PROFILE OF SELECTED URBAN CO-OPERATIVE BANKS IN SOLAPUR AND PUNE DISTRICT

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1 Chapter V PROFILE OF SELECTED URBAN CO-OPERATIVE BANKS IN SOLAPUR AND PUNE DISTRICT 5.1 Introduction 5.2 Profile of UCB in India 5.3 Profile of Selected UCBs in Pune 5.4 Profile of Selected UCBs in Solapur District 113

2 PROFILE OF SELECTED URBAN CO-OPERATIVE BANKS IN SOLAPUR AND PUNE DISTRICT 5.1 INTRODUCTION Financial Statements are the general purpose statements of any entity. They presents the financial position and operating results of an entirebusiness at the end of every financial year. For evaluation of managerial performance,quality, soundness, profitability of any business financial statements are of too much importance. Every bank has to publish Annual Reports at the end of every financial year which shows financial position of the bank, its membership and profitability position, audit class aquire by the bank during that particular year. Similarly annual reports of banks must contain some important ratios and percentages as determind by RBI. From the annual reports of five years under study some important indicators of performance, quality and profitability are taken to show the profile of selected UCBs from Solapur and Pune district to make a comparative study, but before going to sample it is necessary to focus on the position of Urabn Co-operative Banks in India. The Co-operative sector in India is divided into two major segments viz Rural Co-oprative Banks and Urban Co-operative Banks.Urban Co-operative Banks concentrate on credit delivery in urban areas.this chapter analyses the financial performance and soundness of Urban Co-operative Banks in India with special reference to UCBs In Solapur and Pune district. 5.2 PROFILE OF UCB IN INDIA 1 UCBs are graded into four categories on the basis of their financial performance. This financial performance is determined by various parameters such as capital adequacy, level of NPAs and history of profit /loss. On the basis of these parameters relatively stronger banks are included in grade I and II and sick and weak banks are classified as grade III and IV. The number of UCBs goes on declining year by year. Following table can show the changing profile of UCBs during five years from to

3 Year (at end march) No.of UCBs Table No. 5.1 Changing profile of the UCB sector No.of banks in Grade I II III IV % of Banks in Grade III & IV NA NA NA NA NA NA 2011 NA NA NA NA NA NA Source : Reports on Trend and Progress of Banking ( ) There was a decline in the number of UCBs from 1,770 to 1,721 from March 2008 to March 2009.Because of the Process of Consolidation of this sector there is a decline in number of UCBs as the sick and weak banks are merged in the strong banks. The major decline in the Year was the outcome of the announcement of Vision Document in 2005 by RBI. Though there is a decline in total number of banks, it is observed that the banks in grade III and IV have declined but the number of UCBs in grade I and II increased over a year. Not only the No. of UCBs is increased but the percentage share of UCBs in total deposits increased significantly from 53.3 percent to 65.2 percent from March 2008 to March Similarly percentage of loans and advances of UCBs in Grade I banks is also increased. The changing composition of deposits and advances of UCBs shows the growing concentration of banking business in UCBs with sound financial performance. The UCBs are again classified as Scheduled and Non Scheduled banks 115

4 Table No. 5.2 Profile of Urban Co-operative Banks in India Year Scheduled Non-Scheduled Total Increase/Decrease Source : Report on Trend and Progress of Banking in India ( to ). The 2 above table shows that the No. of UCBs in scheduled category is constant, but the No. of UCBs in Non scheduled category is decreasing year by year. The main reason for the decline in No. of UCBs is the introduction of transparent and objective guidelines by RBI in February 2005.The scheme of Merger and Amalgamation of UCBs come within the purview of concerned State Government only after obtaining NOC (No Objection Certificate) from The Reserve Bank. Reserve bank issues this certificate only after taking into consideration the interest of Depositors and post merger financial stability of the acquirer bank. Reserve bank issued another set of guidelines for merger/amalgamation in January 2009 for the UCBs having negative net worth as on March As per this new scheme of amalgamation reserve bank provides i) payment to the depositors under section 16(2) of the Deposit Insurance and Credit Gurantee Corporation Act ii) Financial contribution by the transferee bank. iii) Sacrifice by large depositors. Pursuant to the issue of these guidelines on merger of UCBs the Reserve bank received 158 proposals for merger of which 120 proposals got NOC as on the end June Following table shows Year wise progress in Merger and Acquisition. 116

5 Table No. 5.3 Year wise progress in Mergers and Acquisitions of weak banks by strong banksin India States Total Maharashtra Gujarat Andhra Pradesh Karnataka Punjab Madhaya Pradesh Uttarakhand Chattisgarh Rajasthan Total Source : Banking Ashay Abhipray August 2012 Out of 95 mergers reported up to ,59 comprised of UCBs having negative net worth. Of the total mergers maximum mergers that are 58, took place in the state of Maharashtra

6 Statewise position of UCBs Table No.5.4 Showing statewise spread of UCBs with their branches, deposites and loans (Rs. In Crores) Sr.No State Total Branches deposits Loans UCBs 1 Andhra Pradesh 1064 (6.4) 260 (3.2) 5300 (2.5) 3954 (2.9) 2 Gujrat 243 (14.8) 853 (10.5) 22,475 (10.6) (9.7) 3 Karnatak 268 (16.3) 835 (10.2) 14,418 (6.8) 9,543 (7.00) 4 Kerala 60 (3.6) 358 (4.4) 5,513 (2.6) 3,817 (2.8) 5 Maharashtra 539 (32.8) 4,502 (55.2) 1,38,032 (65.1) 90,257 (66.2) 6 Tamilnadu 129 (7.8) 319 (3.9) 4,876 (2.3) 3,817 (2.8) 7 Goa 06 (0.4) 66 (0.8) 1,696 (0.8) 1,090 (0.8) 8 Other States 304 (17.9) 963 (11.8) 19,721 (9.3) (7.80 Total 1,645 (100.00) 8,157 (100.00) 2,12,031 (100.00) 1,36,341 (100.00) (figures in bracket indicate percentage to total) Source: Banking Ashay Abhipray, Dec 2011 published by Pune Nagari Banks Association Ltd. Pune. From 4 the above table it is observed that Maharashtra state is on second place in having maximum number of UCBs i.e. 539 out of 1645 UCBs in India.It means 32.8 percent of total UCBs in a country are only in Maharashtra and obviously 65.1 percent deposits of UCBs are contributed through Maharashtra state.it is a considerable thing because though Andhra Pradesh have 1064 UCBs i.e.60.4 percent 118

7 of the total UCBs there deposits are of Rs.5,300 croers only as compared with deposits of 1,38,032 croers in Maharashtra. In case of disbursement of loans also Maharashtra state is in leading position with loans of Rs.90,257 croers as compared with loans of Rs.3,954 of Andhra Pradesh. By considering the role of UCBs in Maharashtra,the UCBs are selected from two districts from Maharashtra i.e. Solapur and Pune District. The progress of Urban Co- operative banks in India during last Five years can be explained with the following table. Table No. 5.5 Number of UCBs in India during five years from to Year No.of UCBs Source : Report on Trend and Progress of Banking in India ( ) Graph No

Table No.5.6 Owned capital of UCBs in India during five years from 2006-07 to 2010-11 (Rs.

8 Table No.5.6 Owned capital of UCBs in India during five years from to (Rs. In croers) Year Owned Capital Source : Report on Trend and Progress of Banking in India ( ) Graph No.5.6 Showing Owned Capital of UCBs in India 120

Table No 5.7 Deposits of UCBs in India during five years from 2006-07 to 2010-11 (Rs. In croers) Year 2006-07 2007-08 2008-09 2009-10 2010-11 Deposits 14192.

9 Table No 5.7 Deposits of UCBs in India during five years from to (Rs. In croers) Year Deposits Source : Report on Trend and Progress of Banking in India ( ) Graph No.5.7 Showing Deposits Of UCBs in India 121

Table No 5.8 Investments of UCBs in India during five years from 2006-07 to 2010-11 (Rs.

10 Table No 5.8 Investments of UCBs in India during five years from to (Rs. In croers) Year Investments Source: Report on Trend and Progress of Banking in India ( ) Graph No.5.8 Showing Investments of UCBs in India 122

Table No 5.9 Loans of UCBs in India during five years from 2006-07 to 2010-11 (Rs. In croers) Year 2006-07 2007-08 2008-09 2009-10 2010-11 Loans 8841.05 9755.54 10587.66 12023.93 15279.

11 Table No 5.9 Loans of UCBs in India during five years from to (Rs. In croers) Year Loans Source : Report on Trend and Progress of Banking in India ( ) Graph No.5.9 Showing Loans of UCBsin India From the above table it is clear that though the number of Urban Co- operative banks was decreasing every year, the capital, deposits and investments of these banks are increased to a large amount. But still it is a question that in spite of showing such a tremendous growth in capital, deposits and investments why the number of UCBS is decreasing year by year? 123

12 5.2 PROFILE OF SELECTED UCBS IN PUNE DISTRICT The first Co-operative bank established in Pune District was Defense Accounts Bank which was established on 9 th January 1906, and in the same year the second Co-operative bank was established on 18 th Jan. 1906, i.e. Cosmos Bank. If we consider the period From the establishment of 1 st bank i.e. From 1906 to 2011 The various Co- operative banks in Pune district were established as Follows. During Decade During UCBS established UCBS established UCBS established UCBSE established At present there are Fifty Five (55) Urban Co- operative Banks working in Pune Dist. Of which Forty Eight (48) Banks are in Aadit class A as per the gradation of Reserve Bank of India. Out of 55 banks 29 banks have net NPA percentage 0% 19 banks have net NPA less than 5%, 6-banks are within the range of 5% to 10% of net NPA and only one bank have NPA more than 10 %. Following is the list of UCBs in Pune district. Member banks of Pune Zilla nagari sahakari banks association 5 1. Pune urban Co- operative Bank Ltd. Pune. 2. Pune people s Co- operative Bank Ltd. Pune. 3. Janata sahakari Bank Ltd. Pune. 4. Vishveshwar Co- operative Bank Ltd. Pune. 5. Sharda sahakari Bank Ltd. Pune. 6. Pune urban Co- operative Bank Ltd. Pune. 7. Pune people s Co- operative Bank Ltd. Pune. 8. Janata sahakari Bank Ltd. Pune. 9. Vishveshwar Co- operative Bank Ltd. Pune. 10. Sharda sahakari Bank Ltd. Pune 11. Annasaheb Magar sahakari Bank Ltd. Bhosari 12. Ashok Nagari sahakari Bank Ltd. Pune Pimpari 124

13 13. Baramati sahakari Bank Ltd. Baramati 14. Bhagini Nivedita sahakari Bank Ltd. Pune. 15. Bharati sahakari Bank Ltd. Pune 16. Cosmos co- op. Bank Ltd. Pune. 17. Defence Accounts co-op. Bank Pune. 18. Dharmaveer sambhaji Urban co- op. bank Ltd. New sangavi. 19. Daund Urban co- op. bank Ltd. Dound. 20. Haveli sahakari Bank Ltd. Moshi. 21. Indapur Urban co- op. Bank Ltd. Indapur. 22. Indrayani co- op. Bank Ltd. Pune Pimpari. 23. Jaybhavani sahakari Bank Ltd. Pune. 24. Jayhind Urban co- op. Bank Ltd. Pimpari chinchwad. 25. Janata sahakari Bank Ltd. Pune. 26. Janseva sahakari Bank Ltd. Pune, Hadapsar. 27. Jijamata mahila sahakari Bank Ltd. Pune. 28. Lala Urban co- op. Bank Ltd. Narayangaon. 29. Lokseva sahakari Bank Ltd. Pune. 30. Lonawala sahakari Bank Ltd. Lonawala. 31. Mahesh sahakari Bank Ltd. Pune. 32. Muslim co.-op Bank Ltd. Pune. 33. Pawana sahakari Bank Ltd. Pune Chinchwad. 34. Pimpari Chinchwad sahakari Bank Ltd. Pimpari. 35. Prerana co- op. Bank Ltd. Thergaon. 36. Pune cantonment sahakari Bank Ltd. Pune. 37. Pune municipal corporation servants co- op. Bank Ltd. Pune. 38. Pune merchant s co- op. Bank Ltd. Pune. 39. Pune people s co- op. Bank Ltd. Pune. 40. Pune sahakari Bank Ltd. Pune. 41. Pune Urban co- op. Bank Ltd. Pune. 42. Rajgurunagar sahakari bank Ltd.Rajgurunagar. 43. Rajarshi shahu sahakari Bank Ltd. Pune. 44. Ramrajya sahakari Bank Ltd. Pune. 45. Rupee co- op. Bank Ltd. Pune. 125

14 46. Sadhana sahakari Bank Ltd. Pune. 47. Sampada sahakari Bank Ltd. Pune. 48. Sanmitra sahakari Bank Ltd. Hadapsar. 49. Sevavikas co-op. Bank Ltd. Pune. 50. Sharad sahakari Bank Ltd. Manchar. 51. Shivajirao Bhosale sahakari Bank Ltd. Shivajinagar. 52. Shri Anand co- op. Bank Ltd. Pune, Chinchwad. 53. Shri Chatrapati Urban co.op Bank Ltd. Pune 54. Shri Gajanan Lokseva sahakari Bank Ltd. Pune. 55. Shri Ganesh sahakari Bank Ltd. Pune. 56. Shri Ganesh sahakari Bank Ltd. Sangavi. 57. Shri Laxmi co- op. Bank Ltd, Pune. 58. Shri Laxmikrupa Urban co-op. Bank Ltd. Pune. 59. Sharada sahakari Bank Ltd. Pune. 60. Sant Sopankaka sahakari Bank Ltd. Saswad. 61. Suvarnayug sahakari Bank Ltd. Pune. 62. Udyam Vikas sahakari Bank Ltd, Pune. 63. Vidya sahakari Bank Ltd. Pune. 64. Vishveshwar sahakari Bank Ltd, Pune. 65. Walchandnagar sahakari Bank Ltd, Walchandnagar. Five UCBs selected from pune district To study these situations Five banks are selected as sample, From Pune District, These are as Follows. a) Pune urban Co- operative Bank Ltd. Pune. b) Pune people s Co- operative Bank Ltd. Pune. c) Janata sahakari Bank Ltd. Pune. d) Vishveshwar Co- operative Bank Ltd. Pune. e) Mahesh sahakari Bank Ltd. Pune. 1. Pune Urban Co- operative bank Ltd. Pune. Pune Urban Co- operative bank was registered on 16 th July Thus the current year i.e is its 88 th year of successful working. The bank has its head 126

15 office at market yard Gultekadi Pune with a license of expanding business within the jurisdiction Pune, Ahmednagar or satara district. From the year 2006 of the bank is continuously in audit class A 2. Pune peoples Co- operative bank Ltd. Pune- Pune peoples Co- operative bank was established on 1 st Jeanery And got a registration on The bank has its Head office in sadashiv Peth, Pune with near about 14 to 15 branches and working within the jurisdiction of Pune, Thane and Ahmednagar. 3. Janata Sahakari Bank Ltd. Pune. Janata Sahakari Bank Ltd. Pune was established on 18 th Oct 1949 and got a registration on 17 th Nov.1984 The bank is now 63 years old. The bank has a wide area of working within seven districts in Maharashtra i.e. Pune, Mumbai, Ratnagiri, Kolhapur, Aurangabad, Latur or Beed. The bank has 30 branches in the F.Y Vishveshwar Sahakari bank Ltd. Pune. Vishveshwar Sahakari bank Ltd. Pune was established on 18 th Sept and got a licence From RBI on The area of working of this bank is with the jurisdiction of Pune, Mumbai and Solapur district. The bank has its Head office at market yard, Gultekdi Pune. The bank is continuously in Audit class A with the Five years period of study i.e. from F.Y to Mahesh sahakari bank Ltd.Pune Mahesh Sahakari bank ltd. Pune was established in 1972 and got a licence from RBI on 18 th February 1980.The area of working of the bank is Pune,Satara.Thane, Raigad,Ahmednagar and SolapurDistrict.The bank has been awarded with audit class A during the five years under study. Profile of selected UCBs from Pune district with share capital, reserve funds, deposits, loans and other variables Profile of these UCBs is shown with the help of following tables and their explanation. 127

Table No 5.10 Showing Share Capital (Issued & Subscribed) of UCBs in Pune Dist (Figures in croers) Sr. No. Name of Bank 2006-07 2007-08 2008-09 2009-10 2010-11 1. Pune Urban Co-op. Bank 4.15 4.50 5.

16 Table No 5.10 Showing Share Capital (Issued & Subscribed) of UCBs in Pune Dist (Figures in croers) Sr. No. Name of Bank Pune Urban Co-op. Bank Ltd.Pune 2. Pune People s Co-op. Bank Ltd.Pune 3. Vishveshwar Sah.Bank Ltd. Pune Mahesh Sah. Bank Ltd. Pune Janata Sah. Bank Ltd. Pune Source : Annual Reports of Selected UCBs from Pune from F.Y. ( to ) Graph No.5.10 Showing share Capital of UCBs in Pune From the above table it is shown that Pune UCB, Pune People s Co-op. Bank and Mahesh Sah. Bank have Subscribed share capital below 10 Crores While Vishvweshwar Sah.Bank and Janata Sah. Bank have subscribed capital of more than 20 croers and 60 croers. The Subscribed capital of all these banks shows increasing trend every year during the five years under study. 128

Table No. 5.11 Reserve Funds and other Reserves (UCBs in Pune) Sr. Name of Bank 2007 2008 2009 2010 2011 No. 1. Pune Urban Co-op. Bank 18.97 22.29 25.46 28.66 33.44 Ltd.Pune 2. Pune People s Co-op.

17 Table No Reserve Funds and other Reserves (UCBs in Pune) Sr. Name of Bank No. 1. Pune Urban Co-op. Bank Ltd.Pune 2. Pune People s Co-op. Bank Ltd.Pune 3. Vishveshwar Sah.Bank Ltd. Pune Mahesh Sah. Bank Ltd Pune 5. Janata Sah. Bank Ltd. Pune Source : Annual Reports of Selected UCBs from Pune (from F.Y to ) Graph No.5.11 Showing Reserves &Surplus of UCBs In Pune District 129

18 The above table shows reserve Funds and Other Reserves, which consists of Statutory reserve, General Reserve, Building Fund, Dividend Equalisation Fund, Charity Reserve,Bad and Doubtful Advances Reserve, Contingent provisions for Standard Assets, Shareholders welfare reserve, Employees welfare reserve etc. Table No Deposits (UCBs in Pune) Sr. Name of Bank No. 1. Pune Urban Co-op. Bank Ltd.Pune Pune People s Co-op Bank Ltd.Pune 3. Vishveshwar Sah.Bank Ltd. Pune 4. Mahesh Sah. Bank Ltd Pune 5. Janata Sah. Bank Ltd. Pune Source: Annual Reports of Selected UCBs from Pune (from F.Y to ) Graph No Showing deposits of selected UCBs in pune District 130

19 All the five UCBs selected have increasing trend in deposits mobilization. Of the five UCBs Pune UCB and Mahesh Sahakari Bank have deposits below 500 croers, pune People s Co-op. bank and Vishveshwar Bank has deposits more than 500 croers but less than 1000 croers and only Janata Sahakari Bank Ltd have deposits above 1000 crores. Thus all the UCBs have very strong deposit base. Table No.5.13 Investments (UCBs in Pune) Sr.No. Name of Bank Pune Urban Co-op Bank Ltd.Pune 2 Pune People s Co-op Bank Ltd.Pune 3 Vishveshwar Sah.Bank Ltd. Pune 4 Mahesh Sah. Bank Ltd Pune 5 Janata Sah. Bank Ltd. Pune Source:Annual Reports of Selected UCBs from Pune( from F.Y to ) Graph No.5.13 Showing Investments of selected UCBs in Pune District 131

20 The UCBs have made investments in Central and State Govt. Securities, other trustee securities, in shares of various companies, Maharashtra State Finance Corporation and other Co-operative institutions as well as in various Bonds. Table No. 5.14(A) Loans & Advances Short Term Loans Sr. No. Name of Bank Pune Urban Co-op Bank Ltd.Pune 2 Pune People s Co-op Bank Ltd.Pune 3 Vishveshwar Sah.Bank Ltd. Pune Mahesh Sah. Bank Ltd. Pune 5 Janata Sah. Bank Ltd. Pune Source:Annual Reports of Selected UCBs from Pune( from F.Y to ) Graph No 5.14(A) Showing Short Term Loans Of UCBs In Pune District 132

21 All the five selected UCBs in Pune district shows increasing amount of short term loans year by year. These short term loans and advances are again classified as secured by Government and other Approved Securities & secured by others. Thus maximum portion of short term loans is secured. Table 5.14(B) B) Medium /Long Term Loans Sr. No. Name of Bank Pune Urban Co-op. Bank Ltd.Pune 2 Pune People s Co-op. Bank Ltd.Pune 3 Vishveshwar Sah.Bank Ltd. Pune Mahesh Sah. Bank Ltd Pune 5 Janata Sah. Bank Ltd. Pune Source: Annual Reports of Selected UCBs from Pune( from F.Y to ) Graph No.5.14( B) Showing Medium and Long term loans of UCBs in Pune district 133

22 The above table shows medium and long term loans distributed by the selected UCBs. The medium term loans are also given against securities, but there is a major portion which is unsecured. For Uraban Co-operative Banks RBI fixed the proportion of Priority Sector lending and weaker section lending.as per RBI guidelines 60% of total advances should be given to priority sector which is determined by RBI from time to time. Upto 2008 this percentage was 60 but after 2008 the percentage of priority sector lending is reduced to 40. Following tables showed the percentage of priority sector lending and advnces to weaker section to total loans and advances. 134

Table No. 5.15 Showing percentage of priority sector lending to total Loans& Advances (UCBs In Pune) Sr. No. Name of Bank 2006-07 2007-08 2008-09 2009-10 2010-11 1 Pune Urban Co-op. Bank 64.49 61.

23 Table No Showing percentage of priority sector lending to total Loans& Advances (UCBs In Pune) Sr. No. Name of Bank Pune Urban Co-op. Bank Ltd.Pune 2 Pune People s Co-op. Bank Ltd.Pune 3 Vishveshwar Sah.Bank Ltd. Pune Mahesh Sah. Bank Ltd Pune 5 Janata Sah. Bank Ltd. Pune Source:Annual Reports of Selected UCBs from Pune( from F.Y to ) Graph No.5.15 Showing Percentage of priority sector lending to total advances (UCBs Pune) 135

24 From the above table and graph it is observed that in the first two years i.e 2007 and 2008 Pune Urban Bank and Vishvwshwar Sahakari Bank followed the instructions of RBI about priority sector lending i.e. these two banks sanctioned 60% or more than 60% loans to priority sector.mahesh Sahakari Bank is almost near to the instructions of RBI i.e it sanctioned 50 % or more of their advances to priority sector. ButPune People s Co-operative Bank and Janata Sahakari bank both can not reach the limit of 60% priority sector lending. After 2008 this limit was reduced to 40% and therefore after 2008 all the five selected UCBs had sanctioned loans to priority sector above 40%. Table No.5.16 Showing Percentage of advances given to weaker section to total advances (UCBs in Pune) Sr. Name of Bank No Pune Urban Co-op. Bank Ltd.Pune 2 Pune People s Co-op. Bank Ltd.Pune 3 Vishveshwar Sah.Bank Ltd NA NA Pune 4 Mahesh Sah. Bank Ltd. Pune Janata Sah. Bank Ltd. Pune Source : Annual Reports of Selected UCBs from Pune( from F.Y to ) All the five UCBs selected sanctioned loans and advances to weaker section as per the guidelines of RBI. 136

Graph No.5.16 Showing percentage of weaker section lending to total advances (UCBs Pune) Table No 5.17 Showing No. of members of UCBs In Pune Dist. Membership Sr.

25 Graph No.5.16 Showing percentage of weaker section lending to total advances (UCBs Pune) Table No 5.17 Showing No. of members of UCBs In Pune Dist. Membership Sr. Name of Bank No. 1 Pune Urban Co-op. Bank Ltd.Pune 2 Pune People s Co-op. Bank Ltd.Pune 3 Vishveshwar Sah.Bank Ltd Pune 4 Mahesh Sah. Bank Ltd. Pune Janata Sah. Bank Ltd. Pune Source:Annual Reports of Selected UCBs from Pune( from F.Y to ) The above table shows that there is an increasing trend in Number of members of all the five selected urban co operative banks in Pune district.increase in No.of members of bank is an indicator of confidence of people on that bank. 137

Graph No. 5.17 Showing No.of members of UCBs In Pune District 5.

26 Graph No Showing No.of members of UCBs In Pune District 5.4 PROFILE OF SELECTED UCBs IN SOLAPUR DISTRICT There are total 39 UCBs in Solapur District at present,of which 6 banks have net NPA percentage 0,18 banks have net NPA less than 5%, 4 banks are within the range of 5% to 10% of net NPA and 8 banks have NPA more than 10%. The progress of Urban co-operative banks during last five years can be explained with the help of following table. Table No No.of banks, their capital deposits, Investments and loans In Solapur District (Amount in lakhs) Sr.No. Year No. of Owned Deposites Invests. Loans UCBs Capital Source : Solapur Zilla Nagari Bank Association Reports,

27 Graph No Owned Capital of UCBs In Solapur District Graph No deposits of UCBs In Solapur District 139

28 Graph No Investment of UCBs In Solapur District Graph No Loans of UCBs in Solapur District 140

29 The above table shows that the No. of Urban Co-operative Banks is constant within five years.there is increase in Capital, Deposits, Investments, and Loans year by year but still there are 8 banks having greater NPA more than 10%. The List of UCBs in Solapur District is provided below. List of Member Banks of Solapur Zilla Nagari Sahkari Banks Association Solapur 6 1) Solapur Janata Sahakari Bank Ltd., Solapur. 2) Vyapari Sahakari Bank Ltd. Solapur. 3) Brahmadevdada Mane Sahakari Bank Ltd. Solapur. 4) Janata Sahakari Bank Ltd. Kurduwadi 5) Shankarrao M.P. Sahakari Bank Ltd. Akluj. 6) Vikas Sahakari Bank Ltd. Solapur. 7) The Pandharpur Urban Bank Ltd. Pandharpur. 8) The Pandharpur Merchants Co-operative Ltd. 9) Karmala Urban Co-operative Bank Ltd. 10) Solapur Siddheshwar Sahakari Bank. Ltd. 11) The Mangalwedha Urban Co-operative Bank Ltd. 12) Solapur Nagari Audyogik Sahakari Bank Ltd. 13) The Laxmi Co-operative Bank Ltd. 14) The Social Urban Co-operative Bank Ltd. 15) Swami Samarth Sahakari Bank Ltd., Akkalkot. 16) Rukmini Nagari Sahakari Bank Ltd. Pandharpur. 17) Sangola Urban Co-operative Bank Ltd. 18) Samarth Sahakari Bank Ltd. Solapur. 19) Kavita Urban Co-operative Bank Ltd. 20) Arjun Urban Co-operative Bank Ltd. 21) Nishigandha Sahakari Bank Ltd. Pandharpur 22) Rajmata Urban Co-operative Bank. 23) Madheshwari Development Urban Co-operative Bank. 24) Indira Shramik Mahila Nagari Sahakari Bank. 25) Nilkanth Urban Co-operative Bank Ltd. 26) Mohol Urban Co-operative Bank Ltd. 141

30 27) Lokmangal Urban Co-operative Bank Ltd. 28) Shri Mahaveer Urban Co-operative Bank Ltd. 29) Vidyanand Urban Co-operative Bank Ltd. 30) Dilip Urban Co-operative Bank Ltd. 31) Bharat Urban Co-operative Bank Ltd. 32) Sadguru Gahininath Urban Co-operative Bank Ltd. 33) Mahesh Urban Co-operative Bank Ltd. 34) Sharad Nagari Sahakari Bank Ltd. 35) Ahilyadevi Urban Co-operative Bank Ltd. 36) Krishiseva Urban Co-operative Bank Ltd. 37) Shishakti Urban Co-operative Bank Ltd. 38) Kamala Urban Co-operative Bank Ltd. 39) Manorama Urban Co-operative Bank Ltd. Five ucbs selected from solapur district To study the causes of higher NPA, its effects and comparative situation, following five banks are selected as sample. 1. Solapur Janata Sahakari Bank Ltd. Solapur. 2. The Laxmi Co-operative Bank ltd. Solapur. 3. Lokmangal Co-operative Bank Ltd.Solapur. 4. Samarth Sahakari Bank ltd. Solapur. 5. Mohol Urban Co-operative Bank Ltd. 1. Solapur Janata Sahkari Bank Ltd. Solapur Solapur Janata Sahakari bank Ltd. Solapur was established on 28 th February 1966.Till 31 st March 2011 the bank has 32 Branches incuding Head Office.The bank is working all over Maharashtra with the network of its branches. The bank has received the status of Scheduled Bank in June At present the bank has an authorized capital of 50 croers with Issued & Subscribed Capital of 28 croers approx. 142

31 2. The Laxmi Co-operative Bank Ltd. Solapur. The Laxmi Co-operative Bank was established on 6 th June 1929.The bank has 14 branches with 2 extension counters.the bank has its branches in Solapur,Pune, Ahmednagar, Sangli,Satara and Osmanabad district. The bank has an authorized capital of Rs. 10 Croers with an Issued 7 Subscribed Capital of Rs Croers. 3. Lokmangal Co-operative Bank Ltd. Solapur. The Lokmangal Co-operative bank is established in 1997.The bank has total three branches including head officein Solapur district. The functional area of bank is Solapur,pune, Satara,Sangali, Ahmednagar, Osmanabad, Raigad, Thane, Ratnagiri, Kolhapur, Aurangabad Nashik, Latur and Beed. The bank has an authorized capital of Rs. 10 croers with an Issued & Subscribed Capital of4.57 croers till Samarth Sahakari Bank Ltd. Solapur. Samarth sahakari bank is established in The bank had total 6 branches including headoffice, in Solapur District.The bank is functioning in Pune, Thane, Mumbai. nashik, Aurangabad, Ahmednagar and Latur District. The bank has an authorized Capital of 15 croers Rs. With an issued and subscribed capital of 8.74 croers till Mohol Urban Co-operative Bank Ltd. Mohol. Mohol Urban Co-operative Bank Ltd.Mohol is established in The bank has limited working area within Solapur district with no branches. The bank has an authorized capital of Rs. 0.5 Croers, with an Issued and Subscribed capital of Rs croers till Profile of selected ucbs from solapur with the help of share capital, reserve funds, deposits loans and other variables The following tables and charts can help in showing the position of selected UCBs in Solapur District. 143

32 1. Share Capital The banks can raise funds by issue of shares,by receiving deposits from members and Non members and by raising loans and /or issuing debentures. The above table shows the subscribed share capital of all the five selected Urban Co-operative Banks in Solapur district. The five UCBs selected are from different capital base and having origin in different period. This also shows that the banks are selected from all categories i.e from very small share capital to large share capital base.all the five UCBs selected showed consistant growth in issued and subscribed capital during the five year period under study. Fllowing tables and graphs can explain the position of five UCBs selected from Solapur District. 144

Table No. 5.19 Table showing Share Capital of Five selected UCBs (Solapur Dist ) Sr No. Name of the bank 2006-07 2007-08 2008-09 2009-10 2010-11 1. Solapur Janata Sahakari bank 17.91 18.65 20.12 21.

33 Table No Table showing Share Capital of Five selected UCBs (Solapur Dist ) Sr No. Name of the bank Solapur Janata Sahakari bank ltd. Solapur. 2. The Laxmi Co-operative Bank ltd.solapur 3. Lokmangal Co-operative Bank Ltd. Solapur Samarth sahakari bank ltd.solapur 5. Mohol Urban Co-operative Bank.ltd. Source : Annual Reports of selected UCBs from Solapur (from F.Y to ) Graph No.5.19 Showing Share Capital of selected UCBs in Solapur District 145

34 2. Reserves Funds and other reserves The banks have to set aside 20 percent of its net profits as statutory reserve. Besides the statuory reserve banks maintain various other reserves like dividend equalization reserve,reserve for bad and doubtful loans etc. All these reserves are created out of current year s profits,therefore though these reserves can be used in emergency situation,it reduces the percentage of distributable profits. Table No Table showing Reserve funds and other reserves Sr No. Name of the bank Solapur Janata Sahakari bank ltd. Solapur The Laxmi Co-operative Bank ltd.solapur 3. Lokmangal Co-operative Bank Ltd Solapur 4. Samarth Sahakari bank ltd.solapur Mohol Urban Co-operative Bank.ltd. Source:Annual Reports of selected UCBs from Solapur (from F.Y to ) Graph No Showing Reserve Fund and other reserves of UCBs In Solapur District 146

35 The above table shows Reserve funds and other reserves of these five banks Which shows increasing trend during five years. 3. Deposits Accepting deposits is the primary function of bank. Large deposit mobilization is an indicator of confidence of people on the bank.urban Co-operative banks are providing higher rate of interest on deposits as compared to nationalized banks there fore they can attract more deposits but along with rate of interest they have to ensure safety of deposits of public. As DICGC provide a coverage of risk to the deposits upto Rs.1 lakh ( afterwards increased to 5 Lakhs) it creats a feeling of security among the people. As a result of all this we can see the increasing deposits of all UCBs selected from Solapur District. Solapur Janata Sahakari Bank having deposits of Rs. 508 croers in 2007 showed continuous increase in deposits during the five years under study with a large deposit base of Rs 836 croers in Laxmi Co-operative Bank has adeposits of 145croers in 2007 which has increased to 205 croers in2011. Lokmangal bank, Samarth sahakari Bank and Mohol urban Bank also showed consistant increase in deposits during five years from2007 to

36 Table No Table showing Deposits Sr No. Name of the bank Solapur Janata Sahakari bank ltd. Solapur. 2. The Laxmi Co-operative Bank ltd.solapur 3. Lokmangal Co-operative Bank Ltd. Solapur Samarth Sahakari bank ltd.solapur 5. Mohol Urban Co-operative Bank.ltd. Source : Annual Reports of selected UCBs from Solapur (from F.Y to ) Graph No Showing Deposits of Selected UCBs in Solapur District The above table shows that there is an increasing trend in deposits of these five selected banks. All the banks have extended their deposit base to the large extent. 148

37 4. Investments Banks Investments are classified according to the RBI guidelines applicable to Co-operative banks. Among the five UCBs selected Solapur janata sahakari Bank is a scheduled co-operative bank therefore the guidelines applicable to scheduled cooperative bank are applicable to this bank.these are as follows. Investments of banks are classified under following categories; a) Held To Maturity (HTM) b) Available for sale(afs) c) Held for trading (HFT) Investments under HTM category have been valued at acquisition cost. Premium if any on such investments is amortised over the residual life of that particular investment. Investments under AFS and HFT category have been valued at market price. Except Solapur Janata sahakari bank other banks are non scheduled banks. they also invest in Government Securities as per the guidelines of RBI. From the following table it is observed that Solapur Janata Sahakari bank showed increase of 15 to 25 croers every year in investments during the period under study. Laxmi co-operative bank during first three years can not increase the investments, but during forth and fifth year under study i.e and 2011 it showed greater growth in investments. Lokmangal bank, Samarth sahakari bank and Mohol Urban bank showed little increase in investments during the years 2007,2008 and 2009 but in the years 2010 and 2011 their investments jumped up. 149

Table No. 5.22 Table showing Investments Sr No. Name of the bank 2006-07 2007-08 2008-09 2009-10 2010-11 1. Solapur Janata Sahakari bank 155.68 174.63 200.81 228.22 240.79 ltd. Solapur. 2. The Laxmi Co-operative Bank 58.

38 Table No Table showing Investments Sr No. Name of the bank Solapur Janata Sahakari bank ltd. Solapur. 2. The Laxmi Co-operative Bank ltd.solapur 3. Lokmangal Co-operative Bank Ltd. Solapur Samarth Sahakari bank ltd.solapur 5. Mohol Urban Co-operative Bank.ltd. Source : Annual Reports of selected UCBs from Solapur (from F.Y to ) Graph No Showing Investments of UCBs in Solapur District All the five banks have made sufficient investments as per RBI rules 150

39 4. Loans and Advances The loans and advances given by banks can be classified under various categories like period, purpose,security etc. On the basis of period the loans and advances are classified under three categories as follows. a) Short term loans: For a period of 1 year. b) Medium Term Loans: For a period of 2 years to 5 years c) Long term loans: For aperiod more than 5 years. On the Basis of security a) Fully Secured loans. b) Partly secured loans c) Unsecured loans On the basis of purpose a) Home loan b) Agricultural loan c) Personal Loan d) Educational loan e) Small Scale Industries f) Cottage industries etc for the purpose of NPA period criteria is more important therefore loans classification on the basis of period is taken.some UCBs shown their loans only in two categories as short term and Medium/ long term. Following table showed the Loans and advances (Short Term) of selected five UCBs From Solapur Dist. 151

Table No. 5.23 (A) Table showing Short Term Loans and Advances (UCBs in Solapur) Sr No. Name of the bank 2006-07 2007-08 2008-09 2009-10 2010-11 1. Solapur Janata Sahakari bank 185.33 199.13 220.

40 Table No (A) Table showing Short Term Loans and Advances (UCBs in Solapur) Sr No. Name of the bank Solapur Janata Sahakari bank ltd. Solapur. 2. The Laxmi Co-operative Bank ltd.solapur 3. Lokmangal Co-operative Bank Ltd. Solapur Samarth Sahakari bank ltd.solapur 5. Mohol Urban Co-operative Bank.ltd. Source : Annual Reports of selected UCBs from Solapur (from F.Y to ) Graph No.5.23 A Showing Short Term Loans and Advances of UCBs in Solapur District 152

41 The above table showed the short term loans and advances disbursed by five banks during five years period.the loan disbursement of banks is showing increasing trend every year.all the banks showed increase in short term loans according to their capital base and business.solapur janata Sahakari Bank as having capital of more than 100 croers,the loans disbursed are also large i.e. starting from 185 croers in the year 2007 and with 15 to 20 croers increase every year it showed the short term loans of Rs.265 croers in the last year of study Though the capitals of Laxmi Co-operative Bank Ltd.Solapur and Samarth sahakari Bank Ltd. Solapur is in a medium structure the Laxmi Co-operative Bank showed increase and decrease in short term loans,only in the year 2010 there is a tremendous increase in short term loans. In case of Samarth Sahakari Bank there is up and down situation in short term loansduring the period of five years under study. Lokmangal Co-operative Bank and Mohol Urban co-operative bank though having a very small capital base there business is also comparatively small but these banks showed consistent increase in short term loans. Short term loans are sanctioned by banks generally against the Government securities.,but all loans are not secured and therefore there is ahigher risk of NPA among short term loans. 153

Sr No. Table No. 5.23 (B) Medium/ Long Term Loans and advances in UCBs in Solapur dist. Name of the bank 2006-2007- 2008-2009- 07 08 09 10 2010-11 1. Solapur Janata Sahakari bank 392.36 413.07 479.

42 Sr No. Table No (B) Medium/ Long Term Loans and advances in UCBs in Solapur dist. Name of the bank Solapur Janata Sahakari bank ltd. Solapur. 2. The Laxmi Co-operative Bank ltd.solapur 3. Lokmangal Co-operative Bank Ltd. Solapur Samarth Sahakari bank ltd.solapur 5. Mohol Urban Co-operative Bank.ltd. Source : Annual Reports of selected UCBs from Solapur (from F.Y to ) Graph. No.5.23 (B) Showing medium and Long Term loans of banks in Solapur District 154

43 Sr No. Table No Showing Percentage of priority sector lending to total advances. (UCBs in Solapur Dist.) Name of the bank Solapur Janata Sahakari bank ltd. Solapur. 2. The Laxmi Co-operative Bank NA ltd.solapur 3. Lokmangal Co-operative Bank Ltd. Solapur NA NA NA NA NA 4. Samarth Sahakari bank NA NA ltd.solapur 5. Mohol Urban Co-operative Bank.ltd. Source : Annual Reports of selected UCBs from Solapur (from F.Y to ) Graph No Showing Percentage of Priority sector lending to total Advances 155

44 Sr No. Table No.5.25 Showing Percentage of weaker section lending to total advances (UCBs in Solapur) Name of the bank Solapur Janata Sahakari bank ltd. Solapur. 2. The Laxmi Co-operative Bank NA ltd.solapur 3. Lokmangal Co-operative Bank Ltd. Solapur NA NA NA NA NA 4. Samarth Sahakari bank NA NA ltd.solapur 5. Mohol Urban Co-operative Bank.ltd. Source : Annual Reports of selected UCBs from Solapur (from F.Y to ) Graph No:5.25 Showing percentage of Weaker section lending to total loans and advances 156

45 Table No Table showing No. of members of UCBs in Solapur Sr No. Name of the bank Solapur Janata Sahakari bank ltd. Solapur The Laxmi Co-operative Bank ltd.solapur 3. Lokmangal Co-operative Bank Ltd. Solapur 4. Samarth Sahakari bank N.A N.A ltd.solapur 5. Mohol Urban Co-operative Bank.ltd Source : Annual Reports of selected UCBs from Solapur (from F.Y to ) Graph No Showing No. of members of UCBs in Solapur District 157

46 REFERENCES 1. Report of Trend and Progress of Banking in India ( ) Pp Report of Trend and Progress of Banking in India ( ) Pp Banking Ashay Abhipraya (August 2012). Published by Pune Nagari banks Association Ltd. Pune. 4. Banking Ashay Abhipraya (December 2011) Published by Pune Nagari Banks Association Ltd. Pune. 5. Pune Zilla Nagari Bank Association List Published (2008). 6. Solapur Zilla Nagari Bank Association List Published (2008). 158

CHAPTER 5 PROBLEMS AND PROSPECTS OF CO-OPERATIVE BANKS COMPUTERISATION IN PUNE

CHAPTER 5 PROBLEMS AND PROSPECTS OF CO-OPERATIVE BANKS COMPUTERISATION IN PUNE 5.1 Introduction Nowadays, Banks are increasingly adopting IT based solutions, for providing better services to their customers