Banking Services in India-583

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CERTIFICATE

This is to certify that the dissertation project entitled “Financial statement analysis ” submitted by Miss. Nandita Dutta ,is a 6th semester student of Department of Business Management BITS affiliated to Fakir Mohan University, Vyasa Vihar, Balasore, Orissa, for the partial fulfilment of B.B.A Degree is a record of bonafide research work carried out by her under my supervision and guidance. The project work embodies Miss. Nandita Dutta original contribution and it has not been submitted anywhere else before.

I wish him all the success and bright future.

Dhirendra Kumar Jena Lecturer in BITS M.Com, MBA, Msc (IT)

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PREFACE
World over, dramatic changes are taking place in banks and banking operations. The Financial Performance of the bank must be judged in the context of changing scenario. The complexities of banking operation in the recent years have undergone significant changes due to innovations in the banking products cross border dealings. The banks have become a part and parcel of economic activities of the people Understanding of the development of the banks, structural system and organizations, basic concept and their functions is of paramount importance for the students of management. In the case of Balasore-Bhadrak Central Co-operative Bank, various types of ratios have been used for different years, which are compared and shown in trend. The structure, the ongoing development, and requisite information of various aspects of this bank have been amply described in this project. Numerous tables, figures, diagrams, examples and interpretations of various ratios are throughout in this project.

Date: Place:

Miss. Nandita Dutta

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ACKNOWLEDGEMENT
Before I get in to the thick of the things, I would like to add a few heartfelt words for the people played a significant role for timely and systematic preparation of the project. In particular I would like to extend my respectful gratitude to Mr. DHIRENDRA JENA, Faculty of Finance under whose guidance I carried out my project work. This project report will be tedious and tiring job with out his valuable suggestion and co-operation. Last but not the least, special thanks to my parents, friends and staff members of BALASORE –BHADRAK CENTRAL CO-OPERATIVE BANK for providing valuable information and due support in the process of preparing the report.

Miss. Nandita Dutta
Roll No.-63204B10001

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DECLARATION
I do here by declared that

the project on “ FINANCIAL STATEMENT ANALYSIS ” of BALASORE –BHADRAK CENTRAL CO-OPERATIVE BANK is submitted by me to BALASORE INSTITUTE OF TECHNICAL STUDIES , Balasore towards partial fulfillment of the requirement of the BBA project. I have made all sincere and dedicated effort to make this project purposeful. All the findings of my work are true in their nature and not based on any earlier successful attempt made in any other report. I further declare that the project work is bonafied report to the best of my knowledge ad information. The honorable authority may take necessary action against me if they find the report misleading and false.

Miss. Nandita Dutta
Roll No.-63204B10001 BALASORE INSTITUTE OF TECHNICAL STUDIES, Balasore

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CONTENTS
Page-No Preface Acknowledgement Declaration CHAPTER-1  Co-operative Banking in India CHAPTER-2  Bank Profile  Chart CHAPTER-3  Ratio Theoretical Frame Work  Methodology  Objective of the Study  Scope of the Study  Limitations CHAPTER-4  Ratio Analytical Frame Work CHAPTER-5  Findings  Suggestion  Conclusion BIBLIOGRAPHY ANNEXURE
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34-43

44-56 57-60

61-62 63-74
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CHAPTER-1
 Co-operative banking in India

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CO-OPERATIVE BANK IN INDIA

In the general sense, the term “Co-operation” means, the idea of “living together and working together”. Co-operation is a form of business organization. It is the only system of voluntarily organization suitable for poor people. In this system, the persons voluntarily associate together as human beings on a basis of equality, for the promotion of their economic interests. Thus, the Co-operative Bank can be defined as “an institution established on the Co-operative principles and engaged in the normal banking business of accepting deposits from the public for the purpose of lending and repay it on demand or otherwise”.

Organization Structure of the Co-operative Credit Institution
Co-operative Credit Institutions

Rural Co-operative Credit institution

Urban Co-operative Banks

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Short-Term Structure

Long-Term Structure

State Co-operative Banks

District Central Co-operative Banks

Primary Agricultural Credit Societies

State Co-operative Agricultural and Rural Development Banks

Primary Co-operative Agriculture and Rural Development Banks

The Co-operative Movement in Indian Banking was started with the objective of providing finance to the agriculturist and thus relieving him from the clutches of the village money lenders, i.e., to solve the problem of rural indebtness by supplying credit at low rates of interest. In India, the Co-operative Societies Act was passed in 1904. A new Co-operative Societies Act was passed in 1912. Though the movement has completed more than 90 years, the progress has been slow.

STRUCTURE OF CO-OPERATIVE BANKING IN INDIA

The Co-operative Credit Institutions in India can be classified as under:

Co-operative Credit Structure in India

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From the chart, it can be seen that the organization of the Co-operative Credit Societies is pyramidal in nature. It has a three- tier structure. i) ii) iii) Primary Credit Societies at the bottom. Central Co-operative Bank at the middle. State Co-operative bank at the top.

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That is, the primary societies are functioning in the various towns and villages, the Central Banks at the district headquarters and the State Cooperative Banks at the State Capitals forming the apex of the system. The Reserve Bank of India assist the co-operative structure by providing concessional finance through NABARD in the form of General Lines of Credit for lending to agricultural activities. Thus, the whole system is integrated with the Banking structure of the country. The primary Agricultural Credit Societies: A Primary society is an association of borrowers and non-borrowers residing in a particular locality and taking interest in the business affairs of one another. As membership is practically open to all inhabitants of a locality, people of different status are brought together into the common organization. The affairs of those organization are managed by honorary secretaries and presidents assisted by board of directors, all these officials being elected from amongst the shareholders of the principle ‘of one man, one vote’. Most of the societies are organized and working on the principles of unlimited liability. The society may be started with ten or more persons of a village. In March 2001, nearly 10, 00, 00,000 (Ten Crore) as on that date. Their deposit base is very poor at rs. 13481 crore as at end March 2001. Total outstanding loans of all PACS are totally dependent on CCbs for their financial need. NABARD has also been extending funds to develop the infrastructure of PACs. Capital The primary society derives its funds from entrance fees, share capital, reserve funds deposit or loans from non-members, from central and provincial cooperative banks and from the Government. The deposits of the society may be either fixed, savings or recurring. Unfortunately, the deposits of primary societies are not sufficiently large. The society provides short-term credit to its members ordinarily on the personal security of the borrower with the personal surety or sureties of other members. It may also lend on mortgages.

Central Co-operative Banks: A central co-operative Bank is a federation of primary societies in a specified area. Where membership of a Central Cooperative Bank is restricted to primary societies only, it is known as a ‘banking union’. Now days, individuals are also admitted as members of all Central Co-operative Banks. Central Co-operative Banks are generally situated at the headquarters of district and have on their boards of management, individuals of sufficient influence and business capacity in

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addition to representatives of primary societies. The CCBs form an important in the short-term structure of Co-operative Credit Institutions. AS at March 2001 there were 367 district central co-operative Banks with 12580 branches in various states in India. Capital A Central Co-operative Bank obtains its funds from share capital, reserve funds, deposits (current, savings, fixed, recurring) and loans from the State Co-operative Bank or other joint stock banks. Sometimes primary societies deposit their surplus funds with the Central Co-operative Banks to which they are affiliated and this forms another source of funds for the Central Cooperative Banks. State Co-operative banks: At the top of the co-operative banking, there are State Co-operative Banks, organized with the object attracting deposits from the rich urban classes. These banks are also more suitably equipped to serve as channel between the co-operative movement and the joint stock banks. There are at present 30 such banks. The constitutions of banks differ from one another, but generally speaking, the membership comprises representatives of Central banks as well as individual shareholders. A logical development of these banks would have been establishment of all-India Co-operative Bank. but there is no such instution,although the Indian state co-operative banks association has been coordinating their activities and performing certain services to all these banks.NABARDE maintains contact with the state co-operative banks. In addition to offering them rediscount facilities, collect and disseminate useful information regarding co –operative movement. As at the end march 2002, there where 30 SCBs with 831 branches in India. The total deposits of all SCBs as at end march 2001 aggregated to rs.32626 crore as compared to rs.29557 crore in March 2000. Among the States, Maharashtra mobilized

maximum deposits of rs.9136/- crore, followed by Tamil Nadu at ra.2475 crore. Tamil Nadu came third rs.1635/- crore of deposits in March 1997 of the 30 SCBs in 2001, 23 made profits while 6 made losses during 2000-01. Capital and operation of the Bank The State Co-operative banks attract deposits from the richer urban classed and grant financial accommodation to Central Co-operative Banks and through them to primary societies. They form the only link between the co-

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operative organization on the on hand and the money market and joint stock banks on the other. They are the balancing factors as between Central Cooperative Banks; for the transfer the surplus funds available with some Central Banks to the needy ones. The State Co-operative Banks derive their funds from share capital, reserve fund, deposit form the public, loans from the State Bank, joint stock banks, and deposits of Central Banks affiliated to them. Generally speaking, it may be stated that the organization of the State Cooperative Banks is very efficient and, in spite of competition from joint stock banks, they do very good business. They are prohibited from transacting all types of commercials banking business and so their funds are not at present being fully employed. With the growth of Co-operative movement these funds may in due course be more effectively and efficiently employed within the movement. Co-operative Banks Banks established under the co-operative system are called Co-operative Banks. These are State Co-operative Banks, Central Co-operative Banks and Primary Co-operative Banks. SCB is an apex level bank for a state. CCBs are apex level baks for each district. Primary Co-operative Banks are rural or Semi-Urban Level Co-operative Banks. Co-operative Credit Societies These are financial institutions whose primary object is to provide credit facilities, i.e., loans and advances to its members only. These societies are formed in large organizations or Government Department or at certain regions. The members are those working in the particular organization/region. They collect subscriptions, deposits, etc., from members and loans from cooperative banks and extend credit facilities to its members only.

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Primary Agricultural Credit Societies

These are similar to credit societies, but these credit societies can extend loans to its members only for the purpose of agriculture connected activities. Credit Societies are not permitted to undertake all banking business. In other words, they can’t provide cheque book facility to members and they can’t deal with persons other than their members. While the RBI has overall control on all financial institutions, operational guidelines and control over co-operative banks need to have a minimum paid-up capital of rs.1 lakh only.

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CHAPTER-2
 BANK PROFILE
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CHART

INTRODUCTION
Agriculture, banking and co-operatives the main story of Rural India with its vast chunk of farmers have made repaid strides in Balasore, the granary of Orissa. And District Central Co-operative Bank(DCCB) has come a long way in combing the three into one with a meager working capital of just about Twenty six thousand rupees, the BAlasore Central Co-operative Bank got registered in the February, 1916 and was later amalgamated with Bhadrak Central Co-operative Bank in 1956 when the working capital was a more 10

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lakhs where as it is a whopping 633 crore now. And the total advances to various secrors amazing.

Keeping pace with the changing times and emerging technologies, all its Thirty Branches along with The Head office have been fully computerized and 97 PACS out of 38 are not way behind.

HISTORY
Way back in 1907, Co-operative movement made its presence felt in the District of Balasore with the launching of its first ever Co-operative Society when the province of Orissa was still a part of Bengal. Here in an extract from the first Annual Report of the Balasore Co-operative Bank Ltd, Balasore for the year 1916-17.

The first Co-operative Society in the District was in the year 1907 in the Sadder Sub- Division long before the Co-operative movement was established in the province, then a part of the province of Bengal. From 1907-1912 there

was mother society and in 1912, a society was started in the Khasmahals of Bhadrak Division. Towards the middle or the year 1914, an informal conference of local gentlemen was held under the presidency of Raj Bahadur Monomohan Roy ( then Babu M.M Roy), then collector or the District for the purpose of discussing the measures to be adopted for giving an impetus to the

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Co-operative movement in the Sadder Sub-Division of the district. The present Register, then Deputy Register also attended. It was then decided that an honorary organizer be appointed. In October 1914, Babu Prafulla Chandra patnaik was appointed honorary organizer Mr. Kilby had then taken charge of the District, Before march, 1915 Seven Societies were organized which were financed by the Honorable Raja of Kanika and Babu upendra naraindutta gupta.

However, it was felt towards the end of the year 1915 that when we had so many villages in which the principle of joint and several liability had been worked so long that the creation of a Central Bank would have to precede the consideration of village societies.

Mr. Collins, Register of Co-operative Societies on leave now. After personally visiting some of the Societies, advised the starting of a Co-operative Central Bank. The Honorary Organizer then drew up the Bye-Laws and prospectus on the basis of model Bye-Laws and prospectus and organized the Central Bank. An application for its registration sent on the 12th January 1916.

It was only registered as NO.134 of 1915-16 under Act II or 1912 on the 19 th February 1916. Although the Bank had been registered, it didn’t commence to work till the last or june 1916. The operations of Bank are confined to the

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Sadder Sub-didvision of Balasore only. The report further signed it is too early yet to try to observe anything on this point, but we believe the societies have been much benefited by the facilities them for purchasing bullocks, by bringing into play the spirit of fair and honest dealing between man and man, a spirit we are doing our best to foster. Rudiments of Co-operations are not unknown in the village communities though the principle of joint credit is unfamiliar to the people of this part of the country. The council or elders, even now exercise considerable power in the village. It isn’t unnatural that Co-operative movement should spread in the congenial soil and the popularity of the movement and the appreciating by the villagers of the benefits and daily in evidence by the increasing eagerness of village people sector to become members of existing society or to open nuances. Improvidence and illiteracy are the two be setting evils of the people and the Co-operative movement by teaching thrift and punctuality, by giving impetus to education and improvement in agriculture, by introducing systematized payment of loans can contribute it. It will have amply justified its inauguration. And since then there has been no looking back.

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NAME AND ADDRESS OF THE BANK

i) The Balasore Bhadrak Central Co-operative Bank Ltd. (formerly The Balasore District Cooperative Central Bank Ltd.) is registered as “ cooperative Society” under the Orissa Cooperative Societies Act’1962

ii) (Orissa Act-2 of 1963) & its address shall be At O.T> Road, po.Balasore Dist.Balasore-756001. iii) It may be referred in this Byelaws briefly “THE CENTRAL BANK”

AREA OF OPERATION The area of operation of the bank shall extend the whole of Balasore and Bhadrak Revenue Districts. It may open Branches in any part of these Districts with prior sanctions of the Registrar, Co-Operative Societies, Orissa.

OBJECTS
i) To raise funds for financing Co-operative Societies registered or deemed to be registered under the Act and duly affiliated to it, individuals and other body corporate enrolled as nominal or associate

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member of the Bank subject to the provisions of the Orissa Cooperative Societies Act, Rules framed and orders issued there. ii) To develop, assist and co-ordinate the work of the affiliated Societies and secure for them financial help whenever, necessary, arrange for their supervision and inspection.

iii) To organize Co-operative Societies for the promotion of thrift, self help and mutual aid among agriculturists and other persons for promotions of economic interest of its members in accordance with Co-operative principles. iv) To organize Self Help Groups and to promote Micro finance among the economical poors directly or through affiliated PACS and LAMPCS. v) To develop and strengthen Co-operative Movement in the Districts of Balasore and Bhadrak. vi) To provide training facilities to its own employees and

employees/directors/ members of affiliated Societies and to establish training centre for the purpose. vii) To arrange for supply of printing stationeries, books, forms,

register iron chests etc. as required by the affiliated Societies. viii) To carry on general business of banking as defined in the

Banking Regulation Act. ix) To caryy on solicing or procuring insurance business both for life and non-life as referral agent to boost non-fund business of the Bank.

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x) To caryy on Treasury business for profitable investment of Bank’s fund. xi) To undertake such other works to promote the cause of co-operation and to do all such things as may be necessary or desirable for accomplishment of the aforesaid objects. xii) To regulate the activities of employee of its affiliated Credit

Societies.

xiii)

To undertake any other business that will be required growth of

the Central Bank in the contest of changing scenario of the Banking Sector.

MEMBERSHIP i) Every Co-operative Society central or primary within the area of operation of the Central Bank. ii) All the members of the committee including Co-opted Members but excluding the members nominated or appointed U/s 28(1-b),31(1) or 32(1) of the Act of the primary Societies affiliated to the Central Bank shall be deemed to be the members of the Central Bank in term of section 16(1-a) of the Act so long as they continue as members of the Managing Committee of their respective society. iii) The State Government. iv) The Central Government. v) The Orissa State Co-operative Bank Ltd. vi) Orissa Khadi & Village Industry Board. vii) Anybody corporate as a nominal or associate member subject to compliance of provisions under the O.C.S. Act and Rules.

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viii) An individual including professionals like Chartered Accountant & experts in the fields of the Banking, Agriculture, Co-operation and Economics as nominal or associate members. ix) Self Help Groups as nominal members. x) Any Local Authority.

FUNDS The Central Bank shall ordinarily obtain its funds from following sources:

i) Share subscription. ii) Deposits. iii) Borrowings. iv) Loans from Government. v) Other borrowings including debentures. vi) Grant and subsides from Government. vii) viii) Admission and other fees. Contribution towards cost of supervision and collection.

ix) Donation x) Miscellaneous. SHARE CAPITAL The Authorized Share Capital of Central Bank shall be Rs. 100,00,00,000/- ( Rupees One hundred Crores)made up of 9,00,00(Nine lakh) sharea of Rs.1000/- each allotted to regular members and 10,00,000(ten lakh) shares of Rs.100/- each allotted to nominal members. TRANSFER AND WITHDRAWAL OF SHARES

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i) No members shall be permitted to transfer any share except in accordance with the provisions of the Act and Rules. ii) No member, shall any time be permitted to withdraw any share except for the purpose of affiliating itself to another Central Bank or when it is liquidated or with the written permission of the Registar. DEPOSITS The Bank pays different rates of interest depending upon the nature and term deposit. Hence, deposit costs depend upon deposit mix of Bank. BORROWINGS To meet the objects the central Bank may borrow money by way of deposit and loan for such period and on such terms as fixed by the Managing Committee/ Finanace bank from time to time, upto 30(thirty) times of paid up share capital plus free Reserves. INVESTMENTS The funds of the Central Bank shall be utilized for the purpose of granting loans for Agriculture, Non-agriculture and Non-Farm Sector or any other as decided by the Committee. a) To Co-operative Societies registered or deemed to have been registered under the act and affiliated to the Bank. b) . (i) To individuals, Private Limited Companies/ Body Corporate who are nominal/ associate members of the Bank for different purposes against adequate and proper securities within the ambit of the directives/ orders of R.B.I./ NABARD/O.S.C.B.

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Ltd. And R.C.S. Orissa received from time to time observing all formalities. (ii) The Central Bank may also invest its funds in the manner and schemes as approved by NABARD/OSCB/ Government approved schemes and the Committee from time to time. (iii) It shell be competent for the bank to act as an agent for the disbursement of any type of loans obtained from the government or any other institution on such terms and condition as may be agreed upon with the approval of the Registrar. Central bank may invest fund beyond SLR in Government securities/approved trust Securities/Mutual funds and share market as per RBI/NABARD guidelines.

(iv)

MAXIMUM LIMIT OF LOANS a) The central bank shell not lend to any society any sum which with the society’s other indebt ness will exceeds the maximum borrowing power of that society as fixed from time to time or determined by registrar by a general order to any class of societies or by Specific orders to any society. b) Bank may finance loan to nominal member including individuals under farm. Non-Farm, Non-Agriculture sectors as per the approved scheme of NABARD/RBI/OSCB and the management of the bank up to a limit fixed in the scheme. RATE OF INTEREST OF LOANS The rate of interest shall be charged on loan according to the decision of the managing committee of the bank from subject to guidelines issued by RBIO from time to time. SANCTION OF LOANS TO MEMBER

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i)

It shall be duty of the committee or such sub-committee to which power have been delegated by the committee to deal with any application for loan received from its members, to obtain full information if necessary from the registrar regarding such societies and to see that loan are granted them with due care and caution The committee or sub committee shall settle all terms in regard to period of repayment of loan granted to them, the installment of repayment and the rate of interest etc. in conformity with the instruction issued by the RBI/NABARD/Registrar from time to time. The committee or sub-committee authorizes Secretary or his sub-ordinate officer for sanction of loan with limit fixed for each.

ii)

iii)

EXTENSION OF LOAN The committee shall power to extend from time to time the period fixed for repayment of loan in case of cooperative societies and individual subject to approval of R.C.S. (O). However, the committee may grant extension of time of repayment of individual loans for the interest of the bank recommendation as per the banking norms as and when required.

REPAYMENT OF LOANS i) It shall be open to borrower to repay a loan wholly or partly before the due date according to its convenience. ii) If the due date for repayment of loan falls on holidays, the next day working day shall be deemed to be the due date for repayment of such loan or installment of loan and the member shall be treated to have committed default on the following date of due date.

LOAN COMMITTEE To expedite disposal of loan application, the managing committee may form a loan committee consisting of 5(five) member. The President, the Secretary and 3(three) other member elected by the committee will constitute the sub-committee. The managing committee may delegate its powers under (a) (xxi) of the central bank to deal with the matter .3(three) member will form the quorum for the meeting of the sub committee. Ordinarily 3(three) clear days notice shall be given to the member

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for holding this meeting. All proceedings by the loan committee shall be placed before the managing committee for ratification. Incase urgency where there may not be sufficient time to convene a meeting the business may be circulating papers to the members of the loan committee. Any decision arrived by the circulation shall be placed in the next meeting if the committee for ratification.

GENERAL BODY
THE GENERAL BODY OF THE CENTRAL BANK SHELL CONSISTS OF :

i) ii) iii)

Nominated member of the committee. Members societies as per the provision of the O.S.C. Act and Rules in this regard and The member co-opted members (but not nominated) of the committee of primary societies which are affiliated to the Central Bank.

The following among other matters be dealt with by the General Body: i) Consideration of Audit Report and Annual Report ii) iii) Election of member of the Committee if any prescribed matter. Reviewing the loan advance to the member of the committee or any of their near relatives having common economic interest and if necessary to direct action for recovery of such loan. Approval of the programmed of the Activities of the Central Bank prepared by the committee for ensuring year. Disposal of net profit Expulsion of member if any. Consideration of any other matter which may be brought forward accordance with the Bye-laws

iv) v) vi) vii)

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viii) The general Body of the Central Bank shell be held at least once in cooperative tear being convened by the committee. ix) x) The committee shall convene special meeting of the general body member. No business other then that specified in such requisition shall be discussed in such requisitioned meeting.

ANNUAL STATEMENT The central Bank shall prepared by Bank annually in such form as may be prescribed as per B.R. Act, NABARD Act and Registrar from time to time and submit the same to proper quarters as required in time. The statement of final accounts prepared by central Bank shall placed before the auditor general of cooperative societies, got to be issued by the A.G.C.S. in time every year.

PROFIT i) The Annual net profit of the central Bank declared distributed by the Auditor general, cooperative societies shall be disposed of the following manner. a) Not less then 25%shall be carried to the reserve fund. b) Such portion profit as may be prescribed under the Act and Rules to the cooperative Education fund. c) 15(fifteen) % shall be carried to the Agricultural Credit Stabilization Fund. d) Out of the reminder a dividend may paid up to a maximum of 12% per annum to members proportionally to the amount of paid up share capital held during the year subject to norm stipulated by the NABARD and Registrar. Provided that if the member or in case of deceased member or executor of liquidated Societies failed to received the dividend due to them after issue of three notice from the Central Bank within a period three

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years, on completion of the third year the dividend due to such member shell forfeit and forfeited amount shall be credited to Reserve Fund of the Central Bsank. e) The reserve fund shall belong to the bank as a whole. No member can claim as share in it. It shall be invested in any of the securities specified in section -20 of the Indian Trust Act 1882(ii of 1882) and shall not be drown up except with the Registrar.

REDRESSAL OF NPA LOANS AND BAD DABTS a) The Central Bank can formulate one time settlements (O.T.S.) scheme for recovery NPA loan from the affiliated societies and individual as a case may as per guideline fixed by the committee of management subject to the approval of the Govt/R.C.S.(O). b) If any sum belonging to the central bank is either stolen or other wise lost and found irrecoverable or if any loan due to central Bank is found otherwise irrecoverable either wholly or in part it shall be open to the General Body to write off such amount against such source of funds subject to approval of Auditor general of Cooperative Societies. MISCELLANEOUS No amendment shall be made except at a meeting of the General Body. And in accordance with Rules framed under the Act. The amendment shall not take effect until it is registered by the authority, i.e., the Deputy Registrar of Co-operative Societies, Balasore. All matters not specifically provided in these provided in rules of Business to be framed under these Bye-law, shall be decided according to the terms of the Act and Rules framed and orders issued there under. Should any doubt arises as to the construction or meaning of the provision of the Act or any Rule framed under the Act or any order issued there under any Bye-law of Central Bank or its affiliated societies in regard to any matter not provided for in these Bye-laws or as to the validity or effect to the proceeding of a meeting of the Executive Committee, the Managing Committee or General Body, the President shall refer the same to the Registrar Co-operative Societies, Orissa whose decision shall be final.

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INSPECTION AND SUPERVISION i) The Central bank shall have the right to inspect the societies affiliated to it and such Inspection may be done by deputing to any Officer of the Central Bank. ii) The Central bank have power to call for from Societies affiliated to it such Societies for the purpose of such inspection. iii) To inspect and to ascertain by enquiry if the Bye-laws are being properly observed by the societies. iv) v) vi) To obtain and review periodical report on the working of such societies. To call for list of defaulting borrowers in Societies affiliated to it. To direct the Societies concerned to take proper action and to take steps to see that such orders are carried out. vii) To make subsidiary rules for regulating the work or supervision. viii) To direct to take such legal action for recovery of it’s or the Central Bank dues.

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ix)

To direct for production of any Books or records of the book.

VISION 2010 i) ii) iii) iv) v) vi) vii) In all villages there must be S.H.G. & T.F.G. with Credit Linkage. At least one SBD passbook in each family in all villages. To make all PACS profit making vibrant co-operative institution. All agricultural family will be in co-operative fold. Dividend to all share holders. Total financial inclusion in Balasore and Bhadrak District. To provide state or Art core Banking service in all Branches having ATM connectivity with major Bank or the country. viii) To be a model scheduled Co-operative Bank in the country with sound Corporate Governance System in place.

Performance indicator in BBCC Bank
Yea r Total Shar e Capit al Ow Depo Borro n sit Wing Fun s d 26.1 239.0 133.0 8 8 8 32.7 261.9 195.7 4 0 8 Cost of Investm Manag ent ement (T.COS T) 1.52 1.23 95.15 116.63 Capital CD Adequa Rati cy o Ratio 18.01% 13.70% 131 % 146 % Loa n Out stan din g 312 72.4 2 382 86.7 9
30

08- 24.67 09 09- 29.88 10

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210- 33.20 111 211- 35.39 12 212- 40.18 13

38.1 299.0 211.2 2 1 6 48.2 5 53.8 0 347.9 5 441.7 6 208.6 2 252.8 8

1.44 1.51 1.24

131.29 144.69 262.05

12.78% 13.69% 14.06%

146 % 136 % 110 %

437 92.2 6 472 13.9 489 69.4

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Total share capital
2012-13 2011-12 2010-2011 2009-10 08-09 0 10 20 30 40 50

Rs. In Crores

60

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Deposits
1000 800 600 400 200 0

Rs. In Crores

2008- 2009- 2010- 2011- 201209 10 11 12 13

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Own Fund
50 40 30 20 10 0 20 20 20 20 20 04- 05- 06- 07- 0805 06 07 08 09

Rs. In Crores

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Brrowings
300 250 200 150 133.28 100 50 0 2008-09 2009-10 2010-11 195.78 211.26 208.62

Rs. In Crores 252.88

2011-12

2012-13

Cost of Management (T.COST)
Rs. In Crores 2 1.5 1 0.5 0 2008-09 2009-10 2010-11 2011-12 2012-13

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Investment
250 200 150 100 50 0

Rs. In Crores

2004- 2008- 2009- 2010- 2011- 201205 09 10 11 12 13

CD Ratio
160% 146% 146% 140% 131% 136% 120% 110% 100% 80% 60% 40% 20% 0% 2004- 2008- 2009- 2010- 2011- 201205 09 10 11 12 13

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Profit
350 300306.91 250.04 257.65 250 227.95 211.53 200 150 100 50 0 2008-092009-10 20010- 2011-12 2001211 13

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CHAPTER-3
     Ratio Theoretical Frame Work Methodology Objectives Scope Limitations

FINANCIALSTATEMENT ANALYSIS
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Financial Statements contain a wealth of information. If properly analyzed and interpreted, they can provide valuable insight in to the firm’s performance. Analysis of Financial Statements is of vital interest to the lenders (short term as well as long term), investors, security analysis, managers and others. The relationships between various items in the financial statements are expressed by means of ratios. A Ratio is a simple arithmetical expression of the relationship of one number to another. It may be defined as the indicated quotient of two mathematical expressions. According to Accountant’s Handbook by Wixon, Kell and Bedford, “a ratio is an expression of the quantitative relationship between two numbers.” According to Kohler, “a ratio is the relation , of the amount, a, to another , b, expressed as the ratio of a to b; a:b (a is to b); or as a simple fraction, integer, decimal, fraction or percentage.” In simple language ratio is one number expressed in terms of another and can be worked out by dividing one number into the other. Ratio analysis is a technique of analysis and interpretation of financial statements. It is the process of establishing and interpreting various ratios for helping in making certain decisions. However, ratio analysis is not an end in itself. It is only a means of better understanding of financial strengths and weaknesses of a bank. Calculation of mere ratios does not serve any purpose, unless several appropriate ratios are analyzed and interpreted. The ratios may be used as a symptom like blood pressure, the pulse rate or the or the body temperature and their interpretation depends upon the caliber and competence of the analyst. The followings are the four steps involved in the ratio analysis: (I) Selection of relevant data from the financial statements depending upon the objective of the analysis. (II) Calculation of appropriate ratios from the above data. (III) Comparison of the calculated ratios with the ratios of the same firm in the past, or the ratios developed from projected financial statements or the ratios of some other banks or the comparison with ratios of the industry to which the bank belongs. (IV) Interpretation of the ratios. Interpretation of the Ratios The interpretation of ratios is an important factor. Though calculation of ratios is also important but it is only a clerical task where as interpretation needs skill,

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intelligence and farsightedness. The inherent limitations of ratio analysis should be kept in mind while interpreting them. The impact of factors such as price level changes, change in accounting policies, window dressing, etc. should be kept in mind when attempting to interpret ratios. The interpretation of the ratios can be made in the following ways: (a) Single Absolute Ratio (b) Group of Ratios (c) Historical Comparison (d) Projected Ratios (e) Inter-bank Comparison Use and Significance of Ratio Analysis The ratio analysis is one of the most powerful tools of financial analysis. It is used as a device to analyze and interpret the financial health of enterprise. Just like a doctor examines his patient by recording his body temperature, blood pressure, etc. before making his conclusion regarding the illness and before giving his treatment, a financial analyst analyses the financial statements with various tools of analysis before commenting upon the financial health or weaknesses of an enterprise. “A ratio is known as a symptom like blood pressure, the pulse rate or the temperature of an individual.” It is with help of ratios that the financial statements can be analyzed more clearly and decisions made from such analysis.

Managerial Uses of Ratio Analysis 1. Helps in decision-making: Financial statements are prepared primarily for decision-making. But the information provided in financial statement is not an end in itself and no meaningful conclusion can be drawn from these statements

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alone. Ratio analysis helps in making decisions from the information provided in these financial statements. 2. Helps in Financial Forecasting and Planning: Ratio Analysis is of much help in financial forecasting and planning. planning is looking ahead and the ratios calculated for no. of years work as a guide for the future. Meaningful conclusion can be drawn for future from these ratios. Thus, ratio analysis helps in forecasting and planning. 3. Helps in Communicating: The financial strength and weakness of a firm are communicated in a more easy and understandable manner by the use of ratios. The information contained in the financial statements is conveyed in a meaningful manner to the one for whom it is meant. Thus, ratios help in communication and enhance the value of the financial statements. 4. Helps in Co-ordination: Ratios even help in co-ordination which is of utmost importance in effective business management. Better communication of efficiency and weakness of an enterprise results in better co-ordination in the enterprise. 5. Helps in Control: Ratio analysis even helps in making effective control of the business. Standard ratios can be based upon Performa financial statements and variances or deviations, if any, can be found by comparing the actual with the standards so as to take a corrective action at the right time. The weaknesses or otherwise, if any, come to the knowledge of the management which helps in effective control of the business. 6. Other Uses: These are so many other uses of the ratio analysis. It is an essential part of the budgetary control and standard costing. Ratios are immense importance in the analysis and interpretation of financial statements as they bring the strength or weakness of a firm.

7. Unity to Employees: The employees are also interested in the financial position of the concern especially profitability. Their wage increases and amount of fringe benefits are related to the volume of profits earned by the concern. The employees make use of information available in financial statements. Various ratios relating to bank like per employees business, per branch productivity,

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factor separation analysis, capital adequacy ratio etc. enable employees to put forward their view point for the increase of wages and other benefits. 8. Unity to Government: Government is interested to know the overall strength of the Bank. Financial statements published by Bank units are used to calculate ratios for determining short-term, long-term and overall financial position of the concerns; profitability indexes can also be prepared with the help of ratios. Govt. may base its future policies on the basis of bank information available from various units. The ratios may be used as indicators of overall financial strength of public as well as other sectors. In the absence of the reliable economic information, governmental plans and policies may not be successful. 9. Tax Audit Requirements: Section 44 AB was interested in the Income Tax Act by the Finance Act, 1984. Under this section every assesses engaged in any business and having turnover or gross receipts exceeding Rs. 40 lakh is required to get the accounts audited by a Chartered Accountant and submit the tax audit report before the due date for filling the return of income under section 139(1). In case of a professional, a similar report is required if the gross receipts exceed Rs. 10 lakh. 10. Utility to Creditors: The creditors or suppliers extend short-term credit to the concern. They are interested to know whether financial position of the Bank warrants their payments at a specified time or not. The bank pays short-term creditors out of its current assets. If the current assets are quite sufficient to meet current liabilities then the creditor will not hesitate in extending credit facilities. 11. Utility to Share holders: Investors in the concern will like to assess the financial position of the concern where he is going to invest. His first interest will be the security of his investment and then a return in the form of dividend or interest. For the first purpose he will try to assess of fixed assets and then loans raised against them. The investor will feel satisfied only if the concern has sufficient amount of assets. Long-term solvency ratios will help him in assessing financial position of the concern. Profitability ratios, on the other hand, will be

useful to determine profitability position. Ratio analysis will be useful to the investors in making up his mind whether present financial position of the concern warrants further investment or not.

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The District Central Co-operative Bank, Balasore calculates several ratios for knowing the overall performance and also the current financial position of the Bank. These ratios are listed below. a) Average Working Fund. b) Average Cost of Fund. c) Average Yield on Advances. d) Average Yield on Assets. e) Transaction Cost. f) Risk Cost. g) Non-Interest Income. h) Net Interest Income. i) Operating Margin/ Financial Margin. j) Profitability/ Net Financial Margin. k) Credit Deposit Ratio. l) Return on Assets. m) Net NPA to Advances. n) Capital Adequacy Ratio (CAR). o) Per Employees Business. p) Per Branch Productivity. q) Solvency Ratio. r) Factor Separation Analysis. s) Break-even Level.

METHODOLOGY
This methodology used to collect the required information or data are discussed with different manager guided by them and visiting various department of Balasore Bhadrak Central Co-operative Bank, Balasore.

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SOURCES OF INFORMATION Secondary data: secondary data are those data which refer those form already gathered and available data in contrast with the primary data there may be internal sources within the firm. Externally these sources may include in the book or periodical, published report, data, services etc. For the completion training has consulted the secondary data which include: 1) 2) 3) 4) 5) Book of the project Published report relevant to the topic Record of the bank Periodicals & files Commercials data & Brochures provided

Various methods to be used to know the financial position of Balasore Bhadrak Central Co-operative Bank, Balasore. 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19) Average Working fund. Average Cost of fund. Average Yield on Advances. Average Yield on Assets. Transaction Cost. Risk Cost. Non interest Income. Net Interest Income. Operating Margin/ Financial Margin. Profitability/ Net Financial Margin. Credit Deposit Ratio. Return on Assets. Net NPA to Advances. Capital Adequacy Ratio (CAR) Per Employees Business. Per Branch Productivity. Solvency Ratio. Factor Separation Analysis. Break-even Level.

OBJECTIVES OF THE STUDY
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The project objective consists of the business benefit that organization expects to achieve as a result of spending time and exerting effort to complete a project.

PROJECT OBJECTIVE: The present study has been undertaken with the following specific objective: • To study the financial analysis carried out by Balasore Bhadrak Central Co-operative bank. • To study the products and services offered by the bank. • To study the financial health of the bank in terms of its margin. • And, to study the Capital Adequacy Ratio maintained by the bank.

SCOPE OF STUDY
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The scope of the study is to get a true and clear understanding of the financial analysis done in banks.

This study gives an impetus to analytically examine the changes being put forward by the current changes in the present financial market.

LIMITATIONS
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i) ii)

The study is limited to 5 years only. Majority of data are collected from secondary sources. However, some important primary information is being collected from bank officials.

iii)

Data’s have been analyzed in the report under some assumption such as total working fund is assumed to be average working fund with lack of information.

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CHAPTER-4
 Ratio Analytical Frame Work

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DATA ANALYSIS AND INTERPRETATION RATIO 2008-09 2009-10 2010-11 2011-12 Working 4,751,851 5,703,403 6,333,126 6,904,240 fund (avg.) Avg. cost 6.81 5.75 4.87 4.55 fund Avg. yield 10.72 9.02 7.67 7.90 on advances Avg. yield 8.87 7.48 6.64 7.10 on assets Transaction 1.52 1.23 1.44 1.51 Cost Risk Cost 2.62 2.88 2.59 2.50 Non.13 .14 .16 .17 interest income Net interest 2.05 1.72 1.76 2.55 income Operating 2.06 1.73 1.77 2.55 Margin Profitability .65% .37% .35% .14% CD Ratio 131% 146% 146% 136% Return on 6.45 3.70 3.59 1.45 Assets Net NPA to 17.32% 5.41% 5.69% 5.68% advances Capital 18.01% 13.70% 12.78% 13.69% Adequacy Ratio (CAR) Per 188 220 252 281 Employees Business Per Branch 1780.03 2079.90 2377.24 2645.43 Productivity Solvency 5.53% 5.78% 6.00% 7.05% Ratio Break Even 6.16 10.72 11.05 27.42 Level

2012-13 8,506,595 4.54 7.32 6.44 1.24 2.32 .19 1.89 1.90 .22% 110% 2.21 4.83% 14.06%

318 2997.84 6.36% 15.31

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INTRODUCTION
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The Bank acting as financial intermediaries, mobilize saving of the society and get their resources through borrowings for providing credit to the needy sector. They have to pay salaries to their staff, pay interest on their deposit and borrowing and of course incur overhead expenses in the business operation. Moreover they are required to make provisions for any potential loss of their assets. Finally, they need to pay a reasonable amount of dividend to their share holders, who are the real owners. Hence, Banks will have to earn profit and only a profit earning bank can maximize the wealth of its shareholders.
FACTORS AFFECTING PROFITABILITY

Profit is excess of income over expenditure during any accounting period, where as profitability is a relative term which is expressed as percentage to average working fund in case of banks. The followings are some important factors that determine the profitability of a Bank I) Amount of working funds deployed II) Cost of funds III) Yield on funds IV) Management cost (Operating cost) V) Risk cost Amount of working funds deployed Working funds are the fund deployed by a Bank. The amount of working fund so deployed can be found out by subtracting the aggregate amount of contra items from total liabilities of the Balance Sheet. Working Fund =Total Liabilities – Bills for collection and Bill Receivable as per contra Contra items include =Bills collection, I.B.lodged, O.B. lodged, Branch Adjustment Year 2008-09 2009-10 2010-11 2011-12 2012-13 Working 4,751,851 5,703,403 6,333,126 6,904,240 8,506,595 Fund (avg.) * Average working fund is taken as total working fund. (Rupees in Thousands)

Interpretation BITS
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By analyzing the working fund over a period of 5 years from 2008-09-05 to 200809. We found that amount of working fund deployed by the Bank had been increased. This indicates that the deposit mobilization has been more. In fact the financial position had become stronger. I) Cost of Funds

Various sources of funds for this bank comprises of share capital and reserves (Own funds), Deposit, Borrowings and other liabilities. a) Share capital and Reserves (Own funds) Share capital is contributed by share holders, and also by the members in cooperative Banks and may be treated as cost free for the purpose of analyzing profitability. However, for a conservative analysis of profitability, dividend paid by the bank may be taken as cost of funds. In this case the Bank did not declare any dividend for the period under consideration. Reserves being past profit retained in the business are cost free. Average Cost of Fund =Total Interest Paid/Average Working Fund*100 *Total interest paid ( as per p/l account) includes =interest paid on deposits &interest paid in Borrowings. Year 2008-09 Avg. Cost 6.81 of Fund (%) Interpretation By analyzing the Average Cost of Funds over a period of 5 years be found that it had reduced Constantly from 2008-09 to 2012-13- which indicates lower interest out go by the Bank which means less out flow of money in the form of interest which has reduced is good but bad, because lower interest rate means lower deposits. 2009-10 5.75 2010-11 4.87 2011-12 4.55 2012-13 4.54

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The bank pays different rates of interest depending upon the nature and term deposit. Hence, deposit costs depend upon the deposit mix of bank. For instants the Average cost of Deposit for the year 2011-12 is Rs. 6.92 per Rs. 100 of deposits.

c) Borrowings
Borrowings in this case comprises of Short term loan, Medium term loan and Long term loan. Again, this borrowing is by way of from higher financing agencies, interbank borrowings or refinance from RBI, NABARD, SIDBI, etc. The average cost of borrowing is Rs. 3.52 per Rs. 100 in year 2011-12. III) Yield on Funds The funds mobilized by a bank through different sources are utilized for • Compliance with Statutory Requirements relating to CRR and SLR • Investment in Non SLR Avenue • Granting Loans and Advances • Deploying on other Assets a) Cash in Hand: As Cash in hand yields no returns, the bank should maintain only minimum cash balance required for day to day business. In fact, this will reduce the security risk or the Bank. Similarly, current account kept with SBI and subsidiaries, other notified commercial banks normally yield no income. b) Investment: It includes all the fixed deposit with banks, short-term deposit, investment in central & State Government Securities, Shares of Co-operative Institution etc. The Bank has to maintain some of its investment for the purpose CRR/SLR. The return yield on this investment comprises of interest and dividend actually received. For instance 2011-12 the average yield on investment is Rs. 7.18 per Rs. 100. c) Loans and Advances: These portfolio provides the most profitable avenue for deployment of funds by the Bank. Average Yield on Advances = Interest received on advances (as per p/l account)/Average outstanding advances Including NPA*100 *NPA =provision, provision against standard assets +Outstanding advances (S.T. Loan &cash credits, M.T. Loan & cash credit, L.T. Loan & cash credit) Year 2008-09 2009-10 2010-11 2011-12 2012-13
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Avg. 10.72 Yield on advances (%)

9.02

7.67

7.90

7.32

Average Yield on Assets = Total Interest received (as per p/l account)/Average Working Fund*100 Year 2008-09 Avg. 8.87 Yield on Assets (%) 2009-10 7.48 2010-11 6.41 2011-12 7.10 2012-13 6.44

Interpretation
Average Yield on Assets & the rate of advances is a major indicator about the Banks average return which Companies of interest income as well as non-interest income. Analyzing the Average Yield on Assets & Average Yield on Advances from 2008-09 to 2012-13. We found, it had been reduced. It means the share of non-interest earnings or low interest earning assets will be more disbursement of loans increased over this period of time.

IV) Management Cost (Transaction Cost) These are also called operating cost include all cost other than cost of funds and provision. In fact, transaction cost, risk cost, non-interest income, etc. are some of the factors which may affect the profitability of the Bank. Transaction Cost =Total transaction Cost/Average Working Fund *100

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Total Transaction Cost = Salary & Allowances + Rent, taxes, insurance, lighting + postage, telegrams + Stationary, printing & other expenses
Year 2008-09 Transaction 1.52 Cost 2009-10 1.23 2010-11 1.44 2011-12 1.51 2012-13 1.24

Interpretation By analyzing transaction cost, we found it varies in a zigzag way over a period of 5 years. This is mostly due to changes in the amount of other expenses over these periods.

V) Risk Cost
It is calculated to estimate the likely Annual loss on assets as a ratio of Rs. 100 of Average fund deployed. Risk Cost include provision made towards Bad & Doubtful debt = Total of provision made in B/S towards NPA/Average Working Fund *100 *Total provision made towards NPA =Provisions, Provision against Standard Assets Year 2008-09 2009-10 2010-11 2011-12 2012-13 Risk Cost 2.62 2.88 2.59 2.50 2.32

Interpretation
By analyzing Risk Cost, We found over a period of 5 years the amount of provision mad in Balance Sheet (other Liability) had been decreased. Risk Cost decreases which indicates lower likely losses on assets.

VI) Financial Margin
Just as trading or manufacturing organization computes its gross profit to assess its Activities; banks also ascertain their gross profit, which is called spread. It is calculated as a difference between weighted average yield on assets and weighted average cost of funds.

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Year Financial Margin

2008-09 2.06

2009-10 1.73

2010-11 1.77

2011-12 2.55

2012-13 1.90

Interpretation
In 2008-09 the Financial Margin is 2.06 which has reduced to 1.77 in the year 200607 part reason, is that banks average yield on assets is reduced.(refer to average yield on assets, calculate as above). Beside this risk cost from 2008-09 to 2006-07 has been increased, resulting in increased weighted average cost of fund. It is as well as net interest income. Net Interest Income = Total Net Interest Income/Average Working Fund *100 * Net Interest Income =Total Interest Income – Total Interest Expenditure Year Net Interest Income 2008-09 2.05 2009-10 1.72 2010-11 1.76 2011-12 2.55 2012-13 1.89

VII) Burden
The total non-interest expenditure (total transaction cost) is generally more than miscellaneous Income. The difference between the two is called Burden. In fact, while making the pricing of loans this difference is loaded in to the rate of interest. The concept of Burden says the important of non-interest income for a bank. A high level of non-interest income can not only recover the entire operating cost, but also it can enable a bank to pay high level of compensation to its employees as in the case of private sector bank. Further, if the non-interest income of the bank is high enough to leave a surplus after paying of interest cost as well. Non- interest income = Total non-interest income/Average Working Fund *100 * Non-interest income = other receipts + commission Exchange

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Year Noninterest income

2008-09 0.13

2009-10 0.14

2010-11 0.16

2011-12 0.17

2012-13 0.19

VIII) Net Financial Margin (NFM)
Net Financial Margin =Net Profit/Average Working Fund *100 Year NFM 2008-09 .65% 2009-10 .37% 2010-11 .35% 2011-12 .14% 2012-13 .22%

Interpretation
Analyzing NFM we found that it means profit as percentage of working fund. It has decreased over the years. It means operating expenses would have increased or deposit would have increased or deposits would have increased more, lessing down the profit margin. It needs to be increased. IX) CD Ratio CD Ratio (Credit Deposit Ratio) = Loan Outstanding (total)/Deposits (total) *100 Year CD Ratio 2008-09 131% 2009-10 146% 2010-11 146% 2011-12 136% 2012-13 110%

Interpretation
It is very high. The CD Ratio of 60-70% is acceptable. X) Return on Assets (ROA) Return on Assets =NPAT/Total Assets *NPAT =Net Profit after Tax (Balance as Profit &Loss A/c)

Year

2008-09

2009-10

2010-11

2011-12

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ROA

6.45

3.70

3.59

1.45

2.21

Interpretation
Return on Assets has decreased drastically. It means our assets couldn’t generate good Return. It shows poor assets management. XI) Net NPA to Advances Net NPA to Advances Ratio = Net NPA/ Loans & Advances *100 *Net NPA =Gross NPA – Provision * Gross NPA = Substandard Assets + Doubtful debts + Loss Assets Year 2008-09 Net NPA 17.32 to Advances (%) Interpretation This Ratio indicates the Percentage of loss assets to the total amount of advances made in the particular here. Analyzing the information above except the year 200809. It had reduced marginally from 2005-006 onwards. This may indicate that Bank had gone for stringent collection policies. XII) Solvency Ratio Solvency indicates the ability of the Bank to meet its long term commitments. From the table above we can see that the Bank is able enough to meet its interest payment on its debt. From 2008-09 it had increased considerable. 2009-10 5.41 2010-11 5.69 2011-12 5.68 2012-13 4.83

Solvency Ratio =Total Liabilities to Outsiders/ Total Assets *100 Total Liabilities to Outsiders =Total Liabilities – (Deposits + Borrowings +Adjustment Head + O.D. Interest Reserve + interest payable +other liabilities) Year 2008-09 2009-10 2010-11 2011-12 2012-13
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Solvency Ratio (%)

5.53

5.79

6.00

7.05

6.36

XIII) Break Even Level Break –Even Level (BEL) = (Transaction Cost + Risk Cost) - Non- interest income/Net Financial Margin*100 Year Break Even Level (%) 2008-09 6.16 2009-10 10.72 2010-11 11.05 2011-12 27.42 2012-13 15.31

Interpretation
This is the level of business (in terms of working funds) at which the total income of the Bank is just adequate to meet all its cost. In case, the present level of working fund is more than BEL, the bank would be in profit & the actual profit can be derived as Profit = (actual working funds – BEL working fund) * Net financial margin XIV) Factor Separation Analysis In factor separation analysis all the items of the banks income statement are taken and divided by Average Working Funds. Those are given in the table below.

Particulars 1. Director &local committee 2. Low charges 3. Depreciation & repair properties

2008-09 2009-10 -4.8 5.02 2.48 -1.56 -6.19 6.97

2010-11 .96 5.06 -8.69

2011-12 1.55 1.82 2.7

2012-13

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4. receipts

Other .56

7.76

.01

-0.13

Fig –I Factor Separation Analysis (Graph)
10 8 6 4 2 0 -2 -4 -6 -8 -10

director & local committee fee law charges 200809 200910 201011 201112 201213 depreciation & repair properties other receipts

Interpretation
The purpose is to find out the contribution of each of the items towards profitability. These we can do by taking the ratios for two successive years, i.e., = Items/Average Working Fund and the difference between ratios for 2 years under each item represents contribution of some important items towards profitability. XV) Capital Adequacy Ratio (CAR) Capital Adequacy Ratio =Capital/ Total Risk Weighted Asset *100 Year 2008-09 Capital 18.01% Adequacy Ratio (%) * Refer to Annexure 2009-10 13.70% 2010-11 12.78% 2011-12 13.69% 2012-13 14.06%

Interpretation
Capital Adequacy Ratio is the amount of capital that a bank has to maintain always in proportion to its Risk Weighted Asset in the balance sheet. In fact this is prescribed by the RBI from time to time and this the requirement under BASEL norms as well. Every bank operating in India has to maintain the required Tier I and Tier II capital so as to avoid any future contingencies, which may lead to insolvency, ultimately affecting the public. By analyzing Capital Adequacy Ratio, from 2008-09 to 2006-07 it had increased. Again in the next two years it gets decreased. Overall the bank indicates good Capitalization.

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XVI) Per Employees business Per Employees Business = Deposits (total) + Loan & Advances (total)/ Total Staff Year 2008-09 Per 188 Employees Business * Total Staff = 292 2009-10 220 2010-11 252 2011-12 281 2012-13 318

Interpretation
Per employee business has been increased over the period under consideration, which indicates that productivity of total no. of employees as a whole has risen. This indicates the better human resource management over these periods. XVII) Per Branch Productivity Per Branch Productivity = Total Deposits + Loans & Advances/ Total Branch Year 2008-09 Per Branch 1780.03 Productivity * Total Branch =31 2009-10 2079.90 2010-11 2377.24 2011-12 2645.43 2012-13 2997.84

Interpretation
Per branch productivity is a measure of total business done by a single branch in a particular year. On studying the trend, we found that the series has been increased, indicating strong financial position of each branch. It in fact, says about the aggregate turn over (business) of the bank.

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CHAPTER-5
 Findings  Suggestion  Conclusion

Findings
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I) II)

Analyzing Capital Adequacy Ratio (CAR) the figure is highest for the year 2006-07. That is 18.30% which is well above excepted norms for the bank. Per employees & per branch productivity has increased from 2008-09 to 2012-13 for the banks. Average cost of fund which is one of the parameter to judge the bank’s profitability has reduced during the study period under consideration. Yield on Advances mostly in case of banks depends upon the lending rate which is again determined by the market forces. Average yield on advances had reduced during the period under consideration in this case.

III) IV)

SUGGESTION
I) The bank should try to increase the revenue from other assets (in the form of non-interest income) as it may help the bank to cover the operating cost. More over it helps the bank in this competitive scenario to attract more talents by paying them higher compensation compare to its counter part.

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II)

As the bank is operating & registered under co-operative societies act, its major thrust should be to work on the principle of co-operation & mutual trust. In fact the bank is the medium to include a large segment of population who remain excluded from the formal payment system & financial market. Especially, when the financial market is developing & globalizing. In other words the bank can play a lead role in the financial inclusion. The bank should try to create more credit for the priority sectors in the form of micro-finance or through Primary Agriculture Credit Societies (PACS). Simultaneously it must see that Net NPA position should decreased through appropriate credit evaluation & better collection effort. Management cost being one of the major indicators of the profitability of bank is around 1.5% of the total working fund for the five year period, the bank can decrease this cost with the implementation of MIS (management Information System) & Information Technology Services. The banks should innovative liabilities product in order to attract more funds from the supplier of funds.

III)

IV)

V)

CONCLUSION
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This Bank has traditionally enjoyed various resources such as vast sources of funds, skilled manpower, ever expanding branches, huge no. of members registered, no. of societies affiliated etc.

However, organizational set up, local & rural focused culture & over all as a cooperative kind of society makes the bank uncompetitive compared to its business oriented commercial banks. Hence, in order to stay ahead in the competition with commercial banks & simultaneously to cater the rural needs as well, the bank should devise innovative strategies to cut down the cost & to boost the profit in coming future years.

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BIBLIOGRAPHY

BIBLIOGRAPHY
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• Shekhar Lekshmy, Shekhar K.C, Banking Theory and Practice, Nineteenth edition2005, Vikas Publishing House pvt. Ltd. • Prasanna Chandra, Financial Management, Sixth edition 2004, TATA Mc GRAW HILL . • Sharma & Gupta, Financial Management, Second edition 2009, Kalyani Publishers. • Natarajan S, Parameswaran R, Indian Banking, Second edition 2004, S. Chand & Company Ltd. • BYE-LAWS (EN-BLOC AMENDMENT) of the Balasore-Bhadrak Central Co-operative Bank Ltd., Balasore. • By the Web side, WWW.dccb_bls . com

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ANNEXURE

AVERAGE YIELD OF ASSETS

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Particulars

Amount

Relative share

Earning per 100

Cash & Bank Balances Investment Loans & Advances Other Assets 2008-09 Cash & Bank Balances Investment Loans & Advances Other Assets 2009-10 Cash & Bank Balances Investment Loans & Advances Other Assets 2010-11 Cash & Bank Balances Investment Loans & Advances Other Assets 2011-12 Cash & Bank Balances Investment Loans & Advances Other Assets 2012-13
2008-09 to 2012-13

2,738.84 95147.81 31272.42 4,005.43 1,33,164.5 3,141.46 11,662.75 38,286.79 3,977.52 57,068.52 3,609.99 13,128.63 43,792.59 2,903.99 63,435.2 3,550.87 14,469.02 47,213.90 3,855.98 69,089.77 4,595.99 26,204.90 48,969.40 5,353.67 85,123.96

2.06 71.45 23.48 3.01 100.00 5.50 20.44 67.09 6.97 100.00 5.69 20.70 69.03 4.58 100.00 5.14 20.94 68.34 5.58 100.00 5.40 30.78 57.52 6.30 100.00

N.A 7.64 11.52 N.A N.A 5.69 9.40 N.A N.A 5.50 7.96 N.A N.A 7.18 8.19 N.A N.A 6.74 8.04 N.A

Weigh ted Avera ge Yield of Assets N.A 5.46 2.70 N.A 8.16 N.A 1.16 6.30 N.A 7.46 N.A 1.13 5.49 N.A 6.62 N.A 1.50 5.60 N.A 7.10 N.A 2.07 4.62 N.A 6.69

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AVERAGE COST OF FUNDS
2008-09 to 2012-13 Particulars Amount Relative Share 5.50 50.30 28.04 16.16 100.00 5.74 45.89 34.31 14.06 100.00 6.14 47.17 33.30 13.42 100.00 6.98 50.36 30.20 12.46 100.00 6.32 51.90 29.70 12.08 100.00 Cost per 100 N.A 1.00 6.31 N.A 7.31 N.A 8.26 5.72 N.A 13.98 N.A 7.28 4.31 N.A 11.59 N.A 6.92 3.52 N.A 10.43 N.A 6.76 3.42 N.A Weighted Average Cost of Fundss N.A 5.03 1.77 N.A 6.80 N.A 3.79 1.96 N.A 5.75 N.A 3.43 1.43 N.A 4.86 N.A 3.48 1.06 N.A 4.54 N.As 3.51 1.01 N.A 4.52

Own fund Deposits Borrowings Other liabilities TOTAL(2012-1309) Own fund Deposits Borrowings Other liabilities TOTAL(2010-11) Own fund Deposits Borrowings Other liabilities TOTAL(2011-12) Own fund Deposits Borrowings Other liabilities TOTAL(2011-12) Own fund Deposits Borrowings Other liabilities TOTAL(20`12-13)

2,618.13 23,908.56 13,327.60 7,682.17 47,536.46 3,274.45 26,190.28 19,578.04 8,025.83 57,068.6 3,892.34 29,901.91 21,126.44 8,517.52 63,438.21 4,825.69 34,794.59 20,861.82 8,607.67 69,089.77 5,38,070,15 7 4,417,563,6 37.80 2,528,797,4 70.26 1,027,966,6 81 8,512,397,9 45

BITS

70

FACTOR SEPARATION ANALYSIS
EXPENDITURE Interest Paid On Deposits & Borrowings Salary & Allowances Director & Local Committee Member Fees & Allowances Rent, Taxes, Insurance, Lighting, etc. Law Charges Postage, Telegram & Telephone Charges Audit Fees Depreciation & Repair Of Properties Stationary, Printing & Advertisement Other Expenditures Balance Of Profit INCOME Interest Received On Loans & Investment Commission, Exchange Brokerage Other Receipts Loss if any 200809 .07 .01 2.54 1.03 4.17 1.21 2.18 6.61 2.81 1.16 4.60 .09 3.59 9.41 5.16 2009-10 2010-11 2011-12 .06 .01 7.34 1.00 1.69 1.28 1.67 8.17 3.12 6.46 1.75 .07 5.38 8.85 .05 .01 2.32 1.15 7.88 1.43 1.30 1.20 3.73 8.04 .07 5.54 1.09 .05 .01 1.36 1.03 2.82 1.31 3.11 9.89 2.86 3.03 7.53 .07 6.71 1.08 2012-13 .05 .01 2.91 9.62 1.00 9.76 9.16 7.49 2.89 4.34 7.63 .07 6.76 1.21 -

BITS

71

Structure of Adequacy Ratio (CAR)
SL.NO PARTICULARS . I Capital Funds A Tier I Capital Elements (a) Paid- up share capital (b) © (d) (e) 200809 2009-10 2010-11 2011-12 201213

2,46,65 2,98,833 2,225 ,631 6,027,05 9 22,584,6 80 21,152,9 67 3,48,571 ,337 0 348,571, 337

3,32,028, 3,53,88 803 7,406 11,386,3 07 45,819,2 23 22,795,2 85 4,12,029, 618 0 412,029, 618 19,256, 330 1,09,42 5,062 10,031, 477 4,92,60 0,275 0 492,600 ,275

Statutory Reserves 1,240,5 35 Capital Reserves Other disclosed 1,14,52 free reserves 6,054 Undistributed profit TOTAL Less intangible assets & losses FINAL TOTAL 19,146, 098 3,81,56 4,912 0 381,56 4,912

4,01,4 99,90 3 21,76 4,200 1,16,9 29,93 4 18,84 1,342 5,59,3 35,37 9 0 559,3 35,37 9 0 0 253,3 44,30 1 0 253,3 44,30 1
72

B (a) (b) © (d)

Tier II Capital Elements Undisclosed reserves Revaluation reserves General Provisions & Loss Provisions Subordinated debts TOTAL

0 0 226,35 8,832 0 226,35 8,832

0 0 226,358, 832 0 226,358, 832

0 0 215,670, 419 0 215,670, 419

0 0 228,779 ,348 0 228,779 ,348

BITS

C II (a)

Grand Total (A+B) RISK ASETS Adjusted value of funded risk assets on B/S items (part B) (I) Adjusted value of non- funded & off balance sheet items (part C) Total Risk Weighted Assets (A+B) Percentage of capital funds to risk weighted assets I-c-II-c

607,92 3,744

574,930, 169

627,700, 037 5,268,92 5,308 0

721,379 ,623 5,780,8 52,634 0

812,6 79,68 0 5,780, 852,6 34 0

3,374,6 4,911,37 90,380 8.623 0 0

(b)

© III

3,374,6 4,196,98 90,380 6,748 18.01% 13.70%

5,268,92 5,308 13.69%

5,780,8 52,634 14.06%

5,780, 852,6 34 14.06 %

BITS

73

RISK WEIGHTED ASSETS ON BALANCE SHEET ITEMS
SL. NO . 1 2 (a) (b) 3 4 DESCRIPT RISK ION OF WEIGH ASSETS TED (%) Cash in hand Balance with RBI 0% Banks 20% (current a/c) Money at call and Notice All claims on Banks F.D. certificate of deposit bonds etc. (F/D with OSCB) Investment in Govt. Guarantee & other trustee securities Investment in Bonds/Debe ntures of public financial institutions All other investments Advances Guaranteed by Govt. 200809 200910 2010-11 193,729,1 80 201112 201 213 178,07 212, 0,518 612, 342 35,403 49,5 ,262 34,4 30

105,02 150,43 0,935 5,238

33,772 32,742, 33,453,91 ,688 282 2

20%

171,75 212,99 9,544 6,130

238,527,8 46

260,71 492, 8,432 868, 698

5 (a)

0%

(b)

20%

© 6 (a)

100%

76,680 85,294, 105,224,3 ,300 300 00

128,30 141, 9,300 146, 500

BITS

74

(b) © (d) (e)

(f)

(g)

7 8 (a) (b)

To staff Against Deposits Against LIC policies, & IVP & KVP To Banks/Guara nteed by Banks Guaranteed by DICCC/EC GC All other advances (All loans other than the above) Fixed assets (net of depreciation) Other Assets Tax deducted at source Interest accrued on Govt. Guarantee loans Claims on RBI All other assets (including branch adjustments, on-banking assets, interest

0% 0% 0% 50%

100%

2,928, 3,649,0 4,233,235, 4,589, 4,76 562,48 35,455 797 649,10 5,93 4 5 0,07 6 18,854 22,396, 23,659,65 ,366 295 3 22,929 19,3 ,701 93,6 12

100%

100%

40,040 44,087, 83,547,93 ,063 0-48 5

53,844 92,1 ,990 86,9 76

BITS

75

accrued on nonguaranteed loans, etc.) Total of part B:

374,69 4,196,9 4,911,378, 5,268, 5,78 0,380 86,748 623 925,30 0,85 8 2,63 4

BITS

76

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