A PROJECT REPORT ON ANALYSIS OF FINALCIAL STATEMENT THE PANIPAT URBAN CO-OPERATIVE BANK SUBMITTED IN THE PARTIAL FULFILLMENT FOR THE DEGREE OF BACHELOR OF BUSINESS ADMINISTRATION (SESSION 2014-15) SUBMITTED TO: SUBMITTED BY: MISS NISHA GUPTA PRIYANKA , B.B.A. III YEAR
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APROJECT REPORT
ON
ANALYSIS OF FINALCIAL STATEMENT
THE PANIPAT URBAN CO-OPERATIVE BANK
SUBMITTED IN THE PARTIAL FULFILLMENT FOR THE DEGREE
OF BACHELOR OF BUSINESS ADMINISTRATION
(SESSION 2014-15)
SUBMITTED TO: SUBMITTED BY:
MISS NISHA GUPTA PRIYANKA
, B.B.A. III YEAR
CLASS ROLL No 78O7.
UNIVERSITY ROLL No..
I.B. (P.G.) COLLEGEAFFILIATED BY KURUKSHETRA UNIVERSISTY, KURUKSHETRA
DECLARATION
I PRIYANKA student of B.B.A. III year in I.B.(P.G.) College, Panipat hereby declare
that the project report entitled “ANALYSIS OF FINALCIAL STATEMENT” submitted for the degree of B.B.A. III year is my original work and the project report has not formed the basis for the award of any diploma, degree, associate ship, fellowship or similar other titles. It has not been submitted to any other university or institution for the award of any degree or diploma.
(PRINCIPAL SIGNATURE) PRIYANKA
ACKNOWLEDGEMENT
Survey is an excellent tool for learning and exploration. No classroom routine can
substitute which is possible while working in real situations. Application of theoretical
knowledge to practical situations is the bonanzas of this survey.
Without a proper combination of inspection and perspiration, it’s not easy to achieve
anything. There is always a sense of gratitude, which we express to others for the help
and the needy services they render during the different phases of our lives. I too would
like to do it as I really wish to express my gratitude toward all those who have been
helpful to me directly or indirectly during the development of this project.
I would like to thank my professor MISS.NISHA GUPTA who was always there to
help and guide me when I needed help. Her perceptive criticism kept me working to
make this project more full proof. I am thankful to her for his encouraging and
valuable support. Working under her was an extremely knowledgeable and enriching
experience for me. I am very thankful to her for all the value addition and enhancement
done to me.
No words can adequately express my overriding debt of gratitude to my parents whose
support helps me in all the way. Above all I shall thank my friends who constantly
encouraged and blessed me so as to enable me to do this work successfully.
PRIYANKA
TO WHOM SO EVER IT MAY CONCERN
Certified that the project on “ANALYSIS OF FINALCIAL STATEMENT “ has been completed by GOVIND AGGARWAL student of B.B.A .III year ,I.B.(P.G.) College ,Panipat under my guidance . She has submitted the report in the partial fulfillment of the requirement for the degree bachelor of business administration from Kurukshetra University, Kurukshetra
It is his original research and I recommend that this should be sent for evaluation
CHAPTER 1
Profile of bank
2.1 –Introduction to Banking Industry
2.2 –Growth of Indian Financial Sector
2.3 –Panipat co-operative banks in India
2.4 -About PanipatPanipat co-operative bank Ltd.
2.5 –Financial Highlights of Panipat Panipat co-operative bank Ltd.
2.6 –Retail Banking of PanipatPanipat co-operative bank Ltd.
2.7 –Introduction of Corporate Governance by OSCB Ltd.
2.1-Introduction to Banking Industry
Introduction:
Modern banking in India is said to be developed during the British era. In the 1st half of the 18th century, the British East India Company established three banks -the Bank of Bengal in 1809, the Bank of Bombay in 1840 and the Bank of Madras in 1843. But in the course of time these three banks were amalgamated to a new bank called Imperial Bank and later it was taken over by the State Bank of India in 1955. Allahabad Bank was the first fully Indian owned bank. The Reserve Bank of India was established in 1935 followed by other banks like Punjab National Bank, Bank of India, Canara Bank and Indian Bank.
In 1969, 14 major banks were nationalized and in 1980, 6 major private sector banks were taken over by the government. Today, commercial banking system in India is divided into following categories.
Types of Banking:
1. Central Bank
The Reserve Bank of India is the central Bank that is fully owned by the government. It is governed by a central board (Headed by a Governor) appointed by the Central Government. It issues guidelines for the functioning of all banks operating within the country.
2. Public Sector Banks
A. State Bank of India and its associate banks called the State Bank Group
B. 19 Nationalized Banks
C. Regional Rural Banks mainly sponsored by public sector banks
3. Private Sector Banks
A. Old generation private banks
B. New generation private banks
C. Foreign banks operating in India
D. Scheduled panipat co-operative banks
E. Non-scheduled banks
4. Co-operative Sector
The co-operative sector is very much useful for rural people. The panipat co-operative banking sector is divided into the following categories:
A. State panipat co-operative banks
B. Central panipat co-operative banks
C. Primary Agriculture Credit Societies
5. Development Banks/Financial Institutions
A. IFCIB. IDBIC. ICICID. IIBIE. SCICI Ltd.F. NABARDG. Export-Import Bank of IndiaH. National Housing BankI. Small Industries Development Bank of IndiaJ. North Eastern Development Finance Corporation
Banking Services:
Banking in India is so convenient and hassle free that one (individual, groups or whatever the case may be) can easily process transactions as and when required. The most common services offered by banks in India are as follow:
" Bank Accounts: It is the most common service of the banking sector. An individual can open a bank account which can be either savings, current or term deposits.
" Loans: You can approach all banks for different kinds of loans. It can be a home loan, car loan, and personal loan, loan against shares and educational loans.
" Money Transfer: Banks can transfer money from one corner of the globe to the other by issuing demand drafts, money orders or cheques.
" Credit and Debit cards: Most of the banks offer credit cards to their customer which can be used to purchase goods and services on credit. On the other hand debit card also used to draw cash easily.
" Lockers: Most banks have safe deposit lockers which can be used by the customers for storing valuable, important documents or jewellery.
Banking Services for NRIs:
Non Resident Indians or NRIs can open accounts in almost all Indian banks. The three types of accounts that NRIs can open are:
Banking industry in India has evolved lately under the impact of the stimulus packages announced by the Government. According to the Annual Policy 2008-09 of the Reserve Bank of India (RBI), the central bank, key monetary aggregates have witnessed some growth in 2008-09. This is reflected in the changing liquidity positions arising from domestic and global financial conditions and the policy initiatives taken by the government. Also, reserve money variations during 2008-09 have largely reflected an increase in currency in circulation and reduction in the cash reserve ratio (CRR) of banks.
According to a study by Dun & Bradstreet (an international research body)-"India's Top Banks 2008"-there has been a significant growth in the banking infrastructure. Taking into account all banks in India, there are overall 56,640 branches or offices, 893,356 employees and 27,088 ATMs. Public sector banks made up a large chunk of the infrastructure, with 87.7 per cent of all offices, 82 per cent of staff and 60.3 per cent of all automated teller machines (ATMs).
The Credit Scenario
The year-on-year (y-o-y) aggregate bank deposits stood at 21.2 per cent as on January 2, 2009. Bank credit touched 24 per cent (y-o-y) on January 2, 2009 as against 21.4 per cent on January 4, 2008. The year-on-year (y-o-y) growth in non-food bank credit at 23.9 per cent as on January 2, 2009 was higher than that of 22.0 per cent as on January 4, 2008. Increase in total flow of resources from the banking sector to the commercial sector was also higher at 23.4 per cent as compared with 21.7 per cent a year ago. The incremental credit-deposit ratio rose to 81.4 per cent as on January 2, 2009, as against 63.1 per cent as on January 4, 2008. Also, during 2008-09 so far, the total flow of resources to the commercial sector from banks stood at US$ 58.83 billion up to January 2, 2009. Scheduled commercial banks' credit to the commercial sector expanded by 27.0 per cent (y-o-y) as on November 21, 2008, as compared with 23.1 per cent a year ago.
There has been variation in credit expansion across bank groups. Credit expansion as on January 2, 2009 for public sector banks stood at 28.6 per cent, scheduled commercial banks (SCBs) including the regional rural banks (RRBs) at 24 per cent, foreign banks at 6.9 per cent and private sector banks at 11.8 per cent, according to the Annual Policy for 2008-09 of Reserve Bank of India.
Several measures initiated by the Reserve Bank have resulted in banks reducing their deposit and lending rates between November 2008 and January 2009. The range for deposit rates for public sector banks varied from 5.25 to 8.5 per cent, foreign at 5.25 to 7.75 per cent and private sector banks at 4 to 8.75 per cent. In the post-crisis quarter caused due to collapse of Lehman Brothers, large corporate like Infosys moved their deposits to State Bank of India (SBI), the country's largest bank. Infosys has revealed that it transferred deposits of nearly US$ 200.61 million from ICICI Bank to SBI last year.
Deposits as on January 2, 2009 for public sector banks stood at 24.2 per cent, scheduled commercial banks (SCBs) including the regional rural banks (RRBs) at 21.2 per cent, foreign banks at 12.1 per cent and private sector banks at 13.4 per cent, according to the Annual Policy for 2008-09 of the Reserve Bank of India.
The prime lending rates of public sector banks stood at 12 to 12.5 per cent, private sector banks at 14.75 to 16.75 per cent and foreign banks 14.25 to 15.50 per cent as on January 2009.
Bank loans rose 18.1 per cent on year-on-year basis as on March 13, the RBI has said in its Weekly Statistical Supplement released on March 27, 2009. Outstanding loans rose to US$ 541.82 billion in the two weeks to March 13. The non-food credit rose to US$ 530.19 billion in the two weeks, while food credit stood at US$ 9.61 billion in the same period.
Since October 2008, the central bank has cut the cash reserve ratio, or the proportion of deposits that banks set aside, and the repo rate, or the rate at which it lends to banks, by 400 basis points each to inject liquidity into the system and activate a lower interest rate regime. Also, the reverse repo rate has been lowered by 200 basis points to discourage banks from parking surplus funds with RBI. Till April 7, 2009, the CRR had further been lowered by 50 basis points, while the repo and reverse repo rates have been lowered by 150 basis points each. Public sector banks have pruned their benchmark prime lending rates (BPLRs) by 150-200 basis points. Also, in April 2009, private sector banks such as Axis and Bank of Rajasthan have reduced their BPLRs by 50 basis points. Only few foreign banks such as Citibank have pared home loan rates by 50 basis points to 13.75 per cent.
The rupee depreciated during 2008-09, reflecting varied developments in international financial markets and portfolio outflows by foreign institutional investors (FIIs). The rupee exchange rate was between 48.37 to 49.19 against the US dollar and 63.60-68.09 against the Euro in January 2009.
Government Initiatives
Apart from the bank rate cuts announced in the stimulus packages, cash withdrawals from bank will not attract tax from April 1, 2009 following abolition of the banking cash transaction tax (BCTT) in the Union Budget
2008-09. The total collection of BCTT stood at US$ 120.36 million in 2008-09. Also, inter-ATM usage transaction became free of charges effective April 1, 2009.
Exchange rate used: 1 USD = 49.8417 INR
2.2-GROWTH OF INDIAN FINANCIAL SECTOR
The Indian economy continued to record strong growth during 2007-08, albeit with some moderation. Real gross domestic product (GDP) growth rate at 9.0 per cent during 2007-08 moderated from 9.6 per cent during 2006-07, reflecting some slow down in industry and services. A positive feature during the year was a recovery in the growth of real GDP originating in the agricultural sector, after the slowdown experienced in the previous year. Despite this moderation, the overall growth rate of the Indian economy during 2007-08 was noteworthy in the global context.
During 2007-08, the growth of real GDP originating from the industrial sector decelerated to 8.2 per cent as against 10.6 per cent in 2006-07. In terms of Index of Industrial Production (IIP), industrial growth was at 8.5 per cent as against 11.5 per cent in 2006-07. Manufacturing sector growth at 9.0 per cent during 2007-08 (12.5 per cent during 2006-07) was the lowest in the last four years. The mining and electricity sectors also grew at a slower pace during 2007-08. In terms of use-based classification, the performance of the capital goods sector was particularly impressive with 18.0 per cent growth.
However, the basic goods, intermediate goods and consumer goods sectors recorded decelerated growth of 7.0 per cent, 8.9 per cent and 6.1 per cent, respectively, during 2007-08. The performance of the industrial sector was also affected by the subdued performance of the infrastructure sector, registering 5.6 per cent growth during 2007-08. The services sector recorded double digit growth consistently in the last three years. It grew by 10.7 per cent during 2007-08, on top of 11.2 per cent growth in 2006-07
The Reserve Bank during 2007-08 had to contend with large variations in liquidity not only due to swings in cash balances of the Central Government, but also on account of large and volatile capital flows. The Reserve Bank judiciously used the CRR, LAF and MSS to manage such swings in liquidity conditions, consistent with the objectives of price and financial stability. As a whole, there was a net absorption of liquidity on 171 days and net injection of liquidity on 75 days during 2007- 08. The average daily net outstanding balances under LAF varied between injection of Rs.10,804 crore during December 2007 to absorption of Rs.36,665 crore in October 2007. Net issuances under the Market Stabilisation Scheme (MSS) during 2007-08 amounted to Rs.1,05,691 crore.
In the foreign exchange market, the Indian rupee exhibited two-way movements in the range of Rs.39.26-43.15 per US dollar during 2007-08. The Indian rupee depreciated to Rs.41.58 per US dollar on August 17, 2007 from Rs.40.43 per US dollar on July 31, 2007. The exchange rate of the rupee appreciated thereafter up to January 2008. The rupee moved in a range of Rs.39.26-39.84 per US dollar during October 2007- January 2008. However, the rupee started depreciating against the US dollar from the beginning of February 2008 on account of FII outflows, rising crude oil prices and heavy dollar demand by oil companies. The exchange rate of the rupee was Rs.39.99 per US dollar at end-March 2008.
2.3-Panipat co-operative banks in India
The Co operative banks in India started functioning almost 100 years ago. The Cooperative bank is an important constituent of the Indian Financial System, judging by the role assigned to co operative, the expectations the co operative is supposed to fulfil, their number, and the number of offices the cooperative bank operate. Though the co operative movement originated in the West, but the importance of such banks have assumed in India is rarely paralleled anywhere else in the world. The cooperative bank in India plays an important role even today in rural financing. The businesses of cooperative bank in the urban areas also have increased phenomenally in recent years due to the sharp increase in the number of primary panipat co-operative banks.
Co operative Banks in India are registered under the Co-operative Societies Act. The cooperative bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.
Cooperative banks in India finance rural areas under:
i. Farming
ii. Cattle
iii. Milk
iv. Hatchery
v. Personal finance
Cooperative banks in India finance urban areas under:
i. Self-employment
ii. Industries
iii. Small scale units
iv. Home finance
v. Consumer finance
vi. Personal finance
Some facts about Cooperative banks in India
i. Some cooperative banks in India are more forward than many of the state and private sector banks.
ii. According to NAFCUB the total deposits & landings of Cooperative Banks in India is much more than Old Private Sector Banks & also the New Private Sector Banks.
iii. This exponential growth of Co operative Banks in India is attributed mainly to their much better local reach, personal interaction with customers, and their ability to catch the nerve of the local clientele.
2.4-About Panipat co-operative bank Ltd.
The PanipatPanipat co-operative bank, a Scheduled Bank under RBI Act was registered in the year 1948 as the Apex Bank of the short term Coop. Credit structure of Panipatwith an objective of Development of the agrarian economy of Panipatby catching the credit equipment of the terms of the state.
The OSCB had made a humble beginning with a Share Capital of Rs. 1.76 lakhs and a borrowing of Rs.25.50 lakhs to address the problem of farm credit dispensation. The OSCB, in its own way has contributed in providing farm credit and inputs to bring the desired change over the years. The Bank has been trying to develop the primary societies viz. PACS (Primary Agricultural Co-operative Society) which constitutes of schemes as LAMPS (Large Scale Agriculture Multipurpose Co-operative Society) / FSS (Farmers Service Co-operative Society).
The activities of the OSCB are not confined to dispensation of farm credit alone. As a schedule bank, it has responded to the sweeping change in banking service in view of advancement in Information Techchnology.
The Bank has assumed the role of leader of the Coop - Credit Structure to develop the lower tiers to cope with the emerging challenges of banking activities. The activities of OSCB are
General Banking Business Re-finance to the DCCB Dispensation of farms credit Production Credit
Who's Who
MEMBERS OF THE MANAGING COMMITTEE OF PANIPATPANIPAT CO-OPERATIVE BANK LIMITED, BHUBANESWAR
Sri Jagneswar President
Smt. Kamalini Mohanty
Sri R.N. Dash, IAS
Vice President
Our Inception and Corporatization
General Banking Business:
The Bank has been accepting deposits from the public and offering all banking facilities to its customers through its fully computerized branches and extension counts at Bhubaneswar, Cuttack, Paradeep, Sambalpur. The Banking services offered by the banks include acceptance of all types of deposits, bills, and exchange, issues of letter of credit, advancing loans to farm and non-farm sector.
Provision of locker facilities. The bank has made a humble beginning in providing ATM facility in its Main Branch at Pandit Jawarharlal Nehru Marg.Bhubaneswar for providing Any Time Banking. This facility shall be provided in all the served cities soon. Integration of all the branches and extension counters are on the anvil to provide Anywhere Banking Services.
Refinance to DCCBs:
The OSCB came into existence to support the lending activities of its affiliated DCCBs. The Bank provides refinance to them to pursue the following activities.
(i) Dispensation of farm Credit:
Product Credit:
In Orissa, 39.48 lakh farmers have been enrolled as members of the primary Agriculture Coop. Societies (PACS)/Large Sized Agriculture
And Multi Purpose Co-operative Societies (LAMPS)/Farmers Services Societies (FSS).The Farm credit requirement of the farmer is met by these societies by availing loans from the DCCBs. The OSCB extends
Refinance facilities to the DCCBs for financing the PACS. During 1999-2000, Rs. 426.23 Crores were disbursed to 6.76 lakhs farmers in the state.
The Indian Banking Scenario:
SCB (State Panipat co-operative bank)
CCB (Cental Panipat co-operative bank)
UCB (Urban Panipat co-operative bank)
PCB (Primary Panipat co-operative bank)
SCARDB (State Co-operative Agro-Rural Development Bank)
Our Inception and Corporatization
General Banking Business:
The Bank has been accepting deposits from the public and offering all banking facilities to its customers through its fully computerized branches and extension counts at Bhubaneswar, Cuttack, Paradeep, Sambalpur. The Banking services offered by the banks include acceptance of all types of deposits, bills, and exchange, issues of letter of credit, advancing loans to farm and non-farm sector.
Provision of locker facilities. The bank has made a humble beginning in providing ATM facility in its Main Branch at Pandit Jawarharlal Nehru Marg.Bhubaneswar for providing Any Time Banking. This facility shall be provided in all the served cities soon. Integration of all the branches and extension counters are on the anvil to provide Anywhere Banking Services.
Refinance to DCCBs:
The OSCB came into existence to support the lending activities of its affiliated DCCBs. The Bank provides refinance to them to pursue the following activities.
(i) Dispensation of farm Credit:
Product Credit:
In Orissa, 39.48 lakh farmers have been enrolled as members of the primary Agriculture Coop. Societies (PACS)/Large Sized Agriculture
And Multi Purpose Co-operative Societies (LAMPS)/Farmers Services Societies (FSS).The Farm credit requirement of the farmer is met by these societies by availing loans from the DCCBs. The OSCB extends
Refinance facilities to the DCCBs for financing the PACS. During 1999-2000, Rs. 426.23 Crores were disbursed to 6.76 lakhs farmers in the state.
Direct Finance by OSCB
The OSCB has directly financed the Sugar Industries in the state to help the cultivators to get remunerative prices for their sugarcane crop. It has also financed the PanipatCoop Marketing Federation for fertilizers business. Besides the following large units are also financed by the bank.
c. Bilati (Orissa) Ltd. – Tropical Food processing Unit.
d. Flour Mills
e. Press
f. Mass Media
Chairman and MD of OSCB in a discussion with MD NABARD Mr. Y.C. Nanda about Credit Expantion
Promotional and Development Role
As The Apex Bank of the Coop Credit Structure, the bank has assumed the role of leadership to develop the structure to face the emerging challenge in banking business. The Following activities have been taken by the bank in these regards.
i. Introduction of Kisan Credit Card: - The OSCB has been facilitated dispensation of entire farm credit through Kisan Credit Card only to enable the farmer members to get instant credit. The DCCBs with the help of the Bank have transformed 813 primary societies as Mini Banks who have mobilized Rs. 250 crores from the rural areas.
ii. Information Technology in DCCBs :- The OSCB has taken the responsibility to computerize the operation of the DCCBs to face the challenge from their commercial counterparts. The software package is finalized for the purpose.
iii. Face lift of the branches of DCCBs and the Mini Bank: - The Bank has been providing regular assistance for the face-lift of the DCCB Branches and PACS. The NABARD has also help 200 PACS with financial assistance for improvement of infrastructure facilities.
iv. Organization and linkage of self-help Groups:-The Banks has been patronizing and close monitoring organization of self help groups at primary level and monitoring the progress.
v. Human Resources Development: - The OSCB has been maintaining a Training Institute to impart training to the personnel of DCCBs and PACS/ LAMPS/FSS. Regular Training programs is conducted by the institute for the purpose.
vi. Conduct of Study:- To find out the reasons for low off- take of farm Credit, the bank had appointed all four Universities of the states. They have given their reports basing on which corrective actions have been taken. The bank has also undertaken a study on functioning of SHGs in West Bengal to emulate their experience in the state.
vii. Preparation of development Action Plan and Signing Of MOU:-At the behest of OSCB, the DCCBs have been preparing DAPs and Signing MOU with the Bank and NABARD. This effort of the banks has created a cost consciousness among the lowest tiers and their turn over has increased manifold.
viii. Image Building: The Bank has been undertaking advertisement through hoarding and electronics media to boost up the images of the entire credit structure.
ix. NABARD as partner of the Bank: - The NABARD has been extending required support to the Bank to accomplish its objectives.The assistance include liberal and confessional refinance, assistance from Coop Development Fund, Support to the women Development cell, Technical, monitoring and Evaluation Cell, Faculty support to the Training Institute Etc.
x. Excellence Recognized:- The National Federation of state Coop Banks (NAFSCOB) has awarded the Bank for its outstanding performance for consecutive four years. The NABARD has also awarded the bank for its performance during 1997-98. The Bank has been achieving all the MOU Parameters.
xi. Profits since Inception: - The Bank has been earning profit since its inception and paying divided to its shareholders uninterruptedly.
xii. Corporate Vision:- The Bank aims at a vibrant Coop. Credit Structure by strengthening PACS and DCCBs , best customer services through computerization and anytime-anywhere Banking and above all a satisfied clientele.
STATUS PAPER ON SHORT TERM COOPERATIVE CREDIT STRUCTURE IN PANIPAT
The short term cooperative credit in Panipatcomprising 2714 PACS (including 218 LAMPS and 6 FSS) at the grass roots level, 17 District Central Cooperative Banks at the middle rung and PanipatCooperative Bank at the apex level have been rendering yeomen’s service to the farming community. From out of around 50 lakh agricultural families, 44.98 lakh families have become members of the PACS taking the coverage to 90%.
Progress in coverage of members during past 5 years :
(No. in lakhs)
(* As per the 2001 census)
Mobilisation of resources and strategy to minimize resource cost:
Although the short term cooperative credit structure in Panipatis dispensing 66% of the crop loan disbursed in the State, the market share in total deposit resources mobilised in the State is only 5%. When the credit deposit ratio of the banks of the entire State was 81.42% as on 31.12.2006, the same is 154% in case of OSCB and DCCBs together. The picture clearly tells that whereas the entire deposits mobilised by the OSCB and DCCBs are deployed inside the State, other banks deploy only a part of their resources. Although the Chief Secretary has advised all govt. departments and PSUs to deploy their surplus resources with OSCB, the response has not been very positive. The comparative picture is given below:
Market share of Cooperative Banks/Commercial Banks in Deposit Mobilisation. (Rs. In crores)
Year Commercial Banks
Coop. Bank Total Deposit
Share of Coop. Banks
Share of Commercial Banks.
1998-99 10640.75 766.21 11406.96 6.71% 93.28%
Year No. of Agril. families)
No. of members enrolled
% of coverage of membership to total no. of Agril. families
No. of indebted members
1997-98
39.48 34.60 87.06 13.66
1998-99
39.48 36.58 92.65 14.78
1999-00
39.48 37.72 95.50 14.97
2000-01*
50.14 38.89 77.78 16.10
2001-02*
50.14 39.33 78.66 16.09
2002-03
50.14 39.33 79.44 15.57
2003-04
50.14 40.56 80.89 17.21
2004-05
50.14 44.75 89.25 22.91
2005-06
50.14 44.98 89.70
2006-07
50.14 44.98 89.70
1999-00 12653.12 951.33 13604.45 6.99% 93.01%
2000-01 14818.66 1180.95 15999.61 7.38% 92.62%
2001-02 18689.18 1406.85 20112.91 7.08% 92.92%
2002-03 21006.85 1591.85 22598.70 7.04% 92.95%
2003-04 23359.86 1761.25 25121.11 7.01% 92.99%
2004-05 27372.64 1863.49 29226.13 6.38% 93.62%
2005-06 31966.97 1955.75 33922.72 5.76% 94.22%
2006-07 (31.12.06)
36434.39 1985.96 38420.35 5.16% 94.84%
CD Ratio (As on 31.12.2006):
CD Ratio
Entire State 81.42
Commercial Banks 75.94
OSCB/ CCBs 154.29
2.5-Financial Highlights PanipatPanipat co-operative bank Ltd.
The PanipatPanipat co-operative bank has made strides in many key areas and achieved all targets setup in the Development Action Plan (DAP). The funds comprising of paid of capital and resource, deposit and borrowing are the main resource of the bank. A Major chunk of this resources are deployed under the loans and advances
to the affiliated central Cooperative Banks, Member society and individuals for different purpose under farm and non-farm sectors.
The Statutory investment requirement under RBI Act and BR Act are met by investment in Central/State Governance Securities and others approved trustee securities, seasonal investible surpluses are deployed in call and short term deposits with commercial banks, to maximize as yield on assets.
Besides remaining vigilant over judicious deployment of funds, the banks is also making concerted efforts to bring down the level of non earning assets of the banks and increase the financial margin.
Seasonal investible surplus are deployed in call and short terms deposits with commercial banks and DFHI etc. to maximise the yields on assets. Beside remaining vigilant over judicious deployment of funds, the bank is also making concerted efforts to bring down the level of non-earning assets of the bank and increase the financial margin. Also see the Profit & Dividend of OSCB
The Bank since its inception operated above the break even level and attained sustainable viability long since. As a result the bank continued to build up its Reserves and Funds as per the provision of the bye-laws. The total Reserves at the end of 1997-1998 stood at Rs.5752.52 Lakh as against Rs.4711.00 Lakh in 1996-97 .Quantumwise, the reserves incresed by Rs.1041.52 Lakh during the year, recording growth rate of 22.11 % .
Sources And Uses of Funds
Important financial indicators of OSCB and DCCBs during past 4 years.OSCB (Rs. in Lakhs)
10 Net profit 1347.51 1744.43 1969.39 916.00 --8.37%
11 Dividend 6% 7% 7%
CCBs (Rs. in Crores
Particulars 2002-03 2003-04 2004-05 2005-06
1. Own fund
2. Deposits
3. Loans & Advances
4. Working Capital
5. Cost of Management(COM)
6. % of COM to WC
7. CCBs earning operating profit
8. Profit/Loss
9. Accumulated Losses
181.571569.251820.992897.44
49.631.71
13-7.25/ +9.75
105.95
212.181749.582102.263224.43
51.721.60
15-1.95+17.25
94.77
231.131830.352346.143577.53
53.831.50
17+46.33
53.90
266.231940.352746.354141.60
55.561.34
16-2.40 +13.23
46.61
Reserves:
The Bank since its inception operated above the break even level and attained sustainable viability long since. As a result, the bank continued to build up its Reservers and Funds as per the provision of the bye-laws. The total Reserves at the end of 1998-99 stood at Rs.7092.22 Lakh as against Rs. 5752.52 Lakh in 1997-98. Quantumwise, the reserves increased by Rs. 1339.70 Lakh during the year, recording growthrate of 23.29 % .
Composition of Reserves and Funds of the Bank from 1996-97 along with year-wise growth rate are indicated below.
The short term cooperative credit structure is not lagging behind in financing investment credit for acquisition of capital assets by the farmer members to increase agriculture production and productivity by adopting modern technology. The DCCBs and PACS with the assistance of OSCB have been financing activities like plantation and horticulture, sericulture, pisciculture, farm mechanisation, small road transport operators, small business, small scale industries, etc. both under farm and non farm sector. The financing for the purpose during last 8 years is given as follows:
Schematic finance during last five years (Rs. in Crores
Year Finance under Farm Sector Finance under Non-farm Sector Total
2.6-Retail Banking of PanipatPanipat co-operative bank Ltd. :
Housing loans : The bank is financing Housing Loan under its "APNA GHAR " scheme. Maximum amount under this head is Rs.500000.00 for purchase of readymade house or construction. For repair, renovation or addition/ alteration the limit is Rs.50000.00. The rate of interest is 13% on reducing balance. Maximum repayment period is 15 years with 18 months moritorium period.
Consumer Durable Requirement / Formalities
1. Maximum limit Rs. 50000.00 or 75% of the cost of the item. 2. Subject to five times monthly gross income.
3. Repayable in maximum 40 monthly installments in reducing balance.
Motor Vehicle Finance
For any sort of Surface Transport and Water Transport vehicle both for commercial and personal pupose.
Requirement / Formalities
1. 75% of the total cost of vehicle, including insurance and registration. 2. Repayable in 60 monthly installments reducing balance.
Business Enterprise
Terms Loan for
1. Fixed Assets for Projects. 2. Commercial Complex and Kalyan Mandap
3. Hotels, Tourist Resorts, Health Care units.
4. Equipment and Machinaries.
Requirement / Formalities
1. Maximum 75% of the fixed Assets 2. Maximum repayable periods – 10 years.
3. Interest in reduced balance method.
Working Capital Loans
1. Retail Business 2. Trader
3. Wholesaler
4. Project Solution
Requirement / Formalities
1. Maximum 75% of working capital requirement subject to Stock Holding. 2. Quarterly Interest on days balance.
2.7-Introduction of Corporate Governance by PanipatPanipat co-operative bank Ltd. :
PanipatCooperative Bank is the first bank in the cooperative sector in the country to introduce sound practices of corporate governance to ensure transparency in its functioning. During the last three years, the following initiatives have been taken to follow good corporate practices by addressing a range of issues such as, protection of shareholders rights, enhancing shareholders value, disclosure requirements, integrity of accounting practices and strengthening the control system.
The employees of the bank can now expose any wrongdoing of the top management of the bank without any fear of reprisal. The Board of Management of the bank in its meeting held on 30.06.2003 has accepted the system for protection of whistleblowers adopted in USA and in Indian Companies like Wipro and Infosys. This facility would give protection to the staff, who expose irregularities, corruption, mal-practices etc. by the top management of the bank. Under this system, where any staff of the bank discovers information, which he believes shows serious mal-practice, impropriety, abuse or wrongdoing, then the information should be disclosed without fear of reprisal. Following the spirit of the Sarbanes Oxley Act of the USA, which envisages protection for whistleblowers (staff who expose corruption), a similar policy has been adopted to enable the employees to raise concern about any irregularity and impropriety at an early stage and in the right way without fear of victimisation, subsequent discrimination or disadvantage. OSCB has become the first bank in the country to have adopted such a policy. Employees are normally the first to realise that there are irregular or illegal practices being followed by any colleague/ management. Hence a policy which affords protection to the employees who expose irregularities, corruption, malpractice etc. will go a long way in ensuring transparent management, setting standards, which the DCCBs shall be encouraged to emulate.
Besides, the PanipatCooperative Bank has adopted the following sound practices of corporate governance.
1. Timely audit of accounts has been ensured. The audit for the year 2005-06 was completed by 30.06.06.
2. The bank has been paying uninterrupted dividend to the shareholders.
3. Common coding of accounting heads has been introduced in the State to integrate the accounting practices of the OSCB and all affiliated DCCBs. This has facilitated the computerisation process in the Central Cooperative Banks.
4. Organisation of annual customer meets to understand their changed perception and to reorient the policies and procedures of the bank. Such meets are also being organised at the level of the DCCBs as well as the PACS.
5. A transparent transfer policy have been formulated and adopted in the bank. Transfers are now being effected on the basis of the policy without any other consideration.
6. A bi-monthly house journal entitled “Sampark” is published with effect from January, 2001, which not only provides a forum to the employees to express their views, but also the management is also able to explain the justification for taking important decisions.
7. Each branch of the OSCB, DCCBs as well as the PACS is being visited by a supervisory officer every month to inspect the functioning and also impart guidance.
8. Loans Manual for the Bank has been prepared by NABCON- the consultancy arm of NABARD.
9. Systems Audit of the Bank has been conducted by M/s Haribhakti & Co., Mumbai.
10. A comprehensive HRD policy is being evolved for the Bank by the National Institute of Bank Management, Pune.
CHAPTER 2
2.1 INTRODUCTION OF BANK
banks in India were founded by Indian entrepreneurs and visionaries in the pre-
independence era to provide financial assistance to traders, agriculturists and budding Indian
industrialists. The origin of banking in India can be traced back to the last decades of the 18th
century. The General Bank of India and the Bank of Hindustan, which started in 1786 were the first
banks in India. Both the banks are now defunct. The oldest bank in existence in India at the moment
is the State Bank of India. The State Bank of India came into existence in 1806. At that time it was
known as the Bank of Calcutta. SBI is presently the largest commercial bank in the country. The role
of central banking in India is looked by the Reserve Bank of India, which in 1935 formally took over
these responsibilities from the then Imperial Bank of India. Reserve Bank was nationalized in 1947
and was given broader powers. In 1969, 14 largest commercial banks were nationalized followed by
six next largest in 1980. But with adoption of economic liberalization in 1991, private banking was
age in allowed. The commercial banking structure in India consists of: Scheduled Commercial Banks
and Unscheduled Banks. Scheduled commercial Banks constitute those banks, which have been
included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI includes only those
banks in this schedule, which satisfy the criteria laid down vide section 42 (6) (a) of the Act.
1949 : Enactment of Banking Regulation Act.
1955 : Nationalization of State Bank of India.
1959 : Nationalization of SBI subsidiaries.
1961 : Insurance cover extended to deposits.
1969 : Nationalization of 14 major banks.
1971 : Creation of credit guarantee corporation.
1975 : Creation of regional rural banks.
1980 : Nationalization of seven banks with deposits over 200 crore.
Banking during British period before independence.
Ancient Hindu scriptures provided enough evidence of the existence of money lending business
in India. Mahajans, Shroffs, Shakers, etc. were enjoyed in banking business. In the beginning of the
18th century, the East India Company set up a few commercial banks on modern lines. In 1970, first
India bank knows as the “Bank of Hindustan” was started and was closed down twenty years later.
Later on bank of Hindustan and Bengal Bank also came into existence in 1809. Bank of Hindustan
carried on the business till 1900. The first joint stock bank, namely the General Bank of India was
established in 1786. Later, the East India Company started three presidency banks with government
participation. These were:
1). Bank of Calcutta (1806)
2). The Bank of Bombay (1840)
3). The Bank of Madras (1843)
These banks had the financial participation by the government also.
During the 18th century, these entire banks were also opened by Agency house in Madras and
Calcutta. These entire banks failed, the need of banking regulation in India was seriously felt. As a
result companies Act, 1833 was brought into force. The impact of the agency house got slowly
reduced.
Allahbad Bank came into existence in 1865 and Alliance Bank of Simla in 1875. The first
purely Indian joint stock bank known as the Oudh Commericial Bank was set up in 1906 encouraged
the Indian entrepreneurs to start many new banks. There were as many 648 commercial banks in
India by the end of 1947. As many as 161 banks failed in quick succession during 1913-1914 and
people’s faith in the banks system was shaken. Thus there was a great need of an institution to control
and regulate banking in the country. As a result, the reserve bank if India was established as the
central bank of country in 1935 under an act called Reserve Bank of India Act. Later on with the
passage of the banking regulation Act passed in 1949. RBI was brought under government control.
Under this act, RBL was conferred with supervision and control of the banks and licensing powers
and the authority to conduct inspections was also given to it.
The three presiding banks were amalgamated in 1920 and new bank called Imperial Bank of
India, this bank played an important role in the economy of the country. After independence, it was
nationalized in 1955 and renamed as the State Bank of India. The SBI opened a large number of
branches in rural and semi-urban areas. The RBI acts as a centralized body monitoring any
discrepancies and shortcoming in the system. It is the foremost monitoring body in the Indian
financial sector. The nationalized banks (i.e. government owned banks) continue to dominate the
India banking arena. Industry estimates indicated that out of 274 commercial banks operating in
India, 223 banks are in the public sector and 51 are in the private sector. The private sector bank grid
also includes 24 foreign banks that have started their operations here.
2.2 Definition of Bank and Banking
Bank
Banking
2.3Types of Banks
3)Specialized Banks: There are specialized forms of banks catering to some special needs with
unique nature of activities. These
are ,thus ,foreign exchange bank, individual banks
2.4 STRUCTURE OF RESERVE BANK OF INDIA:
Reserve bank of IndiaReserve bank of India
Indian bankIndian bank
State co-
operative
bank
State co-
operative
bank
RRBSRRBS
NABARDNABARD
Development
bank
Development
bankExim bankExim bankCommercial BankCommercial Bank