A ON (KORAPUT CENTRAL CO-OPERATIVE BANK LTD.) {In Partial Fulfillment Of The Requirement For The Award Of Master Degree In Business Administration Of Biju Pattanaik University Of Technology(BPUT), Rourkela} Submitted By Manoj Kumar Sahu Registration No:-0706277026 Session:-2007-2009 Under the Guidance Of Mr. Biswajit Prasad chattoi Faculty, CENTRE FOR MANAGEMENT STUDIES,OEC BHUBANESWAR Mr.Lakshmidhar Sukla Administrative Inspector Koraput Central Co- Operative Bank Ltd. Jeypore CENTRE FOR MANAGEMENT STUDIES, OEC Nabajyoti Vihar, Nijigarh Kurki, Jatni-752050 ORISSA
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A
ON
(KORAPUT CENTRAL CO-OPERATIVE BANK LTD.) {In Partial Fulfillment Of The Requirement For The Award Of Master
Degree In Business Administration Of Biju Pattanaik University Of
Technology(BPUT), Rourkela}
Submitted By
Manoj Kumar Sahu
Registration No:-0706277026
Session:-2007-2009
Under the Guidance Of Mr. Biswajit Prasad chattoi Faculty, CENTRE FOR MANAGEMENT STUDIES,OEC BHUBANESWAR
Mr.Lakshmidhar Sukla Administrative Inspector Koraput Central Co-Operative Bank Ltd. Jeypore
CENTRE FOR MANAGEMENT STUDIES, OEC Nabajyoti Vihar, Nijigarh Kurki, Jatni-752050
ORISSA
I
DECLARATION
I do here by declare that the project entitled “FINANCEING
AND RECOVERY OF LOANS IN KORAPUT CENTRAL CO
OPERATIVE BANK” being submitted by me to Biju Pattnaik
University Of Technology for the partial fulfillment of
course Curriculum of M.B.A represents my own
contribution and effortand has not be submitted or
Published by me or any other in part or full to anywhere
before for the said agree.
DATE:- 15-Aug-2008
PLACE:-Bhubaneswar
Signature
II
ACKNOWLEDGEMENT
This is to acknowledgement that I Manoj Kumar sahu, a
bonafide student of Centre For Management Studies (CMS), OEC
wish to thank Koraput Central Co-Operative Bank Ltd. jeypore
for giving me a chance to do my summer project in such a
reputed organization.
I am grateful to Mr. Biswajit Prasad Chhatoi, faculity of Centre
For Management Studies (CMS), OEC for her assistance and
advice before and during the course of this project.
I am also grateful to Mr. Lakhmidhar Sukla Administrative
Inspector of Koraput Central Co-Operative Bank (KCCB.) for
spending his valuable time & invaluable guidance and
encouragement given by him during the course of this project.
-Manoj Kumar Sahu
III
PERFACE It is said that only theoretical knowledge about a subject is not
sufficient but when we go for practical aspect of that we can gain deep
knowledge about the subject matter and can able know what actually
happened. Because there is some difference between theory and practice.
My six week practical training in Koraput Central Co-Operative Bank Ltd.
Jeypore provided me with precisely such an experience, giving me the
opportunity to access the concept of theory against the drops of
practicality.
Though there is the scope to go through each and every function
such as Finance Marketing, Administration and Production but as a student
of Finance entire connection was made only on Financing and recovery
management of the bank with the help of past five years data.
The information is gathered through the help of the reports of the bank,
personnel discussion with the official and books& magazines. All the
information is interpreted in this project report in a simple form and in such
a manner so that even a layman can understand the Financing And
Recovery Management of Koraput Central Co-Operative Bank Ltd. Jeypore.
The position of liquidity maintained by the bank is shows clearly that the bank has
maintained the said reserve over and above the prescribed limit. This has resulted in income
loss to the bank. The bank should invest the excess amount beyond CRR requirement in other
profitable portfolios to earn more profit and to avoid idleness of borrowed capital.
B. Statutory Liquid Reserve
Maintenance of SLR also found in excess throughout the year. This is considered to be
the idleness of resources for which the profitability of the bank has affected substantially. But
the bank did not take any tangible action on this observation. For the interest of the bank, it is
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once again advised to take immediate remedial measures for judicious development of
borrowed fund.
KEY PERSONALS:-
There are 33 officers including secretary working to implement the policies and programme
and also to carry out day-to-day transaction of the bank. Simultaneously administration,
supervision and follow up action are also being taken up by them. They are known as the key
personnel of the bank. Their duties and responsibilities are out lined there under,
A. Secretary:-
He is the Chief Executive of the Bank is fully responsible for day-to-day administration of the
bank subject to the control of president. The secretary is authorized to handle the balances
with other banks in joint signature of Manager (Accounts & Operation) / Manager (Loans &
Supervision) and the Branch Manager of the head office counter. At present, Sri James Barla
is acting as the secretary of the bank from 15-07-2008.
B. Assistant Secretary:-
In absence of the secretary, the Assistant Secretary will remain in charge of the secretary and
discharge his function. He is empowered to pass voucher up to Rs. 50.00 and vouchers
exceeding Rs. 50.00 will be passed through him by the secretary for final pass order. He will
be in charge of monitoring investment and collection of MTNA loan to salary earners societies.
At present, Sri Purna Chandra Panigrahi promoted to the rank of Assistant Secretary and is
working i.e. 02-12-2002 in the head office.
C. Manager (Administration & Establishments):-
He is the group officer of the Establishment Section. At present, Sri Bijaya Ch.Sahu is acting
as the Manager (Administration & Establishment) of the bank.
D. Manager (Loans & Supervision):-
He is the group officer of loans and statistics section. He is responsible for submission of
reports and returns and information to the concerned quarters. He is also to attend the
meetings of loan sub-committee meetings. At present, Sri Hrusikesh Biswal is holding this
post.
E. Manager (Accounts & Operation):-
He is the group officer of accounts section of head office along with custodian of double lock of
10 of iron chest, strong rooms, safe deposits locker,cheque, securities and debentures etc. He
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is empowered to handle the amounts held in different bank up to 1 lakh with joint signature of
branch manager (Loans & Supervision). He is also to see smooth mobilization of funds of the
bank. At present, Sri Narasingh Moharana is holding this post.
F. Manager (Recovery Cell):-
He is the group officer of recovery cell. He is responsible for correspondence with the affairs of
LAMPS and other co-operative societies. At present, Sri Radhamohan Bisoye in the rank of
manager is holding this post.
G. Manager (Group – VI):-
He is the group officer of cadre section of the bank. He is to attend the minutes of the
appointment sub-committee meeting of the cadre scheme and its follow up action. At present,
Sri Bijay Chandra Sahu (Establishment & Administration) is in charge of this section.
H. Manager (Internal Audit Cell):-
He is the group officer of internal audit cell of the bank. He is to visit and inspect all branches
and head office at regular intervals. At present, Sri Kamal Charan in the grade of branch
manager is acting as manager of Internal Audit Cell.
- 17 -
CHAPTER.3
RESULTS OF THE STUDY
FINANCEING MANGEMENT OF KCCB:
Koraput Central Co-Operative Bank is advancing all types of agricultural & Non-agricultural
loans to its ultimate borrowers through various schemes.The required amount of financing is
not totally fulfilled by NABARD rather only 30% of total financing KCCB approved from
NABARD and another 30% is borrowed from OSCB and balance 40% met KCCB from its own
resources. If a person taken a loan of Rs100 then Rs60 contributed by NABARD & OSCB
Rs.40 by KCCB. The borrowing position of KCCB from OSCB for last 5 years is as follows.
BORROWINGS
Year Achievement % Of Growth Over Previous Year
2002-03 4670.25 9.23%
2003-04 5170.82 10.72%
2004-05 6211.32 20.12%
2005-06 7788.31 25.39%
2006-07 8371.14 7.48%
{Table No.3.1}
The rate of interest charged by NABARD to OSCB is 3.5% and from OSCB to KCCB it is 4%
and from KCCB to LAMPS is 5.5%. So the margin retained at the level of SCB varies from
scheme to scheme, ranging from 0.50% to 1%. In case of default in repayment of installment
the penal interest @ 2% is charged in addition to the normal rates. The interest on such loan is
payable by CCB to SCB at half yearly intervals ending with 30th September and 31stMarch. At
last the rate of interest charged to ultimate borrowers as fixed by Government is 7%. This
whole system of finance is known as confession finance. This system applicable to S.T (SAO)
loans. But expect this loan other loans financed by KCCB is fully (100%) refinance by
NABARD.
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Ways Of Financing:- The KCCB may advance its loans in two ways; one way is through its LAMPS & another way is
by direct financing. As direct financing may have problems of staff constraint, cost effective risk
factor etc. For which major portion or almost all loans financed through LAMPS/PACS.In
present situation up to 20% of total financing is done through direct financing and forwhich no
difficulties faced by KCCB till now.
Objectives Of Financing:- There are mainly two objectives available with KCCB regarding financing of loans. One is the
main objective and the other one is diversified objective.
Main Objective: - The main objective of financing in KCCB is to provide short term
agriculture loan to the farmers for growing different crops which is shortly known as
ST(SAO)i.e. short term seasonal agricultural operation. Here the bank is service motive. The
loan may be sanctioned in cash component or in kind component. In former case loan amount
is paid in cash and in later case loan issued in kind i.e. fertilizers pesticides, seed cost, etc
should be issued. The crop loan is advanced as per scale of finance. The scale of finance per
acre for different crops grown in the area are to be fixed at the District level by the technical
committeformed for the purpose before the close of December each year. It is desirable to fix
scale of finance for Cash and kind component loan in multiple of hundreds. The periodicity of
lending and recovery of crop loan disbursed during Khariff and Rabi season at PACS/CCB
level are given as under,
Particulars
of the Crops Loaning Period Due date fixed for recovery of loan at
PACS level CCB level
Khariff 1st April to 30th Sept. 25th March 31st March
Rabi 1st October to 31st March 25th June 30th June
Sugar cane Whole year 28th February 31st March
{Table No.3.2}
Diversified Objective: - To expand its business bank is undertaking other loaning operationlike medium term and long term loan for farming and non farming sector. Here the main motive is to get sufficient margin of profit sustain its expenditure.
- 19 -
FINANCING Norms (Fixes By NABARD):- The NABARD has fixed some rules and regulations as regards to advancing of loans to KCCB.
The norms are as follows,
(1) Total borrowing from OSCB/NABARD should be utilized in financing of loans and not used
any other way. Along with that the bank may use 65%-70% of total deposit in financing loans.
(2) The recovery must be 60% of total financing. If the bank unable to recover this much then
refinancing from NABARD has stopped.
(3) The third norm is default free from higher financing agency.
(4) The ST (SAO) loan i.e. crop loan must be financed as per scale of finance and other then
crop loan all other loans should be financed as per unit cost of the product,.
Financing Schemes:-
The KCCB has applied many schemes for financing loans to its ultimate borrowers in both
farming and non-farming sectors. These schemes are as follows,
KISSAN CREDIT CARD
Credit plays a vital role for agricultural production. Many of the farmers are reluctant to avai
lcredit from societies due to various factors like non-availability of adequate credit in time and
cumbersome procedure for sanction and disbursement of loan. The Central Co-operative
Banks are also facing lot of difficulties for frequent sanction of limits every yearcoming in
batches from societies. In the above back drop, the Kissan Credit Card Scheme was
introduced in the state during 1998-99 Rabi Season to simplify the loaning procedure
considering its distinct advantages over the traditionally credit delivery system. The prime
objective of KCC scheme is to ensure timeliness and adequacy in credit delivery at the ground
level.Under the scheme, the PACS/LAMPS can provide better service to the farmers and
enhance their credit business enabling them to attain financial viability. The credit
management of farmers is left to their own wisdom and they are free to draw the credit at their
own discretion at the time of need. So this card is also known as “Any Time Operation Card”.
The year wise K.C.C issued position in Koraput Central Co-Operative Bank for last 5 year is as
follows,
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{Table No.3.3}
KALINGA KISAN GOLD CARD
The OSCB has designed the unique Kalinga Kisan Gold Card scheme to recognize and rew-
ard farmers showing good repayment habit. A package of facilities are provided which includes
interest incentives on all types of loans, free accident insurance of Rs.25000/-, annual lottlery,
exposure visits, freedom to purchase fertilizer and pesticides from any retail outlets and
schematic lending on a priority basis, educational loan for the children of the card holders. The
KCCB has implemented this scheme w.e.f April -2001. The year wise position of Gold
Card/consumption loan of the bank for last 5 years is as follows,
{Table No.3.4}
Eligibility:-A farmer member of the PACS satisfying the following criteria shall be eligible to
get a KALINGA KISSAN GOLD CARD.
a) Member of the PACS for past 2 years.
b) Should have availed loans from the PACS at least for a period of 2 years.
c) Should not be a defaulter for the last 2 years.
SWAROJAGAR CREDIT CARD
In addition to introduction of KKCG to retain the existing clientele base among the farming
community, the bank has been attaching considerable importance for implementation of the
Year Target Achievement % Of Achievement
2002-03 120000 114300 95.25%
2003-04 142000 150895 106.6%
2004-05 190000 190000 100.81%
2005-06 210000 212426 101.16%
2006-07 240000 226799 94.50%
Year Gold Card Issued
Gold Card In Operation
Consumption Loan Issued
No. No. No. Amount
2002-03 1639 1588 480 15.39
2003-04 2325 2151 680 28.18
2004-05 4659 4333 1384 61.45
2005-06 6328 5768 1931 88.73
2006-07 8145 7301 2212 100.56
- 21 -
Swarojagar Credit Card scheme launched by the Union Government to provide hassle free
credit to the small artisans, weavers, small businessmen and those who depend upon service
sector for earning their livelihood. Under this scheme each individual get a loan of Rs.25000/-
only. The year wise position of Swarojagar Credit Card of the bank for last five years is as
follows,
Year Application
Received Sanctioned Loan Disbursed Of Which
Weavers
No. Amount No. Amount No. Amount No. Amount
2004-05 87 19.25 87 19.25 71 13.80 35 6.50
2005-06 423 103.80 423 103.80 423 103.80 - -
2006-2007 302 71.45 302 67.18 282 56.90 - -
2007-08
(31.12.2008)
132 30.30 132 25.05 106 23.80 - -
{Table No.3.5}
SELF HELP GROUPS
In Orissa, the SHG programme was mostly implemented by the nationalized banks and the
RRBs through NGOs till the year 2000. The participation of the DCCBs were almostinsignifi-
cant. The OSCB took the initiating by deputing one officer to study the functioning of SHGs
organized by the District Central Co-operative Banks in West Bengal in North 24 Praganaand
Hooghly Districts during the month of August, 2000. Basing on the study report, it was decided
to replicate the model of West Bengal in Orissa with objective of enlarging the borro-wing
membership of the PACS and to provide credit to the poorest of thepoor. Accordingly the
guidelines were issued for the organization and linking of theSelfHelp Group by the
DCCBs.The branch managers of District Central Co-operativeBanks may organize the Self
Help Groups on the basis of common economics status, homogeneity and common economic
interest. Selected Primary Agricultural Co-operative Societies (PACS) may also organize Self
Help Groups. Besides, the oral lessees and sharecroppers can organize Self Help Groups
exclusively for availing loans from DCCBs/PACS for seasonal agricultural operations. The
overdue of availing this loan facility is mentioned in the Master Circular on “Sanction of limit for
Seasonal Agricultural Operations”. In case of necessity, the DCCSs/ PACS may take the help
of Non-Government Organizations(NGOs),Extensions Officers of the Blocks and District
Development Manager of NABARD for mobilizing and organizing the groups. The group size
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shall be limited to 20 with a minimum number of 5. Under no circumstances, the minimum and
maximum number of members should be divided.
Eligibility:-
The Self Help Groups shall be eligible to get credit support only after 6 months from the date
of organization and mobilization of savings on the basis of their ratings. After ascertaining the
eligibility on the basis of the ratings, the proportion of savings to credit may be decided, which
would vary from 1:1 to 1:4 depending on the assessment of the performance and need of the
group members.This proportion is to be decided by the DCCB branch by their own prudence
To start with, the financial support may be extended in the ratio 1:1 or 1:2, which would
subsequently increase to 1:4, depending on the performance. In case of Self Help Groups
organized by oral lessees/sharecroppers, the deposit credit ratio shall be 1:10. For this
purpose the savings mobilized by the group should be taken as base and not the amount
deposited in the PACS/DCCB branches. To illustrate, if an SHG has mobilized Rs.5,000/- as
deposit, lent Rs.3,000/- among its members and deposited the balance amount of Rs.2,000 in
the PAC /LAMPS/FSS or Branch of DCCB, the credit support will be considered on the basis
of Rs. 5,000/- and not on the basis of the amount of Rs2,000/- deposited by the group.
Purpose Of The Loan:-The group members should democratically decide the income generating economic activities peruse after availing credit support. At the initial stage, the officials of the PACS and DCCB branch may guide the group in the decision make process. But, under no circumstances, they should force the group members to carry on any specific activities. Repayment Period:- The DCCBs may decide the repayment period of loans advanced to the
groups subject to a minimum period of two years to a maximum period of ten years. The
groups may decide the repayment period of loans advanced to their members at the initial
stage, the repayment period from the members to the groups may be limited to a period of one
to two years.
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RECOVERY MANAGEMENT OF KCCB:
The Short Term Co-operative Credit Structure in the state is playing a pivotal role in dispensing
rural credit for agriculture and allied activities. More than 70% of the total corp loan disbursed
in the State is being provided by the Co-Operative Credit Societies. Due to low level of
recovery, the health of many of the primary societies and CCBs is deteriorating and they are
finding it difficult to extend sufficient credit support to the farmers. The prime importance of
recycling of funds need not be over emphasized. To attain sustainable growth in credit
delivery, the recovery position should be at least 80% of the demand whereas it has remained
at the level of 50% to 55% due to varies factors like natural calamities, willful defaulters not
repaying in time and lack of adequate effort by the field machinery to recover the loans in time.
NABARD is gradually moving towards fixing the rate of interest on refinance basing on the
level of NPAs. In the above backdrop, the CCBs have to boost the recovery position and
reduce the level of NPA to maintain their eligibility for availing concessional financial support
from NABARD. The NPA position of the KCCB is as follows,
Year Total Loans & Advances Total N.P.A % To Loans Outstanding
2002-03 9413.23 1019.69 10.83%
2003-04 10413.08 1157.09 11.45%
2004-05 12203.15 1293.44 10.60%
2005-06 15062.70 1364.63 9.06%
2006-07 17542.31 1552.35 8.85%
{Table No.3.6}
The KCCB has adopted following strategies much ahead of the peak harvesting and marketing
season of crops to achieve better recovery performance.
STRATEGIES FOR RECOVERY
1. Preparation Of Demand List:- The society shall prepare a village wise demand list of all the borrowers. The list shall contain
the information of over dues at the beginning of the year i.e. 1st April; loans falling due for
repayment are subsequent months up to March. The total demand for the year should be
- 24 -
arrived at on basis of demand falling due in different months. The demand register shall be
prepared by 30th November by the Secretary of the society which shall be test checked by the
Supervisor in at least 10% cases.The list of defaulters shall be displayed in the notice board of
the society, gram panchayat and at conspicuous places in the village for information of the
borrowers. A copy of the list shall be supplied to the Area Directors and President of the
society to pursue with the defaulting members for repayment.
2. Service Of Demand Notice:-
The demand notice to members shall be prepared by the Secretary and service of the
notices on the members completed by 31st December. In case of KKGC and KKSC holders,
the demand notice shall be served by the Bank Supervisor. As regards other members, the
Secretary of the society shall personally have the notices and obtain the dated
acknowledgement of the borrowers on the reverse of the duplicate copy. In case the borrower
is absent from the village, the notice shall be served on his purpose or any adult member of
the family. In no case the demand notice shall be allowed to be served on the borrowers
through the Peon/Watchman of the society.
3. Fixation Of Target:-
Fortnightly target for recovery should be fixed for each society/branch month wise
starting from December onwards and communicated to all concerned. Normally the target for
recovery should be 15% of the demand by December, 20% in January 25% in February and
30% in March. The achievement against the target shall be monitored and reviewed every
month in branch level meetings of PACS and branch Managers meeting at the Head Office of
the CCBs. The shortfall in achievement during the month shall be added to the next month’s
target. Fortnightly report of recovery of loans shall be submitted by the CCBs to OSCB in the
prescribed format from January to March on the 3rd day of the succeeding fortnight to which it
relates.
4. Recovery Squard :-
A recovery squard for each branch shall be formed with 2 to 3 staff comprising an officer
from Head office, Field Officer of the branch who will attend recovery of loan and contact big
defaulters of Rs. 5,000.00/- and above. In case of shortage of staff, a recovery squard may be
formed to cover the loanees of 2 to 3 branches. The squard shall draw up programme in
advance to visit specific areas/society on a definite date. The achievement in recovery of loans
shall be reported to the Secretary of CCB on the subsequent day of visit. The squard shall be
giving more attention for recovery of NPA loan accounts. The loan accounts likely to become
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NPA by end of the year shall be extracted by Dec. 3 and also pursued for recovery. The
recovery squard shall also assist in execution of E.P. cases in the area.
5. Display Of Default List:-
The names of top 20 defaulters shall be displayed prominently by painting in black color
on the wall in the branch/PACS premises. This should be updated twice a year i.e. in April and
October.
6. Recovery Camp:-
Recovery camps shall be organized at strategic places for a cluster of societies. The
detail schedule of holding such camps should be drawn up much in advance and
communicated to all concerned. The senior officers of Head Office shall attend those camps
unfailingly for which mobilization of the loanees should be done by the field staff of the
Society/branch at least 2 weeks prior to the date of the camp. The District Collector and other
senior officers like P.D., DRDA, DDA, DAO, DRCS, and BDO may be invited to attend such
camps. The non-official Directors and President of societies may also be associated in
recovery of loans. Other line department officers should also be invited to attend the recovery
camps. The CEO of CCBs shall attend at least 15 recovery camps in a month during the
recovery drive (January-March and May-June).
7. Supervise Of Field Movement:-
The CEOs/Senior Officers of CCB should contact surprise check on the movement of
the field staff and take exemplary against the erring employees. The secretary of PACS shall
display his tour programme on the notice board/wall of the society when leaving HQs.
8. Legal Action:-
All defaulted loan accounts of Rs. 2,000/- and above crop seasons shall be covered by
disputes. In case of direct lending by KCCB, all NPA accounts shall also be covered under
dispute. The dispute cases shall be prepared and filed by 31st August. The KCCB would
arrange for holding camps at the branch level for preparation and filing of dispute cases in
consultation with DRCS and Circle ARCS. In such camps the societies will attend the branch
with relevant records and after scrutiny by Branch/Department Officer, the dispute cases will
be filled before the appropriate authority in the camp itself. The decree copies already received
shall also be covered by E.P. cases in in those camps. All dispute and E.P. cases should be
routed through the branch managers to ensure that all required formalities are complied with
before the case is filed. RCS (O) in his letter No. 4641 dated 27-03-2003 has issued instruction
to the Circle ARCS to send a copy of the decree to concerned branch manager so as to enable
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them to ensure filing of E.P. cases with in 15 days from the date of award of decree. The
Branch Manager should also keep close contact with the Principle Officer/Arbitrator/Sale
Officer for expeditious disposal of cases filed. The progress of disposal of dispute and E.P.
cases shall be reviewed in close coordination with the Divisional DRCS and Circles ARCS in
the monthly meetings. Dispute cases filed by the societies pending for more than three months
and E.P. cases more than one year should be identified and brought to the notice of concerned
ARCS and DRCs with copy to RCS, Orissa and Managing Director, OSCB. Similarly in direct
advance cases disputes pending for more than six months and E.P.S pending for more than
one year should be identified and reported to proper quarter.
INCENTIVE SCHEME FOR RECOVERY OF LOANS:-
The expansion credit depends on effective credit disbursal as also on its recovery. Whereas
mounting overdue in the Short Term Co-operative Credit structure in the state is one of the
major reasons attributable to no-viable functioning of many of the PACS/LAMPS despite
implementation of various loan and interest waiver schemes in the past, qualitative lending
coupled with sustainable recovery performance at PACS/LAMPS/FSS are the twin measures,
which would improve the situation. Keeping in view the above objective, the Short Term Credit
Structure, at the instance of GOI and NABARD, has introduced Kissan Credit Card scheme for
providing adequate and timely credit support to the farmers. Simultaneously, Orissa State Co-
operative Bank has also introduced innovative schemes like Kalinga Kissan Gold Card
providing a package of benefits to the borrowers to motivate them to remain default free and
repay their dues regularly. Considering overall recovery scenario, it is considered expedient to
introduce a suitable incentive scheme for the employees who are directly interacting with the
borrowers of PACS/LAMPS for recovery of loans. An incentive scheme linking the recovery
performance with the issue of KKGC and KKSC would ensure improved higher recovery on a
sustained basis apart from creating a conductive climate for recovery by rewarding timely
repayment of the good borrowers.
SHORT TITLE AND COMMENCEMENT:-
The scheme shall be called as “Incentive Scheme for Recovery of Co-operative Loan. ”The
scheme will be applicable to the PACS/branches of CCBs and cover the following employees.
However, the scheme will not be applicable to the PACS/LAMPS/FSS having annual demand
of less than Rs. 5.00/- lakhs.
i) Chief Executive of the PACS/LAMPS and Branch Managers of LAMPS.
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ii) Employees of the PACS/LAMPS
iii) Administrative Inspectors/Supervisors of CCB
iv) Branch Managers of CCBs
v) Staff of DCCB/Co-operation Department functioning as Sale Officers.
Norms Of Incentive & Amount:-The amount eligible for incentive shall be determined on the
basis of the Gold Card / Silver Card issued by the Society up to the end of the year and its
percentage to the borrowing members of the preceding year as per the details bellow.
Gold Card (% of KKGC
holders to borrowing
members)
Silver Card**
(% of KKSC holders to borrowing members)
30% 40% 50% 60%
5.00% Amount of incentive (in Rupees)
3000.00 3500.00 4000.00 5000.00
7.50% 5000.00 5500.00 6000.00 7000.00
10.00% 6500.00 7000.00 7500.00 8000.00
15.00% 8500.00 9000.00 9500.00 10,000.00
{Table No.3.7}
** The silver card was eliminated from previous year i.e. 2006-07
Eligibility:- Only the following categories of societies/CCB branch shall be eligible for the
incentive. The amount of incentive shall be as per norms fixed above,
a) The annual demand of the society under principal shall not be less than Rs. 5.00/-
lakhs. (April-March)
b) The society/Branch of the CCB should have recovered and remitted minimum 60% of
principal and 70% of interest demand during the year.
c) The society/Branch of CCB should have been able to retain the Gold Card Holders not
less than 95% of those covered during the preceding year.
Sharing Of Incentive:- The incentive amount shall be shared by the Chief Executive of
theSCS and other staff at the rate of 70% and 30% respectively. If other staff is not engaged in
recovery of dues and increasing the coverage of Silver / Gold card holders, entire incentive
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shall be awarded to the CEO of SCS. In case of more than one staff, the incentive shall be
equally shared among them. In case of LAMPS, the incentive shall be shared as under:
1. Managing Director of LAMPS 30% of the incentive
2. Branch Manager / branch I/c 40% of the incentive
3. Other employees engaged in recovery 30% of the incentive
In case there are no branches, the entire incentive shall be awarded to the staff of
LAMPS.
Special Award:- In addition to the above, it has been decided to award special incentive of
Rs. 15,000.00/- to the PACS/ LAMPS/ FSS which has recovered 80% of the principal and 90%
of the interest demand for the year as well as covered 15% and 60% of the borrowing
members of preceding year by issue of KKGC & KKSC respectively. The special award will be
presented to the eligible PACS in the State Level Krushak Samabesh.
DIFFICULTY IN RECOVERY
After allowing various schemes for recovery also due to following causes recovery is not up to
satisfaction level,
I. Natural calamities
II. Political Interference
III. Debt Waiver/Relief
IV. No Restriction against LAMPS
V. Absent Of Post Disbursement Supervision (due to staff shortage)
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CHAPTER.4
DISCUSSION & CONCLUSION
-ANALYSIS AND INTERPRETATION -
Now all the necessary data available with us and by analyzing we need to make proper
interpretation. We should make analysis both financing and recovery position individually. So
lets starts with financing position
Loan Financing Position Analysis:-
The financing position of the bank can be analyzed from various point of view which are as follows,
Issue & Outstanding:- The loan issued position of the bank is for last five years and up to date is as follows ,
Year Achivement % of Growth Over Previous Year
2002-03 5612.99 -
2003-04 6942.29 23.68%
2004-05 9459.20 36.25%
2005-06 11174.04 24.48%
2006-07 13339.94 13.30%
2007-08
(31.12.07)
6438.47 -
{Table No. 4.1}
If we analyze the loan issued position of the bank for last five years then we will found that it
has increased gradually. In the year 2002-03 which was stood at Rs.5612.99 lakhs has been
increased to Rs.13339.94 lakhs by 31.03.2007 ,but the % increase is in a decreasing rate
from the year 2004-05 onwards. Against which the loans outstanding position of the bank is in
the same situation. It can easily traced from the under mentioned table,
Year Achievement % Of Growth Over previous Year
2002-03 9413.23 19.57%
2003-04 10103.08 7.33%
2004-05 12203.15 20.79%
2005-06 15062.70 23.43%
- 30 -
2006-07 17542.31 16.46%
2007-08
(31.12.07)
18870.90 7.57%
{Table No. 4.2}
The achievement is in an increased position but the growth rate is changing randomly. In all
together the loan issue and outstanding position of the bank is sound and at a satisfactory
level.
Kissan Credit Card:-
If analyzed the Kissan Credit Card issued position from last five year records (Page
No.17,Table No.3.3) then it maintain a very sound position from its year of implementation.
Again from last three years (except 2006-07)the achievement is more then 100% which is a
very good sign for the bank.
Khariff & Rabi Investment:- The investment on Khariff & Rabi loan during last 5 years is as follows, (Rs In Lakhs)
{Table No.4.3}
If we analyzed Khariff and Rabi loan issued position individually then in khariff loan
achievement against the target is more then 90% over all the year except in 2003-04 which
was only 84.52%. And in the year 2004-05 it was more then 100%. Again the Rabi loan issued
position is very sound as compared to khariff loan and in the last 2 years it has maintained
more then 100% achievement, but in the current year(2007-08) the achievement is as low as
60.60% only because of target fixed i.e. the target included shortfall in khariff-2007 target. In
all together the total Khariff & rabi Loan issue position of the bank has maintained more then
90% So the bank is, maintained a very sound position and able to meet its target.
If we analyzed Kaling Kissn Gold Card issued position from last 5 year records (Page No.18,
Table No.3.4) then we will found that the number of issue has going on increasing and it is a
good sign for the bank as because Gold card is issued to those person who has satisfied some
stipulated condition and one of which is “defaulted free” .So it indicates the no. of defaulter is
going on decreasing. But becoming a gold card holder is not so important rather maintaining
that position is more important. So if we calculate the card is in operation as against issue %
then on the very next year from its implementation it achieved highest percent and later on
also it able to maintained more then 90%. But in the last 2 years it goes down to below 90%.
Overly the card in operation position is sound and up to exception.
Loan To SHG:-
(Rs In Lakhs) Year Cumulative SHG Formed &
Deposit Tapped Credit Linkage Including Revolving Credit
No. Amount No. Amount.
2002-03 4344 124.85 1747 189.92
2003-04 6346 3130.29 2763 360.46
2004-05 6967 379.12 3923 532.71
2005-06 7666 437.61 4741 667.90
2006-07 8461 513.45 5237 780.71
2007-08(31.12.07) 9007 637.66 5472 835.16
{Table No.4.4}
If we analyze the loan to SHG position of the bank for last 5 years records from the above
table then we will found that the credit linkage as against the SHG formed and deposit tapped
is becoming sound i.e. in an increasing trend. So the loan issue position to SHG is up to a
satisfaction level.
Overly the loan financing position of the bank is sound and maintains a satisfaction level. For
which it get the certificate of “A” class bank.
Loans Recovery Position Analysis:- Bank Vrs. PACs:- The recovery position of the loan at the bank level during last 5 years is as follows, Year Demand Collection % Of collection
2002-03 8893.81 4013.60 45.13%
- 32 -
2003-04 11106.30 6082.69 54.77%
2004-05 12785.71 7308.94 57.16%
2005-06 14272.01 8796.16 61.65%
2006-07 17744.20 10749.98 60.585
2007-08(31.12.07) 17621.81 4929.54 27.97%
{Table No. 4.5}
If we analyze the recovery position of loan at the bank level from the above table then we will
found that the it is not so sound. The collection against demand has maintained between
50%to 60% only. But if we see it positively then we will found that the collection % going on
increasing year by year and try to maintained the recovery norms as fixed by NABARD. But in
the year 2007-08 the recovery % is very low i.e. only 27.97% as because there is a balance of
3 months and during those months only collection is more as compare to previous months. So
it may accept that the same level of recovery is maintained this year also.
PACs Vrs. Members:- The recovery position of loan at members level during last 5 years and up to date is as follows,
Year Demand Collection % Of Collection
2002-03 6063..77 3209.15 55.92%
2003-04 7431.02 4962.86 66.79%
2004-05 8058.47 5365.10 66.58%
2005-06 9108.80 7024.43 77.12%
2006-07 10960.70 8106.55 73.96%
2007-08(31.12.07) 12086.53 3845.60 31.82%
{Table NO. 4.6}
If we analyze the recovery position at members level from last 5 years records then we will
found that collection is 65% to 75% as against demand overall all the year except in 2002-
03.And in the year 2007-08 the collection is very low as because there is a balance of three
months and that 3 months is on-season for recovery. But here one more thing can be pointed
out that is recovery percent is more at member level as compare to bank level only because of
imbalance in recovery. How we can easily understand from the following example,
Suppose bank finance a loan of Rs.50,000 to PACs and the same financed by PACs its
members .But at the time of recovery only Rs.35000 has recovered. So collection is 70% at
members’ level. But at the time of recovery at bank level the PACs send onlyRs.30,000 and
balance Rs.5,000 utilized otherwise and recovery is only 60% at bank level.
- 33 -
So because of this imbalance only the collection is more at member level as compare to bank
Level which is misappropriation of money and now the bank is try to minimize this as per as
possible. So this is all about financing and recovery position of the Koraput Central Co-
Operative Bank. And by analysis it can be concluded that even though the financing position of
the bank is in a satisfactory level but further improvement is required. Again the recovery
position of the bank is not up to the satisfaction level and much improvement is required to
cope up with the competitive world i.e. with other commercial banks.
- 34 -
-SUMMARY & SUGGESTION-
Summary:-
Since 1950 the bank has gone through several ups and downs and at present its financial
condition is sound. In order to make the bank more active and better, it is imperative to reduce
the gap of imbalance since the situation is in alarming stage. Surplus staff at PACS level be
identified and terminated. Cost of management of PACS need to be reduced by adopting
austerity measures. Business of PACS is augmented to a substantial extent. Vigorous drive
need be taken up for realization of audit recoveries and misappropriation amount. The
disciplinary procedures have been dealt in a very causal manner. Shortfall in achievement of
projected targets under important portfolio like collection has posted problems in the
profitability and operational efficiency of the bank. Both coercive and persuasive action should
be taken for realization of O.D. loans. Potentially non-viable PACS are adopted by Senior
Officers of the bank. Sincere endeavor be put into achieve viability by diversification of
business adopting remedial measures.
Many-fold improvements in major portfolios like strengthening share capital base,
augmented investment with adequate and qualitative securities, improving collection and own
fund can held to achieve all time viability and profitable.
SUGGESTIONS:-
i. Retention of heavy cash balance on many occasions beyond CRR limit are noticed at
the branch level beyond insured limit as a result of which the bank is sustained income
loss. This also indicates imprudent fund management. So necessary steps should be
taken t invest that cash in a profitable manner.
ii. Since imbalance is major factor of loss of the bank due care is not being taken to arrest
the imbalance. The rising trend of imbalance is an immediate loss to the bank, the in
action of bank is unfortunate.
iii. Despite Successive comments, the bank has not taken any step for realization of
advances and other un-productive assets, which affect the financial health of the bank.
iv. The bank has not furnished the details of loss assets in the audit report, which need be
furnished before next audit.
- 35 -
v. Steps need be taken to ensure proper fund flow analysis for justicious deployment of
funds. During this year 15.14 of the deployable capital is invested under non-income
generating sources which affect the profitability of the bank.
vi. Due care need be taken for realization of loan outstanding under non-farm or non-
agricultural sector as this contributes a major portion of NPA and O.D. interest.
vii. Payment of Bonus/Ex-gratia to employees need be paid as per provisions of Staff
service rule with due consideration of provisions under Minimum Bonus Act and OCS
Act.
viii. Austerity measures need be taken to keep the revenue expenditures with in 50% of real
income.
ix. All out steps also are made to cover all the defaulted loaners under legal action.
x. Management need to ensure inters branch inspection at regular interval to plug the
loopholes in right time.
xi. Internal control system need be strengthened.
xii. Proper credit appraisal and documentation be ensured for making any finance.
xxxvi
BIBLIOGRAPHY &
ABBRIVATIONS
XXXVII
BIBILIOGRAPHY
I. Financial Accounting, 2005, By S.P JAIN & K.L
NARANG.
II. Management Accounting, 2003, By R.K
SHARMA & SHASHI K. GUPTA.
III. Financial Management, 2005, By R.P
RASTOGI.
IV. Research Methodology, 2002, C.R KOTHARI.
V. Final Audit Report- 2007-08, KCCB, Ltd.
VI. Scale of Finance, 2007-08, KCCB Ltd.
VII. Compendium Of Master Circular,2007 ,OSCB
VIII. Annual Report 2006-07, OSCB
XXXVIII
ABBREVIATIONS
i. KCCB:-Koraput Central Co-Operative Bank
ii. DCCB:-District Central Co-Operative Bank
iii. OSCB:-Orissa State Co-Operative Bank
iv. NABARD:-National Bank For Agricultural And Rural Development
v. SCARDBs:- State Co-Operative Agricultural Rural Development Banks
vi. PCARDBs:- Primary Co-Operative Agricultural And Rural Development Banks
vii. LAMPS:- Large Sized Multipurpose Co-Operative Societies
viii. PACS:-Primary Agriculture Co-Operative Societies
ix. MPCS:-Multi Purpose Co-Operative Societies
x. ST (SAO):-Short Term(Seasonal Agricultural Operation)
xi. NPA:-Non Performing Assets
xii. DAP/M.O.U:-Development Action Plans/Memorandum Of Understanding