INDICATORS TO DETERMINE

SUCCESS OF COOPERATIVES
• A recent international study entitled “GLOBAL 300
COOPERATIVES” conducted by the International Cooperative
Alliance [ICA], had proved that cooperative institutions had
performed well and achieved outstanding results.
•
• Total Revenue of over 1 trillion USD; 10th Largest Economy of
the World; 14% Growth Rate; 20% of the List are in the United
States Alone; 50% of the List in US, France, Germany, Italy; 30%
of List in Agriculture and Food Sector; 23% in Retailing; 22%
Insurance; 19% in Banking; 20% More Jobs than all MNCs Put
Together [100 million jobs]; 40% Americans in Coop
Membership; 45% Coop Business in Kenya GDP; 66% Swedish
Daycare Units by Coops; 90% Retail Business by Swiss Coops;
• World’s Largest Cooperative Bank is in France.
• Out of 300 Coops studied worldwide [2008
Analysis by ICA], 28 are from Asia-Pacific
Region: Japan-14, India-04 [Markfed-Andhra
Pradesh, AMUL, IFFCO, NAFED], Singapore-02,
Korea-02, China-01, Australia-03, New
Zealand-02.
 General Models of Parameters

[01] ORGANISATIONAL STRUCTURE

-Charismatic leadership and strong opinion makers
-Elections – methods and techniques
-Local political influence including Caste and creed factors
-Landlords and landless factors
-Dominance by other social, religious and political
sections
-General Body Meetings [Procedures]
-Election Notice and Agenda formulations
-Reports [Annual, Audit and other reports], and
Compliance
• [02] MEMBER AWARENESS
• -Cooperative principles and philosophy;
-Significance of cooperative byelaws
-How many members read tem [or seen by them]
-Member education [how often organized]
•
• [03] MANAGEMENT [ELECTED BODIES]
-Election of Board and Other Committees
-Dominance [By interested groups and influential
people]
-Influence by official bodies e.g., Registrar, Sarpanch and
others
-Role of women in decision-making
• [04] MANAGEMENT [EMPLOYEES]
-Recruitment factors [Proper selection,
Recommended]
-Qualified [Professional and experienced]
-Manager [trained/retrained]

• [05] DECISION-MAKING PROCESS

-Board-Members Relationship
-Board-Manager Relationship
-Board-Committees Relationship
-Ethical and Economically sound Decision-making
process
• [06] COOPERATIVE RELATIONS
-Cooperative-Registrar Relationship
-Cooperative-Govt bodies Relationship
-Cooperative-Member Relationship
[07] INFRASTRUCTURE
-Facilities [shop/office/warehouse and
transport etc.]
-Office machines [computers and other
machines]
 [08] BUSINESS DEVELOPMENT PLANS
-Are these prepared?
-Who prepares them?
-Are these followed?
-Resource mobilisation
• [09] ACCOUNTS AND TRANSPARENCY
-Traditional methods of book-keeping
-Computerisation
-Are receipts issued regularly and promptly?
-Who keeps members’ passbooks, cheque -books,
Credit cards?
[10] RANGE OF SERVICES [PERCENTAGE OF USE
OF SERVICES]
-Items kept [consumer goods, farm
implements, fertilisers etc.]
-How often lifted by members
-Do members lift these from other sources as
well
-Percentage of members using coop services
 NATIONAL FEDERATION OF STATE COOPERATIVE BANKS
LIMITED

Group 01: Resource Development

[i] Owned funds [Share capital and reserves];
[ii] Deposits [Other than cooperatives];
[iii] % of CASA Deposits o total deposits;
[iv] Borrowings [Growth over previous years].
Group 02: Outreach – Extent of Involvement
[i]Total advances [SCB level];
[ii]Agricultural advances [DCCB level] Growth %;
[iii]Owned funds deployed for agriculture –Growth
%;
[iv]NABARD refinance – Growth %;
[v]Non-agricultural advances at DCCB level –Growth
%;
[vi] Advances to small farmers - % share;
[vii] Diversification of loans [Growth – non-farm
sector/SHG linkages].
Group 03: Recovery performance
[i] Overdues over three years - % of reduction;
[ii]% of recovery to demand;
[iii]Asset Quality – Gross NPA level [%].

Group 04: Financial inclusion [FI] by STCCS

[i] No-Frills Accounts - % growth;
[ii]Deposits under FI - % growth;
[iii]Credit under FI - % growth;
[iv]Insurance business under FI - % growth;
[v]Remittances under FI - % growth.
Group 05: Compliance of Prudential Norms
[i] Asset quality - % of standard assets;
[ii]Provisioning – 100% and above;
[ iii][a] Shortfall in SLR; [b] Shortfall in CRR; [c] CRAR.
[iv]Net NPA – less than 5%;
[v]Net worth growth - %.

Group 06: Profitability

[i] Yield on assets to working capital - % increase;
[ii] Return on Equity [net profit/owned funds] % growth;
[iii] Cost of management to working capital - %;
[iv] Risk cost – reduction %;
[v] Business per employee - % increase/decrease.
Group 07: Corporate Governance and Management Performance
[i] Elected board?
[ii]BOD as per Fit and Proper Criteria;
[iii]Code of Conduct for BOD framed?
[iv]Vision and Mission for BOD framed?
[v] Training programme for BOD was organized?
[vi]Number of BOD meetings held during the year;
[vii]Audit committee of the BOD is constituted?
[viii]Amendments to byelaws;
[ix]Amendments to Rules;
[x] Investment policy formulated?
[xi]HRD policy formulated?
[xii]ALM policy has been formulated?
[xiii]Risk management policy formulated?
[xiv]KYC policy formulated by SCB?
[xv]CEO as per Fit and Proper criteria?
•
Group 08: Level of Computerization
[i]Whether HO and Branches fully computerized/TBA/
[ii]CBS has been implemented?

Group 09: Leadership Role of the Bank

[i]Number of PACS in the state;
[ii]How many PACS has full-time paid secretaries;
[iii]Number of PACS having own office premises;
[iv]Number of PACS having godowns/cold storage facilities?
[v]Number of PACS mobilizing deposits;
[vi]Number of PACS computerized in the state;
[vii]Whether SCB supplied computers and developed software for PACS;
[viii]Number of DCCBs inspected during the year;
[ix]Regular training programmes are conducted for staff at various levels?
[x]SCB supported DCCBs in streamlining MIS;
[xi]Repayment of loans to DCCBs by SCB was restructured.

Group 10: Special Achievements/Social Goals/Innovative Schemes etc. of

the bank
 [02] NATIONAL COOPERATIVE
DEVELOPMENT CORPORATION-NCDC

• The parameters were developed by a

specially-constituted committee. A brief
description and assumptions about
parameters used for selection of NCDC
Cooperative Excellence Award-2012
[Consisting of Four Sets and Twenty
Parameters] is given below:
01 Set One: A total of seven parameters [Membership, Ordinary Member Share
Capital, Total Share Capital, Reserve and Funds, Total Funds, Business
Turnover, Net profit]:

-Total of four year data [2007-08 to 2010-2011] has been taken.

-Annual growth rate has been calculated using formulae

= Succeeding Year – Preceding Year *100

Preceding year
-2007-08 has been taken as base year and next preceding year has been
taken as base value for calculating growth rate.

-Growth rate of three year has been arrived using above formulae than
average has been calculated taking 3 year growth rate data.
• 02 Set Two: Total of four parameters
•
• -Audit Classification: Total four year audit rating from 2007-08
to 2010-2011 has been taken and finally all four year rating has
been added to Score Mark.
•
• -Dividend Percentage: Four year dividend distribution
percentage data has been taken [2007-08 to 2010-2011] than
average Dividend distribution has been arrived based on
formulae:
• = Total of Four Year Dividend Distribution Data
• 4
• -Return on Capital [ROC]: It has been calculated by dividing Net Profit by
total available fund then average ROC is arrived at by adding four years’
Return on Capital and then dividing by 4.
•
• Return on Capital =Net Profit*100
• Total Fund
• -Per Employee Business Turnover: Four years [2007-08 to 2010-11] Per
Employee business turnover is calculated by dividing total business turnover
by the total number of employees. Then average Per Employee business
Turnover is arrived at.
•
• Per Employee Business Turnover
• = Total Business Turnover
• Total Number of Employee
• 03 Set Three: Total of four parameters [Data from 2007-08 to 2010-11 has been
taken]
•
• -Member Education Percent: Average member education percent is arrived at after
adding four years Member Education Percent data and dividing them by four.
•
• Member Education Percent = Member Educated*100
• Total Membership
•
• -Employee Trained Percentage: Four year separately employee trained percentage
is calculated, then average ETP is arrived at by dividing it by four.
•
• Employee Trained Percentage = Number of Employee Trained*100
• Number of Employee
• -Social Welfare Activities [Nos.]: It is a total number of social activity undertaken
by the Society for welfare activity of its members in last four year. Society with
maximum Average Social Welfare activity is awarded maximum marks.
•
• Avg. Social Welfare Activities
• = Sum Total of all Welfare Activity in 4 Years
• 4
• -Amount Spent on Welfare Activities [in Rs]: In this head total of four year
amount spent on welfare activity is calculated and divided by four to arrive at an
average value.
•
• Avg. Spent on Welfare Activities
• = Sum Total of four Year Welfare Activity
• 4
• 04 Set Four: Five Parameters [Data of 2010-
11] Memberships, Total Share Capital, Total
Fund, Business Turnover and Net Profit have
been taken. The society having maximum
value among these five set of parameter has
been awarded maximum marks.
•
• [On the scale of 10 – High-Low] [Base Year – 2000]
[Please check-mark as appropriate]
• [The information/entry should be objective not
subjective for a fair assessment]
High Low
SN Particulars 10 09 08 07 06 05 04 03 02 01
01 Membership of the Cooperative
02 Share Capital [Own funds]
03 Reserves
04 Business Turnover
05 Overdues
06 Audit Classification
07 Audit Compliance
08 Dividend
09 Employees [Full-time]
10 Turn-over [per employee]
11 Member Education Programmes Held
12 Training [Employees & Board Members]
13 Social Welfare Activities Carried out
14 Meetings Held [of all organs]
15 Elections Held [Regularity]
16 Reports Prepared [Annual and Audit]
17 Capital Mobilisation
18 Deposits [Members+General]
19 Women/Youth Participation
20 Relations with Government/Banks
• Narrative Responses to be obtained from Chairman/General
Manager/Secretary
• 01 Were the byelaws given to the members?
• YES/NO
• 02 The society has its own workplace and a godown.
• YES/NO
• 03 The society makes use of computers & modern office equipment.
YES/No
• 04 Has the society developed/exhibited its work policy? YES/NO
• 05 What is the major and high profit-earning business of the cooperative society?
Explain
• 06 Major problems which hinder the business of the cooperative? Explain
• 07 Is the General Manager/Secretary a paid employee of the Society?
YES/NO
• 08 Has the government contributed to the share capital of the society?
YES/NO
• 09 Is the society facing any overdue problem? Explain
• 10 Any special feature of the cooperative. Explain
•
 SWOT ANALYSIS METHOD

• SWOT method is applied to gauge the

operational efficiency of an organisation
taking into consideration the existing working
environment and the roadblocks encountered.
It also helps to charter a course which enables
the organisation to make corrections and
develop suitable ways towards achieving the
objectives. Its components are illustrated.
 [A] STRENGTHS [OF THE ORGANISATION]

• Membership base [community support]

• Member loyalty [Business and organisational
participation];
• Legal support and conducive environment;
• Possession of relevant technology;
• Objective, fair, accurate and quick decision-
making
 [B] WEAKNESSES

• Lack of competence
• Low level of participation of constituents;
• Lack of professionalism;
• Lack of resources – raw material, capital and
legal support;
• High cost of operations;
• Lack of branding;
• Lack of appropriate technology;
• Problems with marketability of products
 [C] OPPORTUNITIES
• Creation of local market through member loyalty;
• Adjust/Reduce operational costs through technological
innovations;
• Introduce/strengthen professionalism & Member
awareness;
• Mobilise funds from outside membership base;
• Develop/capture market through fair trade and incentives;
• Develop linkages with higher tier
organisations/federations;
• Expand marketplace;
• Involve women and youth in production and marketing of
products;
• Identify spheres of cooperation and collaboration
 [D] THREATS

• Keen competition in price and quality;

• Fake similar products;
• Avoid conflicting rules and regulations;
• Adverse climatic changes;
• Strict/confusing trading regimes.
 [05] AUDIT CLASSIFICATION IN COOPERATIVES

• Cooperative societies are registered under

respective state cooperative societies Acts and
Multi-State Cooperative Societies Act. Audit of
their accounts is the responsibility of the
Registrar of Cooperative societies. However, in
many cases, the Registrar prepares a list of
Chartered Accountants from which
cooperative societies are allowed to get their
audit done
• The auditor is known in a cooperative society as Friend,
Philosopher and Guide. The only role of auditor like other
company is not doing only auditing but in the cooperative
society the auditor has to give guidance in respect of
preparing the books of accounts and he has to do the audit
within the framework of the object of the society.
•
• The prime duty of the auditor is to scrutinize the functions
of the societies whether they are carrying their activities
within the framework of their objects or not and if it is
found that societies are not working as per the objects, he
has to report to the Managing Committee and, if necessary,
he has to give the guidance in the Annual General Meeting.
•
• Every Auditor shall, after completing the audit of a
society determine and award the audit classification to
the society in accordance with the guidelines prepared
by the Registrar, from time to time.
•
• Every statutory auditor is required to classify the society
on the completion of the audit. The classification letters
could be ‘A’ or ‘B’ or ‘C’ or ‘D’. Several factors need to be
taken into consideration before awarding the
Classification Letter to the society. On completion of an
audit, an auditor has to submit audit report in prescribed
forms, to the society, and copies thereof to the
respective authorities such as Registrar, District Registrar,
District Special Auditor, etc.
• The special features of cooperative audit are as follows.
•
• [1] Examination of Overdue Debts
• [2] Valuation of Assets and Liabilities
• [3] Adherence to Cooperative Principles
• [4] Observations of the Provisions of the Act and Rules
• [5] Verification of Members’ Register and Examination
of their Pass Books
• [6] Special Report to The Registrar
• [7] Discussion of Draft Audit Report with Managing
Committee
•
• Important Provisions to be Considered while
undertaking the Audit
• [1] Bye-Laws:
• [2] Appropriation of Profit - Method of
Calculation of Net Profit
• [3] Reserve Fund
• [4] Dividend
• [5] Contribution To Education Fund
• [6] Contribution to Public Purposes
• [7] Investment of Funds:
• After submission of the Audit Report, the Managing
Committee takes notes of the various paints raised in the
Report. The Report also goes to the General Body. A
compliance Report is prepared and submitted to the
Registrar. The Audit Report with its compliance is the true
mirror of the performance of a cooperative society.
Cooperatives with Classification ‘A’, are regarded as the
successful cooperatives.
•
• In several cases, cooperative institutions employ external
assessors/evaluators to determine the performance levels.
These reports are usually presented to the Board for
verification and approval. On the basis of the Board
decision, cooperatives are awarded appropriate
recognitions.