrary to instruction of RBI. 6. In Gopalapuram the loan amount including interest has become overdue &time barred to an extent of Rs.2, 65,637.28 at end of the year. 7. Lockers maintained by the Bank are not fully utilized in different branches. 8. The bank is not deducting the remitting income tax@ 10% of interest earned on deposits by individual whose interest earned exceeds Rs.5000/- per annum. 9. There is no internal audit system in the Bank. 10. The bank has maintained surpluses balance of CLR/SLR that the optimum level.
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SUGGESTIONS
1. The Bank is advised to take effective steps for monthly tallying of ledger balance of all accounts with general ledger as per instruction as of RBI circulars. 2. Immediate action should be for recovery of balance amount which were in the form over dues. 3. The bank is advised to minimize the retention of cash balance amount & ensure that the same is maintained regularly within the limits prescribed therefore. 4. The Bank is advised to ensure that all amount due toward rent of lockers are recovered regularly. 5. 6. Internal audit system for effective accounting must be introduced. The Bank Was Try To Maintain Internet For Online and Also for transfer

of information. 7. 8. Care Must be taken while Inspect the branches The Bank must be reduce locker rent to maximize utilization.

(by Customers) .
9.

The Bank should introduce Internal Audit System ( For Cost Control) Adequate Promotional activities should be taken.

10.

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BIBLOGRAPHY:
CURRENCY AND BANKING : A.V.RANGANDHA CHARY FINANCIAL MANAGEMENT IN INDIA LOANING PROCEDURE IN CO-OPERATIVE BANKS RECOVERY ACTION PLAN YEAR BOOKS PUBLISHED BY DCCB, ELURU BALANCE SHEETS, PROFITS & LOSS ACCOUNTS OF THE BANK.
WWW.NSE.COM, WWW.BSE.COM WWW.MONEYCONTROL.COM HINDU-BUSINESSLINE NEWS DAILY

: V.K. BHALLA : P.RAGHUNADHA RAO : P.SAI GANGADHARA RAO

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