“PERFORMANCE EVALUATION OF URBAN CO-OPERATIVE BANK - A CASE STUDY OF DEVGIRI URBAN CO-OPERATIVE...

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“PERFORMANCE EVALUATION OF URBAN CO-

OPERATIVE BANK - A CASE STUDY OF DEVGIRI URBAN

CO-OPERATIVE BANKS LTD. AURANGABAD”

DISSERTATION SUBMITTED

TO

DR.BABASAHEB AMBEDKAR MARATHWADA UNIVERSITY,

AURANGABAD.

FOR THE DEGREE OF

MASTER OF PHILOSOPHY

IN

DEPARTMENT OF COMMERCE

BY

MR. KALE BILAS SAKHARAM

UNDER THE GUIDANCE OF

PROF. M. A. LOKHANDE

PROFESSOR AND HEAD, DEPARTMENT OF COMMERCE,

DR.BABASAHEB AMBEDKAR MARATHWADA UNIVERSITY,

AURANGABAD.

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2013-2014

DECLARATION

I hereby declare that this research entitled “Performance Evaluation of

Urban Co-operative Banks – A case Study of Devgiri Urban Co-

operative Banks Ltd. Aurangabad” Submitted for the award of the

Master Of Philosophy degree in the faculty of commerce, to the Dr.

Babasaheb Ambedkar Marathwada University, Aurangabad is of

original nature. I further declare that best of my knowledge and belief

this research work has not been submitted earlier for the award of any

degree of this or any other university.

Date: - / / 2014 (Kale Bilas Sakharam).

Place: - Aurangabad (Research Student)

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CERTIFICATE

This is to certify that the dissertation entitled “Performance Evaluation

of Urban Co-operative Banks - A case Study of Devgiri Urban Co-

operative Banks Ltd. Aurangabad” is the bonafide research work was

carried out by Kale Bilas Sakharam student of M.Phil department of

commerce under the my supervision Dr.Babasaheb Ambedkar

Marathwada University, Aurangabad, during the year 2013-14 in partial

fulfillment of the requirements for the award of the degree of Master of

Philosophy and that the dissertation has not found any other similar title.

Date: - / /2014. Guide

Place: - Aurangabad. Prof. M.A. Lokhande.

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ACKNOWLEDGEMENT

First of all I am thankful to my research guide Prof. M. A. Lokhande under whose

guidance this study was conducted. It was on account of his encouragement and

suggestions that this work has come up in the present from.

I am also thankful to Dr. Sayyed Azharuddin, Dr. Veena R. Humbe, Dr. Vilas

Epper, Dr. N.S.Rathi, Dr. J.R.Suryawanshi of Department of Commerce,

Dr.Babasaheb Ambedkar Marathwada University, Aurangabad for their guidance

as and when needed for the completion of this study.

I am deeply indebted to my father Sakharam Kale and Mother Smt. Sukhashalabai

Kale, Limbaji, Vilas, Kailas (Brother) for their good blessing and continue

encouragement to my education and without whose blessing I could never have

stood in my life.

I am very thankful to my friends Kaldate Krishna, Ughade Ashok, Jagdale

Rameshwar, Chate Hanumant, Dabhade Vishawanath, Kaldate Madhukar,

Dombale Sunil, Tonde Adinath, Hake Deepak and Dhawle Nitin who help me in

completing the present study and to those friends whose good wishes were with

me.

I am thankful to Akade Abhishek, Pawar Mama, Raju Lokhande and Gaikawad

Mama non teaching staff members of Dept of commerce, Dr. B. A. M. U, A ‘Bad.

Lastly, I am thankful to all of them who have directly and indirectly helped me in

completing the present study.

Date: - / / 2014. Kale Bilas Sakharam

Place: - Aurangabad. (Research Student)

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Table of Contents

Chapter No. Particular Page No.

Declaration II

Certificate III

Acknowledgements IV

List of Tables V

List of Charts & Diagrams VI

I Introduction 01-24

II Research Methodology & Literature Review 25-68

III Analysis and Interpretation of Data 69-102

IV Observations and Suggestions 103-110

Bibliography 111-115

Abbreviations 116-117

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LIST OF TABLES

Table No Name of Tables Page No.

1.1 Urban Co-operative Bank in Maharashtra 20

1.2 Grade wise Distribution of UCBs in Maharashtra 21

1.3 Comparative Statistics of Cooperative Societies In Maharashtra 23-24

3.1 Growth Trend of capital/Liability position of DUCB 71-72

3.2 Growth Trend of Asset/Property position of DUCB 72-73

3.3 Per year Share of the Total Fund of Liability 74-75

3.4 Per year Share of the Total Fund of Asset 75-76

3.5 Capital Adequacy 76-77

3.6 Mixer of Bank Deposits on 2008-2013 (Share of Total fund Deposits) 77-78

3.7 Net Growth and Mixer of Bank Deposits on 2008-2013. 79-80

3.8 Short term liquidity position of DUCB 81

3.9 Working Capital 82

3.10 Fixed Assets to Proprietary Fund Ratio 83

3.11 Debt Equity Ratio 84

3.12 Fixed Asset to Current Asset 85

3.13 Working Capital to Net Worth 86

3.14 Solvency Ratio 87

3.15 Fixed Asset to Net worth Ratio 88

3.16 Earning Per Shares (EPS). 89

3.17 Proprietary Ratio. 90

3.18 Profitability Ratio 91

3.19 Non Performing Assets Ratio 92

3.20 Price Earnings Ratio 93

3.21 Dividend Yield Ratio 94

3.22 Dividend Payout Ratio 95

3.23 Interests on Deposits 96

3.24 Interests on Loan 97

3.25 Interests on Investment 98

3.26 Growth trend of Net Profit 99

3.27 Comparative 5 year growth of DUCBA 100-102

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LIST OF DIGRAMS AND CHARTS

Chart No Name of Diagrams and Charts Page No.



























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Chapter –I

Introduction

Chapter I Introduction Page No

1.1 Co-operative Banks in India 02-03

1.2 History of Co-operative Banks 03-07

1.3 Function of Co-operative Banks:- 08

1.4 Advantages and Role of Co-operative Banking in India 08-09

1.5 Structure of Co-operative Banking in India:- 07

1.6 The 7 Co-operative Principle are;- 10-11

1.7 Urban Co-operative Bank – Concept: 12

1.8 Profile of DUCB 13

1.9 Brief History of Urban Cooperative Banks in India 14-18

1.10 Objectives of the Urban Co-operative Banks:- 18-19

1.11 Role of the UCBs in Indian Banking System: 19-20

1.12 Urban Co-operative Banks in Maharashtra 19-23

Table 1.1 Urban Co-operative Banks in Maharashtra 20

Table 1.2 Grade wise Distribution of UCBs in Maharashtra 21

Table 1.3 Comparative Statistics of co-operative societies in MS 23-24

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1.1 Co-operative Banks in India:-

The Co-operative Banks are a special type of banking in which people co-operative with

each other with a view to promote their mutual interest. Co-operative means working together. In

this banking organization, people voluntarily co-operative with each other on equal terms to

promote their own economic interest. The year 1904 marked the beginning of the history of

Agricultural Co-operative Banks in India. The Anyonya Co-operative banks in India are

considered as the first Co-operative bank in Asia.

The Co-operative Bank is an important constituent of the Indian Financial System,

judged by the role assigned, the expectations supported to fulfill, their number, and the number

of officers the Co-operative bank operate. Though the Co-operative movement originated in the

west, but the importance of such banks assumed in India is rarely paralleled anywhere else in the

world. The Co-operative banks in India play an important role even today in rural financing. The

business of Co-operative Banks in the urban areas also has increased phenomenally in recent

years due to the sharp increase in the number of primary Co-operative Banks. Co-operative

Banks in India are registered under the Co-operative Societies Act. The Co-operative Banks is

also regulated by the RBI. They are governed by the Banking Regulation Act 1949 and Banking

Laws (co-operative Societies) Act, 1965.

In India the co-operative movement was introduced as a remedy for the proverbial

poverty of the small agriculturalists. It was the government of Madras (Chennai) who grasped

the possibilities of co-operative movement in India. The origin of urban cooperative credit

societies in India can be traced to the close of 19th century. Inspired by the urban co-operative

credit institutions organized in Germany by Mr. Hermann Schulze (1860) and in Italy by Prof.

Luigi Luzzatti (1866), the first urban co-operative credit society named “ANYONYA

SAHAKARI MANDALI” was established in Baroda on 5th

February, 1889, under the guidance

of Shri V.L. Kavthekar. But the co-operative credit societies got legal status only in 1904, when

the govt. of India passed the first “Cooperative credit societies Act, 1904” with a view to

encourage thrift, eradicate rural indebtedness and provide credit to the needy and weaker sections

of the society in rural areas. This act has widened the scope of co-operative enterprises in India.

UCBs oriented and developed as a result of the cooperative movement to provide self

help to needy sections of society. The co-operative movement came into existence in the late

1700s in England where Robert Owen – a great philosopher advocated the establishment of co-

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operative communities to mitigate the sufferings of the exploited class in the wake of the

industrial revolution. But the modern co-operative movement began in 1844 near Manchester,

England when 28 flannel weavers established “The Rochadale Society of Equitable Pioneers” to

increase their wages.

1.2 History of Co-operative Banks:-

Robert Owen (1771-1858) fathered the co-operation movement. A Welshman who made

his fortune in the cotton trade. Owen believed in putting his workers in a good environment with

access to education for themselves and their children. These ideas were put into effect

successfully in the cotton mills of New Lanark, Scotland. It was here that the first co-operative

store was opened. Spurred on by the success of this, he had the idea of forming “Villages of co-

operation” where workers would drag themselves out of poverty by growing their own food,

making their own clothes and ultimately becoming self – governing. He tried to form such

communities in Orbison in Scotland and in New Harmony, Indiana in the United States of

America, but both communities failed. Although, Owen inspired the co-operative movements,

others such as Dr. William King (1786 – 1865) took his ideas and made them more workable and

practical. King believed in starting small, and realized that the working classes would need to set

up cooperatives for themselves, so he saw his role as one of instruction. He founded a monthly

periodical called The Co-operator, the first edition of which appeared on May 1, 1828. This gave

a mixture of co-operative philosophy and practical advice about running a shop using co-

operative principles. King advised people not to cut themselves off from society, but rather to

form a society within a society and to start with a shop because, “We must go to shop every day

to buy food and necessaries – why then should we not go to our own shop?” He proposed

sensible rules, such as having a weekly account audit, having three trustees and not having

meetings in pubs (to avoid the temptation of drinking profits). A few poor weavers joined

together to form the Rochdale Equitable Pioneers Society at the end of 1843. The Rochdale

Pioneers, as they became know, set out the Rochdale Principles in 1844 which form the basis of

co-operative movement today.

Co-operative communities are now wide spread with one of the largest and most

successful examples being at Mondragon in Basque country of Spain. Co-operatives were also

successful in Yugoslavia under Tito where workers council gained a significant role in

management. In many European countries, co-operative institutions have a predominant market

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share in the retail banking and insurance businesses. The Indian co-operative movement was

initiated by the government. It spread and diversified with the encouragement and support of the

government. Its present condition on is also to a great extent because of the intrusive

involvement of and interference by the government.

The history of co-operative movement in India is broadly divided into two phases.

That means co-operative movement has passed into two phases. They are-

1) Co –operative movement in pre-independence era.

2) Co-operative movement in post–independence era.

These two phases are briefly discussed below:-

i) Co-operative Movement in pre-independence era:

The pages of Indian history cite many evidences of co-operative activities from earliest

times. However, the first recorded activity began in 1904 when this movement was officially set

up by the British Government. Before that in the year 1892, Derrick Nicholson, tried to find out

ways and means to establish institutions so as to help the agricultural sector. He gave the

suggestions for setting of co-operative societies. Within that decade, India faced a terrible famine

in 1899.

The Government appointed the Second Famine Commission 1901 to suggest measures

for the victims. The commission recommended for a number of development activities and

setting up of new institution. The most important among them was the strong recommendation

for organisation of co-operative societies. The Government had accepted many of the

recommendations and in 1904 “co operative societies Act” were passed. The aim was to help the

rural farmers and artisans by providing short term and long term loans.

These credit societies were organised on the basis of two models, one for rural area and

other for urban area. For the former these were organised on Reinfusion Model while for the

latter it was Schulze Delitzsch Bank Model. Due to this Act a number of Co-operative Societies

grew up in rural area, but they could not function effectively. The major defects were.

i) There was no provision for setting up of Non credit Co-operative Societies in rural area.

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ii) No special Central agency was created for financing and supervising the activities of

these societies.

iii) The division of the Credit Co-operative Societies into two types rural and urban stood as

a barrier since no specific arrangements could be done for either due to the overlapping

nature of such classification.

The year 1928 saw a worldwide economic depression. The prices of agricultural

commodities fell down to a great extent and unemployment along with other economic crisis

grew up. The creditors had no way to repay the loan. This brought many co-operative societies in

to a standstill position.

In year 1933, the Reserve Bank of India was set up. The bank took some initiative to

recognise the co-operative movement. It had a separate department for a co-operative credit. It

helped to keep the movement alive which was gradually decaying.

In 1937, the popular Congress Government came to power in several states. The popular

leaders took much more initiative in organising and extending this movement. But much

progress could not do due to outbreak of Second World War. During this time, the ministry

resigned. It was left in the hands of British Government again. But the war itself gave a boost to

co-operative societies. The war brought a sudden increase in the prices of agricultural products

and other food grains.

The rural farmer got extra economic gains. Non credit societies grew up. The working

capital of co-operative societies also increased. The number of different credit and non credit co-

operatives increased rapidly. The co-operative movement gathered momentum. The all India Co-

operative planning Committee in 1945 also worked al lot in this direction.

ii) Co-operative movement in Post independence Era:

After independence for the first 3 years i.e. up to no significant development could be

made. It was mainly due to the problem created by partition and absence of concrete programme

for national re-organisation. However, the leaders of free India could the importance of co-

operative movement for a successful democracy importance was given to strengthen co-

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operative structure of country and various provisions were made through different Five Year

Plan.

The co-operative movement completed its 50 years dump the first plan. The Golden

Jubilee was celebrated throughout the country with much excitement. This made the people feel

the importance of such a movement. Attention was given to utilise the credit in productive

activities.

The First Plan also recommended for training of personnel's and setting up of Co-

operative Marketing Societies.

The Second Plan laid down proposals for extending co operative activity into various

fields. It gave special emphasis on the warehousing co operatives at the State and Central level.

The Third Plan brought still new areas under Co operative societies. The co operative

society for sugarcane, cotton, spinning, milk supply was proposed. Some concrete steps were

taken to train the personnel's. The co operative training College at Pune and many regional

centres were established to train the workers.

The Fourth Plan emphasised for consolidation of co-operative system. The new

programme for high yielding crops was started. Different credit societies were organised to serve

these programmes.

The Fifth Plan made special provisions for improvement of Central Banks and no viable

primary agricultural societies, re-organising marketing as well as consumer societies. It also

recommended for establishment of Farmer’s Service Societies.

The Sixth Plan laid down a point programme for co-operative societies. It aimed at

transforming the primary village societies to multipurpose societies.

i) To reconstruct the policies and of co-operative so that it can bring about economic

development of people.

ii) To extend co-operative activities to the fields of food processing, poultry farming, dairy

farming, fishery and many other related fields.

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iii) To give necessary training and guidance for developing skilled the efficient personnel's.

The Seventh Plan has also given more importance on the growth and expansion of co

operative societies to ensure public participation to achieve its main objective i.e. the movement

towards social justice has to be faster and there must be a sharper focus on employment and

poverty alleviation.

1.3 Functions of Co-operative Banks:-

Co-operative Banks basis functions is to provide credit facility to the farmers, artisans,

workers engaged in cottage and small scale industries and other such areas going on in the rural

areas. Cooperative banks also perform the basic function of banking but they differ from

commercial Banks in the following aspects.

1. Commercial Banks are joint stock companies under the company’s act of 1956 or public

sector banks under a separate act of a parliament whenever as co-operative banks were

establishment under the co-operative society’s acts of different states.

2. Commercial Banks structural is branch banking structure whereas co-operative Banks

have a there tier setup, with state co-operative banks at apex level, central District

cooperative banks at district level and primary cooperative Societies at rural level.

3. Only some of the sections of banking regulation act of 1949, are applicable to co-

operative Banks, regulating only in partial control by RBI of Cooperative Banks.

4. Cooperative banks functions on the principle of co-operative and not entirely on

commercial parameters.

5. Cooperative banks in India finance the rural areas under.

- Farming, Cattle, Milk, Hat chery, Personal Finance, Cooperative banks in India finance the

urban areas under, Self employment, Small scale units, and consumer finance.

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1.4 Advantages or Role of Co-operative Banking in India:-

1. Co-operative Banks give loans to the farmers and artisans at low rate of interest who are

thus saved of the exploitation by the Mahajans. Loans are available only for productive

purposes. Wasteful expenditure is, therefore, avoided.

2. Co-operative Banks give loans to the farmers to buy good seeds, fertilisers and cattle.

These banks also help in the consolidation of land holdings and removal of irrigation and

transport constraints. As a result, agricultural production tends to increase.

3. As a result of co-operative baking income of the farmers has tended to rise, as also their

standards of living in India, co-operative Banks are required to spend 10% of their profit

on rural development. Co-operative Banks thus are an important force behind the rural

up liftmen.

4. Co-operative Banking encourages thrift. Also, small savings of the people are gainfully

used by this.

1.5 Structure of Co-operative Banking in India:-

The Co-operative Banking structure in India is divided into following main 5 Categories.

- Primary Agricultural Credit Societies.

- District Central Co-operative Banks

- State Co-operative Banks or Apex Banks.

- Land Development Banks or State Co-operative Agricultural and Rural.

- Primary Urban Co-operative Banks.

Co-operative banks function on the basis of 'no-profit no-loss'. Co-operative banks, as a

principle, do not pursue the goal of profit maximization. Therefore, these banks do not focus on

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offering more than the basic banking services. So, co-operative banks finance small borrowers in

industrial and trade sectors, besides professional and salary classes.

• Some cooperative banks in India are more forward than many of the state and private

sector banks.

• According to NAFCUB (National Federation of Urban Co-operative Banks and Credit

Societies Ltd), the total deposits and lending of cooperative banks in India is much more

than old private sector banks and also some new public sector banks.

• This exponential growth of co-operative banks in India is attributed mainly to their much

better local reach, personal interaction with customers, and their ability to catch the

nerve of the local clientele.

Although they are not better than private banks in terms of facilities provided, their interest

rates are definitely competitive. For example, the interest rates on auto loans are anywhere less

than 5%-7% than that offered by private banks.

However, unlike private banks, the documentation process is lengthy if not stringent and

getting a loan approved quickly is rather difficult. The criteria for getting a loan from a UCB are

less stringent than for a loan from a commercial bank. For instance, when taking an education

loan, it does not matter whether the course you are going for is recognized or not.

So, it makes better sense to bank with UCBs today, what with the rates some offer being the

best in the industry. And with the risk of a run minimized, they are almost on an equal footing

with commercial banks when it comes to vying for your attention. However, to get a loan, you

have to be a member of the SCB: own its shares worth at least 2.5 per cent of the loan amount, or

a maximum of Rs. 25,000. This amount earns a return of 12-20 per cent.

According to the International Co-operative Alliance Statement of co-operative identity, 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-

controlled enterprise. Co-operatives are based on the values of self-help, self-responsibility,

democracy, equality, equity and solidarity. In the tradition of their founders, co-operative

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members believe in the ethical values of honesty, openness, social responsibility and caring for

others.

1.6 The 7 co-operative principles are:

1. Voluntary and open membership

2. Democratic member control

3. Member economic participation

4. Autonomy and independence

5. Education, training and information

6. Co-operation among Co-operatives

7. Concern for Community

A co-operative bank is a financial entity which belongs to its members, who are at the

same time the owners and the customers of their bank. Co-operative banks are often created by

persons belonging to the same local or professional community or sharing a common interest.

Co-operative banks generally provide their members with a wide range of banking and financial

services (loans, deposits, banking accounts...).

Co-operative banks differ from stockholder banks by their organization, their goals, their

values and their governance. In most countries, they are supervised and controlled by banking

authorities and have to respect prudential banking regulations, which put them at a level playing

field with stockholder banks. Depending on countries, this control and supervision can be

implemented directly by state entities or delegated to a co-operative federation or central body.

Even if their organizational rules can vary according to their respective national legislations,

Co-operative banks share common features:

Customer's owned entities: in a co-operative bank, the needs of the customers meet the

needs of the owners, as co-operative bank members are both. As a consequence, the first aim of a

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Co-operative bank is not to maximize profit but to provide the best possible products and

services to its members. Some co-operative banks only operate with their members but most of

them also admit non-member clients to benefit from their banking and financial services.

Democratic member control: co-operative banks are owned and controlled by their

members, who democratically elect the board of directors. Members usually have equal voting

rights, according to the co-operative principle of "one person, one vote".

Profile allocation: in a co-operative bank, a significant part of the yearly profit, benefits

or surplus is usually allocated to constitute reserves. A part of this profit can also be distributed

to the co-operative members, with legal or statutory limitations in most cases. Profit is usually

allocated to members either through a patronage dividend, which is related to the use of the co-

operatives products and services by each member, or through an interest or a dividend, which is

related to the number of shares subscribed by each member.

Co-operative banks are deeply rooted inside local areas and communities. They are

involved in local development and contribute to the sustainable development of their

communities, as their members and management board usually belong to the communities in

which they exercise their activities. By increasing banking access in areas or markets where

other banks are less present - SMEs, farmers in rural areas, middle or low income households in

urban areas - co-operative banks reduce banking exclusion and foster the economic ability of

millions of people. They play an influential role on the economic growth in the countries in

which they work in and increase the efficiency of the international financial system. Their

specific form of enterprise, relying on the above-mentioned principles of organization, has

proven successful both in developed and developing countries.

A word of caution: Only approach those co-operative banks which have a good history.

Since, a lot of co-operative banks have political interests, providing social help is not one of their

priorities sometime.

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1.7 Urban Co-operative Bank – CONCEPT:

As the name suggests, a bank operating in urban areas on the basis of co-operative

principles is known as Urban Co-operative Bank. There was no well defined concept of an Urban

Co-operative Bank before 1939. Initially UCBs were organized as credit societies in India and

later converted into Urban Banks. It was the Mehta Bhansali Committee (1939) which made the

first attempt to define an Urban Co-operative Bank. Subsequently in 1966, when banking laws

were made applicable to co-operative banks, provision of section 5 [CCV] of Banking

Regulation Act 1949 [As applicable to cooperative societies (AACS)] defined an Urban Co-

operative Bank as a Primary Cooperative

Bank other than a Primary Agricultural Credit Society –

1. The primary objective or principal business of which is the transaction of banking

business,

2. The paid up share capital and reserves of which are not less than one lakh rupees,

3. The by – laws of which do not permit admission of any other co-operative society as a

member.

Provided that this sub – clause shall not apply to the admission of a co-operative

bank as a member by reason of such a Co-operative Bank subscribing to the share capital of such

Co-operative society out of fund provided by the State Government for the purpose.

In short, UCBs are Primary Co-operative Banks organized on Co-operative basis,

operating in metropolitan, urban and semi – urban areas to cater the needs of specific types or

groups of members pertaining to certain class of community, small scale industrial units, trade,

professions, etc. They are of two types: a unit banking type and branch banking type.

Besides providing main banking service to their customers, they also provide various

other banking and subsidiary services to their customers and have developed a nice market for

them to survive.

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1.8 Profile of Devgiri Urban Co-operative Bank Ltd. Aurangabad

Name of Bank :- Devgiri Urban Cooperative Bank Ltd. Aurangabad

Address :- Earth Complex, Kesarsinghpura, Adalat

Road, Aurangabad-431 001.

Registration No :- AGD/BNK/215/84,

And Date 24/01/1984.

Permission of RBI :- UBD/BNK/312/p,

No and Date 18/05/1984.

Area :- Whole Maharashtra state (In Lakh)

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Source: - Annual Reports of 2008-09 to 2012-13 of DUCBA.

1.9 Brief History of Urban Cooperative Banks in India

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, till 1996, were

allowed to lend money only for non-agricultural purposes. This distinction does not hold today.

These banks were traditionally centered around communities, localities work place groups. They

essentially lent to small borrowers and businesses. Today, their scope of operations has widened

considerably.

Particular 31/03/2013

Main Office 1

Total Branches 27

No of Member 36101

Return Share Capital 1801.53

Reserve and other fund 12196.41

Deposits:-1. Saving Deposit 14318.45

2. Recurring Deposit 141.60

3. Current Deposit 3229.45

4. Fixed Deposit 47163.07

64852.57

Loan 1.Secured 40126.01

2.Unsecured 786.17

40912.18

Investment 1.DCCB and MSCB 259.12

2.Nationalised and Other CCB 6809.03

3.Other 24421.87

31490.02

Bad Debts 14.77% 6045.15

Capital Adequacy

Net Property

12.76%

4.30%

Profit 493.34

1) Permanent employee

Peon 39

Other employee 163

No of total employees 202

Working Capital 83020.63

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The origins of the urban cooperative banking movement in India can be traced to the

close of nineteenth century when, inspired by the success of the experiments related to the

cooperative movement in Britain and the cooperative credit movement in Germany such

societies were set up in India. Cooperative societies are based on the principles of cooperation, -

mutual help, democratic decision making and open membership. Cooperatives represented a new

and alternative approach to organization as against proprietary firms, partnership firms and joint

stock companies which represent the dominant form of commercial organization.

The Beginnings

The first known mutual aid society in India was probably the ‘Anyonya Sahakari

Mandali’ organized in the erstwhile princely State of Baroda in 1889 under the guidance of

Vithal Laxman also known as Bhausaheb Kavthekar. Urban co-operative credit societies, in their

formative phase came to be organized on a community basis to meet the consumption oriented

credit needs of their members. Salary earners’ societies inculcating habits of thrift and self help

played a significant role in popularizing the movement, especially amongst the middle class as

well as organized labour. From its origins then to today, the thrust of UCBs, historically, has

been to mobilize savings from the middle and low income urban groups and purvey credit to

their members - many of which belonged to weaker sections.

The enactment of Cooperative Credit Societies Act, 1904, however, gave the real impetus

to the movement. The first urban cooperative credit society was registered in Canjeevaram

(Kanjivaram) in the erstwhile Madras province in October, 1904. Amongst the prominent credit

societies were the Pioneer Urban in Bombay (November 11, 1905), the No.1 Military Accounts

Mutual Help Co-operative

Credit Society in Poona (January 9, 1906). Cosmos in Poona (January 18, 1906), Gokak

Urban (February 15, 1906) and Belgaum Pioneer (February 23, 1906) in the Belgaum district,

the Kanakavli-Math Co-operative Credit Society and the Varavade Weavers’ Urban Credit

Society (March 13, 1906) in the South Ratnagiri (now Sindhudurg) district. The most prominent

amongst the early credit societies was the Bombay Urban Co-operative Credit Society,

sponsored by Vithaldas Thackersey and Lallubhai Samaldas established on January 23, 1906.

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The Cooperative Credit Societies Act, 1904 was amended in 1912, with a view to broad

basing it to enable organization of non-credit societies. The Maclagan Committee of 1915 was

appointed to review their performance and suggest measures for strengthening them. The

committee observed that such institutions were eminently suited to cater to the needs of the

lower and middle income strata of society and would inculcate the principles of banking amongst

the middle classes. The committee also felt that the urban cooperative credit movement was

more viable than agricultural credit societies. The recommendations of the Committee went a

long way in establishing the urban cooperative credit movement in its own right.

In the present day context, it is of interest to recall that during the banking crisis of 1913-

14, when no fewer than 57 joint stock banks collapsed, there was a there was a flight of deposits

from joint stock banks to cooperative urban banks. Maclagan Committee chronicled this event

thus:

“As a matter of fact, the crisis had a contrary effect, and in most provinces, there was a

movement to withdraw deposits from non-cooperatives and place them in cooperative

institutions, the distinction between two classes of security being well appreciated and a

preference being given to the latter owing partly to the local character and publicity of

cooperative institutions but mainly, we think, to the connection of Government with Cooperative

movement”.

Under State Purview

The constitutional reforms which led to the passing of the Government of India Act in

1919 transferred the subject of “Cooperation” from Government of India to the Provincial

Governments. The Government of Bombay passed the first State Cooperative Societies Act in

1925 “which not only gave the movement its size and shape but was a pace setter of cooperative

activities and stressed the basic concept of thrift, self help and mutual aid.” Other States

followed. This marked the beginning of the second phase in the history of Cooperative Credit

Institutions.

24

There was the general realization that urban banks have an important role to play in

economic construction. This was asserted by a host of committees. The Indian Central Banking

Enquiry Committee (1931) felt that urban banks have a duty to help the small business and

middle class people. The Mehta-Bhansali Committee (1939), recommended that those societies

which had fulfilled the criteria of banking should be allowed to work as banks and recommended

an Association for these banks. The Co-operative Planning Committee (1946) went on record to

say that urban banks have been the best agencies for small people in whom Joint stock banks are

not generally interested. The Rural Banking Enquiry Committee (1950), impressed by the low

cost of establishment and operations recommended the establishment of such banks even in

places smaller than taluka towns.

The first study of Urban Co-operative Banks was taken up by RBI in the year 1958-59.

The Report published in 1961 acknowledged the widespread and financially sound framework of

urban co-operative banks; emphasized the need to establish primary urban cooperative banks in

new centers and suggested that State Governments lend active support to their development. In

1963, Varde Committee recommended that such banks should be organized at all Urban Centers

with a population of 1 lakh or more and not by any single community or caste. The committee

introduced the concept of minimum capital requirement and the criteria of population for

defining the urban centre where UCBs were incorporated.

Duality of Control

However, concerns regarding the professionalism of urban cooperative banks gave rise to

the view that they should be better regulated. Large cooperative banks with paid-up share capital

and reserves of Rs.1 lakh were brought under the perview of the Banking Regulation Act 1949

with effect from 1st March, 1966 and within the ambit of the Reserve Bank’s supervision. This

marked the beginning of an era of duality of control over these banks. Banking related functions

(viz. licensing, area of operations, interest rates etc.) were to be governed by RBI and

registration, management, audit and liquidation, etc. governed by State Governments as per the

25

provisions of respective State Acts. In 1968, UCBS were extended the benefits of Deposit

Insurance.

Towards the late 1960s there was much debate regarding the promotion of the small scale

industries. UCBs came to be seen as important players in this context. The Working Group on

Industrial Financing through Co-operative Banks, (1968 known as Damry Group) attempted to

broaden the scope of activities of urban co-operative banks by recommending that these banks

should finance the small and cottage industries. This was reiterated by the Banking Commissions

(1969).

The Madhavdas Committee (1979) evaluated the role played by urban co-operative banks

in greater details and drew a roadmap for their future role recommending support from RBI and

Government in the establishment of such banks in backward areas and prescribing viability

standards.

The Hate Working Group (1981) desired better utilization of banks' surplus funds and

that the percentage of the Cash Reserve Ratio (CRR) & the Statutory Liquidity Ratio (SLR) of

these banks should be brought at par with commercial banks, in a phased manner. While the

Marathe Committee (1992) redefined the viability norms and ushered in the era of liberalization,

the Madhava Rao Committee (1999) focused on consolidation, control of sickness, better

professional standards in urban co-operative banks and sought to align the urban banking

movement with commercial banks.

A feature of the urban banking movement has been its heterogeneous character and its

uneven geographical spread with most banks concentrated in the states of Gujarat, Karnataka,

Maharashtra, and Tamil Nadu. While most banks are unit banks without any branch network,

some of the large banks have established their presence in many states when at their behest

multi-state banking was allowed in 1985. Some of these banks are also Authorized Dealers in

Foreign Exchange

Recent Developments

26

Over the years, primary (urban) cooperative banks have registered a significant growth in

number, size and volume of business handled. As on 31st March, 2003 there were 2,104 UCBs

of which 56 were scheduled banks. About 79 percent of these are located in five states, - Andhra

Pradesh, Gujarat, Karnataka, Maharashtra and Tamil Nadu. Recently the problems faced by a

few large UCBs have highlighted some of the difficulties these banks face and policy endeavors’

are geared to consolidating and strengthening this sector and improving governance.

1645 Urban Cooperative Bank with more than 8150 branches across India. The aggregate

deposit exceeded Rs. 2.00 lakh crores.

Source: Adapted from a paper by O.P. Sharma, formerly of the History Cell.

1.10 Objectives of the Urban Co-operative Banks:-

The UCBs are generally considered as “Small People’s Bank” and they are organized for

promoting thrift and co-operation among the lower and middle strata of the society. The

objectives of the UCBs are summarized in two categories, which are as follow:

[A] Principal objectives:

(i) To promote thrift, self help and mutual co-operation among the members,

(ii) To mobilize resources i.e. to borrow funds form members and non members to utilize for

giving loans to their members,

(iii) To provide credit to the members at reasonable rates for productive purposes,

(iv) To undertake collection of bills drawn, cheques, drafts, etc. accepted or endorsed by

members and approved constituents, to remit funds and to discount cheques and bills of

approved members subject to rules and by laws on their behalf,

(v) To arrange for safe custody of valuables and documents of members and constituents,

and

(vi) To provide all other banking and subsidiary services.

[B] Subsidiary Objectives:

(i) To give possible help and necessary guidance to traders, artisans etc. who are members of

the bank,

27

(ii) To do every kind of trust and agency business and particularly do the work of investment

of funds, sale of properties and of recovery and acceptance of money,

(iii) To undertake every kind of banking and sharaffi business and also give bank guarantee

and letters of credit on behalf of members.

1.11 Role of the UCBs in Indian Banking System:

The performance of the co-operative banking sector as a whole has attracted considerable

attention in recent years. Today they have become an important constituent of the Indian

financial system and cover a large segment of society because of their “PROMPT,

PERSONALIZED AND COURTEOUS SERVICE”. They take the responsibility of covering the

unmonitored sector neglected by commercial banks and are called “purveyors of credit to small

and medium enterprises”. They provide service with no bars of castes, creed, religion, language,

etc. and thus spread the feeling of “Unity in Diversity”. Some UCBs operate beyond their state of

registration and are governed by the Multi State Co-operative Societies Act, 1984. In addition to

their traditional retail banking business, some have also taken up diversified activities like stock

investment scheme, opening and maintenance of nonresident and ordinary rupee accounts,

merchant banking etc. They owe responsibility not only towards customers but also towards

employees and society.

Primary (Urban) co-operative banks play an important role in meeting the growing credit

needs of urban and semi – urban areas. UCBs mobilize savings from the middle and lower

income groups and purvey credit to small borrowers, including weaker sections of the society.

The number of UCBs stood at 1872 at the end of March 2005, including 79 salary earners banks

and 119 Mahila banks. Total no. of scheduled UCBs was 55 at the end of March 2005.

Scheduled UCBs are under closer regulatory and supervisory framework of the Reserve Bank.

Various entities in the urban co-operative banking sector display a high degree of

heterogeneity in terms of deposits / assets base, areas of operation and nature of business. In

view of its importance, it is imperative that the sector emerges as a sound and healthy network of

jointly owned, democratically controlled and professionally managed institutions. In order to

achieve these objectives, the Reserve Bank took a series of policy initiatives in 2004-05. The

most significant initiative in this regard the vision Document and Medium Term Frame work

(MTF) for UCBs. With a view to protecting depositors interest and avoid contagion on the one

hand, and enabling UCBs to provide useful service to local communities and public at large on

28

the other, a draft vision document was prepared and placed in public domain for eliciting

comments. Based on the feedback received from different quarters, the necessary modifications

were carried out in the vision documents to involve as the medium – term frame work for the

sector.

1.12 Urban Co-Operative Banks in Maharashtra:-

Urban Co-Operative banks are an important part of the financial system in Maharashtra.

Despite of being a Bank registered under the Banking Regulation Act 1949, these institutions are

necessarily " the Co-Operative societies and are registered under the Maharashtra Co-Operative

Societies Act 1960." The Co-Operative Banks were established over 100 years ago and were

brought under the purview of Reserve Bank of India, by amending the Banking Regulation Act

1949 vide the amendment in the year 1966. Role of Maharashtra in Urban Co-Operative

Banking sector.

Table 1.1 Urban Co-operative Banks in Maharashtra as on (Rs in Crores)

Source: - maharashtra.gov.in

Note: - Figure in brackets indicates percentage to all India total.

Reserve Bank of India conducts regular inspection of UCBs. They have developed

gradation system for UCBs whereby banks are classified into 4 grades on the basis of CRAR,

Profit/Loss & N.P.A.s. Gradation of UCBs in Maharashtra is as follows :-

Table 1.2 Grade wise Distribution of UCBs in Maharashtra

Grade 31/3/200 8 31/3/20 09 31/3/2010 31/3/2011

Grade I 200 255 274 301

Grade II 190 139 128 105

31/3/2011 India Maharashtra Percentage

Urban Co-Operative Banks (Nos) 1645 539 32.77%

Scheduled banks (Nos) 53 38 71.70%

Non scheduled banks (Nos) 1592 501 31.47%

Multistate banks (Nos) 42 23 54.76%

Share Capital (Rs) 6267 2700 43.08%

Own funds (Rs) 26260 12200 46.46%

Deposits (Rs) 212031 138124 64.14%

Advances (Rs) 136341 90260 66.20%

29

Grade III 99 101 87 78

Grade IV 114 82 64 55

Total

603

577

553

539

Source: - maharashtra.gov.in

Reserve Bank of India impose directions like restriction on declaration of dividend,

reduction of exposure limit etc. for the grade III & grade IV banks.

It needs to strengthen these banks. In March 2005, the Reserve Bank prepared a draft

Vision document for UCBs which, inter alia, discussed the problems of the sector and

highlighted the issue of dual regulatory mechanism which restricted the ability of the

Reserve Bank in handling the weaknesses of entities in the sector. In order to address the

problem of dual control, Vision document proposed the adoption of a consultative

approach for deciding the future set up of weak and sick banks in State.

Objectives:-

1. To rationalize the existing regulatory and supervisory approach keeping in view the

heterogeneous character of entities in the sector.

2. To facilitate focused and continuous system of supervision through enhanced use of

technology.

3. To enhance professionalism and improve the quality of governance in UCBs by

providing training for skill up-gradation as also by including large depositors in the

decision making process / management of banks.

4. To put in place a mechanism that addresses the problems of dual control, given the

present legal framework, and the time consuming process in bringing requisite legislative

changes.

5. To put in place a consultative arrangement for identifying weak but potentially viable

entities in the sector and provide a framework for their being nurtured back to health

including, if necessary, through a process of consolidation.

6. To identify the unviable entities in the sector and provide an exit path for such entities.

30

In terms of the Vision document, the Reserve Bank and the State Government have signed MOU

on 13/12/2006 to ensure greater convergence of approach of the two agencies entrusted with the

regulation and supervision of UCBs. As part of the MOU, it was decided to set up State level

Task Force for Co-operative Urban Banks (TAFCUB) comprising representatives of the Reserve

Bank, State Government and federation/association of UCBs.

The TAFCUB was entrusted.

1) To identify and draw a time bound action plan for the revival of potentially viable Urban

Co-Operative banks and non disruptive exit for non viable UCBs.

2) To facilitate human resource development and IT initiatives in UCBs.

Since 4th January 2007, aprox. 10 to 12 banks were discussed in each meeting. In these

TAFCUB meetings approximately 400 Urban coop. Banks were discussed. After taking detailed

review of these banks, necessary suggestions / directions were issued such as Liquidation,

Appointment of Administrator & exploration for Merger etc.

41 weak Co-Operative banks were merged into financially sound Co-Operative banks thereby

deposits of Approx.3100 crores were secured.

96 banks are taken into liquidation of which depositors of 84 banks are given their deposits back

through insurance claims. In case of remaining banks the preparation of claims are in progress.

Co-Operative banking in India has made substantial progress in dissemination of banking

services based on Co-Operative principles. In view of the special thrust on financial inclusion,

Co-Operative banking has acquired renewed significance in the Indian financial system. The

focus of the recent policy measures, therefore, has once again shifted to the strengthening of Co-

operative banking in India.

Table 1.3 Comparative Statistics of Co-operative Societies in Maharashtra (Rs in Crores)

Particular 2006-07 2007-08 2008-09 2009-10 2010-11

No. Of Societies 200740

-

205553

(02.39%)

212344

(03.30%)

218320

(02.81%)

244306

(11.90%)

No. of Members(Lakh) 476 505 517 542 539

31

- (06.09%) (02.37%) (04.83%) (-0.56%)

Share Capital 12565

-

12809

(01.94%)

14969

(16.86%)

15015

(00.30%)

20543

(36.82%)

Deposits 99792

-

104162

(04.37%)

118024

(13.31%)

128579

(08.94%)

132490

(03.04%)

Working Capital 202207

-

205110

(01.44%)

236401

(15.26%)

246162

(04.13%)

244834

(-0.56%)

Loan & Advances(Net) 82450

-

88166

(06.93%)

82556

(-6.37%)

78190

(-5.29%)

100681

(28.76%)

Sty’s In Profit

i. Number

ii. Profit (Amt)

62880

-

2067

-

63147

(00.42%)

2135

(03.29%)

67950

(07.61%)

2787

(30.54%)

68021

(00.10%)

7212

(158.77%)

70363

(03.44%)

3661

(-49.24%)

Sty In Loss

i. Number

ii. Loss(Amt)

51575

-

3361

-

55257

(07.14%)

4051

(20.53%)

58387

(05.67%)

3558

(-12.17%)

60215

(03.13%)

3569

(00.30%)

59636

(-0.97%)

4526

(26.81%)

Source: - co-operative movement at a Glance in Maharashtra, various issues.

Note: - 1. Figure in the brackets shows the percentage growth over the previous year.

2. The year 2006-07 is an assumed as base year.

The above table 1 shows the comparative statistics of the co-operatives in the state of

Maharashtra during last five years have growth remarkable. The number of societies stood at

2,05,553 in 2007-08, and increased position 2,44,306 in 2010-11, the growth in number of co-

operative was 02.39% to 11.90 % respectively during the over the previous year. Working

capital shown progress in amount as it was Rs. 2,05,110 crores in 2007-08, increased put Rs.

2,44,834 crores in 2010-11, but growth percentage showed decreased 1.44% to -0.56%

respectively during over the previous year. Net advanced by co-operatives showed little progress

Rs. 88,166 crores 2007-08 increased Rs. 1,00,681 crores in 2010-11, there was positive growth

6.93% in 2007-08, increased 28.76% in 2010-11. Number of cooperatives in profit increased

from 62,147 in 2007-08 to increase Rs. 70,363 in 2010-11, amount of profit was Rs. 2,135 crores

32

in 2007-08 increased put Rs. 3,661 crores in 2010-11, shows positive progress 0.42% to 3.44%.

Number of societies in loss increased from 55,257 in 2007-08 to increase 59,636 in 2010-11,

percentage of societies in loss decreased by 7.14% in 2006-07 to -0.97 % in 2010-11. However

the amount of loss increased from Rs. 4,051 crores in 2007-08 to Rs. 4,526 crores in 2010-11,

but the percentage increased from 20.53% in 2007-08 to 26.81 % in 2010-11, shows a good sign.

References:-

1. Upendra Rai (2011):-“Banking Awareness”, Arihant publications (India)

Limited, ISBN-978-81-8348-908-9.

2. Dr.K.V.S.N, Jawahar Babu, B.Muniraja Selkhar,(2012):-“ The Emerging Urban Co-

Operative Banks (Ucbs) In India”, IOSR Journal of Business and Management

(IOSRJBM)ISSN: 2278-487X Volume 2, Issue 5 (July-Aug. 2012), PP 01-05.

3. www.rbi.org.in

4. B. D. Patil (2013): “Growth and Progress of Co-Operative Movement In

Maharashtra”, Online International Interdisciplinary Research Journal, ISSN2249-9598,

Volume-III, Issue-VI, Nov-Dec2013

Chapter -II

33

Research Methodology and Literature Review

(A) Research Methodology:-

Chapter II Research Methodology and Literature Review

Page No

A 2.1 Meaning of Research 26

2.2 Objective Of Study 27

2.3 Period of the Study 27

2.4 Data Collection 27-28

2.5 Scope of the Study 28

2.6 Concept of Performance Evaluation 28-29

2.7 Concept of Financial Statement 29-30

2.58 Balance Sheet 30-31

2.9 Income Statement 31-32

2.10 Statement of Retaining Earning 32

2.11 Statement of Sources and Uses of Funds 32

2.12 The Concept of Financial Analysis 32-33

2.13 Significance of Financial Analysis 33

2.14 Comparative Financial Statement Analysis 33

2.15 Trend Analysis 34

2.16 Ratio Analysis 34-41

2.17 Fund Flow Analysis 41-42

B Literature Review 43-68

34

2.1 MEANING OF RESEARCH

Research in common parlance refers to a search for knowledge. Once can also define research as

a scientific and systematic search for pertinent information on a specific topic. In fact, research is

an art of scientific investigation. The Advanced Learner’s Dictionary of Current English lays

down the meaning of research as “a careful investigation or inquiry specially through search for

new facts in any branch of knowledge.”1 Redman and Mory define research as a “systematized

effort to gain new knowledge.”2 Some people consider research as a movement, a movement

from the known to the unknown. It is actually a voyage of discovery. We all possess the vital

instinct of inquisitiveness for, when the unknown confronts us, we wonder and our

inquisitiveness makes us probe and attain full and fuller understanding of the unknown. This

inquisitiveness is the mother of all knowledge and the method, which man employs for obtaining

the knowledge of whatever the unknown, can be termed as research.

Research is an academic activity and as such the term should be used in a technical sense.

According to Clifford Woody research comprises defining and redefining problems, formulating

hypothesis or suggested solutions; collecting, organizing and evaluating data; making deductions

and reaching conclusions; and at last carefully testing the conclusions to determine whether they

fit the formulating hypothesis. D. Slazenger and M. Stephenson in the Encyclopedia of Social

Sciences define research as “the manipulation of things, concepts or symbols for the purpose of

generalizing to extend, correct or verify knowledge, whether that knowledge aids in construction

of theory or in the practice of an art.”3 Research is, thus, an original contribution to the existing

stock of knowledge making for its advancement. It is the pursuits of truth with the help of study,

observation, comparison and experiment. In short, the search for knowledge through objective

and systematic method of finding solution to a problem is research. The systematic approach

concerning generalization and the formulation of a theory is also research. As such the term

‘research’ refers to the systematic method.

2.2 Objectives of the Study

35

To examine the profitability and operating efficiency regarding saving and advances of the

Urban Co-operative Banks.

1. To review the progress of UCBs in Maharashtra.

2. To study the financial position of DUCBA.

3. To study the growth trend of DUCBA.

4. To study the advancing patterns in the DUCBA.

5. To make suggestions for improving profitability.

2.3 Period of Study: -

The present study covers the span of five year i.e. from 2009- 2013 this period of selected

for study because the complete data for the entire period is available. This period is considered

adequate to study trends and conclusions.

2.4 DATA COLLECTION:-

In order to complete the research study data has been collected through the annual report of the

Devgiri Urban Cooperative Bank Ltd Aurangabad.

I) Primary Data:-

Primary Data collected by the Annual Reports of Devgiri Urban Cooperative

Bank Ltd in Aurangabad.

II) Secondary Data:-

For the purpose of the secondary data were collection by the sources such as Books,

journals, Reports, Magazines, News paper, Thesis, Dissertation and government and Non

government publication related to the topic of the study. In relation to secondary data

collection the e-media also helped, like internet, web sites, email etc, these are facilitate to

finding the secondary data.

36

(III) Data Analysis:-

For the purpose of analyzing the data it has been complied and tabulated in a systematic

manner. As per the need of the study i.e. graphs, charts, and statistical and mathematical tools

has been used.

2.5 Scope of the Study:-

1. Operational Scope:-

The focus of the study is on evaluating the financial performance of DUCB.

2. Geographical Scope:-

The study is considered to the Aurangabad where in DUCB is operating.

3. Temporary Scope: - The study covers five years period i.e. 2008-09 to 2012-13.

2.6 Concept of Performance Evaluation -

Business enterprise are created for achieving one or more objectives profit motive being

the most dominant among all objectives for accomplishing its objectives efficiently and

effectively, the firm needs resources which must be optimally utilized. The firm faces the

question of the use and allocation of resources at two levels first at the macro level, the firm has

to compete for purposes with other firms in the capital market. The Criterion used by the capital

market to allocate resources is efficiency, which is conventionally measured in terms of profit. A

firm would thus succeed to obtain funds from the capital market if it has been profitable in the

past or has a profit making potential in the future. The capital market consists of investors

individuals and institutional who decided about the allocation of funds to the firm on the basis of

information regarding the financial performance of the firm. Accounting through its financial

reports furnishes this information to investor's financial reports or statement in the form of

balance sheet and profit and loss account inform investors how the firm has performed.

37

The firm has been able to gather resources from the capital market at the Micro level if its

internal operations, it has to decide allocation of resources to its various projects; activities and

assets. The firm needs relevant information for making decisions of internal use of resources.

Financial information is needed by investor's creditors, management, Govt., and society.

Financial information is required to predict, compare, and evaluate the firm earnings obviate.

The financial information includes the financial statement, Balance sheet, profit and loss

account income statement etc. From the financial information which have been received from

the financial statement and tested the profitability and efficiently of firm or enterprises which is

called performance appraisal. The accounting system identities and gathers relevant data from

the financial statement. The process of data accumulation involves recording and analysis of

economic events financial statement also performance the measurement function. The firm

performs apprised from the financial statement financial statement is a basic of the enterprise

which is used for investors and outsiders to take decision and valued it. Thus performance

appraisal of the firm can be done by the financial statement.

2.7 Concept of Financial Statements: -

The term financial statements have a very ancient historical background. It is as old as the

term Accountancy. But it did not enjoy any significance during the last few decades because the

scope of business was limited as ownership and management consisted of the self same group of

business who was responsible for the fruits of their business. With liberalization and

globalization in the world today, financial statements are increasingly studied and used by

various classes of people who are directly or indirectly related and interested primarily in the

short term liquidity of the firms and its ability to need the debts as and when they full due, long

term lenders are concerned about the ability of the firm to service its debts over the next three to

ten years; while shareholders and potentials investors are interested in the yield and safety of

their funds. Importance of financial statement has also increased due to government regulations,

awareness about. The American Institutes of Certified Public Chartered Accountant states that

''Financial statement reflect a combination of recorded facts, accounting conventions and

personal judgments and the judgments and conventions applied affect them materially the social

rights among consumers and labor union, increasing insecurity of investors funds etc.'' However

38

now it is obligatory for every organization to prepare financial statements as per the annual

report.

But in the modern accounting system ''The statement of retained earnings, ''Earning Per

Shares” (EPS) and statement of change in financial position” are also considered as important

financial statements. It is very well known that the financial statements basically refer to balance

sheet and profit and loss account or income statement, of course these two basic statement are

supported by a number of schedule, annexure supplement statements explanatory notes,

footnotes etc. Therefore all these financial statements are having good amount of their

importance in the annual accounts of an organization. These statements are prepared on the basis

of the transactions that have taken place during the accounting period.

As financial statements are the final products of accounting work, done during the

financial period, they can be termed as summarized reports of accounting transactions. They are

prepared for the purpose o presenting a periodic review of the progress made by the enterprise or

management. ''The Financial Statement reflects a combination of recorded facts, accounting

conventions and personal judgments, and the judgments and conventions applied affect them

materially.'' Thus financial statements are the supported statements are a mirror image of the

position of an enterprise regarding earning, profit ability to operate in future, change in it's owns

goals and attain at targeted level. Thus they portray a picture of success or failure of the business

that reflects the effectiveness and efficiency of management. In short financial statements are the

pillars of accounting systems.

2.8 Balance sheet:-

The concept of Balance sheet is an old as the concept of accounting. The first balance

sheet was prepared in 1340 (2). Balance sheet is one of the most significant financial statements

the It indicates the financial condition or the state of affairs of a business at a Particular moment

of time Balance sheet contains information about resources and obligations of a business entity

and about its owners interest in the business at a particular point of time. Assets and Liabilities

are shown in the balance sheet. It also indicates the properties and obligations of a business

entity. It is based on the equation.

Net Assets = Total Assets – Total Liabilities

39

It provides a snapshot of the financial position of the firm at the close of the firm’s

accounting period. In joint stock companies, the balance sheet is prepared as per section 211 of

companies’ act 1956, In banking sector however it is prepared as prescribed in the third schedule

under section 29 of Banking Regulation Act 1949 but in Co-Operative banking sector there is no

any format is prescribed by the Banking Regulations act 1949.

According to I.M. Pandey following are three important functions of Balance sheet

(a) It gives a summary of the firm’s assets and liabilities.

(b) It is a measure of the firm’s liquidity.

(c) It is a measure of the firm’s solvency.

A balance sheet contains information about the assets liabilities and owner’s interest in

the business at a particular point of time. Suppose a balance sheet of a firm prepared as on 31st

March 2003 reveals the financial position on this specific date “The balance sheet is a statement

which reports the values of properties owned by the enterprise and claims of creditors and

owners against these properties.” Thus balance sheet is a statement of assets, liabilities and

owner’s equities at their respective book values of a business firm as on a specific date. In short

it can be said that a balance sheet is a “Status Report” indicating the financial condition of an

enterprise. It can be prepared in horizontal vertical or step format.

2.9 Income Statement: -

Income statement termed as a profit and loss Account is a financial statement. A balance

sheet as discussed above indicates firm’s financial position at a specific date. Hence it is

considered as a very significant statement by bankers and lenders. But it fails to indicate whether

firm is making profit or losing money. Therefore creditors and financial analysts have recently

started paying more attention to earning capacity of the firm which is reflected by profit and loss

account or income statement. It is a scoreboard of the firm’s performance during a period of

time. It is a flow statement.

According to Guthman H.G. “The statement of profit and loss is the condensed and

classified record of the gains and losses causing change in the owner's interest for a period of

time” Income statement indicates the result of business operations during two balance sheet

40

dates. This net result of may be favorable or unfavorable. If favorable the result, is net profit and

if unfavorable the result, is net loss. In other words it is a summary report of income and

expenses incurred in the regular course of business during a particular accounting period. The

income statement shows the incomes and expenses of a business enterprise over a period of time

and then gives final figures representing the amount of profit or loss for the accounting period. It

is the performance report of an enterprise indicating change in income and expenses due to

business operations conducted during a particular accounting period and suggest a long range

view of a business and shows where it is leading to. The income statement can also be presented

in a vertical or horizontal form.

2.10 Statement of Retained Earning: -

Statement of retained earning indicates the cause and magnitude of changes in the

retained earnings of the concur during the year. It begins with the amount of accumulated profits

and concludes with the amount of undistributed earnings. It is prepared to show the amount of

profits transferred to reserves, payment of interim dividend, proposed dividend and

appropriations. It follows the income statement and provides a link between the income

statement and the balance sheet.

2.11 Statement of Sources and Uses of Funds: -

It is a statement summarizing the financing and investing activities of an enterprise

indicating where the financial resources have come from and where they have gone. It measures

the changes that occur in assets, liabilities and other accounting aspects of business operations

and trace the reasons for such changes.

2.12 The Concept of Financial Analysis:-

Financial statements are only the means of providing general information regarding

operational results and financial position of a business. These statements merely contain

financial data about business events which do not reveal any significant conclusions such as

efficiency of the management, strength and weakness of the firm, index of future progress etc.

The analysis is done by properly establishing the relationship between the items of balance sheet

41

and profit and loss account. The first task of financial analysis to determine the information

contained in the financial statement. The second step is to arrange information in a way to

highlights significant relationship. The final step is interpretation and drawing of inferences and

conclusions. Thus financial analysis is the process of selection, reviewing and evaluation of the

accounting information.

2.13 Significance of Financial Analysis: -

The Basic limitations of the traditional financial statements comprising the balance sheet

and the profit and loss account is that they do not give all the information related to the financial

operations of a firm. Nevertheless they provide some extremely useful information to the extent

that the balance sheet is a mirror of the financial position on a particular date in terms of the

structure of assets, liabilities and owner’s equity and so on and the profit and loss account shows

the result of operations during the year. Thus the financial statements provide a summarized

view of the financial position and operations of a firm. Therefore; much can be learnt about a

firm from a careful examination of its financial statements as invaluable documents performance

report. The analysis of financial statement is, thus an important aid to financial analysis. The

focus of financial analysis is on key figures in the financial statements and the significant

relationship that exist between them

2.14 Comparative Financial Statement Analysis: -

Comparative financial statements are statements of financial position of a concern so

designed as to facilitate comparison of different accounting variables and thereby draw useful

conduciveness. According to the M.R. Agrawal “Comparative financial statements are those

statements which summarize and present related accounting data for a number of years

incorporating therein the changes (absolute or relative or both) in individual item.10 In these

statements, the financial data for two or more years are placed and presented in adjacent

columns. So that it may provide a true perspective in order to facilitate period comparison. It is

also comparative financial statements are usually prepared with special columns indicating

absolute data for each of the period and changes in it terms of rupees as well as in terms of

percentages. The comparative financial statements is to ascertain the changes accruing year by

42

year in each item of assets, liabilities and net worth shown in the financial statements of a

business firm and whether such changes are favorable or adverse.

1.15 Trend Analysis: -

A study based on trend percentage is known as trend analysis. Trend analysis indicates

the trend of progress during past several years. Trend percentages are helpful in making a

comparative study of financial statements for several years as it indicates increase or decrease in

an item along with the magnitude of change in percentage. According to R. A. Kennedy and S.

Y. Mc Mullen “For the purpose of financial appraisal, an effective use of financial ratios can be

made by observing the behavior of ratios over period of time”.11 As one of the management

tools, the importance of looking into tendency of events between financial statements prepared at

different period cannot be lost sight of where the business was? Where the business is ? And

where the business will be? All these uses being clearly revealed through trend analysis.

According to M.R. Agrawal “The trend analysis is the method of analyzing financial position of

a business on the basis of changes in the items of financial statement of successive years in

comparison a specific date or period commencement of study.

2.16 Ratio Analysis: -

Analysis of financial statement based on ratios is known as ratio analysis. Ratio analysis

is a technique of presenting internal and external events affecting the business transaction

relating to its operations, operating results and attainment of pre-determined goals and objectives

of a business in brief and summary form.

According to Belverd-E-Needless “Ratio guides or short cuts that are useful in

evaluating the financial position and operations of a company and in comparing them with

previous years or with other companies. The primary purpose of ratio is to point out areas for

further investigations. They should be used in connection with a general understanding of the

company and its environment.

Various Ratios;-

Current Ratio:-

43

The current ratio is balance-sheet financial performance measure of company liquidity. The

current ratio indicates a company's ability to meet short-term debt obligations. The current ratio

measures whether or not a firm has enough resources to pay its debts over the next 12 months.

Potential creditors use this ratio in determining whether or not to make short-term loans. The

current ratio can also give a sense of the efficiency of a company's operating cycle or its ability

to turn its product into cash. The current ratio is also known as the working capital ratio.

Calculation (formula)

The current ratio is calculated by dividing current assets by current liabilities:

The current ratio = Current Assets / Current Liabilities

Both variables are shown on the balance sheet (statement of financial position)

Norms and Limits

The higher the ratio, the more liquid the company is. Commonly acceptable current ratio is 2; it's

a comfortable financial position for most enterprises. Acceptable current ratios vary from

industry to industry. For most industrial companies, 1.5 may be an acceptable current ratio. Low

values for the current ratio (values less than 1) indicate that a firm may have difficulty meeting

current obligations. However, an investor should also take note of a company's operating cash

flow in order to get a better sense of its liquidity. A low current ratio can often be supported by a

strong operating cash flow.

If the current ratio is too high (much more than 2), then the company may not be using its current

assets or its short-term financing facilities efficiently. This may also indicate problems in

working capital management. All other things being equal, creditors consider a high current ratio

to be better than a low current ratio, because a high current ratio means that the company is more

likely to meet its liabilities which are due over the next 12 months.

Fixed Assets to Net Worth:-

Fixed assets to net worth is a ratio measuring the solvency of a company. This ratio indicates

the extent to which the owners' cash is frozen in the form of fixed assets, such as property, plant,

44

and equipment, and the extent to which funds are available for the company's operations (i.e. for

working capital).


Fixed assets to Net Worth = Net fixed assets / Net worth

Norms and Limits

Fixed assets to net worth ratio 0.75 or higher is usually undesirable, as it indicates that the firm is

vulnerable to unexpected events and changes in the business climate. But the term "fixed assets"

(non-GAAP term) has different interpretations so it's difficult to use and compare this ratio. That

is why we prefer to use similar ratio "Non-current assets to net worth" implicating IFRS term

"Non-current assets".

Working Capital:-

Working capital is the amount by which the value of a company's current assets exceeds its

current liabilities. Also called net working capital. Sometimes the term "working capital" is used

as synonym for "current assets" but more frequently as "net working capital", i.e. the amount of

current assets that is in excess of current liabilities. Working capital is frequently used to

measure a firm's ability to meet current obligations. It measures how much in liquid assets a

company has available to build its business. Working capital is a common measure of a

company's liquidity, efficiency, and overall health. Decisions relating to working capital and

short term financing are referred to as working capital management. These involve managing the

relationship between an entity's short-term assets (inventories, accounts receivable, cash) and its

short-term liabilities.


Working capital (net working capital) = Current Assets - Current Liabilities

Both variables are shown on the balance sheet (statement of financial position).

45

Norms and Limits

The number can be positive (acceptable values) or negative (unsafe values), depending on how

much debt the company is carrying. Positive working capital generally indicates that a company

is able to pay off its short-term liabilities almost immediately. In general, companies that have a

lot of working capital will be more successful since they can expand and improve their

operations.

Companies with negative working capital may lack the funds necessary for growth. Analysts are

sensitive to decreases in working capital; they suggest a company is becoming overleveraged, is

struggling to maintain or grow sales, is paying bills too quickly, or is collecting receivables too

slowly. Though in some businesses (such as grocery retail) working capital can be negative (such

business is being partly funded by its suppliers)

Debt-to-Equity Ratio:-

The debt-to-equity ratio (debt/equity ratio, D/E) is a financial ratio indicating the relative

proportion of entity's equity and debt used to finance an entity's assets. This ratio is also known

as financial leverage.

Debt-to-equity ratio is the key financial ratio and is used as a standard for judging a company's

financial standing. It is also a measure of a company's ability to repay its obligations. When

examining the health of a company, it is critical to pay attention to the debt/equity ratio. If the

ratio is increasing, the company is being financed by creditors rather than from its own financial

sources which may be a dangerous trend. Lenders and investors usually prefer low debt-to-equity

ratios because their interests are better protected in the event of a business decline. Thus,

companies with high debt-to-equity ratios may not be able to attract additional lending capital.


46

A debt-to-equity ratio is calculated by taking the total liabilities and dividing it by the

shareholders' equity:

Debt-to-equity ratio = Liabilities / Equity

Both variables are shown on the balance sheet (statement of financial position).

Norms and Limits

Optimal debt-to-equity ratio is considered to be about 1, i.e. liabilities = equity, but the ratio is

very industry specific because it depends on the proportion of current and non-current assets.

The more non-current the assets (as in the capital-intensive industries), the more equity is

required to finance these long term investments.

For most companies the maximum acceptable debt-to-equity ratio is 1.5-2 and less. For large

public companies the debt-to-equity ratio may be much more than 2, but for most small and

medium companies it is not acceptable. US companies show the average debt-to-equity ratio at

about 1.5 (it's typical for other countries too).

In general, a high debt-to-equity ratio indicates that a company may not be able to generate

enough cash to satisfy its debt obligations. However, a low debt-to-equity ratio may also indicate

that a company is not taking advantage of the increased profits that financial leverage may bring.

Net Worth:-

Net worth is the difference between a company's total assets and its liabilities. Net worth is also

known as stockholders' (or owners') equity. In accounting and financial analysis the term "net

worth" is also equivalent to the term "net assets".

Net Assets:-

The term "net assets" is the alternative term for "equity" (i.e. the total assets of a business minus

its total liabilities). It is also equivalent to term "net worth". The term is not widely used in the

business community versus the other mentioned terms.

47

Return on investment (ROI) is performance measure used to evaluate the efficiency of

investment. It compares the magnitude and timing of gains from investment directly to the

magnitude and timing of investment costs. It is one of most commonly used approaches for

evaluating the financial consequences of business investments, decisions, or actions.

If an investment has a positive ROI and there are no other opportunities with a higher ROI, then

the investment should be undertaken. A higher ROI means that investment gains compare

favorably to investment costs.

ROI is an important financial metric for:

• asset purchase decisions (such as computer systems, machinery, or service vehicles)

• approval and funding decisions for projects and programs of different types (for example

marketing programs, recruiting programs, and training programs)

• Traditional investment decisions (for example management of stock portfolios or the use

of venture capital).

Calculation (Formula)

To calculate return on investment, the benefits (or returns) of an investment are divided by the

costs of the investment. The result can be expressed as a percentage or a ratio.

Return on Investment (ROI) = (Gains from Investment – Cost of Investment) / Cost of

Investment

It should be noted that the definition and formula of return on investment can be modified to suit

the circumstances -it all depends on what is included as returns and costs. For example to

measure the profitability of a company the following formula can be used to calculate return on

investment.

Return on Investment = Net profit after interest and tax / Total Assets

Norms and Limits

48

One drawback of ROI is that it by itself says nothing about the likelihood that expected returns

and costs will appear as predicted. Neither does it say anything about the risk of an investment.

ROI simply shows how returns compare to costs if the action or investment brings the expected

results. Therefore, a good investment analysis should also measure the probabilities of different

ROI outcomes. It is important to consider both the ROI magnitude and the risks that go with it.

Return on Capital Employed (ROCE):-

Return on capital employed (ROCE) is a measure of the returns that a business is achieving from

the capital employed, usually expressed in percentage terms. Capital employed equals a

company's Equity plus Non-current liabilities (or Total Assets − Current Liabilities), in other

words all the long-term funds used by the company. ROCE indicates the efficiency and

profitability of a company's capital investments.

ROCE should always be higher than the rate at which the company borrows otherwise any

increase in borrowing will reduce shareholders' earnings, and vice versa; a good ROCE is one

that is greater than the rate at which the company borrows.


ROCE = EBIT / Capital Employed = EBIT / (Equity + Non-current Liabilities) = EBIT / (Total

Assets - Current Liabilities)

A more accurate variation of this ratio is return on average capital employed (ROACE), which

takes the average of opening and closing capital employed for the time period.

One limitation of ROCE is the fact that it does not account for the depreciation and amortization

of the capital employed. Because capital employed is in the denominator, a company with

depreciated assets may find its ROCE increases without an actual increase in profit.

EBIT (Earnings before Interest and Taxes):-

EBIT (Earnings before Interest and Taxes) is a measure of a entity's profitability that excludes

interest and income tax expenses. Interest and taxes are excluded because they include the effect

49

of factors other than the profitability of operations. EBIT (also called operating profit) shows an

entity's earning power from ongoing operations.


EBIT = Profit (loss) + Finance costs + Income tax expense

Used List of Ratios:-

1. Fixed Assets to Proprietary Fund Ratio

Fixed Assets to Proprietary Fund Ratio= Fixed Asset/Proprietor’s Fund.

2. Working Capital to Net Worth

Working Capital to Net Worth = Working Capital/Net Worth

3. Solvency Ratio

Solvency Ratio = Total Assets/Total Liabilities

4. Fixed Assets to Net worth Ratio

Fixed Asset to Net worth Ratio = Fixed Asset/ Net Worth

5. Earning Per Shares (EPS).

Earning per Shares (EPS) = Net Profit after Tax and Interest/Number of Equity Shares

6. Proprietary Ratio.

Proprietary Ratio = Shareholders’ funds/Total tangible assets.

7. Profitability Ratio

Profitability Ratio= Operating Profit/ Capital employed*100

8. Price Earnings Ratio

Price Earnings Ratio = Market Price Per Share/Earning Per Share

9. Dividend Yield Ratio

Dividend Yield Ratio = Dividend per Share/Market Value per Share

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2.17 Funds Flow Analysis: -

In financial statements, balance sheet shows assets, liabilities and equity of the firm at a

certain moment of time. Profit and loss account depicts operating results over a period of time.

Fund Flow analysis is an analysis of sources and uses of funds. It highlights the changes in the

financial composition of an undertaking between two dates. As per Accounting Standard Board

of ICAI “A statement which summaries for the period covered by it the changes in financial

position including the sources from which the funds were obtained by the enterprise and the

specific uses to which the funds were applied. Thus funds flow statement is not a statement of

financial position at a particular date, but it is a report of financial operations, changes, flows and

movement of funds. It is an important financial technique widely used by financial analysis,

investors and bankers for judging.

(i) The financial strength of an enterprise.

(ii) The effectiveness of its financial policies

(iii) An understanding regarding the ability of a concern to use funds effectively in its best

interest.

According to techniques such as Ratio Analysis Trend analysis, comparative statement

analysis and common size Analysis have been used for the purpose of study.

(B) Review of Literature:-

Introduction:-

In view of the fact that the present study is primarily related with the contribution

of the Devgiri urban Co-operative Bank Ltd Aurangabad.

The literature on co-operative credit is plenty, studies on the organization and

management of Devgiri urban co-operative bank Ltd. is peripheral. Volumes of literature

on co-operative expert committee and researchers. Most of the studies focused their

attention of working of different levels of co-operative were written by many co-

operators, administrators, study teams, expert committees and researchers. Most of the

studies focused their attention working of the DUCB. These studies have been made on

the basis of data collected from secondary sources. All these studies may be termed as

51

reports of enquiry committees, research studies of institutions and studies of researchers.

The review of literature is dividend in to different categories.

1. Agale Sudhir Vasantrao (2012) aptly observed that the number of DCCBs increased in

the Maharashtra during the study period from 30 to 31. The number of branches

decreased during the period was 3,718 in the year 2001 to 3,646 in the year 2007. The

total number of member of DCCBs also shows the decreasing position during the period

from 100 per cent to 90.97 per cent. The amount of Share Capital of DCCBs shows the

increase in the percentage that 100 per cent to 173.37 per cent. It is interesting to note

that the share of government in the share capital was decreased from 100 per cent to

58.34 per cent during the study period. The progress of owned funds shows by the table

that the own funds of DCCBs increased from 100 per cent to 262.33 per cent during the

seven years period. The growth seen from the table in the deposits was 100 per cent to

154.83 per cent during the period 2001-2007. The working capital also shows the growth

from 100 per cent in the year 2001 to 167.65 per cent in the year 2007.

2. Divekar. D.A. (2013), observed that the UCBs of our country in general and UCBs from

Pune in particular need to realize that they need to quickly adopt CBS else they will be

unable to keep pace with the technological advancement happening around, especially in

Banking and financial sector of India (BFSI). Government of India and RBI have

observed of CBS, UCBs do not integrate well in banking system of India and therefore,

RBI has issued a circular to UCBs directing to complete CBS implementation before 31St

Dec 2013.

The Scenario of CBS implementation in Pune based UCBs in encouraging over

60 percent UCBs are yet to go for CBS, Same is the case with introduction of E-delivery

Channels and Para-Banking service. Meeting line-line specified by RBI itself would be

gigantic task due to complexity of the CBs project. Introduction of E-delivery Channels

would be possible only after successful implementation of CBS.

It is high time that management of UCBs in Pune have their strategies in Pune to

introduce CBs in their respective banks either through their own resources or through

financial assistance from NABARD, NCDC etc. They can even comes together to set-up

common data centre and disaster Recovery site in order to minimize investment of

52

setting- up of such infrastructure and share computing as well as human resources to

manage such advanced it infrastructure.

3. V. Alagu Pandian and R.K. Sharma (2013) aptly observed that the analyzed data

shows that there is no significant difference between all sample selected variables of

District Cooperative Banks and Urban Cooperative Banks in Dehradun. The reference

period is 2007-08 to 2011-12, during this period both the bank results registered

uniformity. Even though, among the two samples selected banks many years in difference

sample selected variables registered negative growth also. It is not much influence to the

impact of significance difference between DCB and Urban Cooperative Bank in

Dehradun. Because, when result fit through Mann – Whitney – U- Test and based on that

given rank number, the researcher easily assess the significance difference between two

banks. The growth rate of interest income, total income, interest expended, total

expenditure, and net profit of DCB in Dehradun and Urban Cooperative Bank in

Dehradun.

4. Jayashree R. Kotnal (2013):- DR. L. C. Mulguand (2013) I observed that concludes

total deposits have been increases in my study. On the contrary the rate of interest is

falling every year. The Bank has adopted production oriented and need based leading

policy and has been making specific efforts for providing credit facilities for person’s

falls under the category of priority sector and weaker sections. The bank as to make such

schemes and policies that increases in deposit ratio. That attracts the more number of

people to be a member of bank. That increases the share capital of the bank.

This will help the bank to widen its operations in the coming year. Further the

bank has already computerized its operations for quick and satisfactory services. It is to

be noted that the depositors are aware of computerization of banking operations. Far and

away the prize that life offers is the chance to work hard at something worth doing, being

a student of master of commerce my experience for SHRI SHIDDHESHWAR CO-

OPERATIVE BANK., was very much useful.

5. Ms. Shachi Pareek (2012) aptly observed that the above analysis reveals that the UCBs

in Jaipur are in a positive state of health with satisfactory level of profitability. Even

being small in size, they have got a great potential to cater the marginal clients. The pace

53

with which these banks are able to reduce the burden is higher than the pace of increasing

the spread. The same will help in lifting their profits automatically.

UCBs in Jaipur should undertake some promotional campaigns to attract more

clients and thus broaden their customer base. This will help in increasing their deposits

and will increase the interest income too. Further, the consistent increase in non-fund

income should be ensured by these banks, so that the burden can be easily reduced. The

outperforming UCBs should be set as a "benchmark", against which the performance of

other UCBs should be measured. This will increase the competitiveness of these banks

and will thus improve their profitability performance.

6. Dr. Padmaja, B., Dr. BhanuKiran, C. and Dr. Rama Prasada Rao, C. H (2013) I

observed that The Anantapur Urban Co-operative Bank has witnessed decrease in

membership during this period 2005-06 to 2009-10 with a negative growth rate of 13.33

percent and the share capital during this period shows -5.41 percent of negative

compound rate, with a not significant value. So H1: There is no significant growth of

Share Capital in the Anantapur UCB. is accepted Deposit mobilation Is an important

activity of the bank. The deposits have increased from Rs.1246 lakhs to Rs.2653 lakhs,

with 112.92 percent during these 5 years. The deposits of Anantapur Urban Co-operative

Bank increased by 2 times. The total deposits of the Anantapur Urban Co-operative Bank

have shown a high growth. The fixed deposits and special deposits constitute 90 percent

in its total deposits. The increase in the volume of deposits during the decade has been

higher due to the adoption of daily saving deposit scheme; the deposits have increased by

2 times in 5 years. The proportion of saving deposits has grown considerably, and the

recurring deposits and the current deposits have recorded a marginal growth rate. The

total deposit of Anantapur Urban Co-operative Bank represents 93 percent to 95 percent

of its working capital. It recorded a compound growth rate of 16.31 with a more

significant’ value. So H2: There is no significant growth of deposit mobilization during

study with regard to Anantapur Urban Cooperative Bank Is rejected. During this period,

it has been witnessed that the Anantapur UCB is self reliant, and has not depended upon

outside sources. As far as the total advances are concerned Jewel loans form the highest

percentage followed by mortgage loans and deposit loans. The other loans form a small

54

percentage of total loans and advances. The percentage of jewel loans increased during

the period.

7. Subrahmanya Bhat. K. M/ Dr.I Bhanu Murthy (2012) The purpose and objectives of

cooperatives provide the framework for cooperative corporate governance. Co-operatives

are organized groups of people and jointly managed and democratically controlled

enterprises. They exist to serve their members and depositors and produce benefits for

them. Co-operative corporate governance is therefore about ensuring cooperative

relevance and performance by connecting members, management and the employees to

the policy, strategy and decision-making processes. The adoption of technology required

banks to re-engineer processes, network branches and introduce alternate delivery

channels such as internet banking, phone banking and mobile banking, data warehousing

and data mining, customer relationship management, integrated treasury management,

human resource management and the implementation of core banking solutions. In

addition, many initiatives of the regulator such as ECS, RTGS and NEFT also lead to

overall technology adoption by banks. New private sector banks are providing very good

services to their customers. So growth rate in advances, investments, deposits as well as

net profits is very high in case of private sector banks. Most of the customers of state co-

op bank are visiting branches occasionally or 3-4 times during a month.

8. Dr. M. Nallusamy (2012):- That for finding the performance of the banking sector,

evidence found from its profitability of the bank. Profitability has been an important

criterion to evaluate the overall efficiency of a bank’s operations. Being a relative

measure, it is devoid of the pitfalls associated with interpretation of term ‘profit’. Even if

one ignores the past year or peer aspect of measuring profitability, it is still the best

indicator of efficiency of banking operations. The concept of profitability is used and

interpreted the same way both in a business firm and a banking company. Bank’s

profitability has assumed greater importance in the changing scenario of autonomy to

banks and financial reforms. Profitability in banking parlance demotes the efficiency with

which a bank deploys its total resources to optimize its profit and thus serves an index of

asset utilization and managerial effectiveness. The present paper attempts to explore the

relationship between bank profitability and its determinants. Since there are many

55

variables affecting profitability, a model giving the most critical variables / ratios has

been developed by using Multiple Discriminate Analyses.

9. Ms Geeta Sharma and Dr Ganesh Kawadia (2011) The A combination of financial

restructuring and institutional reforms can only help urban cooperative banks to improve

the efficiency. Moreover the objective of financial restructuring must be to induce

regulatory, 17 legal and administrative changes considering cooperatives member-centric,

democratic, autonomous and self-reliant institutions. Polarization and bureaucratization is

running through the warp and woof of the UCBs. Their combined effect led to

governance and managerial failure leading in turn to severe financial impairment. The

very concept of banking is undergoing change in the present competitive environment

and the conventional framework for management with which UCBs are comfortable is

not sufficient. Good corporate governance is critical to efficient functioning of an entity

and more so for a banking entity. The framework for good governance and professional

management in urban cooperative banks should essentially emanate from the guiding

principles and the given legal framework in different countries.

10. VIDYA PITRE (2003):- There cannot be two opinions on the service rendered by UCBs

to meet the credit needs of the small borrower. In future, for sustaining and spreading the

network, they would continue to draw upon the resources of the state and central

governments and RBI. At present, there is scope for its spread with its concentration in a

few states. The share of urban population is increasing. The growth of the services sector

and advent of information technology has opened new frontiers. Micro finance, that is,

SHGs, is another area where a group of persons can be directly linked. Insurance is

another identified area for this sector. The large and growing market in India that is

untapped provides profitable avenues apart from challenges in terms of social

commitments; a large part, where interest rates as high as 100 per cent are still prevalent.

They can play the role of facilitators in the transmission of knowledge,

information with regard to the market and new technology-related development from

metropolitan to semi-urban centres. They can educate unemployed youth, who, for

instances, could get guidance and support from them. So instead of seeking help from

outside agencies for acquiring capability in order to compete with other banking groups

56

globally, UCBs should focus on different market/clientele, that is, the unorganized

market, which is local in character.

11. Heiko Hesse and Martin Čihák (2007) The findings in this paper indicate that

cooperative banks in advanced economies and emerging markets have higher z-scores

than commercial banks and (to a smaller extent) savings banks, suggesting that

cooperative banks are more stable. This finding, perhaps somewhat surprising at first, is

due to much lower volatility of the cooperative banks’ returns, which more than offsets

their relatively lower profitability and capitalization. We suggest that this observed lower

variability of returns, and therefore the higher z-scores, may be caused by the fact that

cooperative banks in normal times pass on most of their returns to customers, but are able

to recoup that surplus in weaker periods. To some extent, this result can also reflect the

mutual support mechanisms that many cooperative banks have created. The finding about

the higher z-scores in cooperative banks is quite robust with respect to modifications in

the measurement of volatility and z-scores.

It also remains valid if one distills the “pure” impact of the cooperative nature of a

bank, by using regression analysis and adjusting for differences in bank size, loan to asset

ratios, income diversity, and other factors with potential impact on individual bank’s

stability. Using the regression analysis, we also find that a higher share of cooperative

banks increases stability (measured by z-score) of an average bank in the same banking

system. The impacts differ by the groups of banks, however. High presence of

cooperative banks appears to weaken commercial banks, in particular those commercial

banks that are already weak to start with. This finding is consistent with Goodhart’s

(2004) hypothesis that the presence of non-profit-maximizing entities can pull down

stability of other financial institutions. This empirical result can be explained by the fact

that a higher cooperative bank presence means less space for weak commercial banks in

the retail market and therefore their greater reliance on less stable revenue sources such

as corporate banking or investment banking.

12. Narayana Gowd Talla, Anand Bethapudi and Reddeppa Reddy G, (2009) The

Dharmavaram Urban Co-operative Bank was setup in the early 20th century (1907), and

completed 103 years, (2010). As such, the membership has improved phenomenally over

the years. The share capital, reserves, owned funds, deposits; working capital, loans and

57

advances and the percentage of over dues have increased during the period. Ho1 is not

accepted which means that there is a significant growth in reserves of DUCB. Ho2: There

is no significant in the growth of deposit mobilization during study with regard to

Dharmavaram Urban Cooperative Bank is not accepted .Therefore there is a significant

growth in the deposit mobilization during study in DUCB. Ho3: There is no significant

growth in the loans and advances during the study with regard to Dharmavaram Urban

Co-operative Bank is not accepted which indicates that there is a significant growth in

loans and advances during the study period with regard to DUCB. Ho4: There is no

significant growth in the Total income of Dharmavaram Urban Co-operative n Bank

during the study is not accepted which indicates that there is a significant increase in

growth of Total income of DUCB. Ho5: There is no significant in the increase in the

growth of total expenditure with reference to Dharmavaram Urban Co-operative Bank is

not accepted which shows that there is significant increase in growth of Total expenditure

with reference to DUCB.Ho6: There is no significant in the growth of Share Capital in

the DUCB is accepted which indicates that even there is significant growth in the

membership of DUCB, but there is no significant growth in the increase of its share

capital. Moreover, there is a significant growth in the increase of working capital of

DUCB. There is also significant growth in increase of overdue of DUCB which is a great

concern for the bank. There is no significant growth in the increase of net profit and

earnings per share of the DUCB.

13. DR.SEEMA SANT; DR P.T CHAUDHARI (2012)The analysis of different financial

ratio of UCBs operating in Greater Mumbai and Jalgaon suggest that the technological

changes have significantly improved the productivity and profitability margins of these

banks. Further, the statistics indicate that the performance of UCBs in Greater Mumbai is

significantly better than the performance of UCBs in Jalgaon. Moreover, with the

advancement of communication technology the UCBs have been successful in reducing

their burden ratio and credit-deposit ratio over the time.

14. Dr. Sandip K. Bhatt, Dharmendra P. Patel (2013) Now, it is very much clear that co-

operative banks have very much importance in sustainable development. Without the

help of co-operative banks, millions of people in India would be lacking the much

needful financial support. Co-operative banks take active part in local communities and

58

local development with a stronger commitment and social responsibilities. These banks

are best vehicles for taking banking to doorsteps of common people, unbanked people in

urban and rural areas. Their presence in the social, economic and democratic structure of

the country is essential to bring about harmonious development and that perhaps is the

best justification for nurturing them and strengthening their base. These banks are sure to

win the race because they are from the people, by the people and of the people. Urban

Co-operative Bank is very important role for the sustainable development of India. UCBs

through various facilities provided to the society. This bank has also financially helped

for various sectors. i.e. Education, Health, Social Work, Agriculture, Rural Development,

Wedding Function, Cottage and Small Scale Industries, Retail Traders, Wholesale Trade

etc. The banks also finance the weaker sections.

15. Dr R.Renuka and C Elamathi (2013) The in sum, reforms pertaining to the urban co-

operative and short-term rural co-operative sectors seem to have set in motion a process

of revival in these sectors. As regards the urban co-operative sector, the improvement in

financial performance and health is better established by now; for the short-term rural co-

operative sector, the revival is more fragile and yet to spread across all regions in the

country and all tiers of the sector. In the coming years, it needs to be seen whether the

revival is sustained and broad-based. Further, it is imperative to pave the way for a

revival of the long-term rural co-operative sector given the vital role played by these

institutions in stepping up capital formation in Indian agriculture.

16. N. Babitha Thimmaiah, Jnaneshwar Pai Maroor and Shainy V.P (2013) The Indian

Banking industry (Public sector) is facing two problems. 1. Inefficiency 2. Competition

from private players. These problems can be tackled effectively by giving energy

boosters like training and development, motivation of employees and by creating super

ordinate goals viz survival. So in banking services all concerned decision makers have to

take care of following and four pillars.

1. Target Market-Serve each segment uniquely

2. Understand real customer needs.

3. Integrated marketing-All bank employees are required to work as a team towards

customer satisfaction

59

4. Profit through customer satisfaction. Similarly Bankers should take care of 7 ps

of Bank Service Marketing Mix. Product and price: In the light of competition

from shares, stock, commodities, bankers should invest this in such a way that

competitive rate of return can be offered; Promotion: Use Mouth publicity,

Public relations, sponsorship; Place: Location decision should be taken

scientifically and in the light of competition; People: Selection of people and

retention strategies should be taken by following marketing orientation i.e. first

In banks line of visibility for customers is very important. so all bank work seen

by customers should be well planned and it should be without chaos. Interactions

with customers should be very effective; Physical evidence: Environment and

physical setting should be very attractive.

17. Gupta Jyoti, Jain Suman (2012)

1. Majority (32% as per the study) of the respondent were having housing loan from

this bank.

2. Most (64% as per the study) of the people prefer to take long term loan which is

more than 3 years.

3. There is a very simple procedure followed by bank for loan.

4. Easy repayment and less for malities are the main factors determining customer’s

selection of loans.

5. Quality of services provided by the staff is satisfactory because bank is catering

to a small segment only and the customers are properly dealt with.

6. Customers are satisfied with the mode of repayment of installments.

7. Average time for the processing of loan is less i.e. approx 7 days.

The financial performances of Urban Cooperative Banks (UCBs) improved in

2010-11 though there are some concerns with regard to some of the UCBs reporting

negative CRAR. Within the rural cooperative sector, State Cooperative Banks (StCBs)

and District Central Cooperative Banks (DCCBs) reported profits but the ground level

institutions, i.e., Primary Agricultural Credit Societies (PACS) continued incurring huge

losses. The financial performance of long term cooperatives was found to be even weaker

than their short term counterparts. Also, it was observed that the branch network of

60

cooperatives, though widespread across the country, continued to be concentrated in

certain regions. Moreover, the network of cooperatives was not broad based in the north-

eastern region of the country. This suggests that efforts need to be taken to improve

banking penetration in the north-eastern part of the country along with improving the

financial health of the ground level cooperative institutions

18. Dr. Rasal R. G. (2011) In brief the sample household has a mixed feeling about the

performance of the PACS. They agree the PACS are doing right work, the management is

democratic but the majority of the sample households felt a high rate of interest of co-

operative loans. Complicating lending procedures of PACS and the discriminatory

policies of different section of societies are major drawback.

19. DAS SANJAY KANTI (2012) The in conclusion, MCAB is one of the top most

cooperative banking institutions in Meghalaya and renders services towards the common

people as friend, philosopher and guide. The bank earned consistent profit during the

years from inception except a few years. The C-D ratio of the bank is 24.7 in 2010 and

the CAGR of profit is 30.84%. The poor recovery rate and over dues to demand ratio are

the main problem of the bank. Again, decrease in the rate of NPAs as percentage of loan

outstanding is one of the positive aspect of MCAB. Further, the deposits of the MCAB

are composed of demand & time deposits and demand deposits contribute major share of

total deposits. The bank forwarded loans and advances to the common man in the form of

crop loans, allied agricultural loans, SGSY loans and other small beneficiaries. However,

155 of the total loans & advances are forwarded towards the farmers & SGSY

beneficiaries. Further by analyzing the descriptive statistics, it is also observed that the

correlation between profits is significantly & positively associated with borrowings,

reserves, own fund, deposits & loan and advances which are considered as a positive

aspect of cooperative banking.

Finally, operational efficiency and financial ratios like deposits to staff, net profit

to staff, loan outstanding to staff, spread to staff etc are shown the positive aspect of

accounting efficiency of the bank. In fine, it can be said that MCAB in India are the true

friends of farmers in particular and rural population in general. They have played

significant role in the development of rural economy of India. But as per literature and

studies done by various researchers, MCAB are facing various problems and challenges

61

such as dual control, poor financial base, less focus on deposit mobilization, poor

infrastructural facilities, lake of professionalism, low level of technology up gradation

and poor recovery performance etc. But SCBs are very important financial institutions

and are equally important of Govt. of India that is financial inclusion. But for making

these banks efficient, the above said challenges should be addressed and solved.

20. Dr E. Gnanasekaran, Dr. M. Anbalgan, N. Abdul Nazar,(2012) The overall financial

performance of the UCB’s in all fronts namely, Membership, Share Capital, Deposits,

Loans and Advances, Profit and Reserve Funds, Working capital, Over dues, Loans

issued etc., are showing a significantly and undistrubing trend through the application of

different statistical tools applied in the study.

Therefore it may be undoubtfuly concluded that the UCB’s are the road of

progress. This also clear that, the UCB’s is enjoying a predominant position in the

banking industry occupied in eighth place in the banking institution serving in Vellore

District.

21. Mr. Badhe Durgesh Ashok (2011) It is very much clear that co-operative banks have

very much importance in sustainable development. Without the help of co-operative

banks, millions of people in India would be lacking the much needful financial support.

Co-operative banks take active part in local communities and local development

with a stronger commitment and social responsibilities. These banks are best vehicles for

taking banking to doorsteps of common people, unbanked people in urban and rural

areas. Their presence in the social, economic and democratic structure of the country is

essential to bring about harmonious development and that perhaps is the best justification

for nurturing them and strengthening their base. These banks are sure to win the race

because they are from the people, by the people and of the people.

Urban Co-operative Bank is very important role for the sustainable development

of India. UCBs through various facilities provided to the society. This bank has also

financially helped for various sectors. i.e. Education, Health, Social Work, Agriculture,

Rural Development, Wedding Function, Cottage and Small Scale Industries, Retail

Traders, Wholesale Trade etc. The banks also finance the weaker sections.

22. Dr. Deshmukh Purushottam Vishnu (2013) The Development through cooperation is a

basic principle of corporation movement; it has contributed considerably in the

62

development of Maharashtra specifically Western Maharashtra. With the help of

cooperation society can change economic and social life. As the bargaining power is the

soul of new economic policy, it has posed new challenges before the Indian common man

.On the other hand role of government is constantly minimizing. The Indian

Governments are implementing policies in the favor of Multinational companies,

capitalists and the rich. This leads to serious question whether Indian Consumer and

producer will survive in the era of globalization? The solution to this question is in the

cooperation movement, as it has a bright history. The advent of the Special Economic

Zones, Mall, and Chain Marketing of multinational companies is creating new problems

in India. However, Indian Cooperative sector has the potential of offering new remedies

for these problems. However, the Indian cooperative sector is presently suffering from

some problems. The Indian cooperative banking is one such sector. The performance of

Indian cooperative banking sector on the basis of income, expenditure, NPA, borrowers

etc has been focused.

23. B Munirajasekhar and B Sudheer (2013) the technologically laggard Cooperative

banks should realize that the economic class and age composition of their customers is

already not favorable. It would obviously be difficult for laggard cooperative banks to

attract new young customers if they do not increase their investments on IT in right

direction with cautious approach. It is now high time for the decision makers in

cooperative banks to realize the need to enlarge the base of computerization and see that

the real benefits are delivered at all the levels, customers and stakeholders of the bank.

The decision makers have to work out a definitive time frame for technological

advancement in their respective banks with complete involvement in monitoring,

controlling and evaluating the progress with set parameters.

24. Dr.K.V.S.N, Jawahar Babu, B.Muniraja Selkhar (2012) this study reveals that budget

preparation was carried out in the branches of the bank and that manager are the

personnel responsible for the preparation and implementation of budget. It also revealed

that the bank has a budget committee and that on the average budgets are actualized.

Budget failure according to respondents was caused by poor implementation and

forecasting. There was a significant relationship between budget and control mechanism

63

in the banking industry and there was also a significant relationship between budget

preparation and budget implementation in the banking industry.

25. Gowd Talla Narayana, Bethapudi Anand, and Reddy Reddeppa (2011)The

Dharmavaram Urban Co-operative Bank was setup in the early 20th century (1907), and

completed 103 years, (2010). As such, the membership has improved phenomenally over

the years. The share capital, reserves, owned funds, deposits; working capital, loans and

advances and the percentage of over dues have increased during the period. Ho1 is not

accepted which means that there is a significant growth in reserves of DUCB. Ho2: There

is no significant in the growth of deposit mobilization during study with regard to

Dharmavaram Urban Cooperative Bank is not accepted .Therefore there is a significant

growth in the deposit mobilization during study in DUCB. Ho3: There is no significant

growth in the loans and advances during the study with regard to Dharmavaram Urban

Co-operative Bank is not accepted which indicates that there is a significant growth in

loans and advances during the study period with regard to DUCB. Ho4: There is no

significant growth in the Total income of Dharmavaram Urban Co-operative n Bank

during the study is not accepted which indicates that there is a significant increase in

growth of Total income of DUCB. Ho5: There is no significant in the increase in the

growth of total expenditure with reference to Dharmavaram Urban Co-operative Bank is

not accepted which shows that there is significant increase in growth of Total expenditure

with reference to DUCB.Ho6: There is no significant in the growth of Share Capital in

the DUCB is accepted which indicates that even there is significant growth in the

membership of DUCB, but there is no significant growth in the increase of its share

capital. Moreover, there is a significant growth in the increase of working capital of

DUCB.

26. Gaurav Kumar Gupta and Sanjeev Gupta (2013):- The objective of the present study

is to analyze the financial performance of Urban Cooperative Bank (UCB) in Lakhimpur

Kheri district of U.P. The results of the study show that though the bank has shown

reasonable growth in terms of advances and deposits but it is felt by us that it could have

done much better had it not followed an over cautious approach in lending policy and

would have gone for required expansion.

64

27. DR. VILAS BHIKAJI KHANDARE (2012):-Credit Supply was started in India

through primary cooperative societies as per the cooperative act of 1904. The origin of

urban credit movement in India can be traced to the close of Nineteeth century. The urban

cooperative banks should be tried to do for the small traders, small merchants and the

middle class population of the city. The owned capital working capital, deposits, the

loans and advances, Reserves and paid up share capital of urban cooperative banks in

Beed district shows on an a average positive growth rates during the study period. The

increasing share of reserves and decreasing share of paid up share capital in total owned

funds indicates the increasing self reliance of urban cooperative banks in Beed district. It

is observed from the study that the female customers are only 8.5 percent and farmers are

5 percent in four selected urban cooperative banks in Beed district.

The 71 percent customers of these banks said loan procedure is complicated. The

facility of clearing and transfer services is availed by 74 percent customers. It is observed

that 90 percent customers expected electricity bill facilities, 80 percent expected A.T.M.

services and 7.5 percent passport services. It is observed that the maximum customers

take loan for professional purposes. 63 percent customers utilize demand draft service; 18

percent customers utilize locker facility. Overdraft facility utilized by only 6 percent

customers.

28. K. Ravichandran,V. Alagu Pandian,(2013) The Visvesvarya Urban Cooperative bank

is one leading urban cooperative bank in Karnataka and got best urban cooperative bank

award in Karnataka continuously for four years from 2004 to 2007. The share capital and

reserve fund has made positive growth and the owned and the working capital held by the

bank have made steady progress. Net profits of Visvesvarya urban co-operative bank

during the year 2006-07 to 2010-11. The result shows that except during the year 2009-

10 remaining four years positive ne t profit growth could be observed. Among the five

year period highest per cent could observed during the year 2010-11 i.e., 39.79 per cent.

29. Ramesh Chander, Jai Kishan Chandel (2010) However District Central Co-operative

Banks (DCCBs) play pivotal role in the rural banking system yet failure/bankruptcy of

these banks raise many doubts about their viability and sustenance. In the present study

financial efficiency and performance of four DCCBs operating in Gurgaon division have

been identified and analyzed on five parameters viz. profitability, liquidity, solvency,

65

efficiency and risk. The results reveal that banks performed better on one parameter but

weaken on other which led to dwindling situation. Mahendergarh CCB has performed

well on profitability, liquidity and risk parameters but declined on efficiency and

solvency parameters. Rewari needs to make improvements on all parameters but it

performed well on liquidity. The profitability and efficiency have been quite better in

Faridabad, but it should improve on all other fronts. Except liquidity, the Gurgaon has to

make improvements on all other fronts. The derivation from the Z-score analysis reveal

that all the banks have been declined to become a part of weak performance or

bankruptcy zone. Long term sustenance and efficient operations have been big questions

before these banks. Overall score depicts that Mahendergarh CCB has been the best and

Gurgaon the worst one. In fact all the banks have been suffering from financial

mismanagement and underutilization of resources, so these banks should change their

vision and bring competitiveness besides transparency in their working to sustain and

become vivacious co-operative credit institutions.

30. S. Thyagarajan (2009) the bank envisions a future where financial services are

available to all the women who aspire to make life better for themselves and future

generations. The hallmark of the operations of the organizational structure is that the

bank has been able to invest in businesses built around local women's traditional skills,

giving them an ownership stake in activities in which they had previously been labourers.

One outstanding feature in the business model of the Mann Deshi is that it uses

microfinance and financial literacy as safety nets to increase disaster resilience among the

rural poor women. An outcome of this holistic approach is that around 127000 women in

the rural Maharashtra have been benefited from the services of Mann Deshi and started

controlling the finances, conducting businesses, acquire property rights, and break caste

barriers. The entire family of each of these women now began to reap the full benefits as

more money is spent on children, education and household necessities.

31. Padmini E.V.K (1997) the present study leads to the conclusion that though funds

mobilization is done reasonably well in most DCBs; sufficient attention is not given for

efficient utilization of these funds. Among the DCBs studied, a few DCBs like those of

Ernakulum and Kottayam performed adequately well while the others lag behind. Lack of

66

professionalization and poor management practices seems to be responsible for this

situation.

32. Dr.K.V.S.N Jawahar Babu (2012) Urban Cooperative Banking is a key sector in the

Indian Banking scene, which in the recent years has gone through a lot of turmoil.

Though some UCBs have shown credible performance in the recent years, a large number

of banks have shown discernible signs of weakness. The operational efficiency is

unsatisfactory and characterized by low profitability, ever growing non-performing assets

(NPA) and relatively low capital base. Also urban cooperative banks have not been able

to service the growing credit requirements of clients or the newer demands for loans in

the field of personal finance. In the interest of healthy competition, the urban cooperative

banks should be encouraged to grow. Thus a few bad eggs should not curb the growth of

a key banking entity.

33. Dr. S. Mayilvaganan, E. Soundararajan, (2013).Co-operative occupies an important

position in the Indian financial system. Co-operatives were the first formal institutions to

be conceived and developed to purvey credit to rural India. Thus far co-operatives have

been a key instrument of financial inclusion in reaching out to the last mile in rural areas.

The urban counterparts of rural co-operatives the Urban Co-operative Banks (UCBs) too

have traditionally been an important channel of financial inclusion for the middle and low

income sections in the semi-urban and urban area. The state and central Governments

could recognize that the UCBs are not just co-operative societies but they are essentially

banking entities whose management structure is that of a co-operative. Recently, the

UCBs have increasingly started adopting the three-pronged financial inclusion strategies

used by commercial banks – Banking Correspondents (BC), “no-frill” accounts and

promoting microfinance activities. Once again, their local nature gives them an advantage

over their national rivals in executing these moves better. UCBs enjoy an undeniable

edge in the area of relationship banking.

34. Alok Goyal and Harvinder Kaur (2011) Urban Cooperative Banks are the important

constituent of Indian banking system. These banks have expanded their operations over

the last two decades. It was found in the present study that the situation of NPA in banks

has improved over the period of study. But in 2007-08, the NPA in these banks have

grown in comparison of the previous year. In general, it may be concluded that the

67

position of NPA has improved considerably. Most of the Urban Cooperative Banks have

CRAR ratio of more than 9 percent. It was also find in the study that ROA exhibited in

the years 2008-09 and 2009-10 and actual ROA deviated from its potential throughout

the decade.

35. Deshmukh Jagdish and Somalkar Prakash (2010) aptly observed that Co-operation is

a better choice as compared to the Corporate Sector if run on trust, honesty and

confidence. The Government and Reserve Bank should sponsor this field in the interest

of the common man.

The UCBs should bring in mind that they should firstly survive in the present

world of competition and then grow. They should accept the challenge and succeed by

giving better customer service at a competitive cost. UCBs should diversify its activity in

non-interest income sector also to increase their profitability and expand their customer

base. There is a need for exchange of information and experience between the various

UCBs working in the area.

No doubt the future of UCBs is bright but at the same time it is challenging. For

every UCB coordination between management, customers and regulators is an important

aspect. The experienced and enlightened Board of Directors will make the management

efficient. The future is a capacity building exercise, characterized by conversation,

consolidation, competition, cost consciousness and customer orientation.

36. Dr. R. B.Teli (2005) “Performance evaluation of urban co-operative bank in Kolhapur

district”. The researcher has made the study of performance evaluation of urban

cooperative banks in Kolhapur district. The researcher considered the progress of

different indicators of VCBS in Kolhapur district showed considerable growth in their

membership, share capital reserves, owned funds, deposit, loan and net profit. But at the

same time there is an increase in overdue and number of banks made losses and thus,

there is an urgent need for further investigation of the working of UCBS in Kolhapur

district.

37. Dr. B. S. Gite (2005): “Performance evaluation of Mahila Urban Co-operative Banks in

Parbhani District.” He has made a study evaluation of profitability of selected Mahila

Urban Co-operative Banks (Mahila UCBs) in Parbhani District. His study is confined to

the profitability position of selected Mahila Urban Co-operative Banks in Parbhani

68

District, profit during the period under study, but the rate of increased in the net profit is

flexible according to administrative division and type of bank. Mahila UCBs is a step

forward towards freedom of woman and woman empowerment particularly in a

backward area like Parbhani district of Marathwada region; this is a good sign of woman

entrepreneurship. The two Mahila UCBs have shown notable performance. This is also a

new dimension of co-operative activities in the banking sector.

38. Miss. Banishree Das and Nirod Palai (2006): “Problem and prospects of the co-

operative movement in India under the globalization regime.” This paper presented in

IXV international economy history congress, Hel-Sinki (2006) session 72. This paper

intends to analyze the problems and prospects of co-operative sector in India under free

markets. The paper focuses on several petals and shortcoming like poor infrastructure,

lack of quality management, over dependence on government, dormant membership, non

conduct of elections, lack of strong human resources policy, absence of professionalism

etc.

39. B. D. Patil (2013) The Maharashtra state is the pioneer and rank first in the growth of

co-operative movement in India. The co-operative credit societies and co-operative banks

in Maharashtra are playing key role in the growth of agriculture expansion of rural

development and social and cultural activities. The co-operative movement as the best

source through which to apply it for rural development, people’s empowerment and

poverty alleviation programmed. The basic nature of the co-operative societies is to

encourage the ‘values of self help, democracy, equality and solidarity. Co-operative

members believe in the ethical values of honesty, openness and social responsibility and

carrying for others.

Co-operative movement basically an actives with a common goal, co-operation

refers to the formation of nonprofit economic enterprises for the benefit of their members.

Indian Government launched the movement with the enactment of the cooperative

societies Act 1904. According to the Act of 1904, the co-operative societies were to be

established in every district and were required to be managed by members on democratic

lines. The supreme authority was vested in the general meeting, which consisted of all the

members. All decisions as to liabilities, loans, investments, interests, etc. were to be

adopted at the general meeting. During the early years of the movement, the societies

69

were financed either by loans from government or from private person and deposits made

by members. The government loan up to a certain sum was normally interest free. The

village-based agricultural credit societies started giving loans to deserving members.

Co-operative movement in Maharashtra is based on the remarkable developments

in co-operative societies and co-operative banks. Various institutions in the above fields

are playing vital role in the process of economical, political and social development of

Maharashtra. Maharashtra state is one of the leading states in the co-operative movement

in India. Co-operative in State of Maharashtra have made a tremendous development

during the last four and half decade, several types of co-operative societies and banks

stated in Maharashtra with mission to provide overall services to their members and after

all to serve for the nation. In order to development the socio-economic conditions of the

rural society’s co-operatives have no challenge. Co-operatives have spread over all in

40. Rai Upendra (2011) The co-operative Bank is an important constituent of the Indian

Financial System, judged by the role assigned, the expectations supposed to fulfill, their

number, and the number of offices the Co-operative bank operate. Though the

cooperative movement original in the west, but the importance of such banks assumed in

India play an important role even today in rural financing. The business of Co-operative

Bank in the urban areas also has increased phenomenally in recent years due to the sharp

increase in the number of primary Co-operative Banks. Cooperative Banks in India are

registered under the Co-operative Societies Act. The Co-operative Bank is also regulated

by the RBI. They are governed by the Banking Regulations Act 1949 and Banking Laws

(Co-operative Societies Act. 1965.)

41. Roy Partho Partim (2001): Management of Urban Cooperative Banks, Himalaya

Publishing House, Mumbai. The cooperative credit movement has changed the rural and

urban life of the people. The separate regulations in 1984 for the development of UCB’s

but after liberalization of licensing policy the UCB’s are facing hurdles in their function.

UCB’s suffered the problems of productivity, efficiency and accountability of Non

Performing Assets. The Reserve Banks of India and Government must Reserve take

strong measures to strengthen UCB, otherwise the survival of UCB will become difficult.

It is seen that all the UCB in Maharashtra have earned more net profit.

70

42. Mr. Katkade Maruti Baburao(2010): Share capital:- it has been concluded that the total

authorized share capital the beginning was more in case of comparison of these four

banks reveals that the 10 year average paid up share capital of the those banks. In case of

percentage average growth is concerned the growth of share capital of the banks DNSB

show highest percentage of average growth and VUCB show lowest percentage of

average growth in above four banks.

Reserve fund and other reserve: It has been concluded that the total reserve fund the

beginning was more. The comparison of these four banks reveals that the 10 year average

Reserve fund of banks. DNSB show the highest percentage and VUCB show the lowest

percentage of average growth in above four banks.

43. Ratnaparkhe Santosh Dattatray (2011): The analysis of the source of funds and the

loans and advances performance of the bank combined with the historical profile of the

clearly demonstrates the strength and commitment. The business indicators of the bank

starting from the own fund to the total funds and the percentage of recovery

nonperforming assets clearly shown the performances of the Bombay Mercantile Co-

operative bank ltd. Aurangabad.

With the kind of the Board the management and the committed work force from

the senior management to the level management, the bank is expected to improve their

performance further to reach newer highest in the coming days and play the critical role

in the development of the Economy of nation.

44. Aghav M.P. (2009): Co-operative movement has completed 100 years. During this

period the movement has faced ups & down and today it has to face cut throat

competitions from public and private sector still co-operative sector still exist. In total co-

operative movement DCC Banks plays important role in rural development schemes. All

DCCBs works according to the in to the instruction and direction of Nabard. The total

activities of loan investment is depend upon external funds like and borrowings deposits,

as well as internal funds like paid- up capital, Reserve. Higher the total funds, soundness

of the bank exists. The DCCBs are expected to increase lines DCCBs viz. Jalna,

Osmanabad and sometime on Nanded which not encouraging science at all.

71

Select References:-

(A) Research Methodology

1. Dr.S.N. Maheshwari (2009):-“Financial Management”, Sultan chand & sons Education

Publication/publisher New Delhi.

2. Reddy, Appannaiah, Satyaprasad (2007):- “Financial Management”, Himalaya

Publication House.

3. Kulkarni P.V and Satyaprasad (2009):- “Financial Management”, Himalaya

Publishing House, Ramdoor, Dr. Bhalerao Marg, Girgaon, Mumbai-400 004.

4. Dr. Vijay Upagade , Dr Arvind Shende (2013):-“Research Methodology”, S. Chand &

Company Pvt. Ltd. Ram Nagar, New Delhi-110055.

5. Dr. Pradip Agalave (2010);-“Social Research”, Shri Sai Publication, 1 Bhagwaghar,

Complex, Dharampeth, Nagpur.

6. Dr. A. K. Phophalia:- “ Modern Research Methodology”, Paradise Publications Jaipur.

7. Dr. N.S.S. Nehru (2012):- “Research Methodology”, APH Publications corporation

Ansari Road, Dary Gans- New Delhi.

8. Dr. A. K. Singhal:-“A text Book of Accounting for managers for management students”,

JBC publications & distribution New Delhi-11022.

(B) Literature Review:-

1. Agale Sudhir Vasantrao (2012):- “Progress of District Central Cooperative Banks in

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Chapter -III

Analysis and Interpretation of Data

Chapter

III

Name of Table/Digram and Charts Page No.

3. Introduction 70













78















3.27 Comparative 5 year growth of DUCBA 100-102

3. Introduction:-

Concept of Analysis and Interpretation of Financial Statement:-

Financial statements are indicators of the two significance factors:

(I) Profitability, and

(II) Financial Soundness.

Analysis and interpretation of financial statements, therefore refers to such a treatment of

the information contained in the Income statement and the Balance sheet so as to afford full

diagnosis of the profitability and financial soundness of the business.

A distinction here can be made between the two terms ‘Analysis means methodical

classifications of the data given in the financial statements. The figures given in the financial

statement will not help one unless they are put in a simplified form. For example, all items

relating o ‘Current Asset’ are put at one place while all items relating to ‘Current liabilities’ are

79

put at another place. The term ‘Interpretation’ means explaining the meaning and significance of

the data so simplified.

However, both ‘Analysis and Interpretation’ are complementary to each other.

Interpretation requires Analysis, while Analysis is useless without Interpretation. Most of the

authors have used the term ‘Analysis’ only to cover the meanings of both analysis and

interpretation, since analysis involves interpretation. According to Myres, “Financial statement

analysis is largely a study of the relationship among the various financial factors in a business as

disclosed by a single set of statements and a study of the trend of these factors as shows as in a

series of statements”. For the sake of convince, we have also used the term “Financial statement

analysis” throughout the chapter to cover both analysis and Interpret

Table 3.1 Growth Trends of Capital/Liabilities position of DUCBA.

(Rs. In Crores)

Year Share Capital Reserve Fund

& Surplus

Long term

liability

Current

liability

Total

2008-09

110006350.00

938578160.00

3585876667.00

649076621.00

5283537798.00

2009-10

124554775.00

(13.23%)

989679792.00

(05.44%)

4079804833.00

(13.77%)

801143868.00

(23.42%)

5995183086.00

(13.47%)

2010-11

143819700.00

(15.46%)

1072806372.00

(08.40%)

4589870549.00

(12.50%)

892431431.00

(11.39%)

6698928052.00

(11.73%)

2011-12

155166925.00

(07.89%)

1180710890.00

(10.05%)

5283417336.00

(15.11%)

1233909855.00

(38.26%)

7853205006.00

(17.23%)

2012-13

180153350.00

(16.10%)

1268974917.00

(07.48%)

6485257105.00

(22.75%)

1501976592.00

(21.72%)

9436361964.00

(20.15%)

Source:- Annual Reports of 2008-09 to 2012-13 of DUCBA.

Chart 3.1 Growth Trend of Capital/Liabilities position of DUCBA.

80

Source:- Annual Reports of 2008-09 to 2012-13 of DUCBA

Note: - 1. The year 2008-09 is an assumed as base year.

2. The figure in bracket indicates percentage over the previous year.

Findings:-

1. It is seen from the table 3.1 that the share capital and Reserve funds accounted

combined18.66% of the net growth of DUCB of the year 2009-10, as compared to the

year 2008-09. It is indicated that was an increase (i.e. 23.58%) the net growth of the

DUCB of the year of the end 2012-13.

2. It is revealed from table 3.1 that the long term liability of DUCB accounted 13.77% of

the DUCB during 2009-10, as compared to the year 2008-09. It is shown that was a high

growth (i.e. 22.75%) of the long term liability of the DUCB during the end of year 2012-

13.

3. It is disclosed from table 3.1 that the current liability of DUCB accounted 23.42% of

during the 2009-10, as compared to the year 2008-09. It is focused that was a slight

decline (i.e. 21.72%) in the end of year 2012-13.

81

4. It is appears from the table 3.1 that the total of DUCB accounted 13.46% of during 2009-

10, as compared to the year 2008-09. It is indicated that was high growth of (i.e. 20.15%)

in the end of year 2012-13.

Table 3.2 Growth Trend Asset/Property position of DUCBA

(Rs. In Crores)

Year Fixed Asset Investment Current Asset Total

2008-09

Base year

2347956823.00

1922425558.00

1013155417.00

5283537798.00

2009-10

2821752721.00

(20.18%)

2013136262.00

(04.72%)

1160294103.00

(14.52%)

5995183086.00

(13.47%)

2010-11

3226722631.00

(14.35%)

2088314588.00

(03.73%)

1383890827.00

(19.27%)

6698928052.00

(11.73%)

2011-12

3586753064.00

(11.16%)

2412045196.00

(15.50%)

1854406746.00

(33.10%)

7853205006.00

(17.23%)

2012-13

4091218372.00

(14.07%)

3149001651.00

(30.55%)

2196141941.00

(18.43%)

9436361964.00

(20.15%)


Chart. 3.2 Growth Trend Asset/Property position of DUCBA


Note:- 1. The year 2008-09 is an assumed as base year.

82


Findings: -

1. It appears from table 3.2 that the fixed assets of the DUCB accounted 20.18% net growth

of the DUCB during the year of 2009-10, as compared to the year 2008-09. It is indicated

that was a growth of the DUCB of the fixed asset is decline (i.e. 14.07%) during the end

of the year 2012-13.

2. It is revealed from table 3.2 that the Investment of the DUCB accounted 04.72% net

growth of the DUCB during the year of 2009-10, as compared to the year 2008-09. It is

shown that was a growth trend of the DUCB of the high increase (i.e. 30.55%) during the

year 2012-13.

3. It is disclosed from table 3.2 that the current asset of DUCB accounted 14.52% of during

the 2009-10, as compared to the year 2008-09. It is focused that was an increase (i.e.

18.43%) in the end of year 2012-13.

4. It is appears from the table 3.2 that the total of DUCB accounted 13.47% of during 2009-

10, as compared to the year 2008-09. It is indicated that was high growth of (i.e. 20.15%)

in the end of year 2012-13.

Table 3.3 Position of total fund of DUCB (Liabilities) (Rs in Crores)

Year Share Capital Reserve Fund

& Surplus

Long term

liability

Current

liability

Total

2008-09

110006350.00

(02.08%)

938578160.00

(17.76%)

3585876667.00

(67.81%)

649076621.00

(12.28%)

5283537798.00

(100.00%)

2009-10

124554775.00

(02.08%)

989679792.00

(16.51%)

4079804833.00

(68.05%)

801143868.00

(13.36%)

5995183086.00

(100.00%)

2010-11

143819700.00

(02.15%)

1072806372.00

(16.01%)

4589870549.00

(68.52%)

892431431.00

(13.32%)

6698928052.00

(100.00%)

2011-12

155166925.00

(01.98%)

1180710890.00

(15.03%)

5283417336.00

(67.28%)

1233909855.00

(15.71%)

7853205006.00

(100.00%)

2012-13

180153350.00

(01.90%)

1268974917.00

(13.45%)

6485257105.00

(68.73%)

1501976592.00

(15.92%)

9436361964.00

(100.00%)


Table 3.3 Position of total fund of DUCB (Liabilities)

83

Source:- Annual Reports of 2008-09 to 2012-13 of DUCBA .

Note: - 1. The figure in bracket indicates percentage over the previous year.

Findings: -

1. It appears from table 3.3 that Share Capital and Reserve Fund accounted combined

19.81% of the total funds with DUCB during 2009-10, compared to the year 2008-09.

The same constituted 17.82% of the aggregate funds during 2008-09. It indicated that

was a slight decline (i.e. 15.35%) in the share of share capital & Reserve funds at the end

of 2012-13.

2. It seen from table 3.3 that Long term Liability accounted 67.81% of the total funds with

DUCB during the year 2009-10, as compared to the year 2008-09. It indicated that was a

slight increase (i.e. 68.73%) in the share of long term liability during the year 2012-13.

3. It disclosed from table 3.3 that the Current Liability accounted 12.28% of the total fund

of DUCB during the year 2009-10, as compared to the year 2008-09. It shown that was a

position of current liability increase (i.e. 15.92%) share of DUCB in the year 2012-13.

Table 3.4 Position of total fund of DUCB (Assets)

Year Fixed Asset Investment Current Asset Total

84

2008-09

Base year

2347956823.00

(44.44%)

1922425558.00

(36.38%)

1013155417.00

(19.18%)

5283537798.00

(100.00%)

2009-10

2821752721.00

(47.07%)

2013136262.00

(33.58%)

1160294103.00

(19.35%)

5995183086.00

(100.00%)

2010-11

3226722631.00

(48.17%)

2088314588.00

(31.17%)

1383890827.00

(20.66%)

6698928052.00

(100.00%)

2011-12

3586753064.00

(46.00%)

2412045196.00

(31.00%)

1854406746.00

(23.00%)

7853205006.00

(100.00%)

2012-13

4091218372.00

(43.36%)

3149001651.00

(33.37%)

2196141941.00

(23.27%)

9436361964.00

(100.00%)

Table 3.4 Position of total fund of DUCB (Assets)


Note: - 1. The figure in bracket indicates percentage over the previous year

Findings: -

1. It appears from table 3.4 that Fixed Asset accounted 44.44% of the total funds with

DUCB during 2009-10, as compared to the year 2008-09. It indicated that was a position

of DUCB slight decline (i.e. 43.36%) in the share of Fixed Asset of the end of year 2012-

13.

2. It seen from table 3.4 that Investment accounted 36.38% of the total funds of the DUCB

during 2009-10, as compared to the year 2008-09. It indicated that was a slight decline

(i.e. 33.37%) in the share of Investment during the year 2012-13.

85

3. It disclosed from table 3.4 that the Current Asset accounted 19.18% of the total fund of

DUCB during the year 2009-10, as compared to the year 2008-09. It shown that was a

position of Current Asset increase share (i.e.23.27%) of DUCB in the end of year 2012-

13.

Table 3.5 Capital Adequacy position of DUCB (In lakh)

Sr.

No

Particular 2008-09 2009-10 2010-11 2011-12 2012-13

01 Tyre-1. Capital 3127.68

(-)

3852.26

(23.16%)

3033.98

(-22%)

3074.94

(01.35%)

3853.85

(25.33%)

02 Tyre-2 Capital 788.68

(-)

782.39

(-01%)

1107.55

(41.55%)

1256.10

(13.41%)

1325.61

(05.53%)

03 Total(A+B)Capital 3916.36

(-)

4634.65

(18.35%)

4141.53

(-10.64%)

4331.04

(04.57%)

5179.46

(19.58%)

04 Total Risk Load

on Property

24028.03

(-)

31197.45

(29.83%)

35120.07

(12.57%)

34936.90

(-01%)

40581.53

(16.15%)

05 CRAR 16.30% 14.86% 11.79% 12.40% 12.76%


Table 3.5 Capital Adequacy position of DUCB (In lakh)

86


Note: - 1. The year 2008-09 is an assumed as base year.


Findings: - It was disclosed from the table 3.5 that Capital Adequacy accounted 16.30% t of

DUCB during the year 2008-09. As compared to the year of 2012-13, it indicated that was a

slight decline from (16.30% to 12.76%) of the end of year 2012-13.

Table 3.6 Mixer of Bank Deposits on 2008-2013(Share of Total fund Deposits) (In Lakh)

Sr.

No

Type of Deposits 2008-09 2009-10 2010-11 2011-12 2012-13

01 Current Deposits 1548.00

(4.32%)

2191.89

(5.37%)

3042.31

(6.63%)

2208.39

(4.18%)

3229.45

(4.98%)

02 Saving Deposits 8274.67

(23.07%)

10411.30

(25.52%)

13109.65

(28.56%)

13041.71

(24.68%)

14318.45

(22.08%)

03 Fixed Deposits 26036.10

(72.61%)

28194.86

(69.11%)

29746.75

(64.81%)

38584.01

(71.14%)

47304.94

(72.94%)

3589.00 40798.00 45899.00 52834.00 64853.00

Total (100.00%) (100.00%) (100.00%) (100.00%) (100.00%)

Source: - Annual Reports of 2008-09 to 2012-13 of DUCBA

87

Table 3.6 Mixer of Bank Deposits on 2008-2013(Share of Total fund Deposits) (In Lakh)



2. The figure in bracket indicates percentage over the total fund.

Findings: -

1. It disclosed from the table 3.6 that Current Deposits accounted 4.32% to the total deposit

of DUCB during the year 2008-09. As compared to the year of 2012-13, it indicated that

was a slight increase the share of current deposit (i.e. 4.98%) of the end of year 2012-13.

2. It seen from the table 3.6 that the saving Deposits accounted 23.07% of the total fund

DUCB during the year 2008-09. As compared to the year 2012-13, it shown that was a

slight decline the share of saving deposit (i.e. 22.08%) of the end of the year 2012-13.

88

3. It revealed from the table 3.6 that the Fixed Deposits accounted 72.61% of the total fund

DUCB during the year 2008-09. As compared to the year 2012-13, it shown that was a

slight change the share of saving deposit (i.e. 72.94%) of the end of the year 2012-13.

Table 3.7 Net Growth and Mixer of Bank Deposits on 2008-2013. (In Lakh)

Sr.

No

Type of

Deposits

2008-09 2009-10 2010-11 2011-12 2012-13 Total

01 Current

Deposits

1548.00

(-)

2191.89

(41.60%)

3042.31

(38.79)

2208.39

(27.42%)

3229.45

(46.23%)

12220

(99.00%)

02 Saving

Deposits

8274.67

(-)

10411.30

(25.82%)

13109.65

(25.91%)

13041.71

(-0.52%)

14318.45

(09.78%)

59156

(61.00%)

03 Fixed

Deposits

26036.10

(-)

28194.86

(08.29%)

29746.75

(05.50%)

38584.01

(29.70%)

47304.94

(22.60%)

169867

(66.09%)


Chart 3.7 Net Growths and Mixer of Bank Deposits on 2008-2013. (In Lakh)

89




Findings: -

1. The Fixed Deposits was in the year 2008-09 is Rs 26036.10 lakhs and in the year 2012-

13 is Rs 47304.94 lakhs. There is increasing Rs. 21208.84 lakhs and percentage is

81.69%%. It is good sign of capital growth. The fixed deposits showed an increasing

trend during previous year (table 3.7).

2. The Saving Deposits was in the year 2008-09 is Rs 8274.67lakhs and in the year 2012-13

is Rs 14318.45 lakhs. There is increasing Rs. 6043.78 lakhs and percentage is 73.04%%.

It is good sign of capital growth. The saving deposits showed an increasing trend during

previous year (table 3.7).

3. The Current Deposits was in the year 2008-09 is Rs 1548.00 lakhs and in the year 2012-

13 is Rs 3229.45 lakhs. There is increasing Rs. 1681.45 lakhs and percentage is

108.62%%. It is good sign of capital growth. The current deposits showed an increasing

trend during previous year (table 3.7).

90

Table 3.8 Short term liquidity position of DUCB


Chart 3.8 Short term liquidity position of DUCB

Year Particular Ratio

2008-09 1031155417.00

649076621.00 1.59

2009-10 1160294103.00

801143868.00 1.45

2010-11 1383890827.00

892431431.00 1.55

2011-12 1854406746.00

1233909855.00 1.50

2012-13 2196141941.00

1501976592.00 1.46

91


Findings:-

It appears from table 3.8 that the current ratio accounted 1.59 to 1.46 times of DUCB was

below the norm i.e. 2:1 in the year of 2008-09 to 2012-13. It indicates that short term

liquidity position of the bank is not satisfactory as if does not have adequate current

assets to pay of the debts.

Table 3.9 Working Capital

Source: - Annual Reports of 2008-09 to 2012-13 of DUCBA .

Year Particular

(In Lakh)

Growth

Percentage

2008-09

48150.81 1.04%

2009-10

52249.43 1.13%

2010-11

59223.57 1.09%

2011-12

68982.92 1.16%

2012-13

83021.63 1.20%

92

Chart 3.9 Working Capital


Note: - The 2007-08 is an assumed as base year

Findings: -

It disclosed from table 3.9 that the working capital accounted 1.04% in the year 2008-09

and 1.20% in the year 2012-13. The growth of percentage is that 0.16% in the

last/previous year 2007-08

Table 3.10 Fixed Assets to Proprietary Fund Ratio

Fixed Assets to Proprietary Fund Ratio= Fixed Asset/Proprietor’s Fund.

93


Chart 3.10 Fixed Assets to Proprietary Fund Ratio


Findings: - It appears from table 3.10 that the fixed asset to proprietary funds ratio accounted

2.24 times in the year 2008-09 and 2.82 in the year 2012-13 of DUCB.The increasing growth of

the percentage by 0.58 in the preceding year

Table 3.11 Debt Equity Ratio


2008-09 2347956823.00

1048584510.00 2.24

2009-10 2821752721.00

1114234567.00 2.53

2010-11 3226722631.00

1216626072.00 2.65

2011-12 3586753064.00

1335877815.00 2.68

2012-13 4091218372.00

1449128267.00 2.82

94


Chart 3.11 Debt Equity Ratios


Findings:-

It seen from table 3.11 that the debt equity ratio accounted 3.42 in the year 2008-09 and

4.47 in the year 2012-13 of DUCB was above the norm i.e. 1:1.The increasing growth of

percentage by 1.05 in the last year.


2008-09 3585876667.00

1048584510.00 3.42

2009-10 4079804833.00

1114234567.00 3.66

2010-11 4589870549.00

1216626072.00 3.77

2011-12 5283417336.00

1335877815.00 3.95

2012-13 6485257105.00

1449128267.00 4.47

95

Table 3.12 Fixed Assets to Current Asset


Chart 3.12 Fixed Assets to Current Asset


Findings: -

It seen from table 3.12 that the fixed asset to current asset accounted 2.32 of DUCB in

the year of 2008-09. It indicates that short term liquidity position of the bank is satisfactory as if

DUCB have adequate position to pay of the debts (i.e. 1.86) in the year 2012-13.


2008-09 2347956823.00

1013155417.00 2.32

2009-10 2821752721.00

1160294103.00 2.43

2010-11 3226722631.00

1383890827.00 2.33

2011-12 3586753064.00

1854406746.00 1.93

2012-13 4091218372.00

2196141941.00 1.86

96

Table 3.13 Working Capital to Net Worth


Chart 3.13 Working Capital to Net Worth


Findings:-

It disclosed from table 3.13 that the working capital to net worth accounted 0.35 of

DUCB in the year of 2008-09. It indicates that short term liquidity position of the bank is

satisfactory as if DUCB have adequate position to pay of the debts (i.e.0.48) in the year 2012-13.


2008-09 364078796.00

1048584510.00 0.35

2009-10 359150235.00

1114234567.00 0.32

2010-11 491459396.00

1216626072.00 0.40

2011-12 620496891.00

1335877815.00 0.46

2012-13 694165349.00

1449128267.00 0.48

97

Table 3.14 Solvency Ratio


Chart 3.14 Solvency Ratio


Findings:-

It revealed from table 3.14 that the solvency ratio accounted 0.79 of DUCB in the year of

2008-09. It indicates that short term liquidity position of the bank is satisfactory as if DUCB

have adequate position to pay of the debts (i.e.0.79) in the year 2012-13


2008-09 3361112240.00

4234953288.00 0.79

2009-10 3982046824.00

4880948701.00 0.82

2010-11 4610613458.00

5482301980.00 0.84

2011-12 5441159810.00

6517327191.00 0.83

2012-13 6287360313.00

7987233697.00 0.79

98

Table 3.15 Fixed Assets to Net worth Ratio


Chart 3.15 Fixed Assets to Net worth Ratio


Findings:-

It appears from table 3.15 that the fixed assets to net worth ratio accounted 2.24 to 2.82

times of DUCB were above the norm i.e. 0.75 in the year of 2008-09 to 2012-13. It indicates that

short term liquidity position of the bank is not satisfactory as if does not have adequate current

assets to pay of the debts.


2008-09 2347956823.00

1048584510.00 2.24

2009-10 2821752721.00

1114234567.00 2.53

2010-11 3226722631.00

1216626072.00 2.65

2011-12 3586753064.00

1335877815.00 2.68

2012-13 4091218372.00

1449128267.00 2.82

2008-09 2009-10 2010-11 2011-12 2012-13

2.242.53

2.65 2.682.82

99

Table 3.16 Earning Per Shares (EPS).


Chart 3.16 Earning per Shares (EPS).


Findings:-

It can be seen from the table 3.16 that earning per share accounted Rs. 7 of the DUCB in

the year 2008-09. In the year 2009-10 to 2010-11 earnings per share gone through the high

growth(i.e. 6.28) from Rs 6.27 to Rs. 12.55 and year 2011-12 there was a slight decline (i.e

1.31) from 12.55 to Rs. 11.24 of the DCUB.

Year Particular EPS(Rs)

2008-09 29748798.00

4400254.00 07.00

2009-10 31227544.00

4982191.00 06.27

2010-11 72199974.00

5752788.00 12.55

2011-12 6973718.00

6206677.00 11.24

2012-13 49333879.00

7206134.00 07.00

100

Table 3.17 Proprietary Ratio.


Chart 3.17 Proprietary Ratios.


Findings: -


2008-09 1048584510.00

2347956823.00 0.45

2009-10 1114234567.00

2821752721.00 0.41

2010-11 1216626072.00

3226722631.00 0.38

2011-12 1335877815.00

3586753064.00 0.37

2012-13 1449128267.00

4091218372.00 0.35

101

It appears from table 3.17 that the proprietary ratio accounted 0.45 in the year 2008-09

and 0.35 in the year 2012-13. The decreased growth percentage of proprietary position was 0.10

in the previous year.

Table 3.18 Profitability Ratio


Chart 3.18 Profitability Ratio


Findings:-


2008-09 85983207.00*100

3361112240.00 2.5%

2009-10 74338261.00*100

3982046824.00 1.8%

2010-11 115322863.00*100

4610613458.00 2.5%

2011-12 124862998.00*100

5441159810.00 2.3%

2012-13 116562847.00*100

6287360313.00 1.8%

102

It seen from table 3.18 that Profitability position of 2.50% in the year 2008-09 and

2.80% in the year 2012-13. The increased growth percentage of profitability position of

the bank was 0.30% in the last year.

Table 3.19 Non Performing Assets Ratio


Chart 3.19 Non Performing Assets Ratio

Year Particular

(In Lakh)

Percentage

Growth

2008-09

325.41 1.67%

2009-10

90.10 0.37%

2010-11

57.53 0.20%

2011-12

903.13 2.91%

2012-13

1534.03 4.30%

103



Findings: - It appears from table 3.19 that Non Performing Ratio accounted 1.67% of DUCB

in the year of 2008-09. It indicates that position of the bank is not good for the DUCB that was

increased from 1.67% to 4.30% of the DUCB in the end of the year 2012-13.

Table 3.20 Price Earnings Ratio


Chart 3.20 Price Earnings Ratio

Year Particular

Ratio

2008-09

25/7 3.57

2009-10

25/6.27 3.99

2010-11

25/12.55 1.99

2011-12

25/11.24 2.22

2012-13

25/7 3.57

104


Findings:-

It disclosed from table 3.20 that Price Earnings Ratio accounted 3.57 of DUCB in

the year of 2008-09. It indicates that earning position of the bank is not good for the

DUCB that was from 3.57 to 3.57 that is equal of the DUCB in the end of the year 2012-

13.

Table 3.21 Dividend Yield Ratio


Chart 3.21 Dividend Yield Ratios

Year Particular

Percentage

Growth

2008-09

10/25x100 40%

2009-10

10/25x100 40%

2010-11

12/25x100 48%

2011-12

12/25x100 48%

2012-13

12/25x100 48%

105


Findings: -

It seen from table 3.21 that Dividend Yield Ratio accounted 40% of DUCB in the year of

2008-09. It indicates that position of the bank is good for the DUCB that was increased from

40% to 48% of the DUCB in the end of the year 2012-13.

Table 3.22 Dividend Payout Ratio


Chart 3.22 Dividend Payout Ratios

Year Particular

Ratio

2008-09

10/7 1.43

2009-10

10/6.27 1.59

2010-11

12/12.55 0.96

2011-12

12/11.24 1.07

2012-13

12/7 1.71

106


Findings:-

It seen from table 3.22 that Dividend Payout Ratio accounted 1.43 of DUCB in the year

of 2008-09. It indicates that position of the bank is better for the DUCB that was increased from

1.43 to 1.71 of the DUCB in the end of the year 2012-13.

Table 3.23 Interest on Deposits


Year Particular

(In Lakh)

Percentage

Growth

2008-09

2539.86 1.02%

2009-10

2912.23 1.15%

2010-11

2638.52 0.91%

2011-12

3292.36 1.25%

2012-13

4650.12 1.19%

107

Chart 3.23 Interest on Deposits


Note: - The 2007-08 is an assumed as base year.

Findings: - It disclosed from table 3.23 that Interest on Deposits accounted 1.02% of DUCB in

the year of 2008-09. It indicates that position of the bank that was increased from 1.02% to

1.19% of the DUCB in the end of the year 2012-13.

Table 3.24 Interest on Loan


Year Particular

(In Lakh)

Percentage

Growth

2008-09

3165.66 1.22%

2009-10

2848.88 0.90%

2010-11

3504.47 1.23%

2011-12

4479.96 1.28%

2012-13

5012.27 1.19%

108

Chart 3.24 Interest on Loan



Findings: - It reveals from table 3.24 that Interest on Loan accounted 1.22% of DUCB in the

year of 2008-09. It indicates that position of the bank is better for the DUCB that was decreased

from 1.22% to 1.19% of the DUCB in the end of the year 2012-13

Table 3.25 Interest on Investment


Year Particular

(In Lakh)

Percentage

Growth

2008-09

1312.22 1.12%

2009-10

1611.14 1.23%

2010-11

1337.03 0.83%

2011-12

1390.34 1.04%

2012-13

2469.85 1.78%

109

Chart 3.25 Interest on Investment

Source: -Annual Reports of 2008-09 to 2012-13 of DUCBA.


Findings: - It reveals from table 3.25 that Interest on Investment accounted 1.12% of DUCB in

the year of 2008-09. It indicates that position of the bank is better for the DUCB that was

increased from 1.12% to 1.78% of the DUCB in the end of the year 2012-13.

Table 3.26 Growth trends of Net Profit

Year Particular

(In Lakh)

Percentage

Growth

2008-09

297.49 0.47%

2009-10

312.27 1.05%

2010-11

722.00 2.31%

2011-12

697.37 0.97%

2012-13

493.34 0.71%

110


Chart 3.26 Net Profit



Findings: - It seen from table 3.26 that Net Profit Ratio accounted 0.47% of DUCB in the year

of 2008-09. It indicates that position of the bank is better for the DUCB that was increased from

0.47% to 0.71 % of the DUCB in the end of the year 2012-13.

Table 3.27 Financial Performance of DUCB (As on 31st March 2013)

111


Note - 1. The year 2007-08 is an assumed as base year.


Findings:-

(Rs in Lakh) Sr. No Particular

2009 2010 2011 2012 2013

1 Paid- up Capital 1100.06

(1.06%)

1245.55

(1.13%)

1438.20

(1.15%)

1551.67

(1.08%)

1801.53

(1.16%)

2 Reserve fund 9088.29

(1.03%)

9584.52

(1.05%)

10006.06

(1.04%)

11109.74

(1.11%)

12196.41

(1.10%)

3 Investment 19224.26

(1.05%)

20131.37

(1.05%)

20883.15

(1.04%)

24120.45

(1.16%)

31490.02

(1.31%)

4 Issued Loan 23479.57

(1.05%)

28217.53

(1.20%)

32267.23

(1.14%)

35867.53

(1.11%)

40912.18

(1.14%)

5 Deposits 35858.77

(1.05%)

40798.05

(1.14%)

45898.71

(1.13%)

52834.17

(1.15%)

64852.57

(1.23%)

6 Net Non-

Performing Debt

325.41

(1.67%)

90.10

(0.37%)

57.53

(0.20%)

903.13

(2.91%)

1534.03

(04.30%)

7 Reserve for bad

debts

4617.34

(0.89%)

5661.08

(1.23%)

6843.01

(1.21%)

9527.20

(1.39%)

11331.06

(1.19%)

8 Priority Debts 15399.16

(1.03%)

16590.71

(1.08%)

17623.19

(1.06%)

15743.91

(0.89%)

24957.96

(1.59%)

9 Working Capital 48150.81

(1.04%)

54249.43

(1.13%)

59223.57

(1.09%)

68982.92

(1.16%)

83020.63

(1.20%)

10 Net Profit 297.49

(0.47%)

312.27

(1.05%)

722.00

(2.31%)

697.37

(0.97%)

493.34

(0.71%)

11 Interest on

Deposits

2539.86

(1.02%)

2912.23

(1.15%)

2638.52

(0.91%)

3292.36

(1.25%)

4650.12

(1.41%)

12 Interest on Loan 3165.66

(1.22%)

2848.88

(0.90%)

3504.47

(1.23%)

4479.96

(1.28%)

5012.27

(1.19%)

13 Income on

investment

1312.22

(1.12%)

1611.14

(1.23%)

1337.03

(0.83%)

1390.34

(1.04%)

2469.85

(1.78%)

14 Other Income 130.40

(0.75%)

136.26

(1.04%)

400.72

(2.94%)

168.50

(0.42%)

382.34

(2.27%)

15 Per employee

Income

373.20

(1.12%)

398.93

(0.80%)

457.11

(1.15%)

451.82

(0.99%)

523.49

(1.16%)

16 Capital Adequacy 16.30%

14.86% 11.79% 12.40% 12.76%

112

1. It appears from the table 3.27 that the paid up capital accounted 1.06% of the DUCB in

the year 2008-09. It indicated that was a paid up capital position of the DUCB increased

from 1.06% to 1.16% that is good for the DUCB of the year 2012-13.

2. It seen from the table 3.27 that the Reserve funds accounted 1.03% of the DUCB in the

year 2008-09. It indicated that was a Reserve funds position of the DUCB increased from

1.03% to 1.10% that is good for the DUCB of the year 2012-13.

3. It disclosed from the table 3.27 that an Investment accounted 1.05% of the DUCB in the

year 2008-09. It indicated that was an Investment position of the DUCB increased from

1.05% to 1.31% that is good for future of the DUCB of the year 2012-13.

4. It reveals from the table 3.27 that an Issued loan accounted 1.05% of the DUCB in the

year 2008-09. It indicated that was an Issued loan position of the DUCB increased from

1.05% to 1.14% that is good for future of the DUCB of the year 2012-13.

5. It reveals from the table 3.27 that the Deposits accounted 1.05% of the DUCB in the year

2008-09. It indicated that was a Deposits position of the DUCB increased from 1.05% to

1.23% that is good for future of the DUCB of the year 2012-13.

6. It observed from table 3.27 that the Non Performing Assets accounted 1.67% of the

DUCB in the year 2008-09. It shows that was growing the position from 1.67% to 4.30%

the Non Performing Assets of the DUCB in the end of year 2012-13.

7. It appears from the table 3.27 that the Reserve for Bad Debts accounted 0.89% of the

DUCB in the year 2008-09. It indicated that was Reserve for Bad Debts position of the

DUCB increased from 0.89% to 1.19% that is not good for the DUCB of the year 2012-

13.

8. It seen from the table 3.27 that the Priority Debts accounted 1.03% of the DUCB in the

year 2008-09. It indicated that was a Reserve funds position of the DUCB increased from

1.03% to 1.59% that is not good for the DUCB of the year 2012-13.

113

9. It disclosed from the table 3.27 that Working Capital accounted 1.04% of the DUCB in

the year 2008-09. It indicated that was an Investment position of the DUCB increased

from 1.04% to 1.20% that is good for future of the DUCB of the year 2012-13.

10. It reveals from the table 3.27 that the Net Profit accounted 0.47% of the DUCB in the

year 2008-09. It indicated that was a Net Profit position of the DUCB increased from

0.47% to 0.71% that is better for future of the DUCB of the year 2012-13.

11. It observed from table 3.27 that the Interest on Deposits accounted 1.02% of the DUCB

in the year 2008-09. It shows that was growing the position from 1.02% to 1.41% the

Interest on Deposits of the DUCB in the end of year 2012-13.

12. It appears from the table 3.27 that the Interest on loan accounted 1.22% of the DUCB in

the year 2008-09. It indicated that was Interest on Loan position of the DUCB slight

decline from 1.22% to 1.19% that is not good for the DUCB of the year 2012-13.

13. It seen from the table 3.27 that the Income on Investment accounted 1.12% of the DUCB

in the year 2008-09. It indicated that was an Income on Investment position of the DUCB

increased from 1.12% to 1.78% that is good for the DUCB of the year 2012-13.

14. It disclosed from the table 3.27 that Other Income accounted 0.75% of the DUCB in the

year 2008-09. It indicated that was an Other Income position of the DUCB increased

from 0.75% to 2.27% that is good for future of the DUCB of the year 2012-13.

15. It observed from table 3.27 that the Per Employee Income accounted 1.12% of the DUCB

in the year 2008-09. It shows that was growing the position of Employee from 1.12% to

1.16% the Per Employee Income of the DUCB in the end of year 2012-13.

16. It reveals from the table 3.27 that the Capital adequacy accounted 16.30% of the DUCB

in the year 2008-09. It indicated that was a Capital adequacy position of the DUCB

Decline from 16.30% to 12.76% that is not better for future of the DUCB of the year

2012-13.

Reference:

114

1. Five Year Annual report 2008-09 to 2012-13 of the Devgiri Urban Co-operative Bank

Ltd Aurangabad.

Chapter -IV

Observations and Suggestions

Chapter IV Observations and Suggestions Page No

4.1 Observations and Suggestions 104-110

Bibliography 111-115

Abbreviation 116-117

115

4.1 Observations and Suggestions:

Co-operative banks have been playing a crucial role in financing rural as well as

urban clients for their ventures. They also are instrumental in mobilizing deposits,

transfer of money and serving the people in number of ways. Urban cooperative banks

have a special role to play in urban areas for supporting entrepreneurs, businessmen and

other needy people by way of providing various financial services.

The following observations and suggestions are summarized as under:

1. The major observation of the study is that the co-operatives in the state of Maharashtra

during last five years have grown remarkably. The number of societies stood at 2, 05,553

in 2007-08, and increased to 2, 44,306 in 2010-11. The growth in number of co-

operatives was 2.39% to 11.90 % respectively during the five years period. Working

capital shown progress in amount as it was Rs. 2,05,110 crores in 2007-08, increased put

Rs. 2,44,834 crores in 2010-11, but growth percentage showed decreased 1.44% to -

0.56% respectively during over the previous year. Net advanced by co-operatives showed

little progress Rs. 88,166 crores 2007-08 increased Rs. 1,00,681 crores in 2010-11, there

was positive growth 6.93% in 2007-08, increased 28.76% in 2010-11. Number of

cooperatives in profit increased from 62,147 in 2007-08 to increase Rs. 70,363 crores in

2010-11, amount of profit was Rs. 2,135 crores in 2007-08 increased put Rs. 3,661 crores

in 2010-11, shows positive progress 0.42% to 3.44%. Number of societies in loss

116

increased from 55,257 in 2007-08 to increase 59,636 in 2010-11, percentage of societies

in loss decreased by 7.14% in 2006-07 to -0.97 % in 2010-11. However the amount of

loss increased from Rs. 4,051 crores in 2007-08 to Rs. 4,526 crores in 2010-11, but the

percentage increased from 20.53% in 2007-08 to 26.81 % in 2010-11, shows a good sign

(table 1.3).

In this regard, Urban Cooperative banks in the state of Maharashtra playing major role in

urban as well as rural also. UCB performance of the last five year No. of societies, No. of

Member, Share capital, deposits, Working capital, loan & advances and profit also

increasing year by year.

2. It was seen that the share capital and Reserve funds accounted combined18.66% and

23.58% of the aggregate funds of the bank in the year 2009-10 and 2012-13 respectively.

The net growth of share capital and Reserve fund combined was 4.92% in the previous

year (table 3.1).

It should be noted that the bulk of the contribution to share capital and Reserve fund is

made by the member institutions.

3. The data analysis revealed that the long term liability of DUCB accounted 13.77% and

22.75% of the aggregate funds in the year 2009-10 and 2012-13 respectively. The net

growth of long term liability was 8.98% in the five year study of bank in the preceding

year (table 3.1).

The growth in long term liabilities of the indicates that the bank is expanding its business

operations with the increased funds

4. During five year of the study the combination of current liability accounted 23.42% in the

year 2009-10 and 21.72% in the year 2012-13.The decreased percentage growth of

current liability was 1.70% in the year of five year study period (table 3.1).

The current liability growth rate is not that much of satisfactory but bank should decrease

this growth rate also.

117

5. The Fixed assets the DUCB accounted 20.18% of total assets in the year 2008-09 and

14.07% in the year 2012-13. The decrease in assets can be attributed to restructuring of

the bank assets (table 3.2).

It is suggested that the bank should improve the asset position of the bank.

6. During five year of the study the combination of current asset accounted 14.52% in the

year 2008-09 of the year to year growth and 18.43% in the year 2012-13.The increased

percentage growth was 3.91% in the study of the period (table 3.2).

The growth of the current asset position of the DUCB it is satisfactory, but it is suggested

that the bank should take proper care of the bank’s Assets.

7. The Capital Adequacy of the five year study indicated decreasing growth trend. Capital

adequacy Ratio accounted 16.30% to 12.76% during the year 2008-09 to 2012-13. The

decreased growth of the capital adequacy was 3.54% in the last year (table 3.5).

The rate of the capital adequacy it is not satisfactory, so it may be suggested that bank

should improve the position of capital adequacy by issuing additional equity capital.

8. One of the major observations of the study is that Current Deposits, savings deposits and

term deposits had shown positive growth over the period of five years. However, the

growth in deposits was not satisfactory. Current deposits grew between 0.66-4.98%.(table

3.6).

In this regard, it may be suggested that the bank should encourage tradesmen and

businessmen to open current accounts with the bank.

9. The saving Deposits accounted 23.07% of the total fund in the year 2008-09 and 22.08%

in the year 2012-13. The decreased percentage growth was 0.99% in the last year (table

3.6).

It is focused that saving deposit it is not satisfactory, but bank should focus on how to

increase the saving deposit of the bank.

118

10. The discloser of the study is that the Fixed Deposits was accounted 72.61% of the total

fund in the year 2008-09 and 72.94% in the year 2012-13. The increased percentage

growth was 0.33% in the five year study period (table 3.6).

It is observed that fixed deposit of the bank is not that much of better that purpose bank

should take proper care of the fixed asset of the bank.

11. It was appeared that the current ratio accounted 1.59 to 1.46 times of DUCB was below

the norm i.e. 2:1 in the year of 2008-09 to 2012-13. It indicates that short term liquidity

position of the bank is not satisfactory as if does not have adequate current assets to pay

of the debts (table 3.8).

With regard to the short term liquidity of DUCB it is suggested that the bank should take

proper care of current asset management and liquidity position is maintained at

satisfactory level

12. The working capital ratio indicated increasing growth trend of working capital accounted

1.04% to 1.20% of DUCB in the year of 2008-09 to 2012-13 respectively.(Table 3.9)

It could be understood that the bank is able to mobilize working capital more than 1.2

times of the average working capital of the DUCB.

13. During five years of the study the composition of the fixed asset to proprietary funds

position increasing growth trend of accounted 2.24 to 2.82 times of DUCB in the year of

2008-09 to 2012-13. In this five year study fixed asset to proprietary fund increase 0.58

(table 3.10).

It can be concluded that the assets of the DUCB bank is sufficient to cover its liabilities.

14. It was seen that the debt equity ratio growth trends accounted 3.42 in the year 2008-09

and 4.47 in the year 2012-13. The norm of debts equity ratio i.e. 1:1. It indicates that

short term liquidity position of the bank is not satisfactory as if does not have adequate

position to pay of the debts in the year 2012-13(table 3.11).

119

It is observed that the position of the debt equity ratio of the bank is not satisfactory. It is

suggested that the bank should decrease the growth of debts equity ratio position of the

bank.

15. It was disclosed that the fixed asset to current asset ratio indicated decreasing growth

trend of assets accounted 2.32 to 1.86 of DUCB during the year of 2008-09 to 2013

respectively (table 3.12).

In this regard, it is suggested that the bank should find out the ways and means to

increase the share of the fixed asset and current asset of the unit.

16. The working capital to net worth accounted 0.35 of DUCB in the year of 2008-09 and

0.48 in the year 2012-13. It indicates that short term liquidity position of the bank is less

contribution of the unit in the year 2012-13 (table 3.13).

The working capital position of the bank is satisfactory. It is suggested that the bank

should take proper care of the working capital.

17. One of the major observations of the study solvency ratio accounted 0.79 of DUCB in the

year of 2008-09 and 0.79 in the year 2012-13. It indicates that solvency position of the

bank equal (i.e. 0.79 to 0.79) to during five year 2008-09 to 2012-13 (table 3.14).

It is suggested that the bank should find out the ways and means to increase the share of

the asset as compared to the liability that is better for the bank.

18. The earnings per share Rs. 7 in the year 2008-09 and 7 in the year 2012-13. In this five

year study period bank not improve his position of the bank was an equal (table 3.16).

In this observation, it is suggested that the bank should find out the causes behind that

and that causes convert in to earning and improve the share of bank.

19. With regard to the Profitability position of the unit under the study. It was observed that

profitability position by 2.50% in the year 2008-09 and 1.80% in the year 2012-13. The

indicated that the profitability position decreasing 0.70% (table 3.18).

120

In this regard, bank should take proper care of the profitability position of the bank. It is

suggested bank should extend the loan facility to the customers.

20. One of the major observations of the study is that Non-Performing Asset position of the

unit indicated the high growth by 1.67% to 4.30% of the DUCB in the year of 2008-09 to

2012-13 respectively (table 3.19).

As per observation, the position of the Non-performing asset it is not satisfactory. It is

suggested that the bank should take proper care of the assets of the DUCB and reduce

NPAs.

21. The Price Earnings position of the unit under study had shown growth by Rs. 3.57 in the

year 2008-09 and Rs 3.57 in the year 2012-13. In this five year period of the study price

earning position of the DUCB was equal (table 3.20).

It may be suggested that the bank should find out the ways to increase the share of Price

earning position substantially in order to strengthen the financial position of the bank.

22. The Dividend Yield position during five years of the study it was 40% in the year of

2008-09 and 48% in the year o 2012-13. In this five year period dividend yield position

increasing 8% (table 3.21).

In place of distributing dividends, it is suggested that the bank should reinvest profits to

strengthen working capital position.

23. The Dividend Payout position was1.43 in the year 2008-09 and 1.71 in the year 2012-13.

In this five year period dividend payout position increased was 0.28 (table 3.22).

It is should be suggested that the DUCB shows a satisfactory growth rate.

24. Interest on Deposits was in the year 2008-09 is Rs 2539.86 lakhs and in the year 2012-

13 is Rs 4650.12 lakhs. There is increasing Rs. 2110.26 lakhs and percentage is 83.09%.

It is not good sign of capital growth. The interest on deposits showed an increasing trend

during last year (table 3.23).

121

In this observation, interest on deposit of the bank it should focus on decreasing the

interest on deposit.

25. Interest on Loan was in the year 2008-09 is Rs 3165.66 lakhs and in the year 2012-13 is

Rs 5012.27 lakhs. There is increasing Rs. 1846.61 lakhs and percentage is 58.33%. It is

good sign of capital growth. The interest on loan showed an increasing trend during last

year (table 3.24).

Although the rate of in interest on deposit has increased, the bank should try to obtain

more funds through acceptance of deposits.

26. Interest on Investment was in the year 2008-09 is Rs 1312.22 lakhs and in the year 2012-

13 is Rs 2469.85 lakhs. There is increasing Rs. 1157.63 lakhs and percentage is 88.22%.

It is good sign of capital growth. The interest on Investment showed an increasing trend

during last year (table 3.25).

The growth of investment of DUCB bank is satisfactory. However good investment

opportunities can be explored for gainful investment considering calculating risk factors.

27. Net profit was in the year 2008-09 is Rs 297.49 lakhs and in the year 2012-13 is Rs

493.34 lakhs. There is increasing Rs. 195.85 lakhs and percentage is 65.83%. It is good

sign of capital growth. The net profit showed an increasing trend during last year (table

3.26).

Net Profit of the DUCB shows a satisfactory growth rate. It is suggested that the Bank

should try to keep the same trend in future.

28. Paid up share capital was in the year 2008-09 to 2012-13 there is increasing Rs 1801.53

lakhs from 1100.06 lakhs. The share capital of bank shown an increasing Rs 701.47 lakhs

and percentage is 63.77%. It is good sign of capital growth. The share of the bank had

shown an increasing trend during the last year (table 3.27).

Share capital is the foundation of financial structure of the bank. Therefore it is suggested

that bank should try strengthen the equity base.

122

29. Reserve fund was in the year 2008-09 is Rs 9088.29 lakhs and in the year 2012-13 is Rs

12196.41 lakhs. There is increasing Rs. 3108.12 lakhs and percentage is 34.20%. It is

good sign of capital growth. The reserve fund showed an increasing trend during last year

(table 3.27).

Reserve fund also contribute the net worth of the bank and therefore it is suggested that

the bank should add to for reserve fund to meet the need of capital.

30. The Deposits was in the year 2008-09 is Rs 35858.77 lakhs and in the year 2012-13 is Rs

64852.57 lakhs. There is increasing Rs. 28999.80 lakhs and percentage is 80.86%. It is

good sign of capital growth. The Issued loan showed an increasing trend during previous

year (table 3.27).

In this regard, it may be suggested that the bank should find out the ways and means to

increase the share of deposits substantially in order to strengthen the financial position of

the bank.

31. It was observed that the Reserve for Bad Debts was shown growth by the 0.30% of the

unit in the year 2007-08. It indicated that was Reserve for Bad Debts position of the unit

was not good for the bank (Table 3.27).

Ii is suggested that the bank should find out the ways to reduce bad debts in order to

improve financial position of the bank.

32. During five years of the study that was Priority Debts had shown growth by 0.56% in

over the previous year i.e. 2007-08. The priority Debts of the unit had less contribution of

the total income of the bank (table 3.27).

It can be concluding that there is need to concentrate on priority sector while formulating

credit policy of DUCB.

33. It was disclosed that Other Income of the unit under study had shown growth by 1.52%

in over the preceding year i.e. 2007-08. The income from other sources of the bank had

less contribution in the total income of the bank (table 3.27).

123

In this regard, it may be suggested that the bank should find out the ways and means to

increase the share of other income substantially in order to strengthen the financial

position of the bank.

34. It was observed that the Per Employee Income of the unit under study had shown a very

meager growth by 0.04% in over the previous year i.e. 2007-08. The per employee

income of the bank was not satisfactory (table 3.27).

It may be suggested that the bank should find out the ways to increase the income of per

employee in order to strengthen the financial position of the bank.

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Abbreviation:-

RBI : Reserve Bank of India

UCB : Urban Co-operative Banks

DCCBs : District Central Co-operative Banks

130

SCB : State Co-operative Banks

CCB : Central Co-operative Banks.

NABARD : National Bank for Agricultural and Rural Development

PACBS : Primary Agricultural Credit Banks

CRR : Cash Reserve Ratio

SLR : Statutory Liquidity Ratio

HP : House Power

MT : Medium Term

ST : Short Term

LT : Long Term

MBD : Meeting of Board of Director

MLC : Meeting of Loan Committee

MLRC : Meeting of Loan Recovery Committee

MEC : Meeting of Employee Committee

MAIC : Meeting of Audit and Inspection Committee

MPC : Meeting of Purchase Committee

MIC : Meeting of Investment Committee

MALC : Meeting of Asset and Liability Committee

MSAC : Meeting of Settlement Committee

FD : Fixed Deposits

SD : Saving Deposits

CD : Current Deposits

FA : Fixed Asset

CA : Current Asset

FL : Fixed Liability

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CL : Current Liability

SC : Share Capital

LTL : Long term Liability

RF&S : Reserve Fund & Surplus

CCO : Cash Credit Overdraft

RF : Reserve Fund

Div : Dividend

EWF : Employee Welfare Fund

MWF : Member Welfare Fund

BF : Building Fund

CF : Charity Fund

DAF : Deferred Asset Fund

AIF : Ascending of Invent Fund

CRAR : Capital Adequacy Ratio

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