A STUDY OF LOANS AND ADVANCES AND THEIR MANAGEMENT BY THE URBAN CO-OPERATIVE BANKS (UCBs) IN THE PUNE DISTRICT.

Transcription

1 A STUDY OF LOANS AND ADVANCES AND THEIR MANAGEMENT BY THE URBAN CO-OPERATIVE BANKS (UCBs) IN THE PUNE DISTRICT. A REPORT SUBMITTED TO UNIVERSITY GRANTS COMMISSION AS A MINOR RESEARCH PROJECT IN THE SUBJECT OF COMMERCE BY DR. NIMBALKAR SUHAS ABASAHEB BHARATRATNA DR. BABASAHEB AMBEDKAR COLLEGE AUNDH, PUNE MAY-2015

2 DECLARATION BY THE RESEARCHER I hereby declare that this Minor Research Project titled A study of loans and advances and their management by the urban co-operative banks (UCBs) in the Pune district submitted is based on actual work carried out by me. Any reference to works done by any other person or institution or any material obtained from other sources have been duly cited and referenced. It is further to state that, this work is not submitted anywhere else for any examination. Dr.Nimbalkar Suhas Abasaheb

3 ACKNOWLEDGEMENT It is my duty to thank them all those who have helped me in completing my Minor Research Project work. I express my sincere gratitude to Prin. Dr. M. V. Bobade and all the colleagues of my college for their valuable guidance, continuous support throughout this minor research project. I would like to mention a special thank to the Managers of all the selected banks who had provided essential information regarding this project work. It would have been impracticable for me to undertake this work without the inspiration of my wife Sneha and son Yash. Last but not the least my gratitude are also to all those who directly and indirectly supported me for completion of work. Dr.Nimbalkar Suhas Abasaheb Date: / / /20

4 CONTENTS Chapter No Particulars Page No List of Tables I List of Graphs II List of Maps III Abbreviations III Chapter-I Introduction Introduction Origin of the research problem Need of the Study Significance of the study Reason for selection of the topic Scope and limitations Objectives of the study Hypothesis Research Methodology Sources of the study Conclusion 6 Chapter-II Pune City and Review of literature Introduction Study of Pune District Study of Pune City 9

5 2.4 The Geographical area of Pune 10 city 2.5 Administrative information of 10 Pune District and City 2.6 Climatic Conditions Population Literacy rate Educational facilities Medical Facility 12 Chapter-III 2.11 Review of literature Conclusion 15 Management of loans and advances of UCBs 3.1 Introduction Concept of Management Process of Management Stages of Management The analysis of the selected nine urban co-operative banks in Pune district The classification of progress of Pimpri Chinchwad Sahakari Bank Ltd, Pimpri 3.7 The classification of progress of Pavana Sahakari Bank Ltd, Pune 3.8 The classification of progress of Indrayani Co-operative Bank Ltd, Pune

6 3.9 The classification of progress of Prerana co-operative Bank Ltd, Pune 3.10 The classification of progressof Rajshree Shahu Sahakari Bank 3.11 The classification Ltd, Pune of progress of Bhagini Nivedita Sahakari Bank 3.12 The classification Ltd, Pune of progress of Janseva Sahakari Bank Ltd, Pune 3.13 The classification of progress of Dharmvir Sambhaji Urban Cooperative Bank Ltd, Pune 3.14 The classification of progress of The Seva Vikas Co-operative Banks Ltd, Pune 3.15 Conclusion 29 Chapter-IV Conclusions and Suggestions Introduction Conclusions Suggestions Bibliography Photo Gallery 39-41

7 LIST OF TABLE Table No. Particulars Page No. 3.1 The analysis of the selected nine urban co-operative banks in Pune district 3.2 The classification of progress of Pimpri Chinchwad Sahakari Bank Ltd, Pimpri 3.3 The classification of progress of Pavana Sahakari Bank Ltd, Pune The classification of progress of Indrayani Co-operative Bank Ltd, Pune 3.5 The classification of progress of Prerana co-operative Bank Ltd, Pune 3.6 The classification of progressof Rajshree Shahu Sahakari Bank Ltd, Pune 3.7 The classification of progress of Bhagini Nivedita Sahakari Bank Ltd, Pune 3.8 The classification of progress of Janseva Sahakari Bank Ltd, Pune 3.9 The classification of progress of Dharmvir Sambhaji Urban Co-operative Bank Ltd, 3.10 The classification of progress of The Seva Vikas Co-operative Banks Ltd, Pune I

8 LIST OF GRAPHS Graph No. Particulars Page No. 3.1 The analysis of the selected nine urban co-operative banks in Pune district The classification of progress of Pimpri Chinchwad Sahakari Bank Ltd, Pimpri 3.3 The classification of progress of Pavana Sahakari Bank Ltd, Pune 3.4 The classification of progress of Indrayani Co-operative Bank Ltd, Pune 3.5 The classification of progress of Prerana co-operative Bank Ltd, Pune 3.6 The classification of progressof Rajshree Shahu Sahakari Bank Ltd, Pune 3.7 The classification of progress of Janseva Sahakari Bank Ltd, Pune 3.8 The classification of progress of The Seva Vikas Co-operative Banks Ltd, Pune II

9 LIST OF MAP Figure No. Particulars Page No. Map No.2.1 Pune District 8 Map No.2.2 Pune City 9 ABBREVIATIONS Per. i.e. Govt. NA Ltd. Percentage That is Government Not Available Limited III

10

11 CHAPTER-I INTRODUCTION 1

12 CHAPTER-I INTRODUCTION 1.1 Introduction Co-operative banks are a group of financial institutions organized under the provisions of the cooperative society s act of the states. These banks are essentially co-operative credit societies organized by members to meet their short term and medium term financial requirements. A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically enterprise. Mutual co-operation leads to co-operatives. Co-operatives banks are constituted on co-operative principles of voluntary association, self-help and mutual aid, one share one vote and nondiscrimination and equality of members. Co operative Banks in India are registered under the Co-operative Societies Act Theco-operative bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary cooperative banks located in urban and semi-urban areas. These banks were traditionally centered on communities, localities work place groups. They essentially lent to small borrowers and businesses. Today, their scope of operations has widened considerably. The co-operative banking along with other types of cooperatives, later on strengthens the cooperative spirit. Cooperative banking is one of the most important economic systems, run on self-governing lines to attain economic escalation with social and economic egalitarianism both agro-rural and industrial-urban sectors and people in them. In fact, urban people with small means are unable to offer any tangible security other than their own personal security. They so not satisfy the standards followed by the commercial banks, thus they do not get adequate credit. Thus urban people have obtained credit from moneylenders. The circumstances needed an agency, 2

13 which will provide cheaper and adequate credit to extricate the urban people with a limited means from the clutches of usurers. From the inception of the palling era in the country, the thrust of the government policy has been the development of agricultural and allied activities as, initially the rural areas deserved urgent attention than urban areas. Nevertheless, ameliorative programmes concerning the urban lower middle and poor classes cloud not receive the attention up to the First Five Year Plan. 1.2 Origin of the research problem The need for the provision of credit facilities to town-dwellers was as much urgent as it was in villages in order to combat usury. Joint stock banks were not interested in developing the business of small loans, because the cost of advancing and recovering them was high. Further, as joint stock banks were not likely to have under ordinary circumstances full and intimate knowledge of the standing and resources of persons of moderate means, they would not advance loans on personal security. Ultimately, number of persons with small means, residing in urban and semi- urban area like small traders, artisans, townsmen, factory workers, self-employed persons, petty shopkeepers, retailers, small industrialists, professional, firewalls, cottage workers etc. require credit for their productive and consumption needs. This has given a rise to the movement of developing urban cooperative banking for the use of urban dwellers. Although the urban co-operative banks operate under the purview of Banking Regulation Act, they are philosophically quite different from the commercial banks. They are smaller, their area of operation is limited and they have limited but particular and committed clientele. The urban co-operative banks have less of Walk-in customers. The deposit base of them generally does include corporate and large institutional funds. The urban cooperative banks being the cooperative institutions, they are bound to follow the cooperative principles and values (i.e. open and voluntary membership, democratic management, equitable distribution of surplus, limited interest on capital, cooperative education, cooperation among cooperative and concern for the community etc.) considering the role, importance and responsibility of urban cooperative banks, they must be viable, productive and operationally efficient enough 3

14 in performing their socio-economic responsibility in an effective manner. Looking at the significance of Urban Cooperative Banks, it has been decided to focus on the study of loans and advances and their management by the Urban Cooperative Banks (UCBs) in the Pune City 1.3 Need of thestudy The urban co-operative credit movements started in India with the chief object of catering to the banking and credit requirements of the urban middle class, e.g., the small traders or businessmen, the artisans or factory workers, the salaried people with a limited fixed income in urban or semi-urban areas. Besides protecting the middle classes and men of modest means from the clutches of the moneylenders, the movement is also expected to inculcate the habit of thrifts and savings amongst them. The movement provides the frugal section of the community an opportunity of investing then savings and people tide over the period of stress and strain. 1.4 Significance of thestudy Socio-economic development of the people is impacted by the industrial development of the area. Availability of financial and banking services are essential for boosting industrial development. Such financial and banking services are not available in sufficient number in rural, urban and semi-urban area hence remain undeveloped. In 1931 the central banking enquiry committee recommended that limited liability of co-operative societies generally known as Urban banks should be established wherever necessary for the benefit of middle class people. How for Urban Co-operative Banks in Pune district helped to the people is essential to study. In this minor research project the performance of Urban Cooperative banks working in the district has been studied 1.5 Reason for selection of thetopic Theresearcherbeing the member of a UCBknows theproblemsof Urban Cooperative Banks. The term Urban Cooperative Banks (UCBs) till 1996 were allowed to lend money only for agricultural purpose but now their scope 4

15 has widened considerably to small industries, housing finance etc. In the era of globalization there is a rapid change in the lives of the people residing in the city area. In order to fulfill the different financial needs, large numbers of people rely on the Urban Co-operative Banks. This has resulted in providing loans and advances to the large number of people and it required the management of the loans and advances, hence the researcher has selected this topic with the view of getting information about nature of loans and advances provided by UCBs in Pune city. 1.6 Scope andlimitation The study deals with the work done by Urban Co-operative Banks in their areas of operation i.e. Pune city. The detailed study covers only from the year to The functioning of Urban Co-operative Banks thus becomes the universe of the present study. The complete study on the functioning of UCBs and sample respondents (Bank Managers) would certainly disclose and highlight the factors affecting the performances of the UCBs. 1.7 Objectives of thestudy 1) Tostudy the progress of Co-operative banks of Pune city. 2) Toanalyze the growth and composition of loans and advances of Urban Co-operative Banks. 3) To make suggestions about the problems faced by Urban Co-operative Banks of Pune city. 1.8 Hypothesis 1) The urban co-operative banks in Pune city have made remarkable progress during the study period. 2) The organization and management of Urban Co-operative Banks is active. 3) There are some difficulties faced by banks officials in granting loans and advances to its customers in Pune city. 5

16 1.9 ResearchMethodology The research topic is based upon exploratory research. Secondary data such as annual reports with schedule and loans and advances of selected nine Urban Cooperative Banks have been collected for the period to Some of the data were collected from National Institute of Banking Management (NIBM) - Pune, RBI statistical department publication and Indian banks association publications, Published journals, news papers and Books. It is important to make a plan in order to study and to understand the problems.theaimofthestudydoesnotgetfulfilled,iftheproperplanisnotdone.hencet hetopic A study of loans and advances and their management by the urban cooperative banks (UCBs) in the Pune district wascarriedonaftermakingaproperandauthenticplan Sources of thestudy Secondarysources: The study has been undertaken through reading of various annual reports, books,magazines,researcharticlesandstatisticsgiveninthe various sources Conclusion The present research is based on the management of the loans and advances of the nine urban co-operative banks of Pune city. In the present research topic the origin of the research problem, the need of the study, significance of the study, the reasons behind selecting the topic, scope of the topic, the various objectives of the research and hypothesis, research methodology and source of the study have been analyzed by the researcher. 6

17 Chapter-II PuneCityandReview ofliterature 7

18 Chapter-II Pune City and Review ofliterature 2.1 Introduction 2.2 Study of PuneDistrict Puneis one of thedevelopeddistrictsofmaharashtra,adevelopedstateofindia.punedistrictcomesi ntothewesternmaharashtradivisionandhasgreathistory.puneisknownasthecultura lcapital of Maharashtra. It includes 14 blocks (Taluka) Pune, Haweli, Indapur,Baramati,Daund,Bhor,Purandar,Velhe,Khed,Shirur,Junnar,Ambegaon, Maval and Map No2.1 PuneDistrict 8

19 Mulashi.Punecityislocatedatthesouthernpartofthedistrict.Thegeographicalare aandextentofpunedistricthasnaturallybeenwellstructured.thepunedistrictislo cated to north latitude and to east longitude. It borderswithahamadhnagar from north and east, it has Satara and Raigad districts from south andwestrespectively. It is bound with Solapur and Thane districts. It covers the 5% of total areaofmaharashtra. 2.3 Study of PuneCity PuneistheeighthlargestmetropolisinIndiaandsecondlargestinthestateofMaharas htra. Map No2.2 PuneCity 9

20 Itissituated560meters(1837feet)abovesealevelontheDeccanplateauattheri ghtblankofthemuthariver.punecityistheadministrativeheadquarterofpunedistrict andwasoncethecentreofpowerofthemarathaempire.puneisknowntohaveexisteda satownsince1847.chhatrapathishivajirajebhosalemadeitasthecapitalofmarath aempire.laterpunewasruledbypeshwas,whoweretheprimeministersofmarathae mpire. 2.4The Geographical area of Punecity The total area of Pune city is sq. Km. Out of total area,38.6 % isresidentialarea,1.8%iscommercialarea,9.5%isdefensearea,11%isindustrialarea and9.7%isrecreationalarea. 2.5 Administrative information of Pune District andcity Thereare14Talukasand13PanchayatSamitisinPunedistrict.IthasTwomuni cipalcorporations. Pune Municipal Corporation (PMC) and Pimpri ChinchwadMunicipalCorporation(PCMC).Therearearound1,866villagesinthePu nedistrict. In the modern age, the city has received unique importance because of beingfamousinthefieldofmanufacturing,automobileindustries,governmentandpr ivatesectorresearchinstitutes, information technology, and educational, management, training institutes.thecity of Pune is referred as the Oxford of East proudly. Many research instituteslikeuniversity of Pune, National Chemical Laboratory, and C-DAC do their research invarioussubjects.thelargesttelescopeofasiahasbeensetupnearpune- Nashikhighwayinkhodad.The students from India as well as the various countries come here to have thequalityeducation. 2.6 ClimaticConditions Thetemperatureofcityrangesbetween12c to37c.theaveragerainfallrecordedis600to700mm.maximumrainfallisabsorbedfr 10

21 omjunetoseptembereveryyear. Owingtoitsgeographicallocation,theclimateofthecityiscoolandpleasantthrougho utthe year. ThenaturalbeautyofthecityhasgivenitthetitleofDeccanQueen. 2.7 Population Apopulationisasummationofalltheorganismsofthesamegrouporspecies,w hichlive in the same geographical area, and have the capability of interbreedingwisdom,imaginationdecisionmakingandambitiousaretheimportant. 2.8 Literacyrate PuneisknownastheeducationalcityofMaharashtra.Thequalityeducationpro videdherebroughtaboutasignificationincreaseinliteracyrateofpune.accordingtot he2011census,thetotalliteracyrateofpunecityis 86.15%outofwhichfemaleliteraryrateis and male literacy rate was respectively. Pune is 7 th largest literary rate districts of Maharashtra. 2.9 Educationalfacilities Punehasmorethanhundrededucationinstitutesandnineuniversities.Student sfromall over the world studying at the colleges of the University of Pune. Most colleges inpuneare affiliated to the University of Pune established in Seven others Universitieshavealsobeenestablishedinthecity. Many research institutions of central Government as well as State Governmentarelocated in city. There are well-known coaching classes for UPSC and MPSCExaminationsbecauseofthiscivilserviceaspiringcandidatesalsopreferPune City. 11

22 2.10 MedicalFacility Puneisthefastestgrowingmetropolitancity inindia.thepopulationofthecityisincreasing day by day. In the city life there is always a question of health relatedproblems.the Pune city is surrounded with the number of Hospitals and Medical Institutions suchassasoonhospital,punedistricthospital.thecityhasmanyprivatehospitalsalso,s uchasrubyhall,birlahospital,dinanathmangeshkarhospital,andpoonahospitaletc. Therearesomemedicalinstitutionswherethemedicalstudentscandotheirpracticeafterc omplacenceof theirstudy Review ofliterature A number of studies related to performance of co-operative banking sector in India have been conducted. Here, an attempt is being made to provide an overview of various aspects and issues of this study through the review of existing literature. Some of the main studies selected for review have been discussed below. Kalyankar (1983) In his study titled, Willful Default in Loans of Co-operatives examined the trends in deposits, share capital, working capital, loans outstanding, advances, over dues and recoveries at the district level financing institutes. Socio-economic factors responsible in projecting and promoting future development in the operations and approaches of the co-operative credit organizations were also considered to examine the specific progress made by Central Co-operative Bank of Parbhani District. The study revealed that the cropping intensity, irrigation facility and working capital of the societies were the major factors for explaining over dues at primary agricultural credit societies level. The socio-economic factors were notresponsible for increasing over dues at the borrowers level, but over dues were mainly mounted due to the non-economic factors in case of willful defaulters. 12

23 Devadas (1987) In his book titled, Co-operative Banking and Economic Development studied the role of Assam Co-operative Apex Bank Ltd. in economy of the State. He found that apart from working as a commercial bank it had to discharge three other functions, i.e., to finance primary credit societies, to act as banking centre for primary societies, and to undertake supervision of primary societies. He found that bank had not been able to achieve much in these three fields due to lack of adequate support from government of the state. Prasad (2005) In his research paper titled, Co-operative Banking in a Competitive Business Environment stated that the technology had made tremendous impact on entire banking sector, which had thrown new challenges, due to which co-operative banks were constantly exposed to competition and risk management. Therefore, they needed a combination of new technologies and better processes of credit and risk appraisal, treasury management, product diversification, internal control and external regulation along with infusion of professionalism. In the present business environment, the cooperative banks should be backed by democratization, decentralization so as to make them competitive. He felt an urgent need for transformation in the mindset, identity, business operations, governance and systems & procedures, which will definitely boost the morale of co-operative banks to face environmental challenges. Singh and Singh (2006) In their study titled, Funds Management in Central Cooperative Banks Analysis of Financial Margin attempted to estimate the impact of identified variables on the financial margin of the central co-operative banks in Punjab with the help of correlation and multiple step-wise regression approach. The ratio of own funds to working funds and the ratio of recovery to demand were observed to be having positive significant influence on financial margin, whereas over dues to total loans were found to be negatively associated with the concerned parameter. A high percentage of own funds and timely 13

24 recovery of previous loansoutstanding, as a source of funding new loans by the bank, increased the financial margin in these banks. Dhanappa (2009) In his study titled, Performance Evaluation of UCBs: A Case Study of Kallappanna Awade Ichalkaranji Janata Sahakari Bank Ltd. Ichalkaranji made an attempt to examine the working and financial performance of UCBs. The objective of the study was to examine and analyze the trend, progress and problems of this bank and to offer some important suggestions for improving the competency and efficiency of the bank. The related data had been collected for the period from to He used various statistical tools such as ratios, percentages, averages, and chi-square test to analyze the data, to know the performance of the UCBs in respect of share capital, deposits, reserve funds, loans and advances, investment, profit, and NPAs. He observed that the bank had maintained NPAs under control at the best stipulated level of RBI norms. There was immense instability in net profit.the bank should focus on noninterest income sources (commission based services) to increase the profit level and reduce the NPAs. CD ratio of the bank was declining continuously which was not a good signal. The economic health of the bank was sound and the Bank was able to compete with other banks. He further suggested that loans should be provided (at least to regular borrowers) on competitive rates of interest. Heiko and Martin (2007) IMF conducted a study on co-operative banks and their financial stability. The study was based on individual bank data drawn from the Bank Scope Database for 29 major advanced economies and emerging markets that were members of the Organization for Economic Co-operation and Development (OCED). They found that co-operative banks in advanced economies and emerging markets had higher scores than commercial banks, suggesting that co-operative banks were more stable. These findings, perhaps somewhat surprising at first, were due to much 40 lower volatility of co-operative banks returns, which offsets their relatively lower profitability and cap. 14

25 2.12 Conclusion Ithasbeenobservedthroughthereviewofliteraturethattheresearchershavestudi edthenature of loans and advances of Urban Cooperative Banks of Pune cityfromdifferent point of view. It is concluded through the above review of literature that the urban cooperative banks have unique role to play in 21 st century 15

26 Chapter III Management of loans & Advances in UCBs 16

27 Chapter III Management of loans & Advances in UCBs 3.1 Introduction This chapter contains ten Urban Cooperative Banks from Pune city. The functions of these UCBs have deeply been studied in this chapter. A detailed study of various types of loans and advances provided by UCBs in Pune district has been carried on. The formal interviews of some selected banks managers have also been taken to present the statistics based on the annual reports of Urban Cooperative Banks of Pune district. 3.2 Concepts of Management As there is no universally accepted definition for management, it is difficult to define it. A simple traditional definition, defines it as the art of getting things done by others. This definition brings in two elements namely accomplishment of objective towards the goal. The weakness of this definition is that firstly it uses the word art whereas management is not merely an art but it is both art and science. Secondly, the definition does not state the various functions of a manager clearly. There are various definitions by eminent experts in the field of management. A) Fredmund Malik defines it as the transformation of resources into utility B) Peter Drunker ( ) He has the basic task of management as twofold: marketing and Innovation nevertheless, innovation is also linked to marketing (product innovation is a central strategic marketing issue). Andreas Kaplan specifically defines, European Management as a cross cultural, social management approach based on interdisciplinary principle 3.3 Process of Management Process management is the ensemble of activities of planning and monitoring the performance of a process. The term usually refers to the management of business processes and manufacturing processes. Process of management is the application of knowledge; skills and toolsvisualize measure, control and report and improve 17

28 processes with the goal to meet customer requirements profitably. 3.4 Stages of Management The management process is more than just a set of rules to follow. It is a philosophical approach to business. The management process is best implemented when everyone within the business understands the strategy. The five stages of management are as follows 1) Goal setting The purpose of goal setting is to clarify the vision of the business. The stage consists of identifying the various key facets. 2) Analysis Analysis is key stage because the information gained in this stage will shape the next two stages. In this stage gather as much information and data relevant to accomplishing the vision. The focus of the analysis should be on understanding the needs of the business as sustainable entity, its direction and identifying initiatives that will help the business grow. 3) Strategy Formulation The first step in forming a strategy is to review the information gleaned from completing the analysis. Determine what resources the business currently has that can help reach the defined goals and objectives. 4) Strategy Implementation Successful strategy implementation is critical to the success of the business venture. This is the action stage of the strategy management process. 5) Evaluation and Control Strategy evolution and control actions include performance 18

29 measurements, consistent review of internal and external issues and making corrective actions when necessary 3.5 The analysis of the selected nine co-operative banks from Pune City The researcher has selected nine urbancooperative banks from Pune district for the present research. The researcher has studied the loans and advances provided by these nine co-operative banks from 2010 to Table No- 3.1 Comparative position of growth of loans and advances duringthe (Rs. in Lakhs) year( to ) Sr. No Particulars Year Increase (+) Pimpri-Chinchwad Sahakari Bank Ltd, Pimpri. 2 Pavana Sahakari Bank Ltd, Pune Indrayani Co-operative Bank Ltd, Pune 4 Prerana Co-operative Bank Ltd, Pune 5 Rajshree Shahu Sahakari Bank Ltd, Pune 6 Bhagini Nivedita Sahakari Bank Ltd, Pune 7 Janseva Sahakari Bank Ltd, Pune Dharmvir Sambhaji Urban Cooperative Bank Ltd, Pimpri- Chinchwad 9 The Seva Vikas Co-operative Bank Ltd, Pune Source- Annual Reports (2011 to 2013) All Selected Banks 19

30 Graph No % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Increase (+) Year Year Year The table& Graph no 3.1 explains that there is increase in the loans and advances provided by Pimpri-Chinchwad Sahakari Bank with lakhs. The Pavana Sahakari Bank has lakhs, Indrayani Co-operative Bank Ltd, Pune has lakhs, Prerana Co-operative Bank Ltd, Pune has lakhs, Rajshree Shahu Sahakari Bank Ltd, Pune has lakhs, Bhagini Nivedita Sahakari Bank Ltd, Pune has lakhs, Janseva Sahakari Bank Ltd, Pune has lakhs, Dharmvir Sambhaji Urban Co-operative Bank Ltd, Pimpri-Chinchwad has lakhs, and The Seva Vikas Co-operative Bank Ltd, Pune has lakhs increase in their loans and advances. It is concluded that Janseva Sahakari Bank has highest increase and Indrayani Co-operative Bank Ltd, Pune has lowest increase in loans and advances. 20

31 3.6 The classification of progress of Pimpri-Chinchwad Sahakari Bank Ltd, Pimpri. (Rs. in Lakhs) Table& Graph No 3.2 Particular Increase (+) No.of Branches No. of Members Share Capital Reserve & Other fund Deposit Working capital Profit Audit Class A A A A Increase (+) No.of Branches No. of Members Share Capital Reserve & Other fund Deposit Working capital Profit It has been observed through the above table that there is increase in the number of members of banks from 2010 to 2013 i.e The share capital increased 21

32 till lakhs, the reserve and other fund raised till lakhs. There is remarkable increase in the bank s deposit of lakhs and working capital went up to lakhs. The profit of the bank was lakhs. A class has been allotted to the bank during auditing. 3.7 The classification of progress of Pavana Sahakari Bank Ltd, Pune Table & Graph No 3.3(Rs. in Lakhs) Particular Increase (+) No.of Branches No. of Members Share Capital Reserve & Other fund Deposit Working capital Profit Audit Class A A A A Increase (+) No. of Branches No. of Members Share Capital Reserve & Other fund Deposit Working capital Profit 22

33 The table 3.3 shows that Pavana Sahakari Bank Ltd, Pune has increase in the number of members i.e The share capital went up to 551 lakhs and reserve and other fund were 467 lakhs. The deposit rose up to lakhs and working capital was lakhs. The profit that the bank received was 326 lakhs with maintaining the class A of the audit. 3.8 The classification of progress of Indrayani Cooperative Bank Ltd, Pune Table& Graph No 3.4(Rs. in Lakhs) Particular Increase (+) No.of Branches No. of Members Share Capital Reserve & Other fund Deposit Working capital NA NA NA NA Profit Audit Class A A A A Increase (+) No.of Branches No. of Members Share Capital Reserve & Other fund Deposit Working capital Profit 23

34 Tableno 3.4 explains the progress of Indrayani Cooperative Bank Ltd, Pune. There is little increase in the members of the banks during the years. The share capital increased up to 26 lakhs and reserve and other funds went up to lakhs. The deposit that the bank received was lakhs. The profit of the bank was with audit class A. 3.9 The classification of progress of Prerana Co-operative Bank Ltd, Pune Table& Graph No 3.5(Rs. in Lakhs) Particular Increase (+) No. of Branches No. of Members Share Capital Reserve & Other fund Deposit Working capital Profit Audit Class A A A A Increase (+) No.of Branches No. of Members Share Capital Reserve & Other fund Deposit Working capital Profit. There is increase in the number of members of the bank i.e There share capital and reserve funds raised up to and lakhs respectively. The 24

35 deposit that the banks received was lakhs. The working capital of the bank went up to lakhs with the profit of lakhs. The bank maintained its audit class of A The classification of progress of Rajshree Shahu Sahakari Bank Ltd, Pune Table & Graph No 3.6(Rs. in Lakhs) Particular Increase (+) No. of Branches No. of Members Share Capital Reserve & Other fund Deposit Working capital Profit Audit Class A A A A Increase (+) No. of Branches No. of Members Share Capital Reserve & Other fund Deposit Working capital Profit Table No 3.5 shows that Rajshree Shahu Sahakari Bank has made remarkable progress in its various sections. The number of the members went up to 1756 in the 25

36 given period. The share capital and reserve funds increased and lakhs respectively. The deposit the bank received was lakhs and working capital increased with respectively. The profit made by bank was with A audit class The classification of progress of Bhagini Nivedita Sahakari Bank Ltd, Pune Table No 3.7(Rs. in Lakhs) Particular Increase (+) No.of Branches No. of Members Share Capital Reserve & Other fund Deposit Working capital NA NA NA NA Profit Audit Class A A A A Table no 3.6 mentions the progress of Bhagini Nivedita Sahakari Bank Ltd, Pune. There is increase in members of the bank with The share capital and reserve funds were same i.e.42 and 42 lakhs respectively. The bank received the deposit of lakhs and the profit was lakhs with audit class A. 3.12Janseva Sahakari Bank Ltd, Pune. Table & Graph No 3.8(Rs. in Lakhs) Particular Increase (+) No.of Branches No. of Members Share Capital Reserve & Other funds Deposit Working capital Profit Audit Class A A A A 26

37 59% Increase (+) 0% 1% 0% 40% 0% 0% No.of Branches No. of Members Share Capital Reserve & Other fund Deposit Working capital Profit Table& Graph no 3.7 explains that the number of members of Janseva Sahakari Bank went up to The share capital raised by bank was lakhs. The reserved and other funds of the bank were lakhs. The deposit the bank received was lakhs. The working capital and the profit of the bank were and lakhs respectively. The audit class of the bank was A The classification of progress ofdharmvir Sambhaji Urban Co-operative Bank Ltd, Pimpri- Chinchwad Table & Graph No 3.9 (Rs. in Lakhs) Particular Increase (+) No.of Branches No. of Members Share Capital Reserve & Other fund Deposit Working capital NA NA NA NA Profit Audit Class A A A A 27

38 Table no 3.9 shows that Dharmvir Sambhaji Urban Co-operative Bank Ltd, Pune has increase in the number of members i.e The share capital and reserve and other funds were and lakhs respectively. The banks had deposit of lakhs and profit of the bank was lakhs with audit class of A grade. 3.14The classification of progress of The Seva Vikas Co-operative Bank Ltd, Pune. Table & Graph No 3.10(Rs. in Lakhs) Particular Increase (+) No.of Branches No. of Members Share Capital Reserve & Other fund Deposit Working capital Profit Audit Class A A A A Increase (+)

39 Table 3.10 shows that Seva Vikas Bank increased the members with 332 in the given period. The share capital of the bank was lakhs. Reserve and other fund were lakhs. The bank had deposit of lakhs. The working capital and profit of the bank rose up to and lakhs respectively. The A audit class has been allotted to the bank Conclusion It can be concluded through the above information given in the tables that the urban cooperative banks in Pune district have played an important role in fulfilling the various financial needs of people living in urban areas. The large numbers of people rely on these banks. These banks have a vision of national responsibility through cooperative sector. 29

40 Chapter - IV Conclusions and Suggestions 30

41 Chapter-IV Conclusions andsuggestions 4.1 Introduction Co-operative banking system occupies an important position in the Indian financial system. Co-operative banks were the first formal institutionsto be conceived and developed to purvey credit to urban India. Thus far co-operatives banks have been a key instrument offinancial inclusion in reaching out to the last mile in urban areas. The researcher has made the following conclusions and suggestions based on the topic. 4.2 Conclusions 1) The percentage of priority sector advances and that of weaker sections of the society are much higher than that stipulated by the RBI. 2) It is an endeavor of cooperative banks to grant loans on priority to low income groups. 3) It has been observed during the study that the loans were granted against the security of term deposits and life insurance policies in accordance with RBI directives. 4) In accordance with guidelines issued by RBI, advances have been classified by UCBs as standard, sub-standard, doubtful and loss assets. 5) The selected banks are located in urban area of Pune district, application for loan and other formalities concerning to borrowing are very easy to understand without complete help to the others. 6) It has been realized that most of the customers have little information about the various schemes for loans and advances provided by UCBs 7) UCBs structure is exemplified by its pronounced focus on needs of small and micro credit. It underwent phenomenal transformation since Heterogeneity in size and space is the hallmark of UCBs. Unlike other cooperative credit institutions, it is not dependent on external assistance. 31

42 8) The banks have not extended any finance to the members of the Directors and their relatives, nor renewed and granted extensions to such loans. 9) Lack corporate governance, dual control, political interference, incidence of financial weakness, lack of professionalism, etc. are said to be major drawbacks of the sector. Sustained growth of this sector depends on speed atwhich those weaknesses are corrected, efficient management and efficacy of regulation. 10) Due to professional management, dynamic leadership the some Urban Coop. Banks made the financial inclusion in last a decade. This shows that the urban cooperative banks were marching towards the national goals. Of course, there are a number of deficiencies in the working of the banks such as members' passive participation and the over dues of loans, and hence the usefulness of the women's banks is to be provided in future than at present. 11) The urban cooperative banks have unique importance among the people because they have fulfilled their needs in time. 12) Due to professional management, dynamic leadership the some Urban Coop. Banks made the financial inclusion in last a decade. This shows that the urban cooperative banks were marching towards the national goals. Of course, there are a number of deficiencies in the working of the banks such as members' passive participation and the overdues of loans, and hence the usefulness of the women's banks is to be provided in future than at present. 13) RBI stipulates that 60 per cent of the credit of urban cooperative banks must flow to priority sector out of which 25 per cent should be for weaker sections. The urban co-operative banks do not deny their social obligations but the fact remains that for want of sufficient number of eligible borrowers to fulfill the target of weaker section advances, these banks find it difficult to adhere to these stipulations. 14) There seems to be controversy over the principle of 'Open Membership' in respect of urban banks. Some banks have already become too large in respect of membership and they feel that any further addition of members would make them unmanageable. 32

43 15) Members of urban co-operative banks largely depend on the banks' finances for acquiring their own houses. The urban banks have been doing a lot for housing finance in cities and semi -urban places. 16) The democracy among urban banks is mainly found in the state where cooperative movement is under-developed. The banks which are having high over dues and are not self-reliant in their resources or mismanaged are heading towards dormancy and such banks need rehabilitation. 17) It is concluded that Janseva Sahakari Bank has highest increase and Indrayani Cooperative Bank Ltd, Pune has lowest increase in loans and advances. 4.3 Suggestions On the basis of the study made so far it is clear that the growth of urban co-operative banks on the whole was satisfactory, though therewere imbalances in the various factors. However, we can suggest some ofthe recommendations which can help to improve the functioning ofurban co-operative banks. 1) The bank should provide staff with sufficient training. For improving its performance, it has to concentrate on recovery performance, controlling expenses, robust risk management practices and diversifying their operations. 2) The due considerations should be given to the urban areas while opening the branches. 3) Taking into the consideration the volume of members, deposits and loan disbursement, the women's banks can divide their work into sub-sections headed by the sectional head and the member of the board of directors. The committees such as loan, administration,planning and development, audit and inspection should beappointed. These sections can help to speed up the working ofbanks. 4) The experienced and enlightened board of directors will make the management efficient. Therefore, there is a need for training to board of directors, as it is said, "It is not the good laws that run the good banking, 33

44 but it is good people who run the good/sound banks". 5) The refinance facilities of Nations Housing bank should be implemented through the urban co-operative banks. Generally the loan advanced by urban banks was for a period of three years. But the loans for construction purpose require larger amount and longer period, and therefore, the bank cannot make headway in this respect. 6) It will be wise to take some 'nursing steps' before the bank can go into rehabilitation. The proper nursing measures can be taken when the symptoms of financial weakness are seen, so that the bank will not become weak. 7) There should be uniformity in the presentation of the annual reports of the banks. The annual reports should give at least 5 years' progress report in respect of membership, paid-up share capital, deposits, loans, over dues, profit and loss, audit class, etc.. This will enable the members as well as the general public to know the working of banks. 8) The 'loan cards' may be issued to the members. Such cards will enable the member to know the duration, rate of interest and loans outstanding. 9) There should be an Apex bank for the urban co-operative banks to take care of urban banks. 10) With a view to redressing the complaints of the members and the customers/deposits the 'Suggestion Box' should be kept in the women's banks. It was found that none of the banks was having this facility. 34

45 Bibliography 35

46 Bibliography 1) Bhole L M (2008) financial institutions & markets, tata McGraw-Hill publishing, New Delhi. 2) Chitab Mukund M (2005) Urban Cooperative Bank Mergers, The Chartered Accountant. 3) Choubey, B.N (1968) Principals And Practice Of Cooperative Banking In India, asia publishing house. 4) Khan M.Y, financial management Tata Mc-graw hill 5) Money & Banking Center for Monitoring Indian Economy, 2004 & ) Narsimham Committee (NC) 2: Recommendations on Banking Sector Reforms ) Ojha, P.D. Cooperative Sector: Some Critical Issue RBI Bulletin Feb,1989 8) RBI, Report on Trend & Progress of Banking in India, , , ) Sharma O.P., Brief History Of Urban Cooperative Banks In India RBI monthly bulletin, June ) Amit Basak (2009), Performance Appraisal of Urban Cooperative Banks: A Case Study, IUP Journal of Accounting Research and Audit Practices. Year ) Bhaskaran R and Praful Josh P (2000), Non Performing Assets (NPAs) in Co-operative Rural Financial System: A major challenge to rural development, BIRD s Eye View Dec ) Chander Ramesh and Chandel Jai Kishan (2010), Financial Viability of an Apex Cooperative Credit Institution- A Case Study of the HARCO Bank, Asia-Pacific Business Review Vol. VI, No.2, April-June 2010, pp ) Gurcharan Singh and Sukhmani (2011) An Analytical Study Of Productivity And Profitability Of District Central Cooperative Banks In Punjab, Journal on Banking Financial services and Insurance Research, Vol. 1 Issue 3 (June2011), pp ) Ratna and K.Nimbalkar (2011) A Study of NPA s -Reference To Urban Co-operative Bank, Golden Research Thoughts, Vol.1, Issue.VI Dec ) Dutta Uttam and Basak Amit (2008), Appraisal of financial performance of urban cooperative banks- a case study. The Management Accountant, March 2008, pp ) Fulbag Singh and Balwinder Singh (2006), "Funds management in the central co- operative banks of Punjab- an analysis of financial margin", The ICFAI Journal of Management, Vol. 5, pp ) Kalyankar (1983), Wilful Default in Loans of Co-operatives, Indian Cooperative Review, Volume XX No.2, New Delhi. 36

47 18) Devadas, Bhorali (1987), Co-operative Banking and Economic Development, Deep &Deep Publications, Delhi 19) Singh, Fulbag; and Singh, Balwinder (2006), Funds Management in Central Cooperative Banks- Analysis of Financial Margin, ICFAIJournal of BankManagement, Volume 5, Issue 3, Hyderabad. 20) Dhanappa (2009), Performance Evaluation of UCBs: A Case Study of Kallappanna Awade Ichalkaranji Janata Sahakari Bank Ltd., Ichalkaranji, Indian Cooperative Review, Vol-XXXXVII, No-2, (Oct.), NCUI New Delhi. 21) Heiko, Hesse; and Martin,Cihak (2007), Co-operative Banks and Financial Stability, IMF Working Paper (Jan.), Washington, DC 22) Annual Reports (2011 to 2013) Pimpri-Chinchwad Sahakari Bank Ltd, Pimpri. 23) Annual Reports (2011 to 2013) Pavana Sahakari Bank Ltd, Pune 24) Annual Reports (2011 to 2013) Indrayani Cooperative Bank Ltd, Pune 25) Annual Reports (2011 to 2013) Prerana Co-operative Bank Ltd, Pune 26) Annual Reports (2011 to 2013) Rajshree Shahu Sahakari Bank Ltd, Pune 27) Annual Reports (2011 to 2013) Bhagini Nivedita Sahakari Bank Ltd, Pune 28) Annual Reports (2011 to 2013) Janseva Sahakari Bank Ltd, Pune. 29) Annual Reports (2011 to 2013) Dharmvir Sambhaji Urban Co-operative Bank Ltd, Pimpri- Chinchwad 30) Annual Reports (2011 to 2013) The Seva Vikas Co-operative Bank Ltd, Pune..Magazines 1) Economics and Political Weekly. January, March ) YOJANA 3) SAMPADA 4) LOKRAJYA 5) LOKPRABHA NewsPaper 1) Lokmat 2) Sakal 37

48 Websites 3) Loksatta 4) The Hindu 5) The IndianExpress 6) MaharashtraTimes 7) Pudhari 8) Times OfIndia 1) 2) 3) 38

49 PhotoGallery 39

50 Photo Gallery The people are making their transitions in the bank. The people are making inquiry about loans. The employees are checking the forms. 40

51 A woman is submitting her application for account. The employees are working in the bank. 41