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MEWAR UNIVERSITY, CHITTORGARH

A

Report

Submitted to

Faculty of Management Studies

InPartial Fulfillment of the requirement for the Management training in

Master of Business Administration Programme.

By

ASHOK KUMAR SHARMA

S.M II

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MAWER UNIVERSITY, CHITTORGARH

A PROJECT REPORT

ON

TO STUDY THE LOANING PROCESS AND ANALYSIS OF

FINANCIAL CONDITION OF CHITTORGARH CENTRAL

COOPERATIVE BANK (CCB)

SUBMITTED BY

ASHOK KUMAR SHARMA

Mr.Soumitra Bhattacharya Dr.Rajesh Khothari

(Faculty) (Pro Vice Chancellor)

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ACKNOWLEDGEMENT

The successful completion of this report would not have been possible without the

cooperation and support of our friends & colleagues who has helped us in preparing this

report.

I would like to thank respected Mr. Pradeep Sahay (M.D) of Chittorgarh Central

Cooperative Bank for giving me this opportunity to undertake this project work. I would

like to thanks to Mr. Dinesh Khatri,(Management section officer) who dedicated his

precious time and his input in defining, the project and his valuable contribution to the

design of the methodological framework, the management of the project, assistance in

review of the reports, and the organization of a series of dissemination meeting.

I would also like to extend my thanks to respected ALL EMPLOYEES and other

employees Hamza Hussain, of the bank for giving us valuable guidance.

Lastly a vote of thanks must be given to all the people who are directly or indirectly

involved with the project work.

Thanks

Ashok Kumar Sharma

MBA

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PREFACE

Banks are regarded as the blood of the nations economy without them one cannot

imagine economy moving. Therefore banks should be operated very efficiently, co-operative banks although a small part of whole banking system in India, but they are very

important not only from economical point of view but also from social point of view as it

is more concerned about common peoples welfare and development.

Advance is heart and recovery is oxygen for the bank and for the bank to survive it is

necessary to give advances and recover the amount at the appropriate time. Through this

project I have tried to cover the various aspects like credit appraisal, NPA management,

recovery management, etc. E.g. this project covers all the areas right form the beginning

like inquiry till the loan has been paid up.

Though Loaning is, a very vast topic, I have tried to incorporate to the best of my

capacity from all possible aspects in this project.

I do hope that institution will appreciate this project.

CCB- Central cooperative bank

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INDEX

CHAPTER 1Introduction of Banking

1.1 Early History of Banking

1.2 Status Wise Bifurcation of Bank

1.3 Types of BankCHAPTER 2 - Profile of the Bank

1.1 2.1CCB - CENTRAL COOPERATIVE BANK

2.2 CCB at a Glance

CHAPTER 3 Profile of the NABARD

3.1 Organization structure of NABARD3.2Introduction of NABARD

CHAPTER 5 Loaning process of CCBCHAPTER 6 Schemes and Interest rate

6.1 Main Loaning sector & purpose

CHAPTER 7 CCB Management

7.1 Term Loan

7.2 Classification of Assets

7.3 Findings of CCB

7.4 CCB Reduction Technique

CHAPTER 8 Research Methodology

CHAPTER 8 Data Analysis and Interpretation

REFERENCES AND BIBLIOGRAPHY


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EARLY HISTORY OF BANKING

As early as 2000 B.C., the Babylonians has developed a banking system. There is

evidence to show the temples of Babylon were used as banks. After a period of time,

there was a spread of irreligion, which soon destroyed the public sense of security in

depositing money and valuable in temples. The priests were longer acting as financial 45

agents. The Romans did minute regulations, as to conduct private banking and to create

confidence in it. Loan banks were also common in Rome. From these the poor citizens

received loans without paying interest, against security of land for 3 or 4 years.

During the early periods, although private individuals mostly did the banking business,

many countries established public banks either for the purpose of facilitating commerce

or to serve the government.

However, upon the revival of civilization, growing necessity forced the issued in the

middle of the 12th century and banks were established at Venice and Genoa. The Bank of

Venice established in 1157 is supposed to be the most ancient bank. Originally, it was not

a bank in the modern sense, during simply an office for the transfer of the public debt.

Again the origin of modern banking may be traced to the money dealers in Florence, who

received money on deposit, and were lenders of money in the 14 th century and also in

1349, the business of banking was carried on by drapers of Barcelona.

In India, as early as the Vedic Period, banking, in most crude from existed. The books of

Manu contain references regarding deposits, pledges, policy of loans, and rate of interest.

True, the banking in those days largely mint money lending and they did not know the

complicated mechanism of modern banking.

This is true not only in the case of India but also of other countries. Although, the

business of banking is as old as authentic history, banking institutions have since than

changed in character and content very much. They have developed from a few simple


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operation involving the satisfaction of a few individual wants to the complicated

mechanism of modern banking, involving the satisfaction of capital slowly seeking

employment and thus providing the very life blood of commerce.

THE ORIGIN OF WORD BANK

The word Bank itself derived from the word bancus or banque that is a French.

There were others of the opinion that the word Bank is originally derived from the

German word back meaning joint for which was Italianised into banco.

STATUS WISE BIFURCATION OF BANKS

Scheduled Banks.

Non-Scheduled Banks.

Scheduled Banks

In first schedule, Government of India notifies the Primary Banks, which are licensed and

whose demand and time liability are not less than 50 crores in 1987.

Government of India notifies the Primary banks, which are licensed and whose demand

and time liability are not less than 100 crores can only qualify to be included in the

second schedule since 1993.

A bank becomes scheduled when it fulfils the followings:

A grade rating from RBI

Demand and Time Liability over 100 Crores

Satisfy the RBI guidelines related to CRR and SLR

As per the norms Priority Sector wise lending

Benefits of Being a Scheduled co-operative are described below:

RBI would provide Rediscounting facility at nominal rate

RBI gives remittance facility at par

The demerit of being a scheduled co-operative bank is that the bank will not get 0.5%

subsidy from RBI.


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The conferment of scheduled status on the banks has certain advantages like refinance

facility, directly industrial finance from Reserve Bank of India, avail of Reserve Bank of

India Remittance facility scheme, accept deposits from local bodies, quasi-government

organization, religious, and charitable institutions, guarantees and cheques issued by

Banks are accepted by Government Departments. At the same time, it casts greater

responsibility on the banks in the maintenance of books of accounts and submission of

returns.

Non-Scheduled Bank

The banks, which are not applicable as per the criteria of Scheduled Banks, are called as a

Non-scheduled Banks. These are very small banks.

TYPES OF BANKS

Regional Rural Bank

Nationalize Bank

State Bank Group

Co-operative Bank

Private Bank

Foreign Bank

RESERVE BANK OF INDIA

The Hilton-young commission, appointed in 1926 has recommended the necessity of

centrally empowered institution to have effective control over currency and financial

transaction in the country. Accordingly, the Government had then passed Reserve Bank

of India Act, 1934 and established the Reserve Bank of India with effect from 1st April

1935. The principal aim behind this was to organize proper control over the currency

management in the interest of country benefits and to maintain financial stability. With

this, the RBI mainly looks after the following important functions:

To keep effective control over creation of credits and currency supply

To control the Banking transactions of Central and State Governments

To act as Central administered Authority of all other Banks in the Country.


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To organize control over Foreign Currency Transaction

To assist for improvement in financial aspects of the country

Nationalize Banks

The Banking Company Act establishes it in July 1969 by nationalization of 14 major

banks of India. The sent percent ownership of the bank is of government of India.

State Bank Group

The State Bank of India was established under the State Bank of India Act, 1955, the

subsidiary banks under the State Bank of India (subsidiary Banks) Act, 1959. The

Reserve Bank of India owns the State Bank of India, to a large extent, and rest of the part

is some private ownership in the share capital of State Bank of India. The State Bank of

India owns the subsidiary Banks.

Old Private Banks

These banks are registered under Company Act, 1956. Basic difference between co-

operative banks and private banks is its aim. Co-operative banks work for its member and

private banks work for earn profit.

New Private Banks

These banks lead the market of Indian banking business in very short period, because of

its variety of services and approach to handle customer, also because of long working

hours and speed of services. This is also registered under the Company Act, 1956.

Foreign Banks

Foreign Bank means multi-countries bank. In case of India Foreign Banks are such

Banks, which open its branch office in India and their head office is outside of India.


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Regional Rural Banks (RRB)

Regional Rural Banks are added in Indian Banking since October 1975. The Government

of India in terms of the provision of the Regional Rural Bank Act 1976 has established

these banks. The distinctive feature of Regional Rural Bank is that through it is a separate

body corporate with the Commercial Bank, which has sponsored the proposal to establish

it. The Central Government, while establishing a Regional Rural Bank at the request of a

Commercial Bank, shall specify the local limits within which it shall operate. The

Regional Rural Bank may establish its branches or agencies at any place within the

notified area.

Co-operative Banks

State Co-operative Banks

State Co-operative Bank means the principal Co-operative society in the state. The

primary objective of which is the financing other co-operative societies in the state.

Central / District Co-operative Banks

Central / District co-operative Bank means the principal co-operative society in a district,

the primary objective of which is the financing of other co-operative in that particular

district.

Primary / Urban Co-operative Banks

The primary objective of principal business of which the transaction is of banking

business and paid up share capital and reserve of which are not less than rupees 100,000

and bye-laws of which do not permit admission of any other co-operative society as a

member.


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CCB KENDARIY SAHAKARI BANK

CCB is a Co-Operative Bank in Chittorgarh district, India. Bank was established on 15,

Jan, 1959 Bank has made tremendous & real progress under the leadership of former

Chairman Late Shri Bhagirath Joshi.

Bank is celebrating its 42th anniversary this year. During past years bank has played

vital& leading role for the development of rural and tribal area. Bank has developed in

manifolds with the time.

Chittorgarh is a tribal district and CCB is playing a lead role in development of rural andfarmers. Approximately 65 % members of this bank are SC/ST.

CCB is providing many types of loans and charge different rate of interest on different

types of loans. CCB is a Co-Operative bank not a commercial bank.


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CCB AT A GLANCE

Registration Number : 214H

Membership (31.3.09)

Total Member : 14268 (552)

Loanee Member 7490(199)

Share Capital

State Govt. : 791.31 lakh

Members : 38.28 lakh

Total outstanding loan(31.3.09)

On Member : 4638.42 lakh

On head bank : 17757.91 lakh

Working capital : 27245 lakh

Establishment Expenses : 48.57 lakh

Loan Disbursement (2008-09) : 4638.04 lakh

Recovery % (2008-09) : 75.03 %

Outstanding Demand (30.6.09) : 14470.31 lakh

NPA %31.3.08 : 47.02%

Profit & Loss Position (31.3.09) : 19023041.05 accumulated profit


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Organization Structure of NABARD

Introduction Of NABARD

NABARD is set up as an apex Development Bank with a mandate for facilitating credit

flow for promotion and development of agriculture, small-scale industries, cottage and

village industries, handicrafts and other rural crafts. It also has the mandate to support all

other allied economic activities in rural areas, promote integrated and sustainable rural

development and secure prosperity of rural areas. In discharging its role as a facilitator

for rural prosperity NABARD is entrusted with:

1. Providing refinance to lending institutions in rural areas

2. Bringing about or promoting institutional development and

3. Evaluating, monitoring

4. and inspecting the client banks


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Besides this pivotal role, NABARD also:

Acts as a coordinator in the operations of rural credit institutions

Extends assistance to the government, the Reserve Bank of India and

other organizations in matters relating to rural development

Offers training and research facilities for banks, cooperatives and

organizations working in the field of rural development

Helps the state governments in reaching their targets of providing

assistance to eligible institutions in agriculture and rural development

Acts as regulator for cooperative banks and RRBs.

Some of the milestones in NABARD's activities are:

With its effective overseeing and monitoring of the implementation of theGovernment of India's programme to double the flow of credit to agriculture over

a three-year period from 2004-2005, the total disbursement of credit reached Rs

1,25,309 during 2004-2005. Ground level credit flow to agriculture and allied

activities reached Rs 1,57,480 crore in 2005-2006.

Refinance disbursement to commercial banks, state cooperative banks, state

cooperative agriculture and rural development banks, RRBs and other eligible

financial institutions aggregated Rs 8,622.37 crore.

As on 31 January 2007 through the Rural Infrastructure Development

Fund (RIDF), Rs,59,795.35crore have been sanctioned for 2,31,702 projects

covering irrigation, rural roads and bridges, health and education, soil

conservation, drinking water schemes, etc. Developing among hosts of other

infrastructures, RIDF will create 20971 schools, 6239 primary health centres and

provide drinking water supply in 7267 villages

Watershed Development Fund , with cumulative sanctions of Rs.578.95

crore for 427 projects in 124 districts of 14 states, has created a Peoples

Movement in rural India.

Farmers now enjoy financial access and security through 582.50 lakh

Kisan Credit Cards that have been issued through a vast rural banking network.

http://www.rbi.org.in/home.aspxhttp://www.nabard.org/ridf/genesisofridf.asphttp://www.nabard.org/ridf/genesisofridf.asphttp://www.nabard.org/development&promotional/watersheddevelopmentfund.asphttp://www.nabard.org/development&promotional/kisancreditcard.asphttp://www.rbi.org.in/home.aspxhttp://www.nabard.org/ridf/genesisofridf.asphttp://www.nabard.org/ridf/genesisofridf.asphttp://www.nabard.org/development&promotional/watersheddevelopmentfund.asphttp://www.nabard.org/development&promotional/kisancreditcard.asp

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District Rural Industries Project (DRIP) has generated employment for 23.34

lakh persons with 10.95 lakh units in 105 districts.

Genesis and Historical Background: The Committee to Review Arrangements for Institutional Credit for

Agriculture and Rural Development(CRAFICARD)set up by the RBI under the

Chairmanship of

Shri B Sivaraman in its report submitted to Governor, Reserve Bank of India on

November 28, 1979 recommended the establishment of NABARD. The

Parliament through the Act 61 of 81, approved its setting up.

The Committee after reviewing the arrangements came to the

conclusion that a new arrangement would be necessary at the national level for

achieving the desired focus and thrust towards integration of credit activities in

the context of the strategy for Integrated Rural Development. Against the

backdrop of the massive credit needs of rural development and the need to uplift

the weaker sections in the rural areas within a given time horizon the arrangement

called for a separate institutional set-up. Similarly. The Reserve Bank had onerous

responsibilities to discharge in respect of its many basic functions of central

banking in monetary and credit regulations and was not therefore in a position to

devote undivided attention to the operational details of the emerging complex

credit problems. This paved the way for the establishment of NABARD.

CRAFICARD also found it prudent to integrate short term, medium

term and long-term credit structure for the agriculture sector by establishing a new

bank. NABARD is the result of this recommendation. It was set up with an initial

capital of Rs 100 crore, which was enhanced to Rs 2,000 crore, fully subscribed

by the Government of India and the RBI.

Mission: Promoting sustainable and equitable agriculture and rural development through

effective credit support, related services, institution building and other innovative

initiatives.

http://www.nabard.org/craficard.asphttp://www.nabard.org/craficard.asphttp://www.nabard.org/craficard.asphttp://www.nabard.org/craficard.asp

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In pursuing this mission, NABARD focuses its activities on:

Credit functions, involving preparation of potential-linked credit plans annually

for all districts of the country for identification of credit potential, monitoring the

flow of ground level rural credit, issuing policy and operational guidelines to rural

financing institutions and providing credit facilities to eligible institutions under

various programmes

Development functions, concerning reinforcement of the credit functions and

making credit more productive

Supervisory functions, ensuring the proper functioning of cooperative banks and

regional rural banks

Objectives:NABARD was established in terms of the Preamble to the Act, "for providing

credit for the promotion of agriculture, small scale industries, cottage and village

industries, handicrafts and other rural crafts and other allied economic activities in

rural areas with a view to promoting IRDP and securing prosperity of rural areas

and for matters connected therewith in incidental thereto".

The main objectives of the NABARD as stated in the statement of objectives while

placing the bill before the Lok Sabha were categorized as under :

The National Bank will be an apex organisation in respect of all matters

relating to policy, planning operational aspects in the field of credit for promotion

of Agriculture, Small Scale Industries, Cottage and Village Industries, Handicrafts

and other rural crafts and other allied economic activities in rural areas.

The Bank will serve as a refinancing institution for institutional credit such as

long-term, short-term for the promotion of activities in the rural areas.

The Bank will also provide direct lending to any institution as may approved

by the Central Government.

http://www.nabard.org/creditfunctions/introduction.asphttp://www.nabard.org/development&promotional/developmentalinitiatives.asphttp://www.nabard.org/rolefunctionssupervisory.asphttp://www.nabard.org/nabardact.asphttp://www.nabard.org/nabardact.asphttp://www.nabard.org/creditfunctions/introduction.asphttp://www.nabard.org/development&promotional/developmentalinitiatives.asphttp://www.nabard.org/rolefunctionssupervisory.asphttp://www.nabard.org/nabardact.asp

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The Bank will have organic links with the Reserve Bank and maintain a close

link with in.

Major Activities: Preparing of Potential Linked Credit Plans for identification of exploitable

potentials under agriculture and other activities available for development through

bank credit.

Refinancing banks for extending loans for investment and production purpose in

rural areas.

Refinancing banks for extending loans for investment and production purpose in

rural areas.

Supporting credit innovations of Non Government Organizations (NGOs) and other

non-formal agencies.

Extending formal banking services to the unreached rural poor by evolving a

supplementary credit delivery strategy in a cost effective manner by promoting Self

Help Groups (SHGs)

Promoting participatory watershed development for enhancing productivity and

profitability of rainfed agriculture in a sustainable manner.

On-site inspection of cooperative banks and Regional Rural Banks (RRBs) and iff-

site surveillance over health of cooperatives and RRBs.


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Measure Points

1. GRANTING MEMBERSHIP

2. SELLING OF LOAN APPLICATION FORM

3. RECEIPT OF LOAN APPLICATION

4. LOAN SANCTIONING AND DISBURSEMENT

5. INSURANCE AMOUNT

6. LOAN RECOVERY

7. RECOVERYCHARGES

8. POSTPONEMENT

9. SUBSIDY

10. FIXED DEPOSIT

11. CASH TRANSACTIONS WITH CCB


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GRANTING MEMBERSHIP

the system.

Only the particulars can be edited by the user, all other settings will be done bythe system.


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SELLING OF LOAN APPLICATION FORM

For getting the loan the member will have to purchase the loan application form

from the branch. In case of Joint Loan each member has to purchase a separate

form. There will be various type of forms, each having different fee. The form

will be sold to the purchaser and details will be specified according to following

form.


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Every Item will have a unique Item code.

The facility will be available to choose the item from the list box.

Various item codes will be unique CCB wise, so that there is a uniform inventory

system and track of item movement within the organization is easy.

The price of items will be specified by the CCB and will be chosen automaticallyby the system.

It will be done automatically by the system.

If very few items are less in the stock,

a warning will be printed by the system.

The form once sold will not be taken back.

Cash a/c will be debited as cash will be received on selling of the form and Item

a/c will be credited, as item will be going out.

The receipt will be generated automatically by the system and operator after

printing it will give it to the operator.

RECEIPT OF LOAN APPLICATION

After filling the form, the applicant will submit it in his specified branch. The

receiving officers will enter the following form particulars in the Loan

Application form.


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A unique loan number will be assigned to the newly received form, automatically

by the system.

The operator has to specify the code of the branch, where form will be received.

The checking of all the documents to be submitted along with application form

will be manual.

There will be no upper limit on number of members applying for loan.

The operator will have to specify only the member number the rest details will be

picked up automatically by the system. The system will also display the details on

the screen for cross verification.

Initially Rs. 20/- is taken, as administrative fee if applied loan amount is less than

Rs. 5000. Otherwise Rs. 35/- is taken.

Only the cash amount will be taken and receipt of the amount received will be

printed by the system.

The amount of administrative fee to be taken will be parameterized; only the

administrator will be able to change it.

Cash a/c will be debited as cash will be received on selling of the form and Loan

file fee a/c will be credited.




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Cash a/c will be debited as cash will be received on selling of the form and Loan

file fee a/c will be credited.


printing it will give it to the operator. In case applicant will apply again for the loan, the official concerned can easily

check his previous loan details by just entering loan number.

But the decision regarding whether or not to grant additional loan will be manual.

For taking loan farmer has to contribute some percentage as per scheme.

Borrower contribution involves:

Share Capital

( upto 2 lakhs it is 5 % and

above 2 lakhs it is 3 %,

for women development schemes it is always

3% of loan amount).

Down payment of Project

1 % of administration fee is charged

The checking of Borrower contribution will be manual.

The scheme, purpose and sector for which loan will be taken has to be specified.

The scheme, purpose and sector details will be parameterized.

The operator will only enter scheme, purpose and sector detail.

The checking of the purpose, need, project estimate, property and land cost

estimate, and repaying capacity etc. of the loan applicant cannot be computerized.

The approved sanctioned amount, LVO report dates will have to be specified by

the operator.

The guarantors must be existing members of the banks. This requirement is not

there in case of witnesses.


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The official concerned of the bank will be able to obtain their details by just

entering membership number.

LOAN SANCTIONING AND DISBURSEMENT

Details and various documents of the applicant are checked, and if everything is

found correct the loan is sanctioned and disbursement in single or multiple

installments.

Before actually disbursing loan installments the mortgage deed will be executed

and the operator as per following form will enter its details


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Difference amount is down payment made by Borrower as his own contribution.

The amount is shown automatically in respective accounts from the amount

Received from the Borrower.

Various accounts heads will be updated automatically by the system as per the

above form.

The accounts heads has to be finalized by the SLDB.




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The loan amount will be given in single or multiple installments as per the scheme

and purpose.

In case multiple persons are collectively taking loan, the sanctioned loan amount

will be given to the main Borrower.

Information regarding dates, on which loan installments will be disbursed, has to

be entered in the system.

Total amount will be displayed automatically from the loan installment

disbursement form. The amounts will be adjusted into different accounts

automatically by the system as per the rules.

Particulars will be modified accordingly.


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It will be as done per the above form.

But the amount given to the insurance agency would have to be equal to total

insurance amount added to loan account of various loaners as per thefollowing screen.

The branch will pay the insurance amount directly to the insurance company.

It details will be entered by the operator as per following form

The above entry regarding the payment of insurance on the behalf of the loaner to

the insurance agency.

When actually the loaner makes payment its account is credited by that amount

and the accounts will be adjusted.


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LOAN RECOVERY

According to the demand notice sent, the borrower will deposit the installment

amount.

The operator will enter the details of the amount recovered as per following form.


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The loan repayment period and type of repayment installment (monthly, quarterly,

half yearly, annually) will depend upon the purpose.

The Demand notice will be printed automatically by the system.

Interest will be calculated on the basis of number of days.

No interest on interest will be charged.

Type of Installment Due Date

Annual 30th March

Half Yearly 30th September and 31st March

Quarterly 30th June, 30th September, 31st December

and 31st March

Monthly Last day of every month

Monthly/Quarterly/Half Yearly

If loan will be disbursed in first half of the month, then principal will be

included in the installment demand of the month otherwise only interest is

included.

Annual

If loan will be disbursed between 1st April and 30th September, then

principal will be included in the installment demand of the financial yearotherwise only interest will be included.

But if there is grace period then again principal will not be included in the

installment demand.

If loan has been disbursed between 1st January and 31st March, the

interest will be calculated but will not be included in the installment

demand.


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It will be recovered along with the loan installment at the loan interest rate.

If the amount received from the borrower will be greater than the desired amount,

then additional amount will be considered as advance money.

On the advance money interest equal to loan interest will be paid. The advance

money account will be created and maintained automatically by the system.

The actual amount received in case of cheque will be cheque amount minus

clearance charges.

The adjustment of amount received from the borrower against the demand will be

done automatically by the system. If a person pays more than the demanded money then an account will be created

for his advance payment automatical.

RECOVERY CHARGES

In case the borrower will not pay the due installment, then recovery charges

would be taken from the borrower. If the recovery charges will be taken then its

details will be mentioned as per following details:


Type of InstallmentType of Installment Due DateDue Date Interest PeriodInterest Period

AnnualAnnual 3030thth

AprilApril 11stst

April to 31April to 31stst

MarchMarch

Half YearlyHalf Yearly 3030thth

SeptemberSeptember 11stst

April to 30April to 30thth

SeptemberSeptember

3131

stst

MarchMarch 11

stst

October to 31October to 31

stst

MarchMarch

QuarterlyQuarterly 3030thth

JuneJune 11stst

April to 30April to 30thth

JuneJune

3030thth

SeptemberSeptember 11stst

July to 30July to 30thth

SeptemberSeptember

3131stst

DecemberDecember 11stst

October to 31October to 31stst

DecemberDecember

3131stst

MarchMarch 11stst

January to 31January to 31stst

MarchMarch

MonthlyMonthly Last day of every monthLast day of every month Number of days of the monthNumber of days of the month

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It will depend upon the recovery officer, whether or not to take the recovery

charges.

Whether or not to take recovery charge and amount of recovery charge to be taken

will be determined manually.

But if recovery charges will be taken then its details must be entered in the

system.

The adjustment will be done at the time of recovery amount received from the

borrower.

POSTPONEMENT

The due installment of the loaner can be postponed due to various reasons like

drought, flood etc.

The branch official according to following form will enter the postponement

details:


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The determination of whether or not a loan account can be postponed will be

manual.

The type of postponement will be codified. Presently it is two types one in which

equal distribution will be done without increasing the period, in other therepayment period will increase.

The determination of type of postponement will be manual.

SUBSIDY

The Government of Rajasthan will give the total subsidy amount, along with the

list of beneficiaries to CCB against the requests it will receive.

it will be sent to the branch through Regional Offices and CCB.

The branch will adjust the subsidy amount against the outstanding principal of

each beneficiary and its details will be done as per the following screen:

Cash will be received form the CCB against Subsidy.

Subsidy will be given to the loaner by just adjusting their accounts by the amount.

So the subsidy account will be debited and loaner account will be credited.


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Payment of matured FD will be done through cash or cheque. The operator must

enter the cheque details in the system.

Even if he obtains payment after maturity date, the depositor will only get

payment equal to maturity amount.

If interest of FD will be greater than prescribed limit (presently Rs. 5000) then

TDS will be done and TDS amount will be sent to the Income Tax office

The amount must be deposited for at least six months in the bank otherwise no

interest will be paid. This checking will be done by the system automatically.

On the deposited amount simple interest will be given. The rate of simple interest

that can be given will be parameterized.

On the maturity date the cash will be adjusted to FD holder account along with

the interest if due and income tax will be paid against FD if interest will be more

than Rs 5000 /- .

The operator will enter the details of interest paid on FD to depositor as per

following details:

.


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According to the wish of depositor interest will be paid quarterly, half yearly or

annually on the FD amount.

No interest will be paid from maturity date to date on which FD amount was

actually received by the borrower.

Bank account will be credited by the amount of Cheque issued against interest.

The renewal of FD will be done.

The operator will enter the renewal details as per the following form:

If renewal will be done within 14 days after date of maturity, then FD will be

renewed with the same rate of interest.

Otherwise the FD will be renewed with the current rate of interest, which will bespecified by the administrator and will be picked automatically by the system.

The depositor would be able to obtain loan against FD.

The operator will enter the loan against FD details as per following form:


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On the deposited amount the loan up to 80% would be taken.

The loan interest will be 2% more than the FD rate of interest.

These details will be parameterized and the administrator will be able to change

them after entering valid authorization code.

The interest on FD will be adjusted against the loan amount automatically by the

system.

The adjustment will be done automatically by the system according to above

screen.

CASH TRANSACTIONS WITH PLDB

The branch will send the loan recovery amount, share money amount, accidental

insurance amount etc. to PLDB from time to time.

Similarly the branch will receive the loan reimbursement amount, subsidy

amount, share money amount etc. from CCB.


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The operator as per the following form will enter the details of these amount

transfers to and from CCB in the system:

In case cash will be received from the CCB, the cash account of branch will bedebited and CCB account will be credited.

When cash will be paid to the CCB, the cash account of branch will be credited

CCB account will be debited.


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Main Loaning Sector & Purpose


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Many types of loans are provided by the bank some mainly given loans are:

1. Corp loan:

Bank providing loan for crop.

The main crops are Maize, Mustard, Wheat, Groundnut and Soya bin

etc.

Accordingly, the requirement of credit is estimated keeping in view

scales of finance and the area cultivated under each crop.

Interest rate is 11 % at present.

2. Investment credit for Agriculture:

A. Minor irrigation:


MinorIrrigation

FarmMechanisation

Non FarmSector

Diversify RuralHousing

CropLoan

New Well Tractor SRTO Dairy NewHouses

CropLoan

Old Well Trolley Small

Scale

Industries

Land Development House

Repairing

Pump set Thresher HighEducation

Plantation &Horticulture

Sprinkler Other Ag.

Equipment

Tiny Sector Forestry & Waste

land DevelopmentFieldChannel

SwagojgarCredit Card

Poultry

Generator

set

Rural

Artisans/

Handicrafts

Sheep/Goat/Piggery

Light

Security

Handloom/

Powerloom

Fisheries

Drip

Irrigation

Storage Godown/

Cold StorageVermicompost

Bio Gas

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This financing is proposed for replacements of pump sets,engergisation

of pump set and water conservation devices such as sprinkler and drip

irrigation system.

During 2008-09 credit flow to this sector was Rs.14.39 lakh.

B. Land Development & Dry land Agriculture:

Major activities covered under land development are land reclamation,

land leveling, bunding and soil conservation, farm pond, vermicompostand integrated watershed development.

These activities are needed for improving water management aspects of

irrigation.

Vermicompost technology has immense potential to meet organic manure

requirement in both irrigated and rain fed area.Watershed development isgenerally being done through Govt. funding.

During 2008-09 credit flow to this sector was Rs 7.44 lakh.

C. Farm Mechanization:

Farm mechanization is essential for increasing production, productivity

and adoption of multiple cropping.

It also helps minimizing the cost of cultivation as also increasing croppingintensity. There is good scope of financing tractors in the district.


D. Plantation and Horticulture:

Major horticulture crops grown in the district Guava, Mango, Citrus and

Aonla.

Farmers are showing interest towards horticulture activities.


E. Animal Husbandry:

This sector assumes great importence as it forms integral part of ruraleconomy in the district.

Dairy, Sheep, Piggery, Goat rearing, and Poultry farming are major

allied activities of the rural people.

As there is frequent occurrence of drought conditions in the district,

animal husbandry sector becomes one of the main sources of

income for the farmers.

During 2008-09 credit flow to this sector was Rs. 9.95 lakh.


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F. Non-Farm sector:

Promotion of rural non-farm sector is essential for creating employment

opportunities in rural areas..

As per occupational pattern around 10% of the total work force in thedistrict is engaged in household industry, manufacturing processing,

service, repairs and other work.

This sector offers immense potential in the district. There are goodnumber of large, medium and small scale industries in the district.


G. Rural housing:

Bank is also providing the loan for built new houses and repairing.

Borrower should have agriculture land.

G. Other Priority Sector:

The activities grouped under OPS or Services and Business sector are

considered vital for sustaining the developmental activity in other sector of

the economy.

Interest rates


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This rate of interest are Charged by CCB And CCB to BORROWER from 1, June, 2009.

Note:- In year 2009 the resetting scheme was announced by the bank. According to that

scheme all those loans which were disburse before 31.3.2008 and charged by more than11% interest rate they will be charged by 11% interest rate from 1.4.2009.

CCB followed the rules and regulation of NABARD .


Sr.

No.

Loan

Amount

Rate of interest charged by CCB Rate of interest charged by CCB

to BORROWER

MIS

Purpose,Org.Farming

, A&M,

SGSY,SHG,RH.

FM,Agri.

Clinic,Cold

storage,

RuralGodown,

&

Other all

purpose

NFS MIS

PurposeOrg.Farming

A&M

SGSY,SHG,RH.

FM.,Agri

Clinic,Cold

storage,

RuralGodwon

&

Other all

purpose

NFS

A B C A B C

1. Up to Rs.

500000/-

9.75 9.75 9.75 12.00 12.00 12.00

2. Above

Rs.50000

/-

10.00 10.00 10.0

0

12.50 12.50 12.50

A. CORP

LOAN

8.50 11.00

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Term loans: Mainly there are three types of loan. And there due dates are like that:

Sr.no Type of loan Due date Grace period

1 Yearly 30,April of every year 1 month2 Half yearly 30,Sep.and 31,March Nil

3 Quarterly 31,Mar,30,June,30,Sep,and

31,Dec.

Nil

4. Monthly Last date of month. Nil

Classification of assets:

Category Agriculture Loan Non-Agriculture Loan Provision %

Standard Over due a/c from

180 days

Over due a/c from 90 days .25 %

Sub

Standard

Over due a/c from

180 days to 36

month.

Over due a/c from 90 days to

36 month.

10 %

Doubtful Over due a/c from

more than 36 month .

Over due a/c from more than

36 month.

3 to 4 year 20 %

4 to 6 year 30 %

More than 6 year 50

%

Loss Assets Account which are

marked by auditor

and those which

overdue from long

time and less

possibilities to

recovered loan.

Account which are marked

by auditor and those which

overdue from long time and

less possibilities to recovered

loan.

100 %

Asset classification

The co-operative banks should classify their assets into the following broad groups, viz.


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Performing assets

Standard assets

Non-performing assets

Sub-standard assets

Doubtful assets

Loss assets

Non-performing assets:

NPAs are loans given by a bank or financial institute where the borrower defaults or

delays payments of interest or repayment of principal. Asset here also includes a leased

asset. A NPA was defined a credit facility in respect of which interest and/or installment

of principal has remained past due for a specified period of time.

Performing assets:

Which accounts are not in performing are performing assets. Which accounts are regular

or cover due installments are less than six is called performing assets.

Classification Of Non-Performing Assets

After identification of borrowed accounts as NPA the next stage is asset classification

Standard assets

Standard Assets is one, which does not disclose any problems and which does not carry

more than normal risk attached to the business. Such as asset should not be an NPA.

Sub-standard assets

In case of sub-standard assets, the current net worth of the borrower/guarantors or the

current market value of the security charged is not enough to ensure recovery of the dues

to the banks in full. In other words, such assets will have well defined credit weakness

that jeopardize the liquidation of the debt and are characterized by the distinct possibility

that the banks will sustain some loss, if deficiencies are not corrected.

An asset where the terms of the loan agreement regarding interest and principal have

been re-negotiated or rescheduled after commencement of production, should be

classified a sub standard and should remain in such category for at least 18 months of


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Failure to take punitive (strict and effective) actions against defaulters

Banks failure to appreciate the acts of prompt repayers

Under financing/non financing in time of projects

Mentality and attitude to default willfully

Non action/co-operation of government agencies in recovery

Effect of agricultural debt relief scheme

Inadequate monitoring of court cases and delays in execution

Socio-physical pressure by some people/activities

Target fulfilling under govt. poverty alleviation programme

Lack of income generation due to natural calamities and other uncertainties

Suggestions NPA reduction techniques:

Small NPA loans (loans up to Rs.1 lakh)

- Repaying capacity can be easily gauged

- Mobilizing liquid cash for meeting the debt is not difficult

- Written remedies and repeat personal calls help mostly

- Legal action is time consuming

- Influence of other local persons contacts helpful

NPA-larger than small but medium (above Rs.1 lakh and up to 5 lakh)

- Branch team can talk to the borrower and work out the repayment programmer

- Debts can be settled through Lok Adalat

- Influence of trade professional circles, associates useful

Medium size NPA (once Rs.5 lakh and up to Rs. 25 lakh)

- SWOT analysis and analysis of security will be helpful

- Branches should take advice of H.O. from time to time

- Whether to have legal action or to go for compromise

- Take legal advice


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Large NPA (over Rs. 25 lakh)

- Calls for intervention not only by head office staff but also specialists and

senior management

- Legal, technical advice called for

- of state govt. and SFC in selling assets

- Threat of winding up action would be useful


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RESEARCH METHODOLOGY


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There are many methods, which are well known today for research methodology, out of

which one I have chosen is sampling method, which is really easier, still producing

accurate results.

Sampling in laymens language, is nothing but selecting pockets or samples representing

the whole group and analysis of these samples gives the idea about the respective groups.

On the basis of this, prediction is done and full information about group is integrated.

Though this is not a first hand method, it gives sufficiently good outcomes if used

carefully by experts. It saves the time and energy. The only care should be taken, in order

to have great accuracy, is selection of sample should be such that it should represent the

whole group and information we get from them should be cent percent reliable.

Salient features of my chosen sample

The Leading co-operative bank having head office in my vicinity enables me to

do my work efficiently. This is the striking feature of my sample.

The exclusive schedule bank in Pratapgarh and hence gets priority over the others.

Generally the new bank lacks the experience so it is mandatory to select a sample,

which has enormous experience. CCB has a gigantic experience of successful 42

years, under the lights of which work becomes easier.

Collection of DATA:

Data are only collected from secondary sources, Primary data has not been used.

Secondary Data :

FactsheetsInternet

Pamphlets etc


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1. Share Capital :

Particulars 2006-2007 2007-08 2008-2009

Members 85-44 83-58 82.14

State govt. 28-39 28-39 28-39

total 113-83 111-97 110.53

Conclusion: According to this figure and graph this is shows that the share capital of the

bank is regularly reducing and the reason behind is that the loan disbursement is also

decreasing from last few year.


85.44

28.39

113.83

83.58

28.39

111.97

82.14

28.39

110.53

0

20

40

60

80

100

120

Amount(inLakhs)

2006-07 2007-2008 2008-2009

Year

Share capital

Member

State Gov.

Total

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2. Loan disbursement:

Conclusion: Loan disbursement is not constant, in 2006-07 it was suddenly decrease but

in year it increase.


Particulars 2006-2007 2007-08 2008-2009

Target 150 150 150

Achievement 94.12 125 124.09

150

94.12

150

125

150

124.09

0

20

40

60

80

100

120

140

160

Amount(inLakhs)

2006-07 2007-2008 2008-2009

Year

Loan Disbursment

TargetAchievement

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3. Recovery

Conclusion: Recovery of Bank is not according to the demand because of many

reason like many rebates are provided by bank in between the recovery period,many times people not pay the money etc.


Particulars 2006-2007 2007-2008 2008-200931,may,09

Demand 682.94 913.65 1086.87

Recovery 180.08 338.34 128.31

Balance 502.86 575.31 958.56

recovery% 26.37 37.03 11.81

682.94

180.08

26.37

913.65

338.34

37.03

1086.87

128.31

11.81

0

200

400

600

800

1000

1200

Amount(inLakhs)&%

2006-07 2007-2008 2008-09

31,may,09

Year

Recovery

Demand

Recovery

Recovery%

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4. Loan from CCB

Conclusion: Many time CCB borrow money from LOAN to lent their customer.

From last three it is increase regularly and overdue is also increasing every year.


Particulars 2007-2008 2008-2009 2008-09

Outstanding 1384.93 1417.19 1407.08

Overdue principal 30.77 97.4 107.35

OD% from totalo/s 2.22 6.87 7.63

1384.93

30.77 2.22

1417.19

97.4

6.87

1407.19

107.35

7.63

0

200

400

600

800

1000

1200

1400

1600

Amount&%

2006-2007 2007-2008 2008-2009

YEAR

Loan from SLDB

Outstanding

OD principal

OD %

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5. Establishment Expenses:

Conclusion: Total working capital requirement of bank is increasing and total

establishment expenses is also increasing. But the total establishment expenses is less

than 1 it is the good thing about the bank.


Particulars 2006-2007 2007-08 2008-09

Working capital 1922.25 1999.99 2014.47

Total Est.exp. 11.9 14.59 15.53

% 0.62 0.73 0.77

1922.25

11.90.62

1999.99

14.59

0.73

2014.47

15.53

0.770

500

1000

1500

2000

2500

Amount&%

2006-2007 2007-2008 2008-2009

Year

Establishment expenses

W.C.

Total est.exp.

%

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6. Profit & Loss Position:

Conclusion: In 2006-07 & 2007-08 the in profit but in 2008-09 it in loss and bankincurred accumulated loss because of NPA provisions.


Particulars 2006-2007 2007-08 2008-2009

Profit during theyear 29.06 28.48 -34.18

Accumulated P & L -301.67 -273.21 -307.39

29.06

-301.67

28.48

-273.21

-34.18

-307.39-350

-300

-250

-200

-150

-100

-50

0

50

Amount(inLakh)

2006-

2007

2007-

2008

2008-

2009

Year

Profit & loss Position

Profit during

the yearAccumulated

P & L

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LIMITATION OF THE STUDY

Though I have selected the co-operative bank for my study and no doubt here I have

learnt a lot, but compared to nationalize bank, its network is BIG. The procedure of credit

appraisal, various interest rates on different schemes, recovery programmes are specific

to CCB.


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CHITTORGARH KENDRIYA SAHKARI BANK LTD.CHITTORGARH

AUDITORS REPORT

I have examined the foregoing Balance sheet of the Chittorgarh Kendriya Sahakari

Bank ltd. Chittorgarh as on 31march2009 and profit and loss account of the year

ended on that date with the account relating thereto of the Head office and with the

returns submitted and certified by Branch Manger which returns have been

incorporated in the foregoing Balance Sheet and Accounts subject to my separate

report data we reportthat

1. In my opinion the balance sheet is full and fair one containing all the

necessary particulars .

2. Where I hve called for any explanation or information such explanation and

ioformation have given to me and have been found satisfactory

3. The transaction of the bank which have come to my notics have been within

the competence of the bank

4. The returns received form the branches of the bank have been found

adequate for the purpose of our audit

(JAGDISH PD. CHAUHAN)

INSPECTOR (AUDIT)


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BIBLIOGRAPHY

BOOKS:

Shekhar K.C. Banking Theory and Practices.

Bedi H.L.; Hardikar V.K. Practical Banking Advances.

The Cooperative Banking Acts.

Pamplets .

Factsheets and

Guidence of bank member.

www.rsnindia.com

www.nabardbank.com

http://www.rsnindia.com/http://www.rsnindia.com/

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