Professional Documents
Culture Documents
Introduction:
Co-operative banks in India came into existence with the enactment ofthe Agricultural
Credit Co-operative Societies Act in 1904. Co-operativebank form an integral part of banking
system in India. Under the act of 1904,a number of co-operative credit societies were started.
Owing to theincreasing demand of co-operative credit, anew act was passed in 1912,which was
provided for establishment of co-operative central banks by aunion of primary credit societies
and individuals.
Co-operative Banks in India are registered under the Co-operativeSocieties Act. The
cooperative bank is also regulated by the RBI. They aregoverned by the Banking Regulations Act
1949 and Banking Laws (CooperativeSocieties) Act, 1965.
Credit cooperatives are the oldest and most numerous of all the types ofcooperatives in India.
The cooperative credit institutions in thecountry may be broadly classified into urban credit
cooperatives andrural credit cooperatives. There are about 2090 urban creditcooperatives and
these societies together constitute for about 10 percentof the aggregate banking business and
therefore regarded as animportant segment of the banking system. The urban creditcooperatives
are also popularly known as Urban Cooperative Banks.
The rural credit cooperatives may be further divided into short-term creditcooperatives and
long-term credit cooperatives. With regard to shorttermcredit cooperatives, at the grass-root level
there are around 92,000Primary Agricultural Credit Societies (PACS) dealing directly with
theindividual borrowers. At the central level (district level) District CentralCooperative Banks
(DCCB) function as a link between primary societiesand State Cooperative Apex Banks (SCB).
It may be mentioned thatDCCB and SCB are the federal cooperatives and thus the objective isto
serve the member cooperatives. As against three-tier structure ofshort-term credit cooperatives,
the
long-term cooperative credit structurehas two tiers in many states with PrimaryCooperative
Agriculture andRural Development Banks (PCARDB) at the primary level andState Cooperative
Agriculture and Rural Development Bank at the statelevel. However, some states in the country
have unitary structure withstate level cooperative operating with through their own branches
andin one state an integrated structure prevails. The organizationalstructure of the credit
cooperatives in India is illustrated in chart I.Interestingly, under the Banking Regulation Act
1949, only StateCooperative Apex Banks, District Central Cooperative Banks and selectUrban
Credit Cooperatives are qualified to be called as banks in theCooperative sector. In other words,
only these banks are licensedto conduct full-fledged banking business.
Finance Function:
i.
ii.
Farming
Cattle
Milk
Hatchery
Personal finance
The Land Development Banks meet the long term credit requirements of the farmers
for developmental purposes. They are supervised National Bank for Agriculture and Rural
development (NABARD). The state land development banks oversee the the primary land
development banks situated in the districts and tehsil areas in the state. They are governed both
by the state government and Reserve Bank of India. Recently, The sources of funds for these
banks are the debentures subscribed by both central and state government. These banks do not
accept deposits from the general public.
DISTRICT CENTRAL CO-OPERATIVE BANKS (DCCBS) AND STATE COOPERATIVE BANKS (SCBS) :
They are co-operative banks at the district level and at the state level. Each district
will have not more than one DCCB with a number of DCCBs reporting to the SCB. Earlier
these two tiers were also under the supervision of the RBI. However, following the establishment
of the National Bank of Agriculture and Development (Nabard) in 1982, the supervisory function
of these banks has been passed on to Nabard. The major objectives of the DCBs are to provide
loans to affiliated societies, to act as a balancing centre of finance for primary societies, to
arrange for the supervision and control of the affiliated societies, to raise deposits from members
and non-members, to convene conferences of the member societies and also prescribe uniform
procedure for the working of primary societies, to open branches of the bank at important places
with the permission of the Registrar of Co-operative Societies and to maintain and utilise state
partnership. These apex banks or State Co-operative Banks are formed by federating DCBs in
each state. The apex banks assume a key-position in the co-operative credit structure because the
financial assistance from RBI and the National Bank for Agriculture and Rural Development are
invariably routed through them.
the
5. Democratic management:
The cooperative society is managed by the elected members from and among
themselves. Every member has equal rights through its single vote but can take active
part in' the formulation of the policies of the society. Thus all member are equally
important for the society.
2. Inefficient management:
A cooperative society is managed by the members only. They do not possess any
managerial and special skills. This is considered as major drawback of this sector.
Inefficiency of management may not bring success to the societies.
3. Lack of secrecy:
The cooperative society does not maintain any secrecy in business because the
affairs of the society is openly discussed in the meetings. But secrecy is very important for
the success of a business organisation. This paved the way for competitors to compete in
more better manner.
4. Cash trading:
The cooperative societies sell their products to outsiders only in cash. But, they are
usually from the poor sections. These persons require to avail credit facilities which is not
possible in the case of cooperatives. Hence, marketing is a shortcoming for the
cooperatives.
5. Absence of motivation:
The members may not feel enthusiastic because the law governing the
cooperatives put some restriction on the rate of return. Absence of relationship between
work and reward discourage the members to put their maximum effort in the society.
Indias cooperative banking sector has been suffering in the last many years due to poor
banks.
There are over 1,650 UCBs with close to 7,000 branches in the country.
About 45 Indian co-operative banks with combined deposits of Rs.35,600crore face penal
action by the Reserve Bank of India (RBI), including possible prohibition on their
operations, if they fail to meet a 30 June deadline to achieve minimum capital and reserve
requirements.
Of the 45 cooperative banks, 23 do not even have licences but these together have
Rs.7,600crore deposits.
Of these, 16 are in Uttar Pradesh, three in Maharashtra, three in Jammu and Kashmir and
one in West Bengal.
The 16 banks in Uttar Pradesh together have a deposit base of Rs.2,900crore and will
require Rs.1,400 crore of capital to meet the 4% CAR stipulation. The three banks in
the central bank two months ago for non-compliance with its stipulations.
Of these, seven are in Kerala. These banks have to raise their capital adequacy to 4% by
the end of June and to 7% by March 2014. All cooperative banks have to gradually
migrate to 7% capital adequacy by March, 2014.
bank in satisfaction.
To provide financial assistance to self-employed persons for setting up their own
business.
To do any form of business as specified in section 6 of the banking regulation act, 1949
MEMBERSHIP:
A Class:
Any eligible person can hold A Class share of Rs. 100/-. The Bank is issuing Surety Loan to
salaried class people of Pondicherry State and those who are availing Surety Loan from the Bank
should hold 5% of share to their sanctioned loan amount. A Class member holds the power of
voting in the election to the Board of Directors and he can nominate to the post of Director of the
Bank. If a person holds A Class membership, he can be exempted from deduction of TDS for
the interest amount getting from his deposits in the Bank without any limit. Persons who have
A Class membership in the Bank can avail Jewel Loan above Rs. 1.00 lakh up to Rs.5.00 lakhs.
The total no. of A Class members for the last five years and the share collected is shown hereunder:
Year
No. of member
Amount of Share
2012-13
24,525
2011-12
23,927
2010-11
23,262
2009-10
23,374
2008-09
23,336
FUNDS:
The Main source of funds of the Bank is the various kinds of deposits collected from the public
namely, Fixed Deposit, Recurring Deposit, Cash Certificate, Savings Deposit, Current Deposit.
The deposit position of the Bank is increasing year after year due to the high rate of interest on
deposits provided by the Bank on comparing the rate of interest with other Co-operative and
Nationalized banks. The rate of interest on deposit has been fixed at least 0.5% or 1% higher than
other banks.The deposit position of the Bank for the past 5 years is shown hereunder:
Year
Amount
(Rs.in crores)
2012-13
150.62
2011-12
126.05
2010-11
121.52
2009-10
110.04
2008-09
100.60
ORGANIZATION CHART:
PROFIT:
The Bank is running on profit from the inception. The profit particulars of the Bank for the past 5
years are as follows:
Year
2012-13
2011-12
2010-11
2009-10
2008-09
Amount
(Rs.in Lakhs)
46.59
32.08
83.66
75.60
30.96
NPA/CRAR REPORTS:
NPA:
To safeguard the deposits of public, the ReserveBank of India fixed NPA norms to all Banks
which comes under their control. The NPA particulars of the Bank are detailed as below
Total
Year
Advances (Rs.in
2011-12
2010-11
2009-10
2008-09
2007-08
Lakhs)
10416.44
10061.59
9067.05
7915.75
7505.69
Advance on
Gross
NPANet
NPA
(%)
(%)
1356.99
1185.76
1025.05
1263.68
1092.27
13.03
11.79
11.31
15.96
14.55
6.23
4.87
3.85
8.61
8.07
NPA
CRAR:
The stability and survival of the Bank can be constructed with the CRAR (Capital Risk to Assets
Ratio) of any Bank. The minimum CRAR level needed is 9% as per the directives of Reserve
Bank of India. The CRAR percentage of the Bank for the past 3 years is shown here-under:
Year
31.03.2012
31.03.2011
31.03.2010
Amount
(Rs.in Lakhs)
13.46%
13.66%
15.67%