Performance of UCBs

Performance Assessment of Urban Co-operative Banks (UCBs) -

A Case Study of Tirupati UCB.

By

K. ManoharLecturer in CommerceGovt. Degree College,

Puttur - 517 583, Chittoor DistrictAndhra Pradesh, India

[email protected]

Dr. Himachalam DasarajuProfessor & Chairman (PG) in Commerce

Sri Venkateswara University, Tirupati - 517502E-mail : [email protected]

Dr Kota Srinivasa MurthyPrincipal

Seshachala Institute of Management StudiesPuttur – 517 583, Chittoor District

Andhra Pradesh, IndiaE-mail: [email protected]

0

Performance Assessment of Urban Co-operative Banks (UCBs) -

A Case Study of Tirupati UCB.

Abstract

This article made an attempt to review the progress of UCBs and the analysis

of financial performance of the Tirupati Urban Co-operative Bank (UCB) in Chittoor

district of Andhra Pradesh based on the observation in the financial statements and

problems. Appropriate suggestions are also offered for he development of UCBs in

Chittoor district in general and Tirupati Urban Co-operative Bank in particular. The

Tirupati UCB was established in 1918 with a motive of ‘Each for All and All for

Each’ and to promote thrift and self-help among Tirupati urban people. It has 5

branches in and around Tirupati Town. This paper is an attempt to examine the

progress and performance of Tirupati UCB in regard to membership, deposits,

working capital, loans & advances and operational efficiency. It covers a period of 10

years from 2000-2001 to 2009-10 and is based on secondary data. The analysis is

carried out by using simple statistical tools such as linear growth rate and compound

growth rates and t-value is computed for testing the significance of the variables. The

bank has employed 137 persons and it is the only bank which has the greatest

numbers of employees amongst the UCBs in Chittoor District. Since its inception the

bank has been running on profit lines. The study reveals that the overall analysis

shows the bank performance is good.

Key Words:-Urban Co-operative Banks (UCBs) - Chief Executive Officer ( C.E.O)-

Bankruptcy - Silver Jubilee - Golden Jubilee - Platinum Jubilee – Centenary - Current

Deposits (C.D) - Saving Deposits (S.D) - Fixed Deposits (F.D).

Introduction

Urban Co-operative Banks (UCBs) provide a wide range of financial services

to small investors and depositors. They play a very important role in providing micro

finance to the middle classes and poorer sections of the Urban areas. The urban

co-operative banks have dual status, dual responsibilities, and are subject to dual

control. They have to face enormous challenges to survive in the present day

competitive environment. They were brought under the regulatory ambit of the

Reserve Bank by extending certain provisions of the Banking Regulation Act, 1949,

effective from March 1, 1966 1.

1

Origin and Development of UCBs :

The origin of the Urban Co-operative Banking Movement in India can be

traced to the close of nineteenth century. The Urban bank is modelled after Schulze

Banks of Germany and Luzzatti Banks of Italy. The enactment of the Co-operative

Credit Societies Act, 1904, gave the real impetus to the movement 2. The first Urban

Co-operative Credit Society was registered in Kanjeepuram in the erstwhile Madras

province in October 1904 3. There after, a few more societies were organized in

Chennai and Mumbai. About 78 percent of these Banks are located in five states such

as, Maharashtra, Karnataka, Gujarat, Andhra Pradesh and Tamil Nadu 4. The regional

disparity in the growth of urban co-operative movement is mostly due to strong

co-operative initiative exhibited in these states and absence of similar co-operative

leadership in the other states.

The main objective of Urban co-operative banks is to collect deposits from

members as well as non-members for issuing loans to members as well as non-

members and to promote thrift and self-help among the members.

The Urban co-operative organizations primarily cater to the banking needs and

credit requirements of the weaker sections, lower and middle income class people

comprising small entrepreneurs, village artisans, wage earners, retail traders,

businessmen, factory workers, salaried class as well as other self employed persons

and the like.

Origin of Urban Co-operative Banks in Chittoor District:

The enactment of the Co-operative Societies Act, 1904 augured well for

Chittoor because the Urban co-operative movement started just after three years and

continued up to Independence, perhaps with a few gaps. The year 1907 was epoch

making one An Urban Co-operative Bank was established at Chittoor (April-1907) in

the Chittoor District. During 1918’s Tirupati Urban Co-operative Bank was

established in Titupati Town, Srikalahasti UCB in 1920, Madanapalli UCB in 1923,

Kuppam UCB in 1932 and Balaji UCB, Tirupati in 1999. As on March 2011, six

UCBs with nine Branches were functioning efficiently.

2

Table-1 Profile of UCBs in Chittoor District as on 31-3-2010

Name of the Bank

Place No. of Branche

s

No. of employees

Audit Classification

Premises Area of operation

Tirupati

Madanapalli

Kuppam

Chittoor

Srikalahasti

Balaji

Tirupati

Madanapalli

Kuppam

Chittoor

Srikalahasti

Tirupati

5

2

Nil

2

Nil

Nil

137

24

11

52

10

5

A

A

A

B

B

B

Owned

Owned

Owned

Owned

Owned

Rented

Municipality

Municipality

Grampanchayati

Municipality

Municipality

Municipality

Source : Compiled from field study.

Objectives of the study

The objectives of the present study are

(1) To study the overall progress of the Tirupati Urban Co-operative Bank.

(2) To examine the mobilization of share capital of Tirupati UCB.

(3) To examine the pattern of deposit mobilization of Tirupati Urban Bank.

(4) To make suitable suggestions based on findings of the study.

Methodology

This study is fully based on secondary data information. It has been obtained

by way of interaction and discussion with officials of the bank cited.

For the purpose of analyzing the data various statistical tools and techniques

are adopted to analyse the growth in the variable, viz. Linear Growth Rates (L.G.R)

and Compound Growth Rates (C.G.R) are compiled for the data.

Development of the Tirupati Urban Co-operative Bank :

The Tirupati Urban co-operative Bank came into existence in the early 20 th

century on 2-2-1918. The bank was established with an initial membership of 91 and

a share capital of Rs.3000/-. Its banking operations are widespread. It has established

3

five branches in the town. It has employed 137 persons and it is the only bank which

has the greatest numbers of employees amongst the UCBs in Chittoor District, it has

its own premises in the municipal area. It had acquired spacious own building in the

heart of the temple city in the year 1937. It faces stiff competition from about 25

commercial banks. One striking feature of the bank is that it has 750 Lockers. It has

taken up computerization of all the activities. Since its inception, the bank has been

running in the lines of profit. In Andhra Pradesh it occupied the eighth place in the

area of collection of deposits and run on profit lines. It had celebrated Silver Jubilee,

Golden Jubilee and Platinum Jubilee and in near future it is going to celebrate

centenary functions. The following table1 shows the progress of the bank since

inception.

Table-2 Progress of Tirupati Urban Co-operative Bank

(Rs. in Lakhs)

Years No. of Members

Share Capital

Reserve fund

Deposits Owned funds

Working capital

Loans outstanding

Net Profit

1918

1943

1968

1978

1988

1998

2008

2010

Mean

S.D

C.V

L.G.R

t-value

91

1901

15304

35082

70103

85222

129134

128825

58207.75

53200.61

91.40

36.45

5.262 **

0.03

0.99

10.99

34.09

98.66

144.72

533.21

610.01

179.09

248.37

138.69

49.17

2.896*

0.00

0.47

3.47

8.07

25.51

90.87

295.71

355.52

97.45

144.84

148.63

51.85

2.671 *

0.03

1.46

14.46

42.16

124.17

235.59

828.92

965.53

276.54

392.88

142.07

50.08

2.815 *

0.003

5.52

61.2

246.8

1055.1

3721.21

9187.92

13068.40

3418.27

5024.93

147.00

37.59

2.675 *

0.33

6.98

75.66

288.96

1179.27

3956.8

10016.84

14033.93

3694.81

5414.42

146.54

37.73

2.689 *

0.03

3.11

85.63

219.73

989.34

3061.67

7775.82

10426.85

2820.27

2730.65

178.68

70.86

1.471 ns

0.001

0.07

1.34

3.44

4.77

56.44

90.74

77.50

29.29

38.91

132.87

47.22

2.797*

Source: Annual reports of Tirupati UCBNote: ** significant at 0.01 percent

* significant at 0.05 percent4

Figure-1

The Tirupati UCB was established in 1918 with the membership of 91. Then

the membership was gradually increased from 1901 in 1943 to 1,28,825 in 2010,

registering a linear growth rate (L.G.R) of 36.45 percent which is significant at one

percent level (see table-2). The share capital of the Tirupati UCB has gradually gone

up from Rs.003 lakhs in 1918 to Rs.60.01 lakhs in 2010, registering a growth rate of

49.17 percent which is significant at five percent level. The co-efficient of variance

stood at 138.69. The bank maintained an average share capital of Rs.179.09 lakhs and

its standard deviation stood at 248.37. Though the reserve fund is only Rs.0.47 lakhs

in 1943, it raised steeply to Rs.355.52 in 2010, registering a growth rate of 51.85

percent, which is significant at five percent level. The deposits which have stood at

Rs.0.03 lakhs in 1918 have shot up steeply to Rs.965.53 lakhs in 2010. The progress

in deposit base during the aforesaid period was 50.08 percent, which is significant at

five percent level. The C.V. is 142.07

At the time of inception, the owned funds stood at Rs.0.003 lakhs only which

were multiplied many folds to go up to Rs.13068.40 lakhs in 2010, registering a

growth rate of 37.59 percent, which is significant at five percent level. The working

capital was Rs.0.033 lakhs only in 1918 vis-a-vis Rs.14033.93 lakhs in 2010,

establishing a L.G.R of 37.73 percent, which is significant at five percent level. The

Tirupati Urban Co-operative Bank is providing loans to its members since its

inception. The loan advanced was increased from Rs.0.03 lakhs in 1918 to

Rs.10426.85 lakhs in 2010. The L.G.R was 70.86 percent, which is not significant.

Though the net profit of the bank increased from Rs.0.001 lakhs in 1918 to Rs.90.74

lakhs in 2008, but it decreased to Rs.77.50 lakhs in 2010. The LGR was 47.22

percent, which is significant at five percent level. It may be concluded that there is a

phenomenal progress in the capital base of Tirupati UCB. As a result, loans advanced 5

record an upward trend. Therefore, the increased trend in loans advanced may be the

index for future growth of the bank.

Analysis of performance:

Membership in UCB is of Two types- regular members and associate

members. The regular members contribute to the share capital and they have the right

to vote. The associate members have no right to vote and they are not required to

contribute to the share capital. An Urban bank must raise adequate share capital to

serve as the main foundation as and a security to the depositors and other creditors.

The following table shows the growth of members and share capital of Tirupati UCB.

Table- 3 Progress of Tirupati UCB for the study period 2000-2010

Growth of Members, No. of shares, Share Capital and Share Capital per Member in

Tirupati UCB

Year Members No. of Shares Share CapitalRs.

Share Capital per member

Rs.2000-2001

2001-2002

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

2009-2010

L.G.R

t.value

C.G.R

t-value

1,46,300

1,46,918

1,35,906

1,33,897

1,32,104

1,31,497

1,30,030

1,29,134

1,28,795

1,28,740

-1.493

5.349 **

-1.456

5.546 **

7,08,177

7,20,940

8,98,614

9,77,657

9,51,596

9,48,289

9,83,896

10,66,420

11,55,165

12,19,845

5.348

8.655 **

5.648

7.815 **

3,54,08,867.00

3,60,47,020.00

4,49,30,712.00

4,88,82,852.00

4,75,79,810.00

4,74,14,459.00

4,91,94,802.00

5,33,21,047.00

5,77,58,273.00

6,09,92,293.00

5349

8.655 **

5.648

7.815 **

242.00

245.00

331.00

365.00

360.00

361.00

378.00

413.00

448.00

474.00

6.633

9.370 **

7.209

7.667 **

Source: Compiled from the records of Tirupati UCB

Note: ** = Significant at 0.01 level.

6

Figure- 2

The Table 3 shows that although the membership in Tirupati UCB declined,

the number of shares and the share capital showed an mushrooming trend. The

membership is very high but declined from 1, 46,300 in 2000-01 to 1, 28,740 in

2009-10. After an initial increase, the membership started declining from the third

year and fell gradually registering negative L.G.R (-1.493) and C.G.R (-1.456) which

is significant at 1 percent level. The number of shares increased from 7, 08,177 in

2000-01 to 12, 19,845 in 2009-10 with positive growth rates of 5.348 (L.G.R) and

5.648 (C.G.R) which are significant at 1 percent level. The total share capital also

increased from Rs.3.54 crores to Rs.6.09 crores between 2000-01 and 2009-10 with

growth rates smaller to the number of shares. As the share capital increased while the

membership declined the share capital per member increased from Rs.242 in 2000-01

to Rs. 474 in 2009-10 with significant (at 1% level) growth rates, L.G.R is 6.633 and

C.G.R. is 7.209.

Thus it can be concluded that the membership is quite high but declined

during the period. As the number of shares increased, the total share capital increased

significantly. The share capital per member increased more significantly because of

decline in membership and increase in share capital. The reason for increase in share

capital in last four years would be due to the tendency of the public to deposit their

surplus funds in banks, awareness of the baking system and also good customer

service.

7

Owned Funds:

Owned funds represent aggregate of share capital and reserve of UCB. The

following table shows the pattern of owned funds of Tirupati UCB.

Table-4 Pattern of owned funds in Tirupati UCB in Chittoor District.

(Rs. in lakhs)

Year Share Capital Reserves Owned Funds

2000-2001

2001-2002

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

2009-2010

L.G.R.

t-value

C.G.R

t-value

354.17(68.20)

360.55(68.10)

449.00(71.65)

466.70(70.82)

475.80(69.68)

474.00(69.60)

491.00(62.41)

533.20(64.32)

577.50(62.79)

610.00(63.18)

5.455

10.279 **

5.733

9.204 **

165.12(31.80)

168.92(31.90)

177.73(28.36)

192.30(29.18)

207.00(30.32)

207.00(30.40)

295.71(37.59)

295.70(35.67)

342.30(37.21)

355.50(36.82)

9.635

8.775 **

9.971

10.472**

519.29(100.00)

529.47(100)

626.70(100)

659.00(100)

682.80(100)

681.00(100)

786.70(100)

829.00(100)

919.80(100)

965.50(100)

6.853

14.539 **

7.137

16.256 **

Source: Compiled from the records of Tirupati UCB Note: Figures in parentheses indicate percentages ** Significant at 0.01 level

8

Figure- 3

The table-4 reveals the share capital of Tirupati UCB increased from

Rs. 354.17 lakhs to 610.00 lakhs between 2000-01 and 2009-10 with fluctuations.

After an initial increase to Rs. 360.55 lakhs, the share capital declined gradually until

2005-06 to Rs.474.00 lakhs and increase again to Rs.610.00 lakhs in the end year.

The growth rates are moderate at 5.455 and 5.733 which are significant at 1% level.

The reserves increased gradually from Rs.165.12 lakhs to Rs.355.50 lakhs with high

LGR of 9.635 and C.G.R of 9.971 significant at 1 % level. The owned funds increased

from Rs.519.29 lakhs to Rs.965.50 lakhs with growth rates of 6.853(LGR) and 7.37

(CGR) which are significant at 1 percent level. The proportion of share capital in the

owned funds decreased by five points from 68.20 to 63.18 percent also with

fluctuations, the percentage reached a high level of 71.65 after which it fluctuated and

reached 63.18 percent in the last year. The reserves as proportion of owned funds

increased from 31.80 to 36.82 percent between 2000-01 and 2009-10 fluctuating

between 28.36 percent and 37.59 percent in the intervening years.

Thus, it can be observed from the table that the share capital increased with

fluctuations, during the study period. But, the reserves increased gradually and also at

higher rate than the share capital did. That is why, the owned funds increased

gradually. Also, the percentage of reserves in the owned funds increased while that of

share capital decreased, of course, with fluctuations in both the proportions.

9

Pattern of Deposits:

Deposits of UCBs broadly consists of fixed deposits, saving deposits, current

deposits, recurring deposits and miscellaneous deposits. The following table

represents pattern of deposits in Tirupati UCB.

Table-5 Pattern of Deposits in Tirupati UCB in Chittoor District

(Rs. in Lakhs)

YearDemand Deposits

(C.D & S.D)

Time DepositsF.D,R.D,D.D

Staff Security Deposits & Special Term Deposits

Total Deposits

2000-2001

2001-2002

2002-2003

2003-2004.

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

2009-2010

787.42(7.39)

895.57(7.37)

1021.41(8.40)

10040.4289.64

7611.92(88.06)

7338.41(86.83)

7152.03(85.86)

7830.31(85.22)

9130.10(86.90)

11557.00(88.43)

9866.27(92.61)

11255.17(92.63)

11141.51(91.60)

1160.18(10.36)

1032.08(11.94)

1112.59(13.17)

1178.25(1414)

1357.61(14.78)

1376.83(13.10)

1511.38(11.57)

10653.69(100)

12150.74(100)

12162.92(100)

11200.60(100)

8644.00(100)

8451.00(100)

8330.28(100)

918792(100)

10506.83(100)

13068.38(100)

L.G.R

t-value

C.G.R

t-value

17.185

4.165 **

35.034

4.149 **

-28.554

3.401 **

-22.471

3.055 **

-1.781

0.410 **

-0.900

0.473 **

Source: Compiled from the records of Tirupati UCB Note: Figures in parentheses indicate percentages. **significant at 0.01 level

Figure - 4

10

Table-5 clearly shows that the time deposits of Tirupati UCB have decreased

from Rs 9866.27 lakhs in 2000-01 to Rs.1511.38 lakhs in 2009-10 with wide

fluctuations in the intervening years. The linear and compound growth rates are

negative and very high at -28.554 and -22.471 respectively and are significant at 1

percent level. The demand deposits have increased from Rs.787.42 lakhs to

Rs.11557.00 lakhs during the study period with L.G.R and C.G.R as 17.185 and

35.034 which are significant at 1% level. The time deposits were greater than the

initial year for two years and then declined very sharply. The demand deposits also

declined after an initial increase for three years only to reach a level higher than the

initial year in the end of the study period. The total deposits increased in the first two

years from Rs. 10653.69 lakhs to Rs.12162.92 lakhs in 2002-03 and then declined to

Rs. 8330.28 in 2006-07 to increase again to reach Rs.13068.38 lakhs in 2009-10.

However, the L.G.R and C.G.R are negative at -0.781 and -0.900 which are not

significant. The percentage of demand deposits in total deposits increased slowly from

7.39 to 8.40 and then very steeply to 88.43 by 2009-10 while that of time deposits

declined from 92.61 to 91.60 and then steeply to 11.57 in 2009-10.

Thus it can be concluded that the demand deposits increased, though with

fluctuations during the study period while the time deposits declined after an initial

increase. The total deposits also increased in the beginning, but showed declining

trend during the period. As proportion, the percentage of demand deposits increased

while that of time deposits decreased very sharply.

11

Working Capital

The working capital of UCBs is constituted by share capital, reserves, deposits

and borrowings. The working capital of UCBs consists of interest bearing capital and

interest free capital. Since the reserves carry no interest, it is cheapest source of

capital. The next source of capital is members share capital which carries limited

dividend, but dividend need not necessarily be paid unless the financial position is

sound and it is decided by general body. Another source of working capital for UCBs

is deposits. Deposits are collected from members and non-members. It is interest

bearing external source of capital.

Table- 6 Working Capital of Tirupati UCB

Year Amount(Rs. in Lakhs)

Growth Rate%

2000-2001

2001-2002.

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

2009-2010

L.G.R

t-value

C.G.R

t-value

11172.00

12680.00

12789.00

11859.00

9327.00

9132.00

9116.00

10016.00

11425.00

14033.00

-0.289

0.161 ns

-0.429

0.239 ns

100.00

113.49

114.47

106.47

83.48

81.74

81.59

89.65

102.26

125.60

Source : Compiled from the records of Tirupati UCB.

Figure - 5

12

Table-6 shows working capital of Tirupati Urban Co-operative Bank. Working

Capital increased in the initial three years of the study period from 100 percent to

114.47 percent between 2000-2001 and 2002-2003 and slowly decreased to 89.65 per

cent by 2007-08. It may be due to the fact that the depositors had with drawn their

amount on account of some of the UCBs became bankruptcy in Andhra Pradesh. At

present UCBs are regaining people’s confidence, Hence working capital of Tirupati

UCB was slowly increased in last two years of study period. Further L.G.R and C.G.R

registered negative growth rates -0.289 and -0.429, respectively and also t-value is not

significant.

Loans & Advances:

Loan and Advances act as back bone of banking business. Lending is one of

the principal activities of every bank due to their social obligation to cater to the needs

of different sections of the community. The loan portfolio is typically the largest asset

and the predominant source of revenue. Tirupati UCB is lending under different

categories (Mortgage loans, jewel loans, deposit loans, surety loans, cash credit, short

term loans, medium term loans, staff loans, business loans, vehicle loans etc.) Total

loans and advances outstanding under study in Tirupati UCB is presented below.

13

Table-7 Growth and Composition of Loans & Advances in Tirupati UCB

(Rs. in lakhs)

Year Short Term Loans

Medium Term Loans

Long Term Loans

Total Loans&

Advances

Overdue Percentage of

Overdue on Loans

Percentage of Loans

to Working CapitalOne year

below3 years below

More than 3 years

2000-2001

2001-2002

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

2009-2010

883.56

932.48

852.48

872.48

991.48

1265.48

1605.43

1997.43

2443.43

3263.43

1814.54

1797.67

1813.00

1525.00

1294.00

1050.00

813.00

708.00

609.00

503.00

3948.00

4739.00

5288.00

4825.00

4536.00

3900.00

3763.00

5069.00

6034.00

6659.00

6646.1

7469.15

7953.48

7222.48

6821.48

6215.48

6181.43

7774.43

9086.43

10425.43

868.00

1107.00

1203.00

1123.00

1100.00

1132.00

1039.00

1654.00

2223.00

2634.00

13.05

14.81

15.12

15.54

16.12

18.21

16.80

21.27

24.46

25.26

59.48

58.90

62.19

60.90

73.13

68.07

67.80

77.62

79.58

74.29

LGR

t-value

3.25

1.918 ns

Source: Annual Reports of Tirupati UCB

Note: Ns=Not significant

14

Figure - 6

Figure - 7

Figure - 8

15

Table-7 shows the Loans and Advances outstanding of Tirupati UCB. The per

centage of loans and advances to working capital was more than 60 percent in all the

years under the study. The Linear Growth Rate registered at 3.25 percent, t-value

1.918, which is not significant. But percentage of overdues on loans increased from

13.05 percent in 2000-2001 to 25.26 percent in 2009-10. It had a bad impact on the

financial position of the bank. Hence the Bank should take necessary steps for

reducing the percentage of overdues. Because Financing without recovery has no

fruit, similarly recovery without financing has no seed.

Income, Expenditure and Profit &Loss Account

The particulars of Income, Expenditure and Profit & Loss of Tirupati UCB for the period 2000-2010 have been gathered and presented in the table below.

Table- 8 : Income, Expenditure & Profit of Tirupati UCB during 2000-2010

(Rs. in Lakhs)Year Total

IncomeTotal

ExpenditureGross

Profit/LossProvisions & Contingencies

Net Profit/Loss

2000-2001

2001-2002

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

2009-2010

L.G.R

t-value

C.G.R

t-value

1692.00

2034.52

2193.08

2115.34

1575.67

1435.53

1406.85

1431.53

1723.16

1850.06

-2.376

1.338 ns

-2.282

1.306 ns

1583.71

1990.05

2028.58

2028.65

1478.02

1342.69

1152.25

997.31

1271.59

1662.36

-4.776

2.130 *

-4.752

2.102 *

108.29

4447

164.50

86.69

97.65

92.84

254.60

434.22

451.57

187.70

17.061

20657 *

19.367

2.938 **

30.62

11.21

111.33

28.04

52.54

51.89

172.46

343.50

385.50

110.25

23.032

2.614 *

33.250

3.354 **

77.67

33.26

53.17

58.65

45.11

40.95

82.14

90.72

66.07

77.45

4.670

1.452 ns

5.200

1.466 ns

Source: Compiled from records of the Tirupati UCB.

*Significant at 0.05 level, **Significant at 0.01 level.

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Figure - 9 Incomes, Expenditure &Profit of Tirupati UCB during 2000-2010.

The total income of the Tirupati UCB has shown a declining trend after initial

increase from Rs.1692.00 lakhs in 2000-01 to Rs2193.08 lakhs in 2002-03.

It gradually decreased to Rs.1406.85 lakhs and then again increased to Rs.1850.06

lakhs in 2009-10. The growth rates are negative at -2.376(L.G.R) and -2.282(CGR)

and are not significant. The total expenditure also increased in the beginning from

Rs. 1583.71 lakhs in 2000-01 to Rs.2028.65 lakhs in 2003-04 and then declined to a

level of Rs.997.31 lakhs in 2007-08, after which it increased to Rs. 1662.36 lakhs in

2009-10. The growth rates are negative at -4.776(L.G.R) and -4.752(C.G.R) but are

significant at 5 percent level. The profits increased from Rs.108.29 lakhs to Rs.187.70

lakhs between 2000-01 and 2009-10 with wide fluctuations between Rs.44.47 lakhs

and 451.57 lakhs, the former in the second year and the latter in the penultimate year

of the study period. The growth rates are very high at 17.06 (L.G.R) and

19.367(C.G.R) and the former is significant at 5 percent level and the latter is

significant at 1 percent level. The provisions and contingencies also increased from

Rs.30.62 lakhs to Rs.110.25 lakhs, after fluctuating between Rs.11.21 lakhs and

385.50 lakhs with very high L.G.R and C.G.R of 23.032 and 33.250 respectively, the

former significant at 5 percent level and the latter at 1 percent level. The net profit

which was Rs. 77.67 lakhs in 2000-01 decreased to Rs. 77.45 lakhs with L.G.R of

4.670 and C.G.R of 5.200 which were not significant.

Thus, it can be concluded that both the total income and total expenditure

increased between the beginning and ending year of the study period. But, the lower

levels of income and expenditure in some of the intervening years resulted in negative

growth rates. As the negative growth rate of expenditure is greater than that of the

total income, gross profit increased significantly. But as the provisions and

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contingencies also increased significantly. The net profit remained almost stagnant

between the beginning and end year of the study period.

Findings of the Study

1. The number of members declined during the study period.

2. The total share capital of the bank increased significantly.

3. The bank increases reserve fund adequately for managing uncertainties.

4. The demand deposits increased, while the time deposits declined during the

study period.

5. The Working Capital of the bank increased from 100 per cent to 125.60 per

cent for the study period with fluctuations.

6. The Loans & Advances decreased during 2004-05 to 2006-2007 and slowly

increased trend in the last year of the study.

7. The Overdues position of the bank also shows unfavourable condition during

the study period.

8. The total income and total expenditure increased between the beginning and

the end year of study period.

9. The Net Profit showed fluctuation trend during the study period.

Suggestions

(1) The bank must try to undertake effective steps to attract the members and

retain the existing members.

(2) The bank can consider increasing the share capital in the coming financial

years.

(3) The bank must make an advertisement to increase its deposits in the form of

saving, current and fixed deposits.

(4) The bank should reduce fixed deposits and must increase current and savings

deposits for the purpose of reducing its interest.

(5) The bank must try to increase its lending activity. It has to increase the

lending activity for earning income.

(6) The bank must adopt safe lending practices.

(7) The bank must take necessary steps for reducing over dues.

(8) Mouth publicity is a great source of publicity. So Tirupati UCB can tie up the

neighbouring colleges and universities and give the community oriented

projects to the students of MBA, M.Com, Banking and Finance, and thus it

can increase the number of members of the Bank.

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(9) Many people in rural areas are doing business worth of thousands of rupees

of business like dairy, poultry, fruit farming etc., and for that they have

emergency of finance or they want to deposit their daily amounts, but the

banks and their branches are not available in this area. So the Tirupati UCB

can open their extension counters in those areas. This system will increase the

deposits from the rural areas also.

(10)The Tirupati UCB has a branch at Tirumala without having any transactions

with Tirumala Tirupati Devasthanams. Hence the Bank Directors or CEO

may make an attempt in this regard so that TTD may deposit some amount in

the bank, so that bank working capital may be increased. In turn it will

enhance the lending potentiality of Bank

(11)It is not worthy to mention that the pigmy deposit and mini deposit schemes

are the special features of the UCB. It is suggested that the voluntary attitude

of the sub staff in the mobilization of such deposits may be rewarded suitably.

This in turn may strengthen the saving habits of the public at large.

(12)The bank should come up with attractive loan schemes during festival

seasons, which will surely increase their business.

The overall analysis shows that the performance of Tirupati Urban

Co-operative Bank performance is good. One of the important activities of the bank is

to enhance the members and make the concentration on improving the sources of

other income for the bank and also it has to reduce the Risk cost. The study reveals

that the bank has large scope for further development and expansion in future.

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References:

(1) Mathur B.S.(1975) “Co-operative in India”, Sahitya Bhavan, Agra.

PP 269-270.

(2) Madan G.R. (1994) “Co-operative Movements in India” Mital Publications,

New Delhi.

(3) The Tamil Nadu Journal of Co-operation, published by the Tamil Nadu

Co-operation Union at Chennai. January 2000.

(4) RBI (2005), Report of the High Power Committee on Urban Co-operative

Banks, RBI Bulletin Mumbai.

(5) Rao, P.R.G.(2002), strengthening urban Co-operative Banks through corporate

Governance, Academy of corporate governance Bombay.

(6) Singh, Kartar (2003), ‘ Governance in co-operative Banks-Need for Reforms’

Kurukshetra.

(7) Pitoe, Vidya (2003) Urban Co-operative Banks: Issues and Prospects

Economic and Political Weekly April 12, 2003.

(8) Chalan, A.V. (2008), Financial Performance of Co-operative Bank, NCDC

Bulletin: 7-15.

(9) Kumar, Uttametal (2008) “Appraisal of Financial Performance of Urban

Co-operative Banks- A case study.” The Management Accountant March,

2008 PP.170-174.

(10) Karnachi, T.H (2009) “Performance of Alnavar Urban Co-operative Bank”

Southern Economist, July 1, 2009.

(11) Annual Reports of Tirupati UCB

(12) www.rbi.org.in

(13) www.nf.ucb

(14) www.ncui.net.in

(15) www.cooperation.ap.gov.in

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Born in 1966 at Koppedu Village, Chittoor District of Andhra Pradesh, India Mr K. Manohar did his B.Com., in 1983, M.Com., in 1986. He has been working as a Lecturer in Commerce, Govt. Degree College, Chittoor district, Andhra Pradesh (INDIA). He is having 15 years of teaching experience. He is pursuing Ph.D in Commerce under the guidance of Prof D. Himachalam, Department of Commerce in Sri Venkateswara University, Tirupati. He has participated in various national seminars, workshops, etc. and also published 5 articles in reputed National and International journal

Prof. Himachalam Dasaraju, born in 1953 at Repallawada (Chittoor District) in Andhra Pradesh, did his M.Com in 1978, M.Phil in 1982 and Ph.D in 1989. As an active researcher, he is particularly interested in such areas as Accounting & Finance, Entrepreneurship, Corporate Governance and consumer affairs.

To date Prof.Himachalam Dasaraju has completed 10 Major Research Projects, 2 of which were consultation projects, funded by the UGC, ICSSR and the Ministries of Govt. of India. He has published 5 books and 75 articles. He was declared “Man of the year 2002” by the American Biographical institute, U.S.A. He is now collaborating with Prof. Serge Evraert, University of Montesque, Bordeaux, France, in studies of Corporate Financial Reporting System and Corporate Governance Practices in France and India. He has been a subject expert and panel member far several Indian universities. He worked in Essex Business School, University of Essex,Colchester, UK as Commonwealth visiting Fellow for 6 months in 2008-2009. The University of Essex, UK, has nominated him as Visiting Professor for 3 years up to 2012. He is visiting UK, France and Italy during May – July 2011 for various academic purposes.

Born in 1971 at Nellore in Andhra Pradesh, India Dr. Kota Sreenivasa Murthy did his B.Com., in 1992, M.Com., in 1994 and M.Phil., in 2007. He has been working as a Principal in Seshachala Institute of Management Studies, Puttur, Chittoor district, Andhra Pradesh (INDIA). He was awarded Ph.D in Commerce in 2011 by Sri Venkateswara University, Tirupati. He has participated in various national seminars, workshops, etc. He got short term doctoral fellowship from ICSSR, New Delhi and also published 10 articles in reputed National and International journals.

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