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CHAPTER 1 INTRODUCTION

Banking system did not originate in any status of government or by any byelaw of private organization. It has a primitive origin as signified by the name bank itself, meaning a bench or desk on which transaction look place in olden days.

Banking made its appearance as a public enterprise around the middle of 12 th century in ITALY when the bank of Venice was established in the year 1157 originally. It was not a bank but only on office of the transfer of public debt. Banking in the modern of the term can be said to have originated in England in the year 1964.

However modern banking came into existence only after the industrial revolution, that took place in European countries in the 18 th and 19 th century.

BANKING SYSTEM IN INDIA

Banking system occupies an important role in a nation‟s economy. A banking institution is indispensable in a modern society. It plays a vital role in the economic development of a country forms the core of the money market in an advanced country.

According to Indian Banking Regulation Act 1949, sec. 5 (1) (c) define the term banking as “acceptingfor the purpose of lending or investment of deposit of money from the public, repayable on demand or otherwise and withdrawal by cheque, draft, order or otherwise”.

We have mainly followed the British pattern of banking system viz, branch banking in India. Branch banking is popular because of the geographical of our country. Indian banking can be divided into three categories, viz RBI, the commercial banks and co-operative banks. The commercial banks broadly classified into nationalize or public sector bank and private sector bank. The private sector bank includes a small number of Indian scheduled bank which have not been nationalized and branches of foreign bank.

ORGANIZATIONAL STRUCTURE OF INDIAN BANKING SYSTEM

Chart 1.2

Reserve Bank of India

ORGANIZATIONAL STRUCTURE OF INDIAN BANKING SYSTEM Chart 1.2 Reserve Bank of India Regional Banks Commercial Banks
ORGANIZATIONAL STRUCTURE OF INDIAN BANKING SYSTEM Chart 1.2 Reserve Bank of India Regional Banks Commercial Banks
Regional Banks
Regional Banks

Commercial Banks

ORGANIZATIONAL STRUCTURE OF INDIAN BANKING SYSTEM Chart 1.2 Reserve Bank of India Regional Banks Commercial Banks
ORGANIZATIONAL STRUCTURE OF INDIAN BANKING SYSTEM Chart 1.2 Reserve Bank of India Regional Banks Commercial Banks

Co-operative Banks

State co-operative Banks

State co-operative Banks
 
PACB
PACB

Public Sector Banks

   

Private Sector Banks

   
Nationalized
Nationalized
ORGANIZATIONAL STRUCTURE OF INDIAN BANKING SYSTEM Chart 1.2 Reserve Bank of India Regional Banks Commercial Banks

Domestic Banks

District co-operative Banks

ORGANIZATIONAL STRUCTURE OF INDIAN BANKING SYSTEM Chart 1.2 Reserve Bank of India Regional Banks Commercial Banks
ORGANIZATIONAL STRUCTURE OF INDIAN BANKING SYSTEM Chart 1.2 Reserve Bank of India Regional Banks Commercial Banks
  • Banks

ORGANIZATIONAL STRUCTURE OF INDIAN BANKING SYSTEM Chart 1.2 Reserve Bank of India Regional Banks Commercial Banks
ORGANIZATIONAL STRUCTURE OF INDIAN BANKING SYSTEM Chart 1.2 Reserve Bank of India Regional Banks Commercial Banks
  • State Banks

ORGANIZATIONAL STRUCTURE OF INDIAN BANKING SYSTEM Chart 1.2 Reserve Bank of India Regional Banks Commercial Banks
UCB
UCB
  • Foreign Banks

ORGANIZATIONAL STRUCTURE OF INDIAN BANKING SYSTEM Chart 1.2 Reserve Bank of India Regional Banks Commercial Banks

State Bank of
India

ORGANIZATIONAL STRUCTURE OF INDIAN BANKING SYSTEM Chart 1.2 Reserve Bank of India Regional Banks Commercial Banks
  • Associates

The co-operation credit movement was officially launched in India in 1904 after the

famous prescription of Nicholson to “find Raiffeison”. It represents a three tier structure –

primary agricultural credit societies [PACs] forming the ground floor, the central co-operative banks [CCBs] the middle level, and the state co-operative banks [SCBs] the top floor as the apex

institutions.

Co-operative banking is retail and commercial banking organized on a co-operative basis. Co-operative banking institutions take deposits and lend money in most parts of the world. The object of co-operative is to offer banking facilities to persons of limited means requiring creditor productive purposes in the use of land and labour at their disposal. These are the federations of primary credit societies in a district and are of two types those having a membership of primary societies only and these having a membership of societies as well as individuals. They also conduct all the business of a joint stock company.

Financial analysis is one use of financial statements to analyze a company‟s financial position and performance, and to assess future financial performance. Thus it becomes necessary to analyze financial statements in order to understand more about profitability and financial position of a business.

STATEMENT OF PROBLEM

Financial analysis is used to analyze the financial position of the organization. For this

purpose, the financial analyst will concentrate on the income statement, balance sheet and cash

flow statement one key area of financial analysis involves extrapolating the company‟s past

performance. Hence the researcher look the past performance of the Wayanad District Co-

operative Bank into an estimate of the bank‟s future performance, as a problem to studied upon.

IMPORTANCE OF THE STUDY

Wayanad is basically an agrarian sector. So most of the people‟s livelyhood mainly depends upon the agricultural development and its sustainability. Wayanad District Co-operative Bank plays a vital role for improving their existing living conditions by providing loans and other financial assistance to the needy people.

Now a day‟s agricultural sector faces more difficulties and the continuous loss occurred in the agricultural crops due to adverse weather conditions, problem of water, power supply, irrigation facilities and rural infrastructure facilities, lack of marketing information, poor knowledge about the new techniques and facilities used in agriculture, etc. make the lives of people a horrible one with financial burden and other problems.

In such situations, this study is relevant to know how much the Wayanad District Co- operative Bank can realize its objectives and to contribute to the welfare of the people in Wayanad district.

OBJECTIVES OF THE STUDY

The objectives of the study are to evaluate the growth rate and profitability analysis of the financial statements of the Wayanad District Co-operative Bank.

SCOPE OF THE STUDY

The scope of the study is concentrates on the Wayanad District Co-operative Bank. This study aims to evaluate the financial performance of the bank. It further attempt to the profitability growth rate of financial statements in the recent years.

METHODOLOGY OF STUDY

There are two types of data are used for the study. They are primary and secondary data.

  • 1. Primary Data Primary data is collected from the bank employees through personal interviews and questionnaires.

  • 2. Secondary Data Secondary data is collected from the records annual reports and financial reports maintained by the bank.

PERIOD OF THE STUDY

The period of the study taken into account data relating to year viz, 2009-2010, 2010- 2011, 2011-2012.

LIMITATIONS OF THE STUDY

  • 1. This study focus only the financial aspects of the bank, it ignores efficient management and other factors of the bank.

  • 2. Time factor is the major defect of this study. Detailed financial analysis of the bank is found to be a difficult task within one allowed period

  • 3. Limitation of the ratio analysis may effects the study

  • 4. Lack of knowledge of the banking terminology is another problem.

CHAPTER SCHEME

Chapter I

Deals with introduction, it consists of objectives of the study, scope of the study, research methodology, Limitation and cauterization.

Chapter II Co-operative banking sector History of co-operative banks. Chapter III Wayanad District Co-operative Bank An overview Chapter IV Financial analysis Chapter V Findings and suggestions

CHAPTER -2

CO-OPERATIVE BANKING SECTOR

Co-operative banks are institutions established on the principles of co-operation and it deal in ordinary banking business. It is formed to extend credit facilities to farmers and small scale industries. It collects funds through shares, accept deposits and grant loans. The main feature of the co-operative banks is that it has no profit motive. Co-operative banks are very helpful to meet the financial requirements of small farmers, artisans etc.

HISTORY OF CO-OPERATIVE BANK

. Co-operative banks are originated with the enactment of the co-operative credit societies Act 1904, which provided for the formation of the co-operative credit societies. Under the Act of 1904, a number of co-operative credit societies were started. Owing to the increasing demand for co-operative credit, a new Act was passed in 1912, which provided for the establishment of co- operative central banks by a union of primary credit societies and individuals. The chief functions of these banks were;

to attract deposits from non agriculturists to use excess funds of some societies temporarily to make up for shortage in another, and; to supervise and guide the affiliated societies in 1914, the Mclagan committee was appointed to examine the co-operative movement and to make recommendation regarding the improvement of the movement. It recommended the establishment of a State Co-operative Apex Bank. On the basis of the recommendation, a central co- operative bank was established in Bombay, other provinces also take action on similar lines. Although these may be considered as the early beginnings in the direction of establishing co-operative banks to meet the financial needs of the agriculturists, the movement received momentum only after the Second World War.

ORGANISATIONAL STRUCTURE OF THE CO-OPERATIVE CREDIT INSTITUTION

The co-operative banking structure in India comprises two main components-Urban

  • Co- operative Banks and Rural Co-operative Credit Institution. Urban co-operative banks have

single tier structure, while Rural co-operatives have a complex structure, viz, the Short-Term Co-operative Credit Structure [STCCS] and the Long- Term Co-operative Credit Structure [LTCCS]. Within the STCCS, Primary Agricultural Credit Societies [PACS] at the village form the base level, while District Central Co-operative Banks at the apex level. The STCCS mostly provide crop and other working capital loans primarily for a short period to farmers and rural artisans.

The Long-Term Structure of rural co-operatives comprises State Co-operative Agriculture and Rural Developments Banks [SCARDB s ] and Primary Co-operative Agriculture and Rural Development Banks [PCARDB s ]. These institutions focus on providing typically to long term loans for making investments in agriculture, rural industries and, lately housing. The structure of rural co-operative bank is not uniform across the states of the country, and varies significantly from one state to another. Some states have a unitary structure with the state level banks operating through their own branches, while others have a mixed structure incorporating both unitary and federal system.

Chart 2.1

STRUCTURE OF CO-OPERATIVE CREDIT INSTITUTION

Co-operative Credit Institution
Co-operative Credit Institution
Chart 2.1 STRUCTURE OF CO-OPERATIVE CREDIT INSTITUTION Co-operative Credit Institution Rural Co-operative Credit Institutions Urban Co-operative
Rural Co-operative Credit Institutions
Rural Co-operative Credit Institutions

Urban Co-operative Banks

Short Term Structure State Co-operative Banks District Central Co-operative Banks
Short Term Structure
State Co-operative Banks
District Central Co-operative
Banks
Chart 2.1 STRUCTURE OF CO-OPERATIVE CREDIT INSTITUTION Co-operative Credit Institution Rural Co-operative Credit Institutions Urban Co-operative

Primary Agricultural Credit
Societies

Long Term Structure

 
 
 

State Co-operative

  • Agriculture and Rural Development Banks

Primary Co-operative

Chart 2.1 STRUCTURE OF CO-OPERATIVE CREDIT INSTITUTION Co-operative Credit Institution Rural Co-operative Credit Institutions Urban Co-operative
  • Agriculture and Rural Development Banks

Chart 2.1 STRUCTURE OF CO-OPERATIVE CREDIT INSTITUTION Co-operative Credit Institution Rural Co-operative Credit Institutions Urban Co-operative

STRUCTURE OF CO-OPERATIVE BANKS IN KERALA

After the formation of Kerala state, the Kerala Govt. passed an Act in the name of Kerala State Co-operative Societies Act 1969, for the smooth functioning of co-operative societies.

At present in Kerala, the co-operative movement is functioning under the three tier system as given below;

  • 1. State co-operative bank is at the apex of the co-operative credit structure. It acts as the banker‟s bank to the District co-operative banks to forecast and manage the financial requirements of the state as a whole.

  • 2. District co-operative bank operate at the district level with main function of financing the affiliated PACSs in their area of operation.

  • 3. PACSs operative at the village level and maintain direct contact with farmers to supply short term and medium term credit.

CHAPTER-3

WAYANAD DISTRICT CO-OPERATIVE BANK LTD.NO.4357

ORIGIN OF WAYANAD DISTRICT CO-OPERATIVE BANK

The history of the Kalpetta Service Co-operative Bank dates bank to pre independence years it was in 1921 under the leadership of Sri. N. C. Dharma raj Iyer a leading planter and Sahakari, a society by name “Kalpetta Ikiya Nanaya Sangam” was formed and registered on 12-12-1921 with an aim to relieve the poor farmers from the clutches of private finance mafias and intermediate agencies whose only motive was to exploit the poor farmers and their products, the Sangam started its operation on 31-01-1992 with Sri. Dharma raj Iyer as chief promoter and sri. Ravunni menon as honorary secretary and with strength of 129 members.

The areas of operation were Vegappally Kunnathidavaka (now Vythiri) and Achooram Kunnu (now Pozhuthana) villages. The Sangam could survive only with the unblemished support of its farmer members at a time when there were no monetary supports from any Govt. agencies or other banking/ non banking initiation.

The Kalpetta Ikiya Nanaya Sangam was registered as Kalpetta urban co-operative bank on 20 th February 1947. The first president of the Kalpetta Urban Co-operative Bank was sr. M. K. Jinachandran a leading planter & great humanitarian and for a long 23 years he leads the bank as president most efficiently and made it one of the leading banks in the region. He was the spirit of the bank and he got full support from Sri. P.M. Padmanabhan the honorary and also from the esteemed prime members.

January 1 st , 1964 was golden day in the history of the bank. The Kalpetta Urban Bank was registered as Kalpetta Service Co-operative Bank with aid from the central Government. The KSCB could serve better and the common people were much benefited with introduction of deposit schemes, both recurring and daily and cash certificate. In 1965 when Kerala faced a food deficit problems the KSCB took over the ration distribution and performed diligently to the utmost satisfaction of the public.

The KSCB owned its own building in the heart of Kalpetta and moved to the new premises, then the honorable minister of co-operation. Government of Kerala, Sri. P. R.Kurupp formerly inaugurated the bank for the public on 01-07-1967.

In 1969 when Kerala Co-operative Act came into affect the operational area of KSCB was limited to Kalpetta and the neighboring areas now Kalpetta Municipality. Consequently there was a sudden spur in the services provided by the bank. The KSCB ventured into new areas and for the benefit of farmers and traders started Kuries, business loans, agricultural loan etc.

1972 was another golden year in the history of the bank. The silver jubilee old the bank was celebrated with great enthusiasm. A new branch of KSCB was opened at Maniyancode in the year 1984 and moved to its on premises in the year 1995. In 1999 the main branch of KSCB was fully computerized followed by Maniyancode and north Kalpetta Branched in the year 2000.

The KSCB has created history being the first online co-operation bank in Wayanad. The inauguration was done in the bank premises in 19 th December 2009 at 1 pm. In a function presided over by Sri. M. V. Sreyamskumar MLA, the core banking was inaugurated by Sri. Binoy Viswam. Hon minister of forest Govt. of Kerala. The internet banking by Sri. P. V. Sahadevan, president Wayanad District Co-operative Bank mobile banking by Sri. P. T. Gopalalurup, Cahairman, Kerala Co-operative Milk Marketing Federation Ltd. Full Time Banking by Smt. P. R. Nirmala, Chairperson, Kalpetta Municipality and website by Sri. N. K. Sureshkumar, joint Registrar (General) Co-operative Department, Wayanad, followed by facilitation by eminent personalities from different organizations in Wayanad. The big crowded priest testified the creditability and the popularity of the bank in the region.

The Wayanad District Co-operative Bank Ltd No. 4357 is registered as a co-operative society under the Kerala State Co-operative Societies Act of 1969, in 01-10-1982, after the formation of Wayanad District. It is the youngest District C-operative Bank of Kerala. Its head office is situated at Kalpetta and its operations extend to the whole of Wayanad revenue district. Its registered address is Wayanad District Co-operative Bank Ltd No.4357 head office Kalpetta North Wayanad.

WAYANAD DISTRICT CO-OPERATIVE BANK

The bank selected for the study namely „The Wayanad District Co-operative Bank Ltd No.4357‟ is situated at Kalpetta and its operations extent to the whole of Wayanad district. It has been able to make presence felt in a strong way in the district came into being 01-10-1982 soon after the formation of Wayanad district in 1 st November 1980.it is the youngest District co- operative bank with 25 branches spread across the district, popularly known as “ Jilla Bank ”. The bank has bagged the 1 st price in implementation of Kissan Credit Card Scheme for the year 1999-2000. It is the first among District Co-operative banks in the state to finance self help groups directly setting a role model for other to follow.

MAJOR FEATURES OF WAYANAD DISTRICT CO-OPERATIVE BANK

  • 1. Top among all banks in Wayanad in agricultural financing.

  • 2. Far among district co-operative banks in Kerala to issue Self Help Group loans.

  • 3. 25 branches located at important centers of Wayanad district.

  • 4. All banking services including locker facility.

  • 5. Interest only for outstanding balance and 1% additional interest for senior citizen deposit.

  • 6. The only district co-operative bank of the state which give direct loans to SHGs.

  • 7. For women development, separate cells are opened to provide loans at ½ % rebate of interest rate.

  • 8. Won best performance award from Govt. for implementing KCC scheme.

  • 9. For better NPA management a recovery cell has been constituted at H.O under the leadership of Deputy General Manager.

10. Grading of the branches according to their performance A,B,C&D.

OBJECTIVES

The main objectives of TheSS Wayanad District Co-operative Bank is to collect deposit from members and non-member and to provide loans to them. The other objectives of bank are:

  • 1. To provide a safe place for investing the reserves of the affiliated societies.

  • 2. To carry on the business of the banking

  • 3. To finance co-operative societies registered under the co-operative societies act in force from time to time and admitted as a member of the bank.

  • 4. To develop, assist and co-operative the work of affiliated societies.

  • 5. To receive money from the Kerala state co-operative bank for purchasing shares in affiliated societies.

  • 6. To advance long term loans for the purchase and construction of building and issue of medium term loans for purchase of vehicles for the employees of the bank.

  • 7. To motivate the staff best branch award and business promotion awards.

  • 8. To introduce special deposit mobilization plans.

  • 9. To maintain a good audit system.

10. To maintain a good relation with the society in community development and rural development programs. 11. To promote agricultural through augmenting farm credit, issuing agricultural lending.

12. To conduct various training programs for improving the quality and efficiency of employees.

OPERATIONAL AREA

The head quarters of Wayanad district co-operative bank shall be at Kalpetta and its operation shall extent to the whole of the Wayanad district.

BRANCHES

There were 3 branches worked at the time of formation of the bank. For providing more services to its customers the bank opened various branches at different places in the district. All the branches are computerized with uniform software. Now the bank has 19 ordinary branches and 6 evening branches at three taluks of the Wayanad district i.e, Mananthavady, Sulthan Bathery and Vythiry.

MANAGEMENT- CONSTITUTION OF THE BOARD

The management of Wayanad district co-operative bank ltd. Is vested in the board of directors elected by general body. Subject to the provision of the act and rules of the final authority of the bank shall vest in the general body. Quorum for a general meeting is 21 members. In which 18 are elected members and 3 directors are nominated by the government. Board of directors consisting not more than 7 members. The board shall remain in office for a period of 5 years. Board meetings are conducted minimum once in a month.

POWERS OF GENERAL BODY

The ultimate authority in all matters, relating to the administration of the bank shall be the general body. The following matters, shall be dealt with the general body:

  • The program of activities for the ensuing year.

  • The removal of the elected members of the board of directors.

  • The approval of the annual budget of income and expenditure.

  • The annual report due to the registrar.

  • The amendment of bye-laws.

  • Disposal of net profit

  • The expulsion of a member

NOTICE OF MEETING OF GENERAL BODY

  • At least fortnights notice shall be given to all members before the meeting of general body is convened.

  • Notice for a general body meeting may be given to the members by sending it by post under certificate of posting.

  • If there is any irregularity in the serving of notice, it shall not invalidate the proceedings.

  • In the case of amendments bye-laws of the bank, notice shall be send to each of the members in due time, and such notice shall give the members a reasonable clear idea of the nature of the amendments proposed.

EMPLOYEE PATTERN

Banking is an area in which one quality of service depends upon the quality of the staff and employees. The Wayanad district co-operative bank has 173 staff including a general manager who is the chief executives of the bank.

Chart-3.1

STRUCTURE OF W.D.C.B LTD.

 

Board of Directors

 

President

 

General Manager

 

Deputy General

 

Manager

 

Inspector of Branches

 

Ex. Officers (3)

(2)

 

Senior Manager (5)

 

Agriculture Officer

(1)

 

Section Manager

 

Senior Accountant (3)

 

Junior Accountant

 

Clerks (6)

 

Typist (3)

 

Record Keeper (1)

 

Peons (3)

 

Drivers (2)

MEMBERSHIP

A Class Members: Every primary agricultural co-operative society working in the area of operation shall be eligible for admission as A Class Members having voting power in the general body meeting.

B Class Members: Govt. of Kerala and the Kerala State co-operative bank shall be eligible for admission as “B” Class shares at such time and in such manner as may be agreed upon between

the bank or state govt. as the case may be.

SOURCES OF WORKING CAPITAL

The working capital represents as the fund used for the lending purpose of the bank. The working capital of Wayanad district co-operative bank is raised from the following sources:

  • a) Share capital

  • b) Reserves

  • c) Deposits

`A

Share Capital

The present capital structure of the bank consists of A class and B class shares. The paid up share capital of the bank from 2009-10 to 2011-12 is given in the following table:

Table. 3.1

Share capital of W.D.C.B ltd

Year

Annual Paid up share capital ( Rs in Lakhs)

Trend in percentage

2009-10

522.16

100

2010-11

552.46

105.80

2011-12

764.75

146.45

Interpretation: The above table showing an increasing trend of share capital from 2009-10 to 2011-12. The share capital was 522.16 lakhs in 2009-10 and it end 764.75 lakhs in 2011-12.

It is represented with the help of following diagram.

Fig.3.1

Share capital of W.D.C.B Ltd

Chart Title

900 800 700 600 500 400 300 200 100 0 2009-10 2010-11 2011-12
900
800
700
600
500
400
300
200
100
0
2009-10
2010-11
2011-12

B

Reserves

The profit retained separate is termed as reserve. In co-operative banks, there are two types of reserves statutory reserve and non statutory reserve.

The following table shows the reserves of Wayanad district co-operative bank ltd.

Table no: 3.2

The Reserves of W.D.C.B Ltd

Year

Amount of reserve ( Rs. in lakhs)

Trend in Percentage

2009-10

1319.71

100

2010-11

1277.82

96.82

2011-12

497.70

37.71

Interpretation: It can be seen from the above table, reserves of W.D.C.B Ltd, has a decreasing trend.

It can be represented with the help of following diagram.

Fig.3.2

Reserves of W.D.C.B

1400 1200 1000 800 600 400 200 0 2009-10 2010-11 2011-12
1400
1200
1000
800
600
400
200
0
2009-10
2010-11
2011-12

C

Deposits

Deposits are one of the main sources of fund of the bank. Bank receives idea savings from the people in the form of deposits. Deposits may be any of the following types:

  • 1. Current deposit: in case of current deposit money can be deposited and withdrawn at any time by cheques. Usually bank does not allow any internet on this kind of deposits because, bank cannot utilize this short term deposits. These types of deposits generally opened by business men for their convenience.

  • 2. Fixed / Time Deposit: These are made for a fixed period. These can be withdrawn only after the expiry period for which the deposits have been made. The bank gives high rate of interest on this deposit. The rate of interest depends upon the duration of deposits.

  • 3. Savings deposits: As the name suggest, these deposits are mainly for the promotion of saving and thrift among, in the case of deposits there are certain restrictions on the number of withdrawals. It is permitted to 15 per half year.

  • 4. Recurring deposits: In this type of deposits, at the end of every week or month affixed amount can be withdrawn only after the expiry of the specified period. It may be opened for monthly installments in sum of Rs. 5/- with maximum of in 1000/- the total amount is repayable 30 days after the last installment within 30 days from the due date.

The deposits of the bank from 2009-10 to 2010-11 given in the following table:

Table no.3.3

The deposits of W. D. C. B Ltd,

Year

Amount of Deposits ( Rs. In lakhs)

Trend in percentage

2009-10

23932.75

100

2010-11

26444.69

110.49

2011-12

31987.63

133.65

Intrepretation

Here we can see that the amount of deposit is increasing year by year, in W. D.C.B Ltd. The deposits having an increasing trend in 2009-10 was 23932.75 lakhs and in 2010-11, it reached to 26444.69 lakhs, and it increased to 133.65% in the year 2011-12.

Graf no. 3.3

Deposits of W. D. C. B Ltd

35000 30000 25000 20000 15000 10000 5000 0 2009-10 2010-11 2011-12
35000
30000
25000
20000
15000
10000
5000
0
2009-10
2010-11
2011-12

Types of Deposits of Wayanad District co-operative Bank Ltd

The W. D. C. B. Ltd receiving deposit in the form of FD, savings Deposits and current deposits. The amounts of deposits at the beginning and at the end of the period are as follows;

Table no: 3.4

Types of deposits of W. D. C. B. Ltd (amt in lakhs)

Types

Deposits as on 31-03-

Deposits as on 31-03-

Deposits as on 31-03-

2010

2011

2012

Fixed deposits

 

14080.17

15668.72

19097.34

Savings deposits

 
  • 7896.80 8257.61

 

9173.90

Current deposits

 
  • 1955.78 2518.35

 

1574.07

Money

at

all

short

   

2142.30

notice

Total

23932.75

26444.68

31987.63

Interpretation

 

Here we can see that all types of deposits of W. D. C.B. Ltd are increasing year by year. The above table shows that the bank accepts more deposits by way of fixed deposits than others.

Graph 3.4

Types of deposits of W. D. C.B Ltd

25000 20000 15000 10000 5000 0 Series 1 Series 2 Series 3 Series 4 01/01/10 01/01/11
25000
20000
15000
10000
5000
0
Series 1
Series 2
Series 3
Series 4
01/01/10
01/01/11
01/01/12

Profit

Profitability is an important index of the performance of the organization, an analysis of the profitability of the banks provides an insight in to its effectiveness in the utilization of funds and its managerial efficiency. The profits of the W. D. C. B. from 2009-10 to 2011-12 given in the following table.

Table: 3.5

Profit of W. D.C. B Ltd

Year

Net profit (Rs. In lakhs)

Trend in percentage

2009-10

22.38

100

2010-11

14.54

64.96

2011-12

61.68

275.60

Intrepratation

The above table shows a decrease in the profit of the W. D. C. B from

22.38 lakhs to

14.54 lakhs for the year 2010-11. In 2011-12, the bank earns highest profit as compared other

years. The profit of the bank is increased to 61.68 lakhs for the year 2011-12.

It can be representes with the help of the following chart.

Graph 3.5

Profit of W.D. C. B Ltd

70 60 50 40 30 20 10 0 2009-10 2010-11 2011-12
70
60
50
40
30
20
10
0
2009-10
2010-11
2011-12

Profit Distribution

As per by law No. 47, the profit distribution of the co-operative Bank is done in the following manner:

2.

Not less than 5% to co-operative Education Fund as per the Kerala State co-operative societies Act.

  • 3. 15 % to Agricultural can be used for any of the following

I.

  • a. Bad and Doubt reserve

  • b. Dividend Equalization Fund

  • c. Building Fund

  • d. Gratuity Fund

  • e. Investment Fund

  • f. Any other reserve as approved by the General Body meeting

II.

Dividend not more than 20% to the members.

III.

Not more than 7.5% to common good fund

IV.

If any balance is available, that can be ploughed back to the reserve fund.

Non Performing assets

A part of loans and advances are not realized beyond the specified time, it is treated as non performing asset (NPA)

According to RBI rules, any loan repayment which is delayed beyond 180 days specified time limit has to be identified as on NPA. NPA are further classified into three i.e. substandard, doubtful and loss assets.

Substandard assets are those which are non-performing for a period not exceeding two years. Doubtful assets have reminded non-performing foe a period exceeding two years and which are not considering as loss assets. A loss asset is one where loss has been identified but the amount has been identified written off wholly or partly.

Causes of NPAs

  • 1. Diversion / misutilisation of funds

  • 2. In appropriate technology

  • 3. Accidental and natural calamities

  • 4. Viewful default / integrity of the borrower doubtful

  • 5. Improper assessment & market demand

  • 6. Lack of effective co-operation between borrower and banker

  • 7. Political compulsion and corruption

  • 8. Difficulty in execution of decreas obtained

Table 3.6

Non Performing Assets ( NPA)

Year

Amount of NPA (Rs

Annual

income

or

Trend in percentage

in lakhs)

decrease

2009-10

1701.56

0

100

2010-11

1492.09

  • 209.47 87.68

 

2011-12

1153.10

  • 338.99 67.76

 

Interpretation

In the year 2011-12, net NPA stood at 67.76 %. It is very lower than the previous years. The above table shows a decreasing trend in the case of NPA and it is a good sign for the bank.

Graph No. 3.6

1800 1600 1400 1200 1000 800 600 400 200 0 2009-10 2010-11 2011-12
1800
1600
1400
1200
1000
800
600
400
200
0
2009-10
2010-11
2011-12

GENERAL FUNCTION OF WAYANAD DISTRICT CO-OPERATIVE BANK LTD

Like any other bank, the functions of W. D. C. B are grouped as follows:

  • a. Primary Function

  • b. Secondary Function

A . primary fuctions:

The main functions of W.D.B.C.B are deposits mobilasation and providing loans and adavances. a)Deposits mobilization :

Deposits are one of the main sources of finance of the bank and provides high rate of interest for these deposits .Deposits may be recived at any time with in the limits sanctioned under the co-operative act and rules on such rate of interest and subiect by the Board of directors and also subject to the derivatives issued by the RBI in the behalf from the

b) Providing loan and advances :

Wayand District co0opreative bank provides various kinds of loans to differnnt groups of societies. All the loans advanced by the bank beneficial to all in ways. Agricultural loans Gold loans medium term , consumption lons rural housing loans, consumer loans, self help loans etc. are some amoung the loans provided by the bank.

B. Secondary function

The secondary fuction of the bank are agency services and

general utility services. The secondary fuction of WDCB are as follows .

  • a) It provides banking facilities such as collecting bills disconnecting bills, providing remittance facilities and draft facilities etc ..

  • b) Promote agriculture through augmentry form credit, issuing KCCs and increasing agricultural lending.

  • c) Providing insurance coverage to KCC holden

  • d) Conducting seminar for self help groups and KCC holders

  • e) Formation of farmers clubs at all branches and also at PACSs.

  • f) As a part of human recourses development, various traning programs are conducted

  • g) Special deposit mobilization plans are introduced.

  • h) Maintaining suggestion / complaints boxes at branches

  • i) For creating saving habit among the emerging society, students, SB compaign is conducted .

  • j) Get together of all staff and family members ones in a year. Borrowing It shall be competent for the Board of Directors to borrow funds otherwise than by way of deposits, either from members or from persons, other then members or body corporate. Audit System On the basis if the degree of efficiency of each parameter like capital adequancy , asset quality management, earnings and liquidity system, the audit system of W.D.C.B is classified as „A‟ audit classifiacation. All records of the bank should be audited by the co-operative departments of the state govt. Then , the additional registrar of co-operative societies and joint registrar /concurrent auditor appointed by the W.D.C.B to audit the accounts and other records of the bank. Types of Loans

    • Gold loan: The maximum amount of loan

    • MT-consumption loan: It is granted for the purpose of education, house maintenance, marriage and medical treatment.

    • MT- plantation loan : Granted for the purpose of plantation.

    • Rural housing loan: Allowed for the purpose of construction of houses.

    • SHG/SGSY Loans : Loan to selg help groups and swarnajayanthi Gram swareksha yojana.

    • Consumer loans: For buying consumer durables such as T V Refrigerators etc.

    • SRTO/Vehicle loans: Demand promissory notes loans on the basis of promissory notes.

    • Other loans : such as cash credit to individual and others. Restrictions on loans :

  • The bank not lend to any society, any sum with which that society other indebtedness, wide exceed the society‟s maximum borrowing power as fixed ints bye-laws.

  • Loans to depositors on the security of their fixed deposits in the bank may be granted not exceeding 90% of the amount of sum deposits. Period of loans:

  • Except in the case of loans under bye-law 36(3) the period of laons given by the banks shall not ordinarily exceed 5 years .

  • The period of repayment of each loan shall be fixed by the executive committee according to the purpose of loan.

  • A cash credit sanctioned to a member shall be in force for one year only terminable only on 31. December each year. An application should be made in too time for renewable of the each credit. Loans And Advances of W.D.CB The following table shows the loan and advances providing by W.D.C.B.

Loans and advances of W.D.C.B. Ltd. (Amount in lakhs)

Types

Loans

Loans

Loans

And

advances

on

and advances on 31-

and

advances

on

31-03-2010

03-2010

31-03-2010

Short -term loan

15848.28

 

20835.59

26734.43

 

Medium

3480.79

20835.59

4588.26

-term loan

Long-term loan

2812.76

7113.86

6740.21

Total

22141.83

31843.42

38062.9

Interpretation:

Table3.7

This table show the total and advances provided by W.D.C.B. during the year 2010 to 2012. In 2009-2010 the total loans and advances provided by the bank were 22141.83 lakhs. During 2010-2011 it was increased to 31843.42 lakhs and during 2012, it is further increased to 38062.9 lakhs . It can be shown with the help of following diagram.

30000 25000 20000 31-03-10 15000 31-03-11 31-03-12 10000 5000 0 medium term loans long term loans
30000
25000
20000
31-03-10
15000
31-03-11
31-03-12
10000
5000
0
medium term loans
long term loans
short term loans

Security of loans :

Loan and cash credits may be secured on one or other of the following

methods namely:

  • On the promissory note of a society executed by person authorized to do so.

  • On the security or the fixed deposit , if any to the credit of the borrowers.

  • In the pledge of government provisionary notes or central land mortgage bank debentures not exceeding 90%of their market value.

  • On the security of agricultural produce or finished products subjects to the terms and conditions specified by the board and approved by the registrar.

  • On the security of gold jewels wholly belonging to their market value of the wiling fixed by the registrar from time to time.

CHAPTER-4

FINANCIAL ANALYSIS

The analysis of financial statements provides valuable information for managerial decisions. Financial analysis is commonly called analysis and interpretation of financial statements. Analysis of financial statements means establishing relationship between the items in financial statements for determining the financial strength and weakness of the business.

Interpretation is the process of explaining the real significance of the simplified data. Both analysis and interpretation are complimentary to each other. Analysis is useless without interpretation becomes difficult without analysis.

OBJECTIVES OF ANALYSIS

The following are the important objectives of analysis and interpretation of financial statements;

  • 1. An in depth study of each item is the main objective of analysis.

  • 2. To converting the data into an easily understandable manner.

  • 3. To comparing the data of various periods by using the tools like comparative analysis, ratio analysis and trend analysis.

  • 4. To estimate the earning capacity of the business.

  • 5. To access the financial position and financial performance of the business.

Financial analysis is done by using the following statistical tools;

  • 1. Comparative analysis

  • 2. Ratio analysis

  • 3. Trend analysis

  • 1. RATIO ANALYSIS

Ratio simply refers to one number expressed in terms of another number. It shows numerical relationship between two figures. It is found by dividing one number by the other

number. Ratios are expressed in three ways

proportion‟.

„in times‟, „in percentage‟, and „in terms

of

Ratio analysis is a widely used technique of analyzing financial statements. An analysis of financial statements with the help of ratios is termed as ratio analysis.

(1) The Loan and Advances of Percentage of Deposits

This ratio establishes the relationship between loans and advances provided by the bank and total deposits collected. This will indicate the number of times the deposits are turned to loans and advances

The loan and advances as percentage of deposits = Loan and advances / Deposits

Table 4.1 Loan and advances as percentage of deposits

Year

Loans

and

Amount

of

Ratio(Times)

 

advances(Rs in lakh)

deposits(Rs in lakh)

 

2009-10

22141.84

  • 23932.75 0.92

 

2010-11

31843.42

  • 26444.69 1.20

 

2011-12

38062.91

  • 29845.32 1.27

 

Intrepretation:

It can be seen that, the ratio was 0.92 during the year 2009-10 and increased

to 1.2 and 1.27 in 2010-11 and 2011-12 respectively.

40000 35000 30000 25000 20000 15000 10000 5000 0 2009-10 2010-11
40000
35000
30000
25000
20000
15000
10000
5000
0
2009-10
2010-11
  • Loans and advances(Rs in lakh)

  • Amount of deposits(Rs in lakh)

  • Ratio(Times)

Intrepretation:

It can be seen that, the ratio was 0.92 during the year 2009-10 and increased to 1.2 and 1.27 in 2010-11 and 2011-12 respectively.

(2) Interest Earned as Percentage of Loan and Advances

This ratio shows the relationship between total interests earned by providing loan and advances. As interest is the main source of income of the bank, this ratio indicates the rearing capacity and effective utilization of funds of the bank

Interest earned as percentage of loan and advances =

Interest earned for the year/Loan and advances

Interest earned is the total interest and discount realised by the bank in each year on the loan and advances.

Loan and advances are the amount provided by the bank to the public for a fixed rate on interest. The loan and advances are provided for different purpose and for different periods like short term, medium term, and long term.

Table 4.2

Interest Earned as Percentage of Loan and Advances

Year

Interest earned

Loans and advances

Ratio

(Rs in lakh)

(Rs in lakh)

(Times)

2009-10

1473.27

22141.84

0.06

2010-11

3301.27

31843.42

0.1

2011-12

4564.32

38062.91

0.12

Intrepretation:

This table shows the amount of interest earned by the W.D.C.B is against the loan and advances during the years from 2009-10 to 2011-12.The ratio of interest shows an increasing trend. The bank earned interest of 0.12 as against loan and advances in the last year

40000 35000 30000 25000 20000 15000 10000 5000 0 Interest earned (Rs in lakh) Loans and
40000
35000
30000
25000
20000
15000
10000
5000
0
Interest earned
(Rs in lakh)
Loans and advances
(Rs in lakh)
Ratio
(Times)
2009-10
2010-11
2011-12

(3) Interest Paid as Percentage of Deposits

The ratio provides information about the interest paid on different types of deposits.

Interest Paid as Percentage of Deposits = Interest Paid For the Year / Deposits

Table 4.3 Interest Paid as Percentage of Deposits

Year

Interest Paid

Amount of Deposit

Ratio

(Rs in lakh)

(Rs in lakh)

(Times)

2009-10

1732.75

  • 23932.75 0.07

 

2010-11

2317.66

  • 26444.69 0.08

 

2011-12

3374.88

  • 29845.32 0.11

 

Intrepretation:

The above table shows the ratio of interest paid by the bank to deposits during the yers from 2010 to 2012.The ratio of interest paid shows an increasing trend.

interest paid(Rs in lakh)

interest paid(Rs in lakh) 2009-10 2010-11 2011-12
  • 2009-10

  • 2010-11

  • 2011-12

CHAPTER 5

FINDINGS AND SUGGESTIONS

FINDINGS

  • Assets and liabilities of the Wayanad District Co-operative Bank Ltd. show an increasing trend during the last 3 years proportionally.

  • Deposits of the W.D.C.B Ltd increasing very speedy, it is a good indication for the bank.

  • Profit of the bank is 61.68 lakhs during the last year (2011-2012)

  • Share capital of the W.D.C.B Ltd showing an increasing trend up to 764.75 lakhs.

  • Reserve funds of the bank has a decreasing trend at the last 3 years proportionally.

  • Wayanad District Co-operative Bank Ltd. provides high rates of interest to their fixed depositors.

  • The loan allowed to societies, individuals and employees are shows an increasing trend. Thus we can assume that the bank considers its customers in a fair manner.

  • The recovery position of the loans are very weak became most of the loans are given for the agricultural purpose; sudden loss occurred in the agricultural sector affects the re- paying capacity of loan holders. Therefore, the bank has to take proper decision regarding granting of loans.

  • To help the farmers, Kissan Credit Card and self help group, loans are given to them to improve their standard living.

  • Bank has given special emphasis to education loans, women development, housing loans to help the poor people to come forward in different areas.

SUGGESTIONS

  • The Wayanad District Co-operative Bank should maintain good relation with its customers to attract them to approach the bank for their requirements.

  • The employees of the bank should be given proper training and information to work as per the changing scenario.

  • The bank should inform the public about various new deposits and loan schemes available in the bank.

  • The bank should take proper steps to increase its deposit mobilization at an increasing rate. Now it‟s increase is at a very low rate.

  • Bank should take initiative to collect more deposits from small and medium investors and others.

  • Recovery position of the bank is unfavorable to the bank. So proper care must be given for timely recovery of overdue loans.

  • ATM counter should be opened in suitable places to facilitate the customers.

  • Core banking should be introduced in the bank to facilitate the easy banking operation.

  • For further expansion, it should open more branches at different places.

  • Proper measures should be taking to manage the NPA of the W.D.C.B Ltd.

  • New schemes of providing and repaying agricultural loans should be introduced by the bank to save poor agriculturists of the Wayanad district.

CONCLUSION

After completing my project in Wayanad District Co-operative Bank Ltd, I concluded that the bank function well in its deposits mobilization, granting loans and advances and net profit. It performs an important role in the district usually Wayanad is one of the backward district in Kerala. In such circumstances, the W.D.C.B provides various kinds of services to its customers to come forward.

It can be understand that the bank provides different kinds of loans to different loans are groups in the district. But the recovery position of the loans is very weak. The profitability of the bank is also increasing year by year. Deposits of the bank increasing very speedy, it is a good indication for the bank. We can say that the bank helps to increase the saving habits of the people in our district.

In short, the overall performance of the Wayanad District Co-operative Bank in a satisfactory level and auditors shows satisfactory on maintaining books of accounts in the bank.

BIBLIOGRAPHY

  • Management Accounting A. Vinod (2011)

  • Management Accounting I. M. Pandey (2003)

  • Co-operative societies in Kerala P.N. Mohanan (2007)

  • Banking theory and practice A. Vinod (2007)

  • Banking theory and practice Dr. K. Nadarajan (2005)

  • Bye-laws of Wayanad District Co-operative Bank Ltd.

  • Final Accounts of W.D.C.B Ltd.

  • Audit Books of W.D.C.B Ltd.