Submitted in the partial fulfillment of the award of degree in Master of Business Administration (Agri-Business) (Agri-Business) (2008-2010)
DEPARTMENT OF BUSINESS MANAGEMENT College of Horticulture Dr. Yashwant Singh Parmar University of Horticulture & Forestry Nauni, Solan (HP) 173230
ACKNOWLEDGEMENT Pride praises and perfection belongs to the almighty alone, so I would like to consecrate myself before the LORD SHIVA and MAA JAWALA JI who bestowed on me to be through the ups and downs of life and enabling me to see today “The joy of task done”. I am highly grateful to Dr. Y. S. Negi, Professor & Head, Department of Business Management for his ideological contribution and valuable suggestions during the course of summer training Academic life without friends is distance reality so I am conscious of my feelings to my generous friends for their constant encouragement, inspiration and help to achieve my goal. I am thankful to Mr. Jagdeep, Staff of HP State Cooperative Bank Shimla (secrete branch) and finance department department of HP State State Cooperative Bank H.O. H.O. Shimla for their valuable guidance and information about functioning of bank. Language seems to be inadequate to express my sentiments for my loving sister Kiran & Simran All the words in the lexicon will be futile and meaningless if I fail to divulge my extreme sense of gratitude to my parents since the beginning of my academic career at the cost of their personal inconvenience, I shall remain indebted to them for their contribution to my educational goal. Needless to say, errors and omissions are solely mine. Place Date Dogra
Vikas
CONTENT CHAPTER
TITLE
Company profile/ Introduction 1.
1.1 1.2 1.3 1.3 1.4 1.5 1.6 1.6 1.7
Histor History y and evolut evolution ion Positi Positiona onall status status Missi Mission on & visi vision on Alliance Alliance and and Joint Joint Ventures. Ventures. Resea Research rch & devel developm opment ent Pres Presen entt statu statuss Awards Awards & other other recogni recognition tionss
2.
Organizational Structure 2.1 Channel Channel Of Information Information Sharing Sharing 2.2 Manage Managemen mentt struct structure ure 2.3 Channe Channell Of Docume Documenta ntation tion 2.3 Channel Of Statement Result Analysis
3.
Analysis of annual report
4.
Key operational process
5.
SWOT Analysis 5.1 Strength 5.2 Weakness 5.3 Opportunity 5.4 Threat
6.
Summary and conclusion.
7.
Suggestions and recommendations
8.
Personal Learning
9.
References
10.
Annexure
PAGE NO.
Chapter 1
Introduction INDIAN BANKING SECTOR:Banking in India has its origin as early as the Vedic period. It is believed that the transaction from money lending to money banking must have occurred even before Manu, the great Hindu Jurist, who has devoted a section of his work to deposits and advances and laid down the rules relating to rate of interest. During Mogul Period, the indigenous bankers played a very important important role in lending money and finance finance foreign trade and commerce. commerce. During During the days of the east- India Company, it was the turn of the agency house to carry on the banking business the general bank of India was the first joint stock bank to be established in the year 1786. The others that followed were the Bank Bank of Hindustan Hindustan and the Bengal Bengal Bank. The Bank of Hindustan is reported to have continued till 1906 while the other two failed in the meantime. In the first half of the 19th century the east-India company established three banks, the Bank of Bengal in 1809, the Bank of Bombay in 1840 and the banks of Madras in 1843. These three banks are also known as the presidency banks were amalgamated in 1920 and a new Bank – the imperial bank of India established ion 27 th January 1921. With the passing of the state bank act 1955 the under taking of the imperial Bank of India is taken over by the newly constituted the state bank of India
WHAT IS BANKING:the the term term bank bank deriv derived ed from from that that Ital Italian ian word word “Ban “Banka ka”” and and the the bank bankin ing g refer referss to the the compan companies ies that that provid provides es bankin banking g produc products ts and servic services es such such as checki checking ng and saving saving , deposi deposits ts , Loans, Loans, leases leases,, Mortga Mortgages ges credit credit cards cards ATM networ network k , securi securitie tiess broker brokerage age investment banking, insurance , mutual funds and pensions( Kamath, 2005). Banking means accepting for the purpose of landing or investment of deposits of money f rom the public repayable on demand or otherwise one withdraw able by cheque, draft or otherwise Banks in India were started on the British Pattern in the beginning of the 19 th century. in those days, all the. At the time of Second World War about 1500 joint stock banks were operating in undivided India, out of which over 1400 were non- scheduled banks. These banks were manage managed d by bad and dishones dishonestt manage managemen mentt and natura naturally lly there there were number number of bank bank failures. Hence the government has to step in and the banking companies act 1949 was enacted which led to gradual elimination of weak banks who were not in position of fulfill the various requirements of the Act. In order to strengthen the weak banks and receive public confidence in banking system , a new section 45 was inserted in the Banking Regulation Regulation Act in September 1960, Empowering Empowering the Government of India to compulsory compulsory amalgamate weak unit with stronger ones on the recommendations of RBI,
Financial institution ORGANISED STRUCTURE
UN- ORGANISED STTRUCTURE
RBI
INDIGENOUS
BANKS COMMERCIAL BANKS UN-SCHEDULED COMMERCIAL BANKS
MONEY LENDERS UNREGULATED NONBANKERS
SCHEDULED COMMERCIAL BANK
STATE BANK GROUPS NATIONALISED BANKS INDIAN BANKS FOREGION BANKS REGIONAL RURAL BANK
P.O. SAVINGS NON BANKING FINANCIAL COMPANIES COOPERATIVE BANKS
STATE COOPERATIVE BANKS CENTRAL COOPERATIVE BANKS PRIMERY AGRICULTURE CREDIT SCITIES
Financial institution of India consists of organized sector and un-organized sector
ORGANI ORGANISED SED SECTOR SECTOR : the sector sector whose whose parts parts and activit activities ies are syste systemat matical ically ly coordinated coordinated by the monetary authority. authority. It includes includes the RBI. COMMERCIAL COMMERCIAL BANKS, P.O. SAVING, NON- BANKING COMPANIES, AND COOPERATIVE BANKS. Is an apex of the Indian money market.
R.B.I: Reserve Reserve Bank of India, being being the central Bank of the country country though the R.B.I. Does not enter into direct transaction in the money market, but it guides and controls the money market through the bank rate.
Commercial Banks: These are very most important segment of our money market. These commercial banks play a very important role in mobilizing the money (savings) from various sectors to the economy. SCHEDULED COMMERCIAL BANKS: it includes SBI and its 8 associates, 19 nationalized commercial banks and other scheduled banks, foreign banks and regional banks. Today we have 64,918 branches of scheduled banks these are those banks which are included in the second schedule to the Reserve Bank of India Act 1934. In term of Sec 42/5 of Reserve Bank of India Act a commercial bank should fulfill the following conditions
Bank must have a paid up capital and reserve of an aggregate value of not less than Rs. 5 lakh. It must satisfy RBI that all of its affairs are not conducted in a manner detrimental to • the depositor. The schedu scheduled led banks banks enjoy enjoy certain certain privil privilege ege like like approa approachi ching ng RBI for financ financial ial assistance; assistance; refinance etc and correspondingly correspondingly,, they have certain obligations obligations alike maintaining certain cash reserves as prescribed by the RBI, submission of returns etc. NON SCHEDULED SCHEDULED BANKS BANKS : these are those banks which are not included in the second schedule of the RBI Act on the account of failure of the bank with the minimum requirements for being scheduled •
P.O. SAVINGS Banks: this is the oldest in the official small saving schemes in India. Though P.O. saving scheme have received a lot of attention from the attraction of savings, but these are not as much popular as the saving deposits accounts with the commercial banks.
REGIONAL REGIONAL RURAL RURAL BANK : in 1975 1975 the Region Regional al banks banks are establ establish ished ed in the supervision and recommendation by a working group headed by Mr. M Narasima when it was felt that the commercial and cooperative banks are not able to serve the small, marginal farmers, agricultural labor and artisans. Thus to serve this segment the Regional banks are established.
NON- BANKING FINANCIAL: IT includes LIC, the GIC and subsidiaries, the UTI.
COOPERATIVE BANKS: The word cooperative stands for willing to work together in the production and marketing of goods, it is profitable to both producer and consumer to avoid middlemen. If, for instance, farmers can set up their own markets instead of sending
their produce to a wholesaler, they can sell at a price that includes only their costs and a fair profit: Additional wholesale and retail costs are avoided, and prices to the consumer are kept relatively low. In order to take part in this kind of direct production–marketing enterprise, people have formed cooperatives these are voluntary associations of either producers or consumers who band together for the group members' benefits . Cooperative organizations formed for financial benefits exist in most countries of the world. The cooperative way of doing business takes many forms, ranging from local to regional and fede federat rated ed orga organi niza zati tion onss and and from from high highly ly spec special ializ ized ed to mult multip ipur urpo pose se soci societi eties es.. The The cooperative banks have a three tier structure. At the top level there are state cooperative banks, At the district level there are central cooperative bank, At local level there are Rural primary cooperative banks and Urban primary cooperative banks Cooperative banking structure has unique position in the rural credit delivery system of India. The cooperative banking sector which is now a century old has a significant role in the field of credit to the rural through the short term and long term structure from many years the cooperative banks are the prime institutional agencies with a vast network, wide coverage and reach up to the remote areas. Keeping the view of cooperation the H.P. State Cooperative bank was established in Himachal Pradesh in august 1953 under the Cooperative Society Ac t, 1912. Onward from its establishment the bank is developing day by day and satisfying the needs of many people.
History The commercial Banks were operating for the years, but it was being felt that these banks were not not payi paying ng neces necessa sary ry head head to the the credi creditt requi require reme ment ntss of comm common on mass masses es.. Furth Further er the the commercial banks, were mainly concentrating their business in the urban area and the banking facilities facilities to rural people were not available consequently, consequently, the Co-operativ Co-operativee Banks came into pictu picture re after after 1904. 1904. Himach Himachal al Prades Pradesh h has the distin distincti ction on of having having first first Coop. Coop. Socie Society ty Registered in India. Cooperative were primarily visualized as specialized agency for financing the credit requirement of rural people in the country particularly agriculture. Foundation of the Himachal Pradesh state cooperative bank was laid in 1953 by uniting the Mahasu central cooperative bank ltd. The Mandi central bank and the Chamba cooperative bank. bank. Its registration registration is done in august 1953 under the cooperative cooperative societies societies act 1912. Later th the bank starts functioning on 15 march 1954. Bank start functioning as APEX (at the top) Bank under 2- tier system in 6 – districts of Himachal. In 1955 two more Banks namely “Bank of Sirmour & Joint Stock Bank” merged into H.P. State Cooperative Bank. On 1st November 1966 many parts of Punjab ( previous districts Kangra, Kullu, Lahaul & Spiti, Spiti, and some some parts parts of distri districts cts Hoshi Hoshiarp arpur, ur, Gurda Gurdaspu spur, r, ambala) ambala) were were merged merged into into Himachal Pradesh. This results in transfer of Cooperative Banking System of these areas into Himachal Pradesh with 2 already functioning banks “The Kangra Central Cooperative Bank & The Jogindra Central Cooperative Bank”. In 1972 when Solan awarded with the status of separate district two separate branches of H.P. State Cooperative bank at Solan & Arki. While 1 Branch of Jogindra central Cooperative bank is working at Totu (Shimla). Till 29 th September 1976 the assets and liabilities of all these 3 Banks were transferred to each other Now In Himachal Pradesh, the state cooperative bank ltd. With head office at Shimla is functioning as a central cooperative bank in 6 districts namely Solan Shimla Bilaspur Mandi Chamba Sirmour and Kinnaur having 36 blocks. The Kangra central cooperative bank with head office at Dhramshala is functioning as a central cooperative bank banks in 5 districts having 28 blocks. in Solan district the Jogindra cooperative bank with head office at Solan is functioning as cooperative bank creating the need of peoples of 5 districts beside being a state
cooperative cooperative bank for the stat as whole, the Himachal Himachal Pradesh Pradesh cooperative bank is working working as the financing agency for the 6 districts of state and an apex bank for whole of the state. The Himachal Himachal Pradesh Pradesh Co-operativ Co-operativee Bank is serving serving the people of the State through through a network network of 190 branches and Extension Counter of which about 94% is in the rural areas of the State and one branch at New Subzi Mandi Azadpur New Delhi for the benefit horticulturists of the State. Particular
1955
No. of branches
10
2006 154
2007 160
2008 175
Share capital (in lacks)
7.32
757.73
791
798.91
Deposits (in lacks)
41.14
212052
241273
343433
Loans & adv. (in lacks)
29.19
78564
107607
124765
Investment (in lacks)
8.25
170735
1815904
219421
278129
312653
418300
Work Workin ing g lacks)
capi capita tall
(in (in 52.23
PERFPRMANCE OF THE BANKS OVER THE YEARS
POSITIONAL STATUS The Himachal Pradesh State Cooperative Bank works at the APEX level in the hierarchy of the cooperative banking. It acts as the central financing agen cy to the Kangra central cooperative cooperative bank & Jogindra central cooperative bank the bank has the working capital of Rs. 418334.59 lacks and deposits are 343375.01 lacks .
Mission & vision Mission/Targets of the bank is to help the self helped groups by providing them loans at low rate. rate. Prov Provid idin ing g the the educ educat atio ion n to the the work workers ers/e /emp mplo loye yees es of the the coop cooper erati ative ve soci societ eties ies.. Managing the financial status of the cooperative societies. 1. Connec Connectin ting g all the branche branchess with the core banking banking system system (C.B.S.) (C.B.S.) to provide provide the online banking facility till 2010. 2. Install Installing ing the the A.T.Mach A.T.Machine iness in all the branc branches hes.. 3. Achiev Achieving ing the the schedul schedulee status status for the the bank. bank. 4. Providing Providing the the retail banking banking to the the customers customers with with the help help of Informat Information ion Kiosk. Kiosk. 5. Providing Providing the the SAMAGR SAMAGR banking banking facilities facilities to the the customers customers in in one branch. branch.
Vision 1. To providing providing the the loans to the the cooperative cooperative societies societies to establis establish h the viaduct viaduct pariyojana. pariyojana. 2. Starti Starting ng the new schemes schemes for the cooper cooperati ative ve societies societies to recover recover the N.P.A. N.P.A.(no (non n performing assets ) 3. Open Openin ing g the the educ educat atio ion n cent center er for for coop cooper erat ativ ivee socie societi ties es to impr improv ove/ e/in incre creas asee the the business through giving them proper training & suggestions. 4. Provid Providing ing the the loans loans for new new schema schemass time to to time. time. 5. Repairing Repairing the plans plans for for encouragin encouraging g & awarding awarding the employ employees ees of the Bank. Bank.
Alliance & Joint Ventures The bank has alliances with the UTI bank and has RIMITANCES ALLIANCE with all the banks to cash the drafts and deposit the money in the account of customers in any branch of any banks in India
Research and Development : The business development department (BDD) of the H.P. State Cooperative Bank Shimla deal dealss with with the the rese researc arch h and and deve develo lopm pmen entt of the the orga organi niza zati tion on.. The The main main focu focuss of the the department is to find out the possibilities of the bank for serving more peoples in the rural and urban areas and to provide a frame work for the future expectation of the bank .other functions are providing the better facilities for the consumers like installing the ATMs, develo developin ping g the blue blue print print for online online bankin banking g , intern internet et bankin banking, g, determ determini ining ng the market market strategies for the future , determining the interest rate on various schemas to earn reasonable profit for the bank
PRODUCT LINE LINE : H.P. state cooperative Bank has various products for the customers like Deposits, Loans, Others. When we say about the deposits the HP state cooperative bank has the following accounts Current account, saving bank account, Term deposit, R.D., in term deposit bank further have the follow following ing scheme schemess like like Fixed Fixed deposi deposits, ts, Sarvap Sarvapriy riyaa deposi deposits, ts, mahala mahalaksh kshmi mi deposi deposits. ts. Himpuran nivesh Loans it includes different types of loan schemes. Currently the hp state cooperative bank has 40 loans schemes. Like personal loans, home loans, vehicles loans, Education loans, Non agriculture loan, Minor irrigation, self helped group scheme, self employed group scheme etc… Others it includes the locker facilities, drafts, electronic funds transfers
Present status of Bank In term of market share the market share of the bank in the Himachal Pradesh is about 55% of the total shares of the banks in Himachal Pradesh. When we talk about the size of the bank it has 175 branches all over the Himachal Pradesh. The major competitors of the Himachal Pradesh State Cooperative Bank and its alliance are S.B.I, I.C.I.C., Punjab National Bank, Uko Bank, and other banks. In case if the bank has shortage of money and bank needs the money for its various purposes then the main supplier/ lender of the money is the share holders holders or the RBI. When we say bank need money money then the question question arises why the bank need the money it may be for lending the money to the needy persons, or to provide the money to the depositor depositorss in case when the depositor depositor takes the money money back or person who takes the loan are known as the customers of the Bank.
Awards and other recognitions The H.P. State Cooperative Bank Ltd. has granted the national award for achieving overall excellence in banking operations. The H.P. State Cooperative Bank Ltd “the first cooperative bank to implement coor banking banking computer solution solution (the facilitator of internet internet banking) banking) where as only few of nationalized banks are providing this system.”
The H.P. State Cooperative Bank Ltd. Is one of the few organizations which are in true profit and are ar e paying the dividend continuously. The H.P. State Cooperative Bank Ltd. Has double the agricultural advancement in about 2 years against the planed period of Govt. of India of 3 years The H.P. State Cooperative Bank Ltd is the winner of the “Best Outreach Award” for SHGs. Bank has implemented the various loan schemas for the all sectors of society to suit them, the main focus of bank‘s service is to develop the rural masses. Bank is also involved in implementing the programs related to eradication of Poverty run by the Govt. like SGSY/SJSRY, Rural Housing etc. The credit needs of farmers are also also fulfilled by the bank at low rate of 7%.
CHAPTER 2
ORGANISATIONAL ORGANISATIONAL STRUCTURE The organizational structure of the H.P. State Cooperative Bank Ltd. Is as shown below
MANAGEMENT As per Bye-Law No. 36 of the Bank’s Bye –laws, the management of the affair of the Bank vests vests in Genera Generall Body, Body, Board Board of directo directors, rs, presid president ent and the Managi Managing ng Directo Director. r. The President is elected among the members of Board of Directors on its constitution and the appointment of Managing Director is done by the State Govt. Under the provision of section 35-B of the H.P. Cooperative Societies Act, 1968. The BOD is elected after every 4 -5 years as under 1.
2. 3. 4. 5. 6. 7. 8. 9.
6 Directors Directors are elected elected from six six districts districts duly duly elected by by the members members of Coopera Cooperative tive societies. Each one Director is from Kinnaur, Bilaspur, Chamba, Shimla, Mandi and Sirmour Districts. Out of these 6 Directors one Director must be from MF/SF/SC/ST. BOTH BOTH Kangra Central Central Coopera Cooperativ tivee Bank Bank and Jogind Jogindra ra Central Central Cooper Cooperati ative ve Bank from their members of board nominate 1 Director each. H.P State State Cooperativ Cooperativee M&C Federati Federation on also also nominated nominated 1 director. director. H.P H.P Stat Statee Coop Coopera erati tive ve Agri Agricu cult ltur uree & Rura Rurall Deve Develo lopm pmen entt Bank Bank also also nomi nomina nate tess 1 director. 1 director director who represent represent the the Weaver and and Industrial Industrial Coopera Cooperative tive Societies Societies nomina nominated ted by HP Handloom Weaver Apex Cooperative Society Kullu. State Govt. Govt. (under (under section section 35 of HP Coop. Coop. Societies Societies Act, Act, 1971) 1971) nominates nominates 3 directors directors or 1/3 of total no. of directors. (Whichever is less). Regist Registrar rar Coope Cooperat rative ive Societ Societies ies or its nomi nominee nee 2 directors directors (under (under rules rules 39 of HP Cooperative Cooperative Societi Societies es rule 1971) 1971) are nominat nominated ed by the Registrar Cooperative Societies. Managi Managing ng direct director or as ExEx- offic officio io direct director. or.
CHANNEL OF INFORMATION SHARING: - in the H.P. state cooperative bank the channel of information sharing from top to bottom and from bottom to top if the management has to pass the information to the other branches then it is passed through a circular by the bank to the different branches. These information’s are sent to the district offi office ce whic which h circ circul ulat atee the the info inform rmat atio ion n to the the divi divisi sion onss bran branch ches es.. Wher Wheree thes thesee info inform rmat atio ion’ n’ss are are then then give given n to the the empl employ oyee eess who who work work acco accord rdin ing g to thes thesee information’s/guidelines. Any information from the bottom level is passed to the higher level through branch manager then to the division manager then to district manager then to head office then the information is presented to the management
CHANNELS OF INFORMATION SHARING Information at corporate level and unit level is exchanged by using one of the following channels: ➢ ➢
On line / internet : Website of NFL E-mail system
➢
Paper reply system
➢
Courier system
Information exchanged can be broadly divided into two categories of communication namely verbal and written communication.
Verbal Communication:
This refers to informal type of communication where information is exchanged verbally for example example Telephonic Telephonic conversation conversation . There is no legal restriction restriction of keeping keeping record record of the exchanged information.
Written Communication: In this type of communication a record of information exchanged is kept .It is legally bound to keep such records. Maintenance of Master file is an example of this type of communication.
CHANNEL OF DOCUMENTATION: - The channel of documentation is same as that that of the the chan channe nell of info inform rmat atio ion n shari sharing ng but but the the diff differe erenc ncee is that that in the the documentation there is generally the flow of different type of written reports about the branch branch to the head office. These These may include the weekly weekly book , quarterly quarterly report, report, yearly report, etc
CHAPTER 3 Analysis of annual report ANALYS ANALYSIS IS is the proces processs of evalua evaluatin ting g the relatio relationsh nship ip betwee between n compon component entss parts parts of financial statement to obtain a better understanding of firm position and performance. The purpose of financial analysis is to diagnose the information contained in it so as to judge the profitability and financial status of the firm. In the words of Myers, “Financial statement Analysis is largely a study of relationship among the various financial factors in a business as disclosed by a single set of statement, and a study of the trends of these factors as shown in a series of statements”.
METHODS OF FINANCIAL ANALYSIS: there are various methods methods of annual report report analysis the following following methods methods of analysis is
generally used 1. 2. 3. 4. 5. 6.
Comp Compar arati ative ve stat statem emen entt Tren rend ana analy lysi siss Comm Common on size size stat statem emen entt Fund Fundss flow flow ana analy lysi siss Rati Ratio o an analy alysis sis Cost Cost volu volume me prof profit it anal analys ysis is
FINANCIAL YEAR
Amount (in lacks)
trend percentage
2003-2004
74868500.00
100.00
2004-2005
76198200.00
101.78
2005-2006
75773300.00
101.21
2006-2007
79120700.00
105.68
2007-2008
79891100.00
106.71
Particular Capital reserve funds and other funds
2003-2004(base year) 74868500.00 1784044114.67
FINAN FINANCIA CIAL L POSITI POSITIONS ONS OF THE BANK IN RECENT YEARS STARTING FROM THE FINANCIAL YEAR 2003-04 TO 2007-08
2004-05 76198200.00 1782884182.76
2005-06 75773300.00 2009811367.15
2006-07 79120700.00 2007214709.15
2007-08 79891100.00 2561016783.94
fixed deposits saving bank deposits current deposits Borrowings overdue interest revenue interest payable other liabilities Provision Profits
11407803231.99 4664540265.58 406796873.58 2305211259.08 101545736.66 22670180.03 256001472.73 652890247.45 316641483.84
12720977213.59 5493584952.32 341542003.46 2378236712.08 98039421.09 22881111.03 395016879.84 690232611.72 605758234.25
14353418535.22 6090965527.69 709722064.79 2421882725.08 94356053.29 25258966.10 533707421.43 618778674.76 858676377.19
16493064660.34 6919163118.36 664733958.72 2464500264.08 155452173.39 32707644.03 584005199.71 748274591.29 1152681197.15
25618203646.98 8222530379.22 416367640.71 1831021333.00 161093725.46 26462949.97 881945510.61 991255093.72 1017820170.86
Cash balance with other banks Investments Advances interest receivable branch adj premises less depreciation other assets
1032594439.08 2289272341.02 10819697915.99 6225131399.29 669359342.01 311957832.24 43387933.13 542901283.53
660184826.48 4004907803.33 10383959790.50 7704446604.18 531392255.53 521386862.06 36549909.91 710040384.50
63260437.31 6770074259.74 10508778366.67 7856385765.56 441310420.58 582498257.91 30958606.34 923191533.20
1096016735.71 7872977039.38 10277424381.20 10760522714.66 457048686.73 221475603.13 74089921.52 498682440.75
4465424294.39 11804482166.93 11021080106.00 12476970459.87 721916427.51 722184042.33 86421979.70 712146504.93
1.
TREND ANALYSIS:- the analysis in which the trend of last few years is taken into consideration in this we take one year as the base year then we see the trend according to that year i.e. what trend is followed W.R.T the base year. I.
Capital build of the bank
FINANCIAL YEAR
2003-2004
Amount (in lacks)
%age
10325.94
100.00
2004-05
6601.85
63.93
2005-06
6326.20
61.27
2006-07
10960.17
106.14
2007-08
44654.24
432.45
2007-08 the capital still increases than the base year and is more than the base year by Capital growth is satisfactory. And thus the bank has greater capacity to bear risk.
II.
Cash flow to bank in different years
Starting from the financial financial year INFRENCE: Starting 20032003-04 04 the the capi capita tall buil build d up of the the H.P. H.P. Sate Sate Cooper Cooperati ative ve Bank Bank was Rs.7486 Rs.7486850 8500.00 0.00 which which increases by 1.7% of base year in 2004-05. In 200506 the capital decreases and remains only about 1.2% of the base year. But in the financial year 2006-07 capital capital increases increases by large value and become more than base year by 5.6% ,and in the financial year 6.7%. thus the capital is increasing continually thus the
1.
TREND ANALYSIS:- the analysis in which the trend of last few years is taken into consideration in this we take one year as the base year then we see the trend according to that year i.e. what trend is followed W.R.T the base year. I.
Capital build of the bank
FINANCIAL YEAR
2003-2004
Amount (in lacks)
%age
10325.94
100.00
2004-05
6601.85
63.93
2005-06
6326.20
61.27
2006-07
10960.17
106.14
2007-08
44654.24
432.45
2007-08 the capital still increases than the base year and is more than the base year by Capital growth is satisfactory. And thus the bank has greater capacity to bear risk.
II.
Starting from the financial financial year INFRENCE: Starting 20032003-04 04 the the capi capita tall buil build d up of the the H.P. H.P. Sate Sate Cooper Cooperati ative ve Bank Bank was Rs.7486 Rs.7486850 8500.00 0.00 which which increases by 1.7% of base year in 2004-05. In 200506 the capital decreases and remains only about 1.2% of the base year. But in the financial year 2006-07 capital capital increases increases by large value and become more than base year by 5.6% ,and in the financial year 6.7%. thus the capital is increasing continually thus the
Cash flow to bank in different years
INFRENCE: - Starting from the financial year 2003-04 the CASH of the H.P. Sate Cooperative Bank was Rs.10325.94 which decrease by 36.07% of base year in 2004-05. In 2005-06 the cash further decreases and remains about 38.73 % of the base year. But in the financial year 2006-07 cash increases by large value and become more than base year by 6.14% ,and in the financial year 2007-08 the cash with bank increase un expectedly instead of the the recession by 332.45%than the base year. year.
III. III.
Advanc Advances es and and outstan outstandin ding g loans loans of the the bank bank from from 20032003-04 04 to 20072007-08. 08. advances & outstanding loans Amount (in lacks) %age 62251.31 77044.47 78563.86 107605.23 124769.70
FINANCIAL YEAR 2003-2004 2004-05 2005-06 2006-07 2007-08
INFERENCE:-
100.00 123.76 126.20 172.86 200.43
Starting from the financial financial year 2003-04 the the ADVANCES & OURTSTANDING OURTSTANDING LOANS of the H.P. Sate Cooperative Bank was Rs.62251.31 Rs.62251.31 which increase increase by 23.76% of base year in 2004-05. 2004-05. In 2005-06 the ADVANCES ADVANCES & OURTSTAN OURTSTANDING DING LOANS LOANS further increase increase and stays about 26.20 % of the base base year. in the financial year 2006-07 ADVANCES & OURTSTANDING OURTSTANDING LOANS increases by large value and become more than base year by 72.86% ,and in the financial year 2007-08 the ADVANCES & OURTSTANDING OURTSTANDING LOANS increase to the double of the base year year And stays at 100.43% more more than the base year.
IV.
Differ Different ent types types of of depos deposits its during during 2003-04 2003-04 to 20072007-08. 08.
INFRENCE: - Starting from the financial year 2003-04 the CASH of the H.P. Sate Cooperative Bank was Rs.10325.94 which decrease by 36.07% of base year in 2004-05. In 2005-06 the cash further decreases and remains about 38.73 % of the base year. But in the financial year 2006-07 cash increases by large value and become more than base year by 6.14% ,and in the financial year 2007-08 the cash with bank increase un expectedly instead of the the recession by 332.45%than the base year. year.
III. III.
Advanc Advances es and and outstan outstandin ding g loans loans of the the bank bank from from 20032003-04 04 to 20072007-08. 08. advances & outstanding loans Amount (in lacks) %age 62251.31 77044.47 78563.86 107605.23 124769.70
FINANCIAL YEAR 2003-2004 2004-05 2005-06 2006-07 2007-08
100.00 123.76 126.20 172.86 200.43
INFERENCE:- Starting from the financial financial year 2003-04 the the ADVANCES & OURTSTANDING OURTSTANDING LOANS of the H.P. Sate Cooperative Bank was Rs.62251.31 Rs.62251.31 which increase increase by 23.76% of base year in 2004-05. 2004-05. In 2005-06 the ADVANCES ADVANCES & OURTSTAN OURTSTANDING DING LOANS LOANS further increase increase and stays about 26.20 % of the base base year. in the financial year 2006-07 ADVANCES & OURTSTANDING OURTSTANDING LOANS increases by large value and become more than base year by 72.86% ,and in the financial year 2007-08 the ADVANCES & OURTSTANDING OURTSTANDING LOANS increase to the double of the base year year And stays at 100.43% more more than the base year.
IV.
FINANCIAL YEAR 2003-2004 2004-05 2005-06 2006-07 2007-08
Differ Different ent types types of of depos deposits its during during 2003-04 2003-04 to 20072007-08. 08.
fixed deposits Amount (in lacks) %age 114078.03 100.00 127209.77 111.51 143534.19 125.82 164930.65 144.58 256182.00 224.57
saving bank deposits Amount (in lacks) %age 46645.40 100.00 54935.85 117.77 60909.66 130.58 69191.63 148.34 82225.30 176.28
current deposits Amount (in lacks) %age 4067.97 100 3414.42 83.93 7097.22 174.46 6647.34 163.40 4163.67 102.35
INFRENCE: STARTING FROM THE financial year 2003-04 the H.P. State Cooperative Bank has the fixed deposits of RS. 114078.03 lack, the saving bank deposit was about 4665.40 lack and the current deposits was about 4067.97 lacks. In the financial year 2004- 05 the FD increase by 11.5%, SBD increase by 17.77% and there is a fall in the current deposits . In next financial year the FD increase up to 25% , SBD increases up to 30% , CD increase by almost 95% is at 74.46% more respect to the base year. In financial financial year 2006-07 FD increases slightly more and stays stays at 44.58% more than base year in case of SBD the increase increase stands at 48.34% of base year and in case of CD there is decrease decrease in the deposits from last year but stands more than the base year. This means that the trust of the peoples is continually increasing on the bank. V.
Borrow Borrowing ing and invest investmen mentt of of bank bank during during 2003-0 2003-04 4 to to 20072007-08 08 borrowings
FINANCIAL YEAR
Investments
Amount (in
lacks)
Amount (in lacks)
%age
%age
2003-2004
23052.11
100.00
108196.98
100.00
2004-05
23782.36
103.17
103839.60
95.97
2005-06
24218.82
105.06
105087.78
97.13
2006-07
24645.00
106.91
102774.24
94.99
2007-08
18310.21
79.43
110210.80
101.86
INFRENCE: in the financial year 2003-04 the borrowings of the bank was was about Rs. 23052.11
fixed deposits Amount (in lacks) %age 114078.03 100.00 127209.77 111.51 143534.19 125.82 164930.65 144.58 256182.00 224.57
FINANCIAL YEAR 2003-2004 2004-05 2005-06 2006-07 2007-08
saving bank deposits Amount (in lacks) %age 46645.40 100.00 54935.85 117.77 60909.66 130.58 69191.63 148.34 82225.30 176.28
current deposits Amount (in lacks) %age 4067.97 100 3414.42 83.93 7097.22 174.46 6647.34 163.40 4163.67 102.35
INFRENCE: STARTING FROM THE financial year 2003-04 the H.P. State Cooperative Bank has the fixed deposits of RS. 114078.03 lack, the saving bank deposit was about 4665.40 lack and the current deposits was about 4067.97 lacks. In the financial year 2004- 05 the FD increase by 11.5%, SBD increase by 17.77% and there is a fall in the current deposits . In next financial year the FD increase up to 25% , SBD increases up to 30% , CD increase by almost 95% is at 74.46% more respect to the base year. In financial financial year 2006-07 FD increases slightly more and stays stays at 44.58% more than base year in case of SBD the increase increase stands at 48.34% of base year and in case of CD there is decrease decrease in the deposits from last year but stands more than the base year. This means that the trust of the peoples is continually increasing on the bank. V.
Borrow Borrowing ing and invest investmen mentt of of bank bank during during 2003-0 2003-04 4 to to 20072007-08 08 borrowings
Investments
Amount (in
FINANCIAL YEAR
lacks)
Amount (in lacks)
%age
%age
2003-2004
23052.11
100.00
108196.98
100.00
2004-05
23782.36
103.17
103839.60
95.97
2005-06
24218.82
105.06
105087.78
97.13
2006-07
24645.00
106.91
102774.24
94.99
INFRENCE: in the financial year 2003-04 the
2007-08
18310.21
79.43
110210.80
101.86
borrowings of the bank was was about Rs. 23052.11
lacks, lacks, the investment investment of the bank is Rs. 108196.98 108196.98 lack. In financial financial year 2004-05 the borrowings borrowings increases increases the bank by 3.17% and the investment of the bank was decreased by 4.03%. in the next financial year the borrowings stays at 5.06% more than the base year and the investment stays at 2.87% less than the base %age . In next year the borrowing borrowing increase slightly by 1.85% then last year and the investment further decreases decreases by5.01% than base %age. In the financial year year 2007-08 the borrowing decrease positively by 20.57%, the investment increase by 6.87% than previous year which is more than the base year by 1.86%. Thus the income of the bank on investment increases and the expenditure on borrowing decreases effectively. VI.
Other Other liabi liabilit lities ies and and other other asse assets ts of bank bank duri during ng 2003-0 2003-04 4 to 2007-0 2007-08 8
FINANCIAL YEAR
2003-2004 2004-05 2005-06 2006-07 2007-08
other liabilities Amount (in lacks) %age 2560.01 3950.16 5337.07 5840.05 8819.45
100.00 154.30 208.48 228.13 344.51
other assets Amount (in lacks) %age 5429.01 7100.40 9231.92 4986.82 7121.47
100.00 130.79 170.05 91.86 131.17
about 2560.01 lacks which increases by 54.30% in INFRENCE: - in the financial year 2003-04 the other small liabilities of the bank was about next financial year. In financial year 05-06 the liabilities become almost the double of the base year. And in financial year 07-08 the other liabilities of bank become more than 3 times the base year. In case of the assets there is an continues increase in the assets till 2005-06 by 70.05 % and then in 2006-06 there is huge decrease in the other assets about 80% of last year , but in 2007-08 the other assets stays at 31.17% more than the base year . I.e. there is a growth in the bank other assets. it is clear the other liabilities of the bank increases at the higher rate than the increase in the other asset.
lacks, lacks, the investment investment of the bank is Rs. 108196.98 108196.98 lack. In financial financial year 2004-05 the borrowings borrowings increases increases the bank by 3.17% and the investment of the bank was decreased by 4.03%. in the next financial year the borrowings stays at 5.06% more than the base year and the investment stays at 2.87% less than the base %age . In next year the borrowing borrowing increase slightly by 1.85% then last year and the investment further decreases decreases by5.01% than base %age. In the financial year year 2007-08 the borrowing decrease positively by 20.57%, the investment increase by 6.87% than previous year which is more than the base year by 1.86%. Thus the income of the bank on investment increases and the expenditure on borrowing decreases effectively. VI.
Other Other liabi liabilit lities ies and and other other asse assets ts of bank bank duri during ng 2003-0 2003-04 4 to 2007-0 2007-08 8
FINANCIAL YEAR
2003-2004 2004-05 2005-06 2006-07 2007-08
other liabilities Amount (in lacks) %age 2560.01 3950.16 5337.07 5840.05 8819.45
100.00 154.30 208.48 228.13 344.51
other assets Amount (in lacks) %age 5429.01 7100.40 9231.92 4986.82 7121.47
100.00 130.79 170.05 91.86 131.17
about 2560.01 lacks which increases by 54.30% in INFRENCE: - in the financial year 2003-04 the other small liabilities of the bank was about next financial year. In financial year 05-06 the liabilities become almost the double of the base year. And in financial year 07-08 the other liabilities of bank become more than 3 times the base year. In case of the assets there is an continues increase in the assets till 2005-06 by 70.05 % and then in 2006-06 there is huge decrease in the other assets about 80% of last year , but in 2007-08 the other assets stays at 31.17% more than the base year . I.e. there is a growth in the bank other assets. it is clear the other liabilities of the bank increases at the higher rate than the increase in the other asset.
2.) RATIO
ANALYSIS :- the ratio analysis of the service sector is slightly different from the production sector . in term of service sector the ratio analysis depends on certain different aspects. In case of Banking sector we calculate the sum of all liabilities and assets as below( the values are calculated on the bases of average of every month)
LIABILITIES Owned Funds Deposits Borrowing Other Liabilities Total
Amount ( In Lakhs)
38261 273547 22015 12782 346605
ASSETS Cash In hand Loans & Adv. Investments Other assets Total
Amount ( In Lakhs)
13176 108079 211072 14278 346605
Then we find the %age of relative share, interest paid, weighted cost by the following formulas for %of relative share = amount x 100/total , rate per 100 = int. paid paid / % of relative relative share x 100, For weighted cost = rate per 100 x %of relative share/100 share/100
2.) RATIO
ANALYSIS :- the ratio analysis of the service sector is slightly different from the production sector . in term of service sector
the ratio analysis depends on certain different aspects. In case of Banking sector we calculate the sum of all liabilities and assets as below( the values are calculated on the bases of average of every month)
LIABILITIES
Amount ( In Lakhs)
Owned Funds Deposits Borrowing Other Liabilities Total
38261 273547 22015 12782 346605
ASSETS
Amount ( In Lakhs)
13176 108079 211072 14278 346605
Cash In hand Loans & Adv. Investments Other assets Total
Then we find the %age of relative share, interest paid, weighted cost by the following formulas for %of relative share = amount x 100/total , rate per 100 = int. paid paid / % of relative relative share x 100, For weighted cost = rate per 100 x %of relative share/100 share/100
Cost Of Funds Amount ( In Lakhs)
% of Relative Share
RESERVES
38261
11.04
i)ACSF
7906
ii)OTHERS DEPOSITS
Liability
Intt. Paid
Rate per 100
Weighted Cost
2.28
201.47
2.55
0.06
30355
8.76
0
273547
78.92
19006.14
6.95
5.48
6.61
0.28
YIELD ON ASSETS BORROWING 22015
ASSETS Cash & Bank Bal. Loan & Adv. Apex Bank DCCB's Investments Other Assets TOTAL
Amount % of Relative I)DCCShare B ( In Lakhs)
Intt. Recd. 7336
14679 13176 ii)Apex Ban3k.80 Total of 108079 31.Deposit 18 100743 & Borrowing 29.07 O t h e r L i a b i l2it.y 7336 12 TOTAL 211072 14278 346605
Expenditure Intt. on Deposits
60.90 4.12 100.00
6.35 Rate per 2.12100 4.24
295562 85.27
10267.32 12782 346605
20325.45
10.19 3.69
2.96
100.00 9.63
5.82
5.86 8.83
P & L 31.3.2008 Amount ( In Lakhs) Income
19006.14
Weighted Yield 969.76
Interest on loan & adv.
Amount ( In Lakhs)
10267.32
Cost Of Funds Amount ( In Lakhs)
% of Relative Share
RESERVES
38261
11.04
i)ACSF
7906
ii)OTHERS DEPOSITS
Liability
Intt. Paid
Rate per 100
Weighted Cost
2.28
201.47
2.55
0.06
30355
8.76
0
273547
78.92
19006.14
6.95
5.48
6.61
0.28
YIELD ON ASSETS BORROWING 22015
ASSETS Cash & Bank Bal. Loan & Adv. Apex Bank DCCB's
6.35 Amount % of Relative Intt. Recd. Rate per I)DCCShare B 7336 2.12100 ( In Lakhs) 14679 4.24 13176 ii)Apex Ban3k.80 Total of 295562 85.27 108079 31.Deposit 18
Investments Other Assets TOTAL
100743 & Borrowing 29.07 7336 Other Liabil2it.y 12 TOTAL 211072 14278 346605
60.90 4.12 100.00
10267.32 12782 346605
10.19 3.69
Intt. on Deposits
2.96
100.00
20325.45
9.63
5.82
5.86 8.83
P & L 31.3.2008 Amount ( In Lakhs) Income
Expenditure
Weighted Yield 969.76
Amount ( In Lakhs)
19006.14
Interest on loan & adv.
10267.32
201.47
Interest on investment (SLR and Non SLR)
20325.45
969.76
Income From Non Banking Assets
1369.30
1480.55
Intt on Income Tax Refund
812.54
Premium amortisation
4677.64
Excess provision written back
Intt. on ACSF/CDF
Intt. on borrowing
Risk Cost (NPA Provision)
Premium amortization Cost Of Management
0
112.72
Other Provisions
686.48 Branch Adjustments
Branch Adjustments
241.96
0
Net Profit
4429.18
Misc. income
TOTAL
32505.72
TOTAL
430.93 32505.72
After the completion of the P&L account account the calculation of the financial financial margin is done as follows:-
CALCULATION OF FINANCIAL MARGIN Weighted Yield
8.83
Intt. on ACSF/CDF
201.47
Interest on investment (SLR and Non SLR)
20325.45
969.76
Income From Non Banking Assets
1369.30
1480.55
Intt on Income Tax Refund
812.54
Premium amortisation
4677.64
Excess provision written back
Intt. on borrowing
Risk Cost (NPA Provision)
Premium amortization Cost Of Management
0
112.72
Other Provisions
686.48 Branch Adjustments
Branch Adjustments
241.96
0
Net Profit
4429.18
Misc. income
TOTAL
32505.72
TOTAL
430.93 32505.72
After the completion of the P&L account account the calculation of the financial financial margin is done as follows:-
CALCULATION OF FINANCIAL MARGIN Weighted Yield
8.83
Weighted Cost
5.82
Financial Margin
3.00
Misc. expenditure as % to W.C.
0.50
Misc. Inc. as % to W.C.
0.16
Other Income as %age to WC
0.40
Cost Of Management
1.35
Risk Cost as % to W.C NET MARGIN NET PROFIT
0.43
1.28 4429.18 lacks
Financial margin = weighted yield – weighted cost After the calculation of this we reduce different misc. expenditure, inc, etc as % to weighted cost mainly which are not included in the earlier calculation of weighted cost
On the basis of these calculations the different interpretation are calculated these interpretations interpretations are based on the 1. Capi Capita tall adeq adequa uacy cy rati ratio o
6.dep 6.deposi ositt comp compos osit itio ion n rati ratio o
2. Net worth to average working funds ratio
7. Asset co compositions ra ratio
Weighted Cost Financial Margin
5.82 3.00
Misc. expenditure as % to W.C.
0.50
Misc. Inc. as % to W.C.
0.16
Other Income as %age to WC
0.40
Cost Of Management
1.35
Risk Cost as % to W.C NET MARGIN NET PROFIT
0.43
1.28 4429.18 lacks
Financial margin = weighted yield – weighted cost After the calculation of this we reduce different misc. expenditure, inc, etc as % to weighted cost mainly which are not included in the earlier calculation of weighted cost
On the basis of these calculations the different interpretation are calculated these interpretations interpretations are based on the 1. Capi Capita tall adeq adequa uacy cy rati ratio o
6.dep 6.deposi ositt comp compos osit itio ion n rati ratio o
2. Net worth to average working funds ratio
7. Asset co compositions ra ratio
3. Bo Borrowings to to av average wo working fu fund ra ratio
8. As Asset qu quality ra ratio
4. Borrowing to net worth ratio
9. Pr Profitability ratio
5. Various Composition of capital ratio
10. Other ratios
3. Bo Borrowings to to av average wo working fu fund ra ratio
8. As Asset qu quality ra ratio
4. Borrowing to net worth ratio
9. Pr Profitability ratio
5. Various Composition of capital ratio
10. Other ratios
INTERPRETATION INTERPRETATION OF RATIOS SN
RATIO
1
Capital Adequacy Ratio-Capital to total risk weighted assets Net worth to Average Working Fund
Higher the capital ratio, higher the capacity of banks to bear risks This ratio shows the share of Net worth to the total working fund. It indicates the strength of the institution. Higher this ratio, better for the institution
12.47
3
Borrowing to Average Working Fund
This ratio indicates the dependency level of the institution on outside support for doing its business. The interpretation of this ratio depends on the sources of borrowings. If the institution's borrowings largely comprised of high cost borrowings, higher the ratio, higher will be the cost of funds
4.24
4
Borrowing to Net worth
This ratio indicates how many times of its Net worth the institution is borrowing. This has to be seen with restrictions, if any, imposed by statute/ bye-laws/ Board on the borrowing powers of the
33.97
2
INTERPRETATION
AS ON 31.3.2008
INTERPRETATION INTERPRETATION OF RATIOS SN
RATIO
1
Capital Adequacy Ratio-Capital to total risk weighted assets Net worth to Average Working Fund
Higher the capital ratio, higher the capacity of banks to bear risks This ratio shows the share of Net worth to the total working fund. It indicates the strength of the institution. Higher this ratio, better for the institution
12.47
3
Borrowing to Average Working Fund
This ratio indicates the dependency level of the institution on outside support for doing its business. The interpretation of this ratio depends on the sources of borrowings. If the institution's borrowings largely comprised of high cost borrowings, higher the ratio, higher will be the cost of funds
4.24
4
Borrowing to Net worth
This ratio indicates how many times of its Net worth the institution is borrowing. This has to be seen with restrictions, if any, imposed by statute/ bye-laws/ Board on the borrowing powers of the institution and commented upon.
33.97
5
Composition of Capital
Higher the ratio, higher is the control of the Govt. over the institution. But, it also indicates the State's participation and interest evinced by it in strengthening the institution. This ratio may also be seen in the light of adoption of Model Cooperative Societies Act by the State concerned.
30.11
Higher ratio indicates the higher level of participation of individuals.
0.10
The ratio indicates the proportion of low cost deposits in the total deposits. Higher the ratio, better it is for the institution. This would help in keeping down the Financial Cost (FC)
29.08
2
a Govt Govt.. Shar Sharee Cap Capit ital al to Total Share Capital
b Share hare Cap Capital ital of Individuals to Total Share Capital 6 Composition of Deposits a Curre urren nt an and Sav Savin ings gs Deposits to Total Deposits
INTERPRETATION
AS ON 31.3.2008
b Term Term / Fix Fixed ed Depo Deposi sitt to to Total deposits
This ratio indicates proportion of high cost deposits in the total deposits. Higher ratio indicates higher cost of funds. Institutions should maintain proper mix of low and high cost deposits.
c Rati Ratio o of of Tim Timee Dep Depos osit itss to Total Deposits
Higher ratio indicates the stability of the deposit base of the bank. It has also a bearing on the cost of fund mobilized by the bank.
70.92
d Ratio atio of Cust Custo omer mer deposits to Total assets ( Customer deposits refer to deposits of individuals only) e Ratio atio of Vola Volati tile le Liabilities to Total Assets (Volatile Liabilities refer to all liabilities which are likely to be withdrawn even if slightly higher rate is paid by other market players. Ex: Institutional deposits, govt. deposits etc.) Asset Composition 7
Higher ratio helps in reducing the liquidity risk substantially.
53.79
Lower the ratio, better the liquidity
46.21
a NonNon-ea earn rnin ing g Asse Assets ts to Total Assets (Nonearning assets to cash, current account balances, interest receivable, other fixed asset etc.)
This ratio indicates proportion of non-earning assets to total assets. Higher the ratio, lower will be earning ability of the banks. Normally, banks should attempt to maintain non-earning assets at the minimum. Lower the ratio, better it for the bank.
5.78
b Cash ash and and curr curren entt account balances to Total Demand Liabilities (TDL) c Prim Primee Ass Asset et Rati Ratio o I.e. I.e. Prime assets to Total assets Prime Assets are Cash, Inter-Bank Placements (due within 30 days) and liquid securities d Tota Totall inve invest stme ment ntss to TDL
This indicates the cash management position of the bank Higher the ratio, better the liquidity
Higher the ratio, higher is the tendency of the bank for going for risk free earning. However, this ratio will have to be interpreted keeping in view the funds position of the bank, lending
opportunities etc.
e NonNon-SL SLR R inv inves estm tmen ents ts to Total Investment
The position is to be examined with reference to availability of Non-SLR surplus funds and RBI/ NABARD guidelines in this regard.
f Inve Invest stme ment nt in shar sharee and and debentures to Total Investments.
This ratio has to be interpreted keeping in view the instructions issued by RBI /NABRD from time to time.
g ST loan loanss out outst stan andi ding ng to Total loans outstanding
These ratios indicate what proportion of loans and advances are of short-term and long term in nature. These ratios have to be compared with the ratios of ST and LT liabilities to total liabilities to understand whether there is any unduly large asset liability mismatch which may lead to liquidity crunch.
h L.T. L.T. loan loanss outs outstan tandi ding ng to total loans outstanding I High High yiel yieldi ding ng adva advanc nces es to total advances outstanding
62.87
34.24
31.05 The ratio indicates the extent of high value advances in the total loan portfolio. Higher the ratio, better will be the earning ability of the bank. However, while interpreting this ratio, IO will have to study the extent of impaired assets in this category, appraisal capability of the bank, supervisory mechanism etc.
j Rati Ratio o of Net Net loan loanss to Primary deposits primary deposits refer to deposits other than Certificate of Deposits, Interbank Deposits etc. Asset Quality 8
67.55
a Stan Standa dard rd asse assets ts to Tota Totall loan assets
Higher the ratio, better is the quality of advances portfolio of the bank. Besides more standard assets means more earning capacity of the bank
87.99
B Impa Impair ired ed ass asset etss to to Tot Total al loans
This ratio indicates the extent of poor quality loans. If it is more than 5% of the loan, portfolio, the IO is required to critically examine the impaired assets and their composition and suggest measures for improving the recovery position.
12.01
9
Profitability Ratios
a Inte Intere rest st Inco Income me to Gros Grosss Income
The ratio indicates the proportion of interest income to the gross income.
94.12
b Income from The ratio indicates the proportion of income Commission, brokerage from non-fund based business. Higher the ratio, and exchange and other better the profitability of the bank. Normally, this sources to Gross Income ratio will be around 10%
5.88
c Inte Intere rest st paid paid incl includ udin ing g interest due but not paid on deposits and borrowings to interest income
This ratio indicates the proportion of interest income utilized for meeting the interest cost. It also indicates the spread available to the bank to meet the COM and other cost. Very high ratio would indicate serious problem in the bank as to asset liability miss-matches.
65.95
d Cost ost of of Man Manag agem emen entt (CoM) to Gross Income
The ratio indicates what part of the Gross Income goes to meet cost of management. This ratio will have to be compared with State average and peer group averages.
14.39
e Inte Intere rest st on depo deposi sits ts and and borrowings to Total expenditure
The ratio indicates the proportion of interest cost in the total cost. A high level of interest cost indicates a poor level of internal resources position and heavy dependence on outside sources.
71.87
f Staff taff cost cost to Total otal expenditure
This ratio indicates the proportion of staff cost in the total expenditure of the bank
16.66
g Incr Increm emen enta tall CoM CoM to incremental business
This ratio indicates at what cost the incremental business of the bank is built up. What is required to be examines is whether the bank is incurring higher incremental expenditure for generating Rs. 100 of additional business.
h Net Net pro profi fitt to to Gro Grosss Income
This ratio indicates what portion of the gross income is available. This will have to be examined in relation to statutory restrictions. If any and as per NABARD's guidelines.
i Divi Divide dend nd pay pay out out rati ratio o Dividend paid to Net profit
This ratio indicates the % of dividend declared by the bank. This will have to be examined in relation to statutory restrictions. If any and as per NABARD's guidelines.
13.63
j Net profit to owned fund
This ratio indicates return on owned funds
10.25
k Net Net pro profi fitt to to av averag eragee working funds
The ratio indicates margin of profitability available to the bank
1.28
l Inte Intere rest st Cost Cost (on (on deposits and borrowings ) to average Working Funds
This ratio gives the average cost of funds
5.82
m Inte Intere rest st Cost Cost (on (on loa loans ns and advances plus investments ) to average Working Funds n Tota Totall pro provi visi sion onss mad madee towards impaired assets to Total provision required to be made
This ratio gives the average yield on WF
8.83
This ratio indicates the extent of provisions provisions made by the bank. The bank is required to make full provision as per the prudential norms
o Total tal provi rovission ions required to be made to loans and advances outstanding
This ratio indicates degree of risk of loaning operations in the bank. This ratio ra tio should be compared with State, district as well as peer group averages and commented upon.
P Eros Erosio ion n in Asse Assets ts to Total Assets
This ratio indicates the quality of assets. A higher ratio reflects the poor quality of assets held by the bank.
10
Other Ratios
(I) (I) Net Net Wo Worth rth to to To Total tal Outside Liabilities
Higher the ratio, better is the intrinsic strength of the bank. This also indicates risk bearing capability of the bank.
(ii) Business per st staff
The ra ratio in indicates th the le level of of st staff pr productivity in the bank. This ratio will have to be compared with State, district and peer group level averages. This can also be compared with per staff breakeven level of business.
357.09
(iii Per Bran ranch bus busines inesss )
This his rat ratio io ind indicat icates es the the lev level el of bra branc nch h productivity. As in the case of staff productivity, this ratio will have to be compared with that of State, District and peer groups.
2675.11
CHAPTER 4
KEY OPERATIONAL PROCESSES As when we are in the banking sector or any financial sector there is a need to maintain the record of every monetary or nonmonetary transaction .when we talk about the banks it mainly deals with the cash flow the key operational processes of the bank starts after the time when the customer enters the bank 1st time and it is assumed in the financial institution if a person is your client then it is for life time. In case of the bank the following are the key processes which are the main part of working of the bank 1. Chec Checki king ng of Open Openin ing g bala balanc ncee 2. Open Openin ing g of of new new accou account nt 3.
Deposition Deposition// Withdraw Withdrawing ing of cash cash (by consumer) consumer)
4.
Sanc Sancti tion onin ing g of of loa loans ns
5. Intern Internal al proc process ess and transa transactio ctions ns 6. Oth Other pro proce cessses ses 7.
Repo Report rtss prep prepar arat atio ion n
8.
Clos Closin ing g bala balanc ncee
Checking of Opening balance: when the day starts the cash in the locker of the bank is tallied with the balance book of the bank. In the computerization system it is done with the help of check sum option in generated by the system last evening.
Opening Opening of new account
in the computerized system the account opening system is very easy task. the person who wants to open his account has to fill a application form (attached (attached in annexure) and has to submit submit a passport size photograp photograph h , residence residence proof , a garreteer, when he fulfill all the requirements his account is opened according to his wish .
The following types of account can be opened in this bank 1. Current t account
2. Saving account
3. Fixed deposits
4. MlLD
5. HPD
6. RD.
Then the operator or clerk after verifying everything opens his accounts by feeding his detail detailss into the the system. system. he selec selectt the option option OPER OPERATI ATIONS ONS under under operat operation ion select select ACCOUNT then ACCOUNT ACCOUNT OPEN. New account opening screen screen will appear . then all the details are filled which are asked by the system . when we save these details then account no. and customer customer ID is generated generated by the system itself. These information’s information’s are written down by the operator operator on the AOF .the account account will be confirmed confirmed after competent competent official authorizes authorizes the same .after the confirmation of account voucher posting is allowed .
Deposition/ Withdrawing of cash (by consumer ): after the opening of account the deposition and withdrawing is done. The following types of action is done while operating the account 1. Deposition (deposit of cash)
2. Withdrawing (withdrawing of cash )
3. Transfer (transfer of money from one account to other). All these transactions are done with the vouchers which have to be posted into the system. And is done by selection the option VOUCHER TRANSACTION – VOUCHER. Voucher
posting screen will appear all the vouchers other than the outward clearing voucher can be posted through option While posting the voucher select Cr. for CREDITING, Dr. for DEBITING. and in transaction transaction type select transaction transaction type cash for CASH RELATED RELATED TRANSACTIO TRANSACTION N , clg. For CLEARING , tfr for TRANSFER . Account no. in related column After the completion of voucher details, save the transaction. In case of any irregularity the system will display appropriate ‘MESSAGE’ ‘MESSAGE’ on the screen . At the end of of the transaction the system generate the Trn. Now this no. is written down on the front of the voucher in case of of transfer transfer after filling filling the the entries entries in Dr. or Cr. Side Side of the tfr tfr voucher voucher press the forward arrow (>>) fill the opposite opposite details details and then save the some message may appear appear for the user to take note of the same . Transaction no. for for each voucher and batch No. would appear for the user to note down the same. The transaction no. for voucher and batch No. is generated by system
.
Sanctioning of loans : in recent years many banks are providing loans to the customers accordi according ng to their their requir requireme ement nt at differe different nt interes interestt rate. rate. Every Every bank bank is provid providing ing loans loans according to their preference. The loans provided provided by state cooperative cooperative bank are 1. Personal loan
2. Home loan
4. Education loans
5. Non agriculture loan
7. Self helped group scheme
3. Vehicle loans 6. Minor irrigation
8. Self employed group scheme etc…
The person who wants to get a loan he has to fill the form for required type of loans along with the application form he has to submit the various documents insuring his ability of paying paying back the loans. loans. Like voter id, copy of rashan card. Income Income statement, statement, land etc. when the the appl applic ican antt is able able to prod produc ucee the the all the requi require red d docu docume ment ntss then then it is on the the bank bank authorities to evaluate that whether the applicant is eligible for getting the loan all the record related to the applicant is maintained in the loan file of applicant. While passing the loan it is
taken care that the after paying the installment and interest the person is able to get 35% amount of money to his home. If the applicant is able to fulfill these criteria then the bank passes his application and his loan s sanctioned after the sanctioning of loan the amount is transferred to the saving account of the applicant and a separate loan account is generated for the applicant and the interest is credited into his account. This loan account no. is then given to the file of the applicant and is maintained on the records. When sanctioned amount is transferred into saving account it is printed as “tfr from loan account”. This generally happen in case of personal loans, house loans etc where the person has to spend money himself. But in case of education loans or vehicle loans the payment is made to the third party as is required to the third party.
INTERNAL PROCESSES AND TRANSACTION: - internal processes involves the lodging, bouncing, inward clearing, outward clea ring, cheque book, 1.
INWARD CLEARING: - It is the process of debiting the cash into the account of the individuals whose payment is done by the cheque of other banks. Once these cheques are received then are send to clearing house. After clearing these cheque comes to the branch if the issuer account has the enough amount to pay the written amount on the cheque, after the receiving of the inward clearing from the clearing house. the person dealing with the clearing follow this procedure Go to: operation > clearing> inward> entries (Dr.) and the screen will appear
like
Then the selection of clearing type is done from the available drop down menu then the total amount amount is entered as per the clearing clearing statement. under total Doc. Enter total no. of instruments. Then click on “ok ” to save the document. Then go back to Voucher Posting Option and enter all the instruments under same clearing type. Returning are also to be entered in the system and through ‘ REFER’ and ‘RETURN’ Options reasons for returning and Bank & branch where the instrument is required to be returned are to marked.
To authorize this transaction the authorizing officer has to select Authorization > Clearing > entering inward Clearing type wise: and then make insure that the tallying of two accounts i.e. the amount received from the clearing house and the amount entered in the system.
In the authorization screen the individual cheques are also to be authorized. Physical voucher are also prepared for the inward/outward clearing and returning as in case of manual operations. Posting of these voucher are not required as system itself take care of it. 2.
OUTWARD CLEARING:- It is the process in which the cheques which are received received from the customers customers are sent for the clearing clearing to the clearing house, house, so that they are debited and credited in the respective ends. In order to enter the outward clearing the operating person has to select, Operations > Account transaction > Outward Clearing Entries and a screen will appears.
Then enter all the instruments to be sent for the clearing under respective clearing types. types. In accorda accordance nce with with the instruct instruction ion of RBI to enter enter narrati narration on for clearing clearing cheques, provision has been made to enter necessary details. Then Then it is nece necess ssar ary y to auth author oriz izee it befo before re the the “DAY “DAY ENDS ENDS”” and and lodg lodgee the the instruments next day for credit to respective A\c’s. 3.
LODGING OF OUTWARD CLEARING:- it is the is the process on lodging the cleared cheques into account when we select the lodging then the screen appears like
from this screen we can see the the lodged cheques and verify them with the report in our hand if there is any outward clearing return then we select the
Clearing > outward > bounced document and the following screen will appear
Then press the detailed button see the details of bounced document if there is no any bounced document then set instrument/ doc equal to zero. Else select the instrument and press “ok” returning is marketed and after authorizing it the amount is reduced from the respective account head and Cr. impress voucher is generated. And then the physical voucher is prepared for the same. 4.
LODGING OF INWARD CLEARING RETURNS:- the screen open for inward clearing is as in this the operator has to insert the date and then click ok
After After author authoriza izatio tion n of outwar outward d bounce bounced d docume document nt the clearin clearing g is automa automatica tically lly released/cleared.
OTHER OPERATIONS:- these processes involves the other operations than normal operations like issuing of drafts , paying of drafts , locker facilities. These facilities are provided to the customers on very low commission rate. For the issuing of the draft the person has to fill the form and the operating person has to open the draft formation screen in which he has to write the address of the person to whom the draft has to pay, the branch code, amount amount.. Then Then print print the docume document nt on the draft draft sheet which which is to be authori authorized zed by the authorizing officer.
When the draft reaches the paying branch then the authorizing officer of the bank sanction the draft and are sent to cashier for the payment. In case of the locker facilities the customer has to fill the form for the facility of locker and then after adding locker facility to their account account on a minor minor yearly charge. After the issue of locker to the customer one key of the locker is given to the customer and the other is kept by the bank, when the user wants to open his locker the record of his opening/ visit is kept in a locker book. One of the operating officers inserts the key and the user inserts its key after this user can keep what he wants to keep in that locker. If the user wants to close the locker then user needs to just clear the locker and inform the bank authorities about the matter.
REPORT PREPRARTION:- daily in the bank various types of reports are generated as the major work portion of the bank. Some common reports are discussed here 1. Customer related report: - various reports related to customer’s viz. account statement, customer advice, balance and interest certificates are available under this option.
2. Day book report:- from this option various long books , transfer journals, clearing journal day book, cash journal etc. are available.
The user could view all the transactions made by him/her from the user transaction details register. And, from the transaction detail resister the user could view all the transactions made between the dates as entered. This is not dependent on the users. Cash journals arte categorized on user type, transaction type and date wise. To open any of the above mentioned report the user need to click on the report and then click on the open option. A sample cash journal journal for Dr. transaction only is being shown shown here
3. Control Reports :- various control options viz. detail account statement with transaction, exceptional transaction , rejected transactions, pending vouchers, audit summary, account deposits and interest rates, temporary OD report, reversal voucher report, report, system system voucher voucher report, account debit/ credit summery summery report, report, active user list, stop user list, expense comparison statement, transaction exceeding amount, head wise system voucher report, user wise transaction report. ALL reports are used to monitor the transaction of every day. 4. Balance report:- under this options various types of the reports are available like Dormant account list, inoperative and operative account list, daily balance report, Cr & Dr. balanc balancee report reports, s, account account ledger ledger,, summar summarized ized balanc balancee report reports, s, unclaim unclaimed ed account list, balance above daily D.P., balance below closing amount, and category wise report for all accounts.
An operative account looks like
5. General common reports:- under this option various general common reports can be generated/seen like account related, ending reports, cheque/cheque book elated report, passbook reports, SI related reports, credit limit related report, voucher related report, ladder related and various MIS related report. Various Various MIS related reports reports are BSR reports, LBR reports, DCB reports, reports, loans/NPA related reports, ALM reports, low cost deposits reports, analysis of expenses.
Sample
account
holder
list
of
saving
fund
head.
6. Registers: - various registers like open and close account registers, SI received register, lost/stopped cheques register, nomination registers, minor details register and access log register.
Sample lost or stopped register is shown here..
7. Interest Related Reports:- various various interest interest related reports like detailed detailed interest interest sheet, sheet, summar summarize ized d intere interest st sheet, sheet, interes interestt rate rate change change report report,, HO intere interest st sheet sheet,, interest not posted report, etc are included under this option.
Clearing Related Related Reports: Reports:- variou 8. Clearing variouss cleari clearing ng related related report reportss like like Outwar Outward d clearing, inward clearing, RBI clearing and inward cheque return memo reports are available under this option. There are various reports under each Head described above , like under outwards outwards clearing clearing report report , the following following reports reports are available available general outward clearing register, lodged outward clearing register, outward clearing return receipt, status of document, summery reports, clearing house holiday report, work work done done on holida holiday y report reports, s, categor categories ies wise wise report report for accoun accountt holder holder,, lodged lodged document, summarized, authorized documents clearing, clearing extension reports. 9. User Related Reports:- various reports related to the user activities like user type reports, active user reports, all user reports, closed user reports, stopped user reports, revoked user report, one user report, user log report, account edited user wise details are available in this option. Sample user report is shown here
10. Parameter Related Reports: - various type of reports are available in the system system to the parame parameters ters.. These These are like like report reportss related related to common common parame parameter ters, s, accoun accountt wise wise parame parameter, ter, sign sign & photo photo parame parameter ter,, remitt remittance ancess parame parameter ter,, charge chargess parameter, clearing parameters, locker parameters. Sample common parameter report is
11. HO RELATED REPORTS: - various reports related to HO could be viewed or printed from the following options
Main menu > HO reports Under this option the various types of report are size wise statement, apportionment report, annual return of deposit account. Sample size wise report for saving fund account head
12. OTHER REPORTS :- various options available under this options are account details with the transaction details, account ledger, cash ledger, scroll ledger same, voucher summery of transaction, summery report, clearing report, day book and cash book. Sample voucher summery of account head saving funds
Under the reports option all the reports are available in English only and bilingual reports are not taken. Bilingual reports take more time during printing than the English printing, and as such some of the internal reports can be taken out from this menu.
CLOSING BALANCE:- after all the transaction in the bank of a particular day the cashier has to count all the cash in the evening whether it is in the locker or in the hand of the cashier. After counting the amount the cashier tallies the amount with the day report that whether the amount he/she has is equal to the total amount in the bank when the two totals
matches cashier has to mention the record of the cash in the cash record book counting the no. of notes of each type and marking them in their respective rows. This closing balance acts as the opening balance for the next day and the whole process of account transaction to report preparation and then closing balance repeated again every day.
Chapter 5
Swot analysis The overall evaluation of a business’s strengths, weaknesses, opportunities, and threats is called SWOT analysis. SWOT analysis consists of an analysis of the external and internal environments.
External Environment Analysis In gene general ral,, a busi busine ness ss unit unit has has to moni monito torr key key macroenvironment macroenvironment forces (demographic economic, economic, technologi technological, cal, political-leg political-legal, al, and social-cultu social-cultural) ral) and microenvironment microenvironment factors
(customers, competitors, distributors, and suppliers) that affect its ability to earn profits Then, for each trend trend or develo developme pment, nt, manage managemen mentt needs needs to identi identify fy the associ associate ated d market marketing ing opportunities and threats. A marketing opportunity is an area of buyer need in which a compan company y can perfor perform m profit profitabl ably. y. Opport Opportuni unities ties can be classi classifie fied d accordi according ng to their their attractiveness and their success their success probability. probability. The company’s success probability depends on whether whether its business strengths strengths not only match the key success requirements requirements for operating operating in the target target market market,, but also also exceed exceed those those of its compet competito itors. rs. Mere competen competence ce does does not constitute a competitive advantage. The best-performing company will be the one that can generate generate the greatest customer customer value and sustain it over time. An environmental threat is a challenge posed by an unfavorable external trend or development that would lead, in the absence of defensive marketing action, to deterioration in sales or profit. Threats should be classified classified according according to seriousness and probability probability of occurrence. occurrence. Minor threats can be ignored; somewhat more serious threats must be carefully monitored; and major threats require the development of contingency plans that spell out changes the company can make if necessary.
Internal Environment Analysis It is one thing to discern attractive opportunities and another to have the competencies to succeed in these opportunities. Thus, each business needs to periodically evaluate its internal streng strengths ths and weakne weaknesse ssess in market marketing ing,, financ financial, ial, manufa manufactu cturin ring, g, and organi organizat zation ional al competencies. Clearly, the business does not have to correct all of its weaknesses, nor should it gloat about all of its strengths. The big question is whether the business should limit itself to those those opport opportuni unitie tiess in which which it posses possesses ses the requir required ed streng strengths ths or consid consider er better better opportuni opportunities ties to acquire or develop certain strengths. strengths. Sometimes Sometimes a business business does poorly poorly becau because se its departme departments nts do not work together together well well as a team. team. It is therefo therefore re critica critically lly impo importa rtant nt to asse assess ss inte interd rdep epart artme ment ntal al work workin ing g relat relatio ions nshi hips ps as part part of the the inte intern rnal al environmental audit. STRENGTH: STRENGTH: -The The streng strengths ths of the H.P. H.P. State State Cooper Cooperativ ativee Bank Bank depend depending ing on its external and internal environment are 1. The bank bank is spread spread into only only 6 districts districts due due to its limited limited area it is easy to monitor monitor minor requirements of the customers which may else ignored by other banks. 2. The bank bank provides provides the the easiest easiest way to open open a new account account into any of its branch branch as the the customers has to fill minimum requirements which are asked by other banks.
3.
The bank bank has the branches branches in the the remote remote areas where where the the branches branches of other other banks banks are not yet opened which give the bank edge over the other banks.
4. As the bank bank is a cooperative cooperative bank bank thus bank gets gets the advantag advantagee of getting getting priority priority by the different cooperative societies for transactions and loans.
5. Due to the cooperat cooperative ive in nature nature people peopless has faith faith in the bank. bank. 6. Cooperativ Cooperativee staff is the main main strength strength of all the organizat organization ion as in case of of the bank its its cooperative staff is the main strength of the bank.
7. Adhere Adherence nce to coop coop values values and and prin princip ciples les..
8. The H.P. H.P. State Coope Cooperative rative Bank Bank has well well knit organiz organizationa ationall structure. structure.
9. The H.P. H.P. State State Cooperativ Cooperativee Bank has has deep deep roots roots in the the community community.. 10. The H.P. State Cooperative Bank deals the the user as not only the customers but but also the member of the bank. 11. It has great amount amount cooperation cooperation with other district district cooperative cooperative banks( banks( Kangra central cooperative bank, Jogindra central cooperative bank ). 12. The H.P. State Cooperative Cooperative Bank focus focus on the person person of limited means & the poorer poorer section 13. The main priority of The H.P. State Cooperative Cooperative Bank is member services rather than profit. 14. The H.P. State Cooperative Cooperative Bank has the capacity to thrive in crisis. 15. The main emphasis of The H.P. State Cooperative Bank is on GLOCALISATION. GLOCALISATION.
WEAKNESSES:1. The The H.P. H.P. State State Coop Cooper erati ative ve Bank Bank has less less resour resource ces’ s’ as compare compared d to the othe other r nationalized and public banks. 2. The H.P. H.P. State State Cooperativ Cooperativee Bank staff staff lacks lacks the professiona professionalism. lism. 3. Political Political pressures pressures on on the employe employees es of the bank bank as compare compared d to the other other banks. banks. 4. Ther Theree is some some sort sort of gove govern rnme ment nt cont contro roll over over the the work workin ing g of The The H.P. H.P. Stat Statee Cooperative Bank. 5. In The H.P. State Cooperative Bank dependence syndrome is there. Each person think
his work may be done by the other. 6. No inter internet net bank banking ing and and mobil mobilee bankin banking. g. 7. ATM network network is not well well spread like other other nationalized nationalized and and public public banks. banks. 8. Most of of the branches branches are not online online however however they they are comput computerized. erized. 9. Less advertis advertisement ement is other other weakness weakness of of The H.P. H.P. State State Cooperative Cooperative Bank. Bank. 10. Lack of time time managemen management. t. 11. Lack of knowledge about the many aspects of banking to the employees.
12. Due to the restric restricted ted area the total total capital capital of The H.P. State Cooperat Cooperative ive Bank is limited.
OPPORTUNITIES:1. Being the the cooperative cooperative bank bank it has the opportun opportunity ity to finance finance the governmen governmentt projects. projects. 2. Provid Providing ing ATM ATM faciliti facilities es may take take bank bank a long long way. way. 3. With the growth growth of of axis bank bank in the the term of custome customers rs and market market share share the growth growth of bank is also permote. 4. As it is is a state state cooperativ cooperativee bank this this bank bank is bank in demand. demand. 5. Being Being cooperat cooperative ive bank this this bank gets priorit priority y over over the other other banks for coopera cooperativ tivee societies. 6.
Exist Existenc encee of bank bank in remo remote te areas areas..
7. Bank may may take the the advantage advantage of being being cooperat cooperative ive bank by promotin promoting g itself. itself.
THREATS:1. The main main threat to The H.P. State State Cooper Cooperativ ativee Bank Bank is increa increasin sing g steps/ro steps/roots ots of the public banks. 2. Easy Easy polic policies ies of of the the publi publicc banks banks.. 3. Less documentati documentation on of the the public public banks banks for for different different types types of loans. loans. 4. Instant Instant /one /one minute minute service service provided provided by some some banks. banks. 5. Online Online banking banking and mobile mobile banking banking facilities facilities of other other nationalized nationalized and public public banks banks 6. Facilities Facilities like ZERO ZERO BALANCE BALANCE ACCOUNT ACCOUNT by some some of public public sector sector banks. banks. 7. Increasing Increasing market market share of of the other bank bank threaten threaten the H.P. H.P. State Cooperat Cooperative ive Bank to to lose its position in the market. 8. More significant significant brand image in public public acceptance acceptance of product product and services services of public public
and nationalized banks as compared to cooperative banks.
CONCLUSION The present study on H.P. State Cooperative Bank may be concluded as 1. Total no. no. of branches branches of bank bank increased increased up to 175 175 in 2008. 2008. 2. The total deposits in the bank in 2008 are Rs. 343433 lacks.
3. The total total investmen investmentt of the bank in 2008 2008 is Rs. Rs. 219421 219421 lacks. lacks. 4. The total total loans and advances advances of of the bank bank in 2008 2008 is Rs. 12476 124765 5 lacks. lacks. 5. The total total working working capital of of the bank bank for 2008 is Rs. Rs. 418300 418300 lacks. lacks. 6. The H.P. H.P. State State Cooperativ Cooperativee Bank is is working working at the apex apex level in the state. 7. The H.P. H.P. State Coope Cooperative rative Bank Bank has alliance alliance with with the UTI for for clearing clearing and issuin issuing g the bank drafts. 8. The H.P. H.P. State Cooperati Cooperative ve Bank is running running various various loans loans and deposits deposits schemes schemes for for the customers. 9. The H.P. H.P. State Coope Cooperative rative Bank Bank has won won various various awards awards for its appreciable appreciable work work done in rural areas. 10. The capital of the bank is increasing continually and is about about Rs. 798 lacks, thus the bank has greater chance to bear risk is increasing.
11. The cash in hand or with other banks of The H.P. State Cooperative Bank is continusly increasing and is Rs. 44654.26 lacks.
12. In all the 3 deposits deposits the rate of increasing of of fixed deposit is maximum/highest. 13. The investment of the bank is more more than the borrowings of the bank from recent years. 14. The average total liabilities/assets of the bank for the financial year 2007-08 are Rs. 346605 lacks. 15. The weighted cost for the liabilities is 5.82; the weighted yield yield for assets is 8.83. 16. Total average expenditure/income for the the financial year 2007-08 is Rs.32505.72 lacks. 17. Ne t profit of the bank for the financial year 2007-08 is Rs. Rs. 4429.18 lacks. 18. The financial margin is 3.00, 3.00, the net margin is 1.28. 19. The bank has higher the capital ratio, thus higher the capacity of banks to bear risks. 20. Net worth to Average Working Fund ratio is 12.47% thus higher the ratio better the
institution. 21. Borrowing to Average Working Fund ratio is 4.24% thus lower the ratio lower will be
the cost of funds. 22. Borrowing to Net worth ratio is 33.97 thus the bank is borrowing more than 33 time
of its net worth. 23. The Govt. Share Capital to Total Share Capital ratio is 30.11%, which means the
government has higher control over the bank as higher the ratio higher the control of the govt. over bank. 24. Share Capital of Individuals to Total Share Capital ratio is 0.10 %which means there
is low level of participations of individuals 25. Current and Savings Deposits to Total Deposits ratio is29.08% it means the bank is in
batter conditions. 26. Term / Fixed Deposit to Total deposits ratio is 70.92% it indicates the higher cost of
funds.
27. Ratio of Customer deposits to Total assets ( Customer deposits refer to deposits of
individuals only) is 53.79% , indicates that the bank has reduced liquidity risk 28. Ratio of Volatile Liabilities to Total Assets (Volatile Liabilities refer to all liabilities
which are likely to be withdrawn even if slightly higher rate is paid by other market players. Ex: Institutional deposits, govt. deposits etc.) is 46.21% which is on lower side thus the bank has better liquidity. 29. Non-earning Assets to Total Assets (Non-earning assets to cash, current account
balances, interest receivable, other fixed asset etc.) is only 5.78% which is defiantly on the lower side thus the bank has higher ability of earning. Branch business of the bank is 2675.11 lacks 30. The average Per Branch 31. Net profit to Gross Income ratio is 13.63%, Net profit to owned fund ratio is 10.25%,
Net profit to average working funds ratio is 1.28%. 32. Ratio of Interest Cost (on deposits and borrowings) to average Working Funds is
5.82%, ratio of Interest Cost (on loans and advances plus investments) to average Working Funds is 8.83%. 33. The ratio of L.T. loans outstanding to total loans outstanding outstanding is 31.05%, ratio of ST
loans outstanding to Total loans outstanding is 34.24% 34. Standard assets to total assets ratio is 87.99%, means more earning capacity of bank.
Ratio of Impaired assets to Total loans is 12.01%. 35. Interest Income adds 94.12% to the gross income of the bank, Interest paid including
interest due but not paid on deposits and borrowings contributes 65.95% to the income through interest. 36. Interest on deposits and borrowings contributes 71.87% in total expenditure. 37. Business per staff ratio of the bank is 357.09 and tells about the productivity of bank
staff.
SUGGESTIONS AND RECOMMENDATIO RECOMMENDATIONS NS To run run any any orga organi niza zati tion on succe success ssfu full lly y the the mana manage geme ment nt need needss to thin think k alwa always ys for for the the betterment of their service and product, every time there is a chance of improvement in the functioning of every organization specially when we talk about the banking sector in past there is very less or no competition in the market and the banks has no pressure to provide better facilities to the peoples but in recent years the the competition is increased due to the entry of the public banks and other money lending units . Considering this the state cooperative banks need to be more careful and needs to take such steps which favors hem to stay ahead in the market. Some of the suggestions and recommendation are given here which may help the H.P. State Cooperative Bank to stay in the competitive market if they adopt these. 1. In order order to be competi competitiv tivee in the market, market, all three three –segment –segmentss of cooper cooperati ative ve banks banks should jointly work out a coordinated strategy for establishing workable synergy to compliment and supplement each other. 2. Cooperativ Cooperativee bank has to work work out out institution institution specific specific areas areas specific specific strategy strategy keeping keeping in view market, regulatory framework and cooperative values related factors. 3. Healthy Healthy relationsh relationship ip should should be established established with the the customer. customer. 4. More More mass awarene awareness ss campaig campaigns ns should should be organized organized in order order to enhanc enhancee market market share of bank. 5. Customer’s Customer’s satisfac satisfaction tion must must be be the top priority priority of the the bank 6. More branche branchess should should be open at the remote remote areas areas of Himach Himachal al Pradesh. Pradesh. 7. Maximum practical exposure should be provided to the job trainees so that they may
handle the various enquiries of customer effectively. 8. Bank can can provide provide the facility facility of of ZERO BALANCE BALANCE ACCOUNT ACCOUNT to the students students or the employees. 9. Loanin Loaning g proced procedure ure should should be simple simple;; less less document documentatio ation n should should be involv involved ed in the loan sanctioning procedure. 10. Functi Functioni oning ng should should be fast fast i.e. i.e. the time taken taken to do any work should should be reduce reduced d efficiently. 11. Online banking should should be provided to customers for their their batter service. 12. Customer’s care center should be established.
13. Help line no. should should be given to every customer. 14. A.T.M. machines should should be installed at the faster rate so that that maximum customers can take advantage of this facility in wide spread area. 15. Credit cards should be provided to the the customers according to their reliability. 16. Staff should should be more cooperati cooperative. ve. 17. Banking timing should should be increased from 8 AM to 8 PM. 18. Loaning Loaning criteria should should be revised. 19. Bank should provide appropriate knowledge knowledge about their products. 20. All branches branches should should be online. online. 21. No inter branch charges should be deduced 22. Commission on on bank drafts should be reduced. 23. Proper use of machinery machinery and the infrastructure, assets should done. 24. Usually there is a large time gap between transaction and printing or pass book which need to be reduced. 25. Run differen differentt schema schemass for the differe different nt types types of custom customers ers.. Like Like more more interes interestt for those who deposit more than one lack or other. 26. Special Special line of credit credit may be extend extended ed to rural rural credit credit cooper cooperati ative ve financ financing ing rural women entrepreneurs at interest rate of 4%. 27. There is a need of upward upward revision of the interest interest subvention subvention from the present 3% to at least 4.5% in order to meet the requirement of lending short term credit at 7%. 28. Banks should should switch over to loan system instead of debentures debentures for giving giving funds to ARDBs. 29. Today Today the commercia commerciall banks banks are taking taking to the correspon corresponden dentt or agency agency model to incre increas asee thei theirr outre outreac ach h and and to meet meet thei theirr fina financ ncial ial incl inclus usio ion n goals goals.. They They are associating with MFs in a big way to finance large no. of SHGs. Cooperative bank should be aggressive in this direction as they are not aggressive in this direction. 30. Bank should should adopt the essential essential feature of good corporate corporate governance governance i.e. efficiency, efficiency, professionalization, transparency and accountability. 31. In order to compete compete at the market place, brand image is of great significance significance in public acceptance of product and services. 32. Roots should be more deepen into the the community.
33. Cooperative bank has fewer resources than required which which should be overcome. 34. Proper Proper posting posting of the staff staff should should be done. done. It is general generally ly seen seen the branch branch has
requirement of 5 employees but there are only 3-4 employees working in that branch. 35. Employees should should be be more professional. 36. Policies should be be made for the less chances chances of the NPA. 37. Proper channel for the recovery recovery of the loans should should be established. established. 38. Time to time review of the the customers should should be done. 39. Transaction more than a particular amount amount should be made confirmed confirmed by the customer by telephonic conversation. 40. Intimation Intimation to the customers customers about the deposition deposition of cheque into their account should should be given to the customer by any communication medium. 41. Market status of the bank bank should be be informed to the customers customers periodically. 42. Customers should should be treated as family members. members. 43. Loans must be be given at floating rate of interest to the customer. 44. Door to door campaign should be done. 45. Seminars on the working working of the bank bank should be be held time to time. 46. Refresher training to the employees employees should be given time to time. 47. Staff should be more supportive supportive with the customers. 48. Supporting environment environment should be provided to the employees. employees. 49. Mobile banking should should be included in the future plane of the bank. 50. Bank may strengthen prudential norms and market discipline. 51. Bank should adopt international benchmarks as appropriate to situation. 52. Management Management of organizatio organizational nal changes and consolidat consolidation ion within the financial financial system system should be done. 53. Websit Websitee should should be updated updated regularl regularly y and the details details of the differen differentt polici policies es and interest rates must be posted properly. 54. More and more information information pamphlets should be provided to the customers. 55. Bank should upgrade the technological infrastructure of of the financial system.
56. HRD department should be strengthen.
57. 57. Bank Bank may may repl replac acee the the gove govern rnme ment nt guara guarant ntee ee with with ratin rating g as recom recomme mend nded ed by Vaidyanathan Task Force. 58. Bank should extend the credit facilities.
Bank may promote promote market marketing ing facili facilities ties to the member memberss to sell sell their their produc producee at 59. Bank remunerative prices. 60. Bank may provide provide consumer consumer goods, goods, especially especially essential essential commoditi commodities es under under P.D.S P.D.S
program at reasonable prices. Bank may work on the updatin updating g of skill skill of the Artisans Artisans,, Crafts Craftsmen men and weaker weaker 61. Bank sections of the society engaged in Industrial activities and help them to market their produce. 62. Bank should work to enable to all persons to come together and gainfully employ
themselves themselves in diverse diverse field such as Horticultur Horticulture, e, Floricultu Floriculture, re, Fisheries, Fisheries, Housing, Wool, Poultry, Labour & Construction, Dairy and Tourism etc. 63. Enrollment subsidy should be provided to newly enrolled member of IRD/Scheduled
caste/ Scheduled tribe families, equivalent to value of one share is provided to the beneficiaries to encourage them for becoming members of the co-operative societies. 64.
anagerial anagerial subsidy/I subsidy/Interes nterestt Subsidy Subsidy and working working capital subsidy subsidy being provided enga engage ged d in cons consum umer er/m /mar arket ketin ing g unde underr spec specia iall centr central al assi assist stan ance ce for for speci special al component plant/Tribal area sub-plan. M
65. Bank should encourage encourage the un-employed un-employed educated educated youth, youth, for organize tourism tourism Co-
operative.
PERSONAL LEARNING Working with the H.P. State Cooperative Bank as a part of summer training is an highly knowledgeable experience for me as it teaches me various lessons. H.P. State Cooperative Bank is an cooperative bank which is working at the apex level of all Central Cooperative Banks in Himachal Pradesh. While working with this bank I learn many things which are defiantly going to help me in future for my carrier as well as for my moral. The organization
of cooperative bank is different than the other nationalized banks, and thus helps me in having good knowledge of banking sector. It is not a easy work to conclude what I learn from the H.P State Cooperative Bank as what I learnt there is as much valuable as much the knowledge of books for a person. I learn their many valuable facts and some of them are… 1. What What is the bank? bank? Why we need need a bank? What What is the role role of bankin banking g in our money money market? 2.
Various reasons behind the establishment of banks in India.
3. Type Typess of of ban banks ks in Indi India. a. 4. Meaning Meaning of cooperative cooperative bank, need of coopera cooperative tive bank. bank. 5. Differe Different nt levels levels/ty /types pes of coope cooperati rative ve banks. banks. 6. Positional Positional status status,, mission, mission, vision, vision, etc etc of H.P. State Cooperat Cooperative ive Bank. Bank. 7. How the organization works i.e. organizational structure of H.P. State Cooperative
Bank. 8. Various Various departme departments nts of of the the bank bank and and how how they they work. work. 9. How the research and development is done in H.P. State Cooperative Bank.
10. Leave procedure of the bank and how many many leaves a person can take in 1 year. 11. How the recruitment and the the transfers of the new/ old employees are done. done. 12. How the various orders/instructions/circulars orders/instructions/circulars are issued to different branches. 13. How they mention the the records of all the documents related to anything like instruction issued to different branches or transfer orders or recruitment orders. 14. How the annual reports of of the employees are made. 15. Different types of loans facilities provided by the bank bank to the customers. customers. 16. How the interest interest is calculated calculated on the loans. loans. 17. Difference between floating rate of interest and fixed rate of interest. 18. What are the different different documentation documentation required required for person to apply for different different loans like like for person personal al loan loan salary salary statem statement ent,, for education education loans fee struct structure ure of the institute, for vehicles loans the invoice of the dealer, etc...
19. The criteria set by the bank for a person to avail the loan (i.e. person can take his 35% 35% net salary after all deduction of all installments.) 20. Why the bank need a grunter while sanctioning sanctioning of loans. 21. Responsibilities of the grunter of the person applying for loans. 22. Restrictions on the branch for sanctioning of loans. 23. Procedure of repayment of loans i.e. the installments of loan payment. 24. Procedure of recovery of the the loans if not paid at time. 25. Procedure of clearing the guarantee after the payment of loans. loans. 26. Mode of payment of the loans to the customers. 27. How a new account account of the person is opened. 28. Documentation involved in opening of new account. account. 29. What are the responsibili responsibilities ties of the cashier? 30. 30. Diffe Differe rent nt type typess of accou account ntss in H.P. H.P. State State Coop Cooper erat ativ ivee Bank Bank prov provid ided ed to the the customers. 31. Procedure of deposition deposition and withdrawing from the account. 32. Difference between the transfer, deposit, withdrawing, withdrawing, draft forms. 33. How a cheque book is entered, enlisted, issued issued and destroyed by the bank. bank. 34. Difference Difference between cross cheque cheque and normal normal cheque. 35. Necessity of authorization of any transaction. 36. How the authorization of of the transactions is done done by the higher higher authority. 37. How different types of vouchers are entered into the system. 38. What is inward clearing, why it is necessary? 39. What is clearing, clearing, procedure of clearing? clearing? 40. Difference Difference between inward and outward outward clearing.
41. Procedure Procedure of outward clearing clearing.. 42. What is lodging lodging and bouncing of clearing. 43. How the printing printing of passbook, passbook, drafts, drafts, FD is done and how they are authorized authorized after printing. 44. How the day book is generated and printed and then got verified through vouchers. vouchers. 45. How different different types of reports reports like control control report, balance report, general general common report, registers, interest related report, clearing related reports, user related reports, parameter related reports and HO related reports are printed and monitored. 46. How to differentiate between the false currency and real currency. currency. 47. Precautions taken by bank bank not to supply supply the false currency to the customers. 48. How the bank analyses its market positions. positions. 49. All the figures figures of the bank are on average average basis. 50. Provide Motivation: Job training provides motivation motivation to learn.
51. It provide provide feel of actual actual job.
52. Learns Learns the rules & regulations regulations:: It help to learn the rules, regulation regulation and procedure procedure by observing their day –to-day application.
53. Teachi Teaching ng of knowled knowledge ge and skill. skill. Job training training
is the best method method for teaching teaching
know knowle ledg dgee and and skil skilll which which can can be acqu acquir ired ed thro throug ugh h pers person onal al obse observ rvat atio ion n in a relatively short period.
54. Economical Economical Method: Method: This method method is very economical economical because no additional additional space, equipment, personnel or other facilities are required for training.
55. Teaching Teaching of knowledge knowledge and skill skill in short time period: period: It is appropriate appropriate for teaching teaching knowledge and skills which can be learned in short period of time.
56. Practi Practice: ce: Practice Practice makes makes a Man Perfect Perfect .The .The skill skillss practic practicee on the job trainin training g are better learned and less easily for gotten.
57. Feedback: Feedback: On the job training training provides provides information information on how much we have learned learned and how well we are doing.
58. Make possible to feel like part of organization: Summer training make make trainees to feel as the part of organization
59. Teach Teach how to work in an organiza organizatio tion: n: it gives practical practical experien experience ce of work in an organization. It teaches how to follow the senior officers and to obey their orders. It helps in understanding how to build healthy relationships within organization.
60. It helps in understand understanding ing the competitors competitors & their strategies: strategies: This training is useful in knowing the competitors and their different strategies to deal with. 61. The net profit profit of the bank is 4429.18 4429.18 lacks
REFERENCES 1. www.hpscb.com
2. www. www.na naba bard rd.c .com om 3. www. www.go goog ogle le.c .com om 4. www.rbi.c i.com 5. www. www.ba bank nkma mate te.c .com om 6. Docum Document entss provide provided d by the the bank empl employe oyees. es. 7. Various Various circulation circulationss issued issued by the bank bank itself, itself, by RBI, by by NABARD. NABARD.
ANNEXURE I ACCOUNT OPENING FORM
ANNEXURE II MEMORANDUM
ANNEXURE III TRANSFER VOUCHER
ANNEXURTE IV WITHDRAWING FORM
ANNEXURE V DRAFT FORM
ANNEXURE VI DEPOSITION FORM
ANNEXURE VII FORM FOR DEPOSITION BY CHEQUE
