PATIALA CENTRAL COOPERATIVE BANK

BRIEF HISTORY

The cooperative finance in Patiala was made available by a state owned bank viz. the

STATE BANK OF PATIALA. With taking over the assets and liabilities, the Patiala

Central Cooperative Bank Ltd., Patiala was registered on 28/09/1949 under the

Cooperative Societies Act, 1912. The Bank is presently serving in its 59th year.

CONSTITUTION AND MANAGEMENT

The Bank is managed by a Board of Directors (8 elected by the member Cooperative

Societies and 3 nominated by the Government being member of the Bank having

contributed a handsome amount of Rs. 90 lacs as share capital.

BRANCHES

Apart from its Head Office at Patiala, the Bank has a network of its 43 branches spread

all over the district. 16 out of the 43 branches of the Bank, are working at the Focal

Points- a scheme started by the Government of Punjab in the year 1978.

BUSINESS TURN OVER

The business turn over of the bank for the year 2008-09 was Rs.804067.55 lacs.

RESOURCES

The Bank raises its resources with the collection of share capital, owned funds, deposits

and borrowings.

DEPOSITS

There are various schemes of deposits namely- current deposits, savings bank deposits,

fixed deposits, recurring deposits.

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ADVANCES

The Bank advances both in farm and non-farm sector. Total loans outstanding as on

31/03/2009 stood at Rs.71457.74 lacs.

FARMERS CLUB

There are 11 Farmers Clubs working in the district adopted by this bank out of which 3

farmers clubs are newly framed.

OBJECTIVES OF RESEARCH

This research has been conducted –

To evaluate the working of Cooperative Banks in the various districts of Punjab. In

this research the financial position of these banks have been analysed.

To evaluate the sources from which the cooperative banks acquire capital for lending

to agriculture and cost of acquisition of funds

To study the progress made in share capital.

To analyse the profitability of the banks

METHODOLOGY

There are two types of data generally collected during a research process – Primary data

and Secondary data. In this study secondary data is being used. The time reference of the

study is five years spanning the period 2004-2008. This period enables us to have a

comparative picture of growth of cooperative banks in Punjab.

The secondary data pertaining to financial position, membership, working of

cooperatives, capital structure, lending and borrowings have been collected from

published as well as unpublished sources. RBI publications, statistical statements, annual

reports, records of the bank, various websites, editorials, journals have been referred to

for the purpose.

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Wherever required graphs have been used in the report. The simple percentage of growth

rates is calculated. The formula used for calculating percentage change over last year in

2008 is as follows:

(Total of year 2008 - Total of year 2007) / Total of year 2008

For example, In case of total investment of SAS Nagar, percentage change over last year

is calculated as –

(Total investment in 2008 – total investment in 2007)/ total investment in 2008

i.e. (Rs.11031.99 lacs – Rs.11620.00 lacs) / Rs.11031.99 lacs = - 5.33

SAMPLE SIZE

Sample size refers to the number of items to be selected from the set of objects to

constitute a sample (i.e. a part of population that represents the whole population).

Sample size has to be decided while collecting primary data and in this project report

since all the data collected is secondary data therefore no sample size have been taken

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INTRODUCTION TO BANKS

A Bank is a financial institution licensed by a government. Its primary activities include

borrowing and lending money. Many other financial activities were allowed over time.

For example banks are important players in financial markets and offer financial services

such as investment funds. The level of government regulation of the banking industry

varies widely, with countries.

DEFINITION

The definition of a bank varies from country to country.

Examples of statutory definitions:

"banking business" means the business of receiving money on current or deposit

account, paying and collecting cheques drawn by or paid in by customers, the making

of advances to customers, and includes such other business as the Authority may

prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2,

Interpretation).

"banking business" means the business of either or both of the following:

receiving from the general public money on current, deposit, savings or other

similar account repayable on demand or within less than 3 months ... or with a

period of call or notice of less than that period;

paying or collecting cheques drawn by or paid in by customers

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WIDER COMMERCIAL ROLE

The commercial role of banks is not limited to banking, and includes:

issue of banknotes (promissory notes issued by a banker and payable to bearer on

demand)

processing of payments by way of telegraphic transfer, EFTPOS, internet banking or

other means.

issuing bank drafts and bank cheques

accepting money on term deposit

lending money by way of overdraft, installment loan or otherwise

providing documentary and standby letters of credit (trade finance), guarantees,

performance bonds, securities underwriting commitments and other forms of off-

balance sheet exposures

safekeeping of documents and other items in safe deposit boxes

currency exchange

acting as a 'financial supermarket' for the sale, distribution or brokerage, with or

without advice, of insurance, unit trusts and similar financial products

ECONOMIC FUNCTIONS

The economic functions of banks include:

Issue of money , in the form of banknotes and current accounts subject to cheque or

payment at the customer's order. These claims on banks can act as money because

they are negotiable and/or repayable on demand, and hence valued at par. They are

effectively transferable by mere delivery, in the case of banknotes, or by drawing a

cheque that the payee may bank or cash.

Netting and settlement of payments – banks act as both collection and paying

agents for customers, participating in interbank clearing and settlement systems to

collect, present, be presented with, and pay payment instruments. This enables banks

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to economize on reserves held for settlement of payments, since inward and outward

payments offset each other. It also enables the offsetting of payment flows between

geographical areas, reducing the cost of settlement between them.

Credit intermediation – banks borrow and lend back-to-back on their own account

as middle men

Credit quality improvement – banks lend money to ordinary commercial and

personal borrowers (ordinary credit quality), but are high quality borrowers. The

improvement comes from diversification of the bank's assets and capital which

provides a buffer to absorb losses without defaulting on its obligations. However,

banknotes and deposits are generally unsecured; if the bank gets into difficulty and

pledges assets as security, to raise the funding it needs to continue to operate, this

puts the note holders and depositors in an economically subordinated position.

Maturity transformation – banks borrow more on demand debt and short term debt,

but provide more long term loans. In other words, they borrow short and lend long.

With a stronger credit quality than most other borrowers, banks can do this by

aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions

(e.g. withdrawals and redemptions of banknotes), maintaining reserves of cash,

investing in marketable securities that can be readily converted to cash if needed, and

raising replacement funding as needed from various sources (e.g. wholesale cash

markets and securities markets).

BANKING CHANNELS

Banks offer many different channels to access their banking and other services:

A branch, banking centre or financial centre is a retail location where a bank or financial

institution offers a wide array of face-to-face service to its customers.

ATM is a computerized telecommunications device that provides a financial institution's

customers a method of financial transactions in a public space without the need for a

human clerk or bank teller. Most banks now have more ATMs than branches, and ATMs

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are providing a wider range of services to a wider range of users. Also, most ATMs

enable card holders from other banks to get their account balance and withdraw cash,

even if the card is issued by a foreign bank.

Mail is part of the postal system which itself is a system wherein written documents

typically enclosed in envelopes, and also small packages containing other matter, are

delivered to destinations around the world. This can be used to deposit cheques and to

send orders to the bank to pay money to third parties. Banks also normally use mail to

deliver periodic account statements to customers.

Telephone banking is a service provided by a financial institution which allows its

customers to perform transactions over the telephone. This normally includes bill

payments for bills from major billers (e.g. for electricity).

Online banking is a term used for performing transactions, payments etc. over the

Internet through a bank, credit union or building society's secure website.

Mobile banking is a method of using one's mobile phone to conduct simple banking

transactions by remotely linking into a banking network.

Video banking is a term used for performing banking transactions or professional

banking consultations via a remote video and audio connection. Video banking can be

performed via purpose built banking transaction machines (similar to an Automated teller

machine), or via a videoconference enabled bank branch.

TYPES OF BANKS

Banks' activities can be divided into:-

Retail banking, dealing directly with individuals and small businesses;

Business banking, providing services to mid-market business; corporate banking,

directed at large business entities;

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Private banking, providing wealth management services to high net worth individuals

and families;

Investment banking, relating to activities on the financial markets. Most banks are

profit-making, private enterprises. However, some are owned by government, or are non-

profit organizations.

Central banks are normally government-owned and charged with quasi-regulatory

responsibilities, such as supervising commercial banks, or controlling the cash interest

rate. They generally provide liquidity to the banking system and act as the lender of last

resort in event of a crisis.

TYPES OF RETAIL BANKS

Commercial bank: the term used for a normal bank to distinguish it from an investment

bank.

Community Banks: locally operated financial institutions that empower employees to

make local decisions to serve their customers and the partners.

Community development banks: regulated banks that provide financial services and

credit to under-served markets or populations.

Postal savings banks: savings banks associated with national postal systems.

Private banks: banks that manage the assets of high net worth individuals.

Offshore banks: banks located in jurisdictions with low taxation and regulation. Many

offshore banks are essentially private banks.

Savings bank: in Europe, savings banks take their roots in the 19th or sometimes even

18th century. Their original objective was to provide easily accessible savings products to

all strata of the population. In some countries, savings banks were created on public

initiative; in others, socially committed individuals created foundations to put in place the

necessary infrastructure. Nowadays, European savings banks have kept their focus on

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retail banking: payments, savings products, credits and insurances for individuals or

small and medium-sized enterprises. Apart from this retail focus, they also differ from

commercial banks by their broadly decentralized distribution network, providing local

and regional outreach—and by their socially responsible approach to business and

society.

Building societies and Landsbanks: institutions that conduct retail banking.

Ethical banks: banks that prioritize the transparency of all operations and make only

what they consider to be socially-responsible investments.

Islamic banks: Banks that transact according to Islamic principles.

TYPES OF INVESTMENT BANKS

Investment banks "underwrite" (guarantee the sale of) stock and bond issues, trade for

their own accounts, make markets, and advise corporations on capital market activities

such as mergers and acquisitions.

Merchant banks were traditionally banks which engaged in trade finance. The modern

definition, however, refers to banks which provide capital to firms in the form of shares

rather than loans. Unlike venture capital firms, they tend not to invest in new companies.

BOTH COMBINED

Universal banks, more commonly known as financial services companies, engage in

several of these activities. These big banks are very diversified groups that, among other

services, also distribute insurance— hence the term bancassurance, a portmanteau word

combining "banque or bank" and "assurance", signifying that both banking and insurance

are provided by the same corporate entity.

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OTHER TYPES OF BANKS

Islamic banks adhere to the concepts of Islamic law. This form of banking revolves

around several well-established principles based on Islamic canons. All banking activities

must avoid interest, a concept that is forbidden in Islam. Instead, the bank earns profit

(markup) and fees on the financing facilities that it extends to customers.

IMPORTANCE OF A BANK

SAFETY OF MONEY:

The money with the bank remains in safe custody there is always risk in keeping cash

with one’s own self. It may be lost or stolen. Business man like to keep money with a

bank to avoid risks of money the customer need not keep large some of money.

IT CULTIVATES HABIT OF SAVING:

Banks cultivates the habit of saving in the Bank on the one hand are safe and on the

other earned interest for the depositor who prompted to safe and deposit money in

their banks accounts.

FINANCIAL HELP TO CUSTOMER:

Banks allows overdraft facilities to their customer so whenever a customer needs

money he can even withdraw more money then the balance in his account. Bank also

grants loans and credit facilities to their customers.

SAFE CUSTODY OF VALUABLE ARTICLES :

Valuable articles deals security etc. can also be deposited in the bank for safe custody.

Safe deposit vaults are provided by bank storing for these valuables.

OTHER INFORMATION:

By opening an account with a bank, the customers may also take advantages of

various other services providing by the banks, such a purchase and sale of securities,

travelers cheque etc.

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BANKER-CUSTOMER RELATIONSHIP

Instead of secondary functions banks gave some other important services to his

customers. The main function of banker & customer is as Debtor & Creditor. Banker

works as an agent & also a trustee of his customer.

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INTRODUCTION TO COOPERATIVE BANKING

Cooperative banking is retail and commercial banking organized on a cooperative basis.

Cooperative banking institutions take deposits and lend money in most parts of the world.

The Cooperative banks have a history of almost 100 years. The Cooperative banks are an

important constituent of the Indian Financial System, judged by the role assigned to

them, the expectations they are supposed to fulfill, their number, and the number of

offices they operate. The cooperative movement originated in the West, but the

importance that such banks have assumed in India is rarely paralleled anywhere else in

the world. Their role in rural financing continues to be important even today, and their

business in the urban areas also has increased phenomenally in recent years mainly due to

the sharp increase in the number of primary cooperative banks. While the cooperative

banks in rural areas mainly finance agricultural based activities including farming, cattle,

milk, hatchery, personal finance etc. along with some small scale industries and self-

employment driven activities, the co-operative banks in urban areas mainly finance

various categories of people for self-employment, industries, small scale units, home

finance, consumer finance, personal finance, etc.

DEFINITION

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

same time the owners and the customers of their bank. Cooperative banks are often

created by persons belonging to the same local or professional community or sharing a

common interest. Cooperative banks generally provide their members with a wide range

of banking and financial services (loans, deposits, banking accounts. Even if their

organizational rules can vary according to their respective national legislations,

Cooperative Banks share some common features:

Customer-owned entities: In a cooperative bank, the needs of the customers meet

the needs of the owners, as cooperative bank members are both (customers and

owners). As a consequence, the first aim of a co-operative bank is not to maximize

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profit but to provide the best possible products and services to its members. Some

cooperative 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: Cooperative banks are owned and controlled by their

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

equal voting rights, according to the cooperative principle of “one person, one vote”.

Profit allocation: In a cooperative 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 cooperative 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 cooperative’s 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).

FEATURES OF COOPERATIVE BANKS

Cooperative Banks are organised and managed on the principal of co-operation,

self-help, and mutual help. They function with the rule of "one member, one

vote". function on "no profit, no loss" basis.

Cooperative banks, as a principle, do not pursue the goal of profit maximization .

Cooperative bank performs all the main banking functions of deposit

mobilization, supply of credit and provision of remittance facilities. Cooperative

Banks provide limited banking products and are functionally specialists in

agriculture related products. However, cooperative banks now provide housing

loans also.

UCBs provide working capital loans and term loan as well. The State Cooperative

Banks (SCBs), Central Co-operative Banks (CCBs) and Urban Cooperative Banks

(UCBs) can normally extend housing loans upto Rs 1 lakh to an individual.

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The scheduled UCBs, however, can lend upto Rs.3lakh for housing purposes. The

UCBs can provide advances against shares and debentures also.

Cooperative bank do banking business mainly in the agriculture and rural sector.

However, UCBs, SCBs, and CCBs operate in semi urban, urban, and metropolitan

areas also. The urban and non-agricultural business of these banks has grown over

the years.

The cooperative banks demonstrate a shift from rural to urban, while the

commercial banks, from urban to rural.

Cooperative banks are perhaps the first government sponsored, government-

supported, and government-subsidized financial agency in India. They get

financial and other help from the Reserve Bank of India NABARD, central

government and state governments. They constitute the "most favoured" banking

sector with risk of nationalization. For commercial banks, the Reserve Bank of

India is lender of last resort, but co-operative banks it is the lender of first resort

which provides financial resources in the form of contribution to the initial capital

(through state government), working capital, refinance.

Cooperative Banks belong to the money market as well as to the capital market.

Primary agricultural credit societies provide short term and medium term loans.

Land Development Banks (LDBs) provide long-term loans. SCBs and CCBs also

provide both short term and term loans.

Cooperative banks are financial intermediaries only partially. The sources of their

funds (resources) are:

(a) Central and state government,

(b) The Reserve Bank of India and NABARD,

(c) Other co-operative institutions,

(d) Ownership funds and,

(e) Deposits or debenture issues.

It is interesting to note that intra-sectoral flows of funds are much greater in

cooperative banking than in commercial banking. Inter-bank deposits,

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borrowings, and credit from a significant part of assets and liabilities of

cooperative banks. This means that intra-sectoral competition is absent and intra-

sectoral integration is high for cooperative bank.

Some cooperative banks are scheduled banks, while others are non-scheduled

banks. For instance, SCBs and some UCBs are scheduled banks but other

cooperative bank are non-scheduled banks. At present, 28 SCBs and 11 UCBs

with Demand and Time Liabilities over Rs.50crore each included in the Second

Schedule of the Reserve Bank of India Act.

Cooperative Banks are subject to CRR and liquidity requirements as other

scheduled and non-scheduled banks are. However, their requirements are less than

commercial banks.

Since 1966 the lending and deposit rate of commercial banks have been directly

regulated by the Reserve Bank of India.

Although the Reserve Bank of India had power to regulate the rate cooperative

bank but this have been exercised only after 1979 in respect of non-agricultural

advances they were free to charge any rates at their discretion. Although the main

aim of the cooperative bank is to provide cheaper credit to their members and not

to maximize profits, they may access the money market to improve their income

so as to remain viable.

TYPES OF COOPERATIVE BANKS

1) STATE COOPERATIVE BANKS (SCBs) State cooperative banks are a federation of central cooperative banks and act as a

watchdog of the cooperative banking structure in the state. Its funds are obtained from

share capital, deposits, loans and overdrafts from the Reserve Bank of India. State

cooperative banks lend money to central cooperative banks and primary societies and not

directly to farmers.

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FEATURES OF SCBs

These are organized at a state level and are at the apex of three-tier cooperative credit

structure. It is through these banks that RBI provides credit to cooperatives. RBI

generally provides loans to SCB on interest rate, one or two percent lower than bank

rate. There were 28 SCBs, 14 of which were scheduled banks.

They operate as 'balancing centers' for central cooperative banks (CCBs) and raise

funds on their own to make them available to the CCBs and through them or directly

to primary societies in such districts were CCBs are not in operation.

Working capital derives largely from owned funds, deposits and borrowings from

RBI/NABARD.

The share capital in owned funds is raised largely (70%) from affiliated or member

cooperative societies, including CCBs, and practically the rest from the state

government concerned.

SCBs lend almost as short-term loans to cooperative societies for seasons agricultural

operation.

2) CENTRAL COOPERATIVE BANKS (CCBs)

Central cooperative banks are the federations of primary credit societies in a district and

are of two types – those having a membership of primary societies only and those having

a membership of societies as well as individuals. The funds of the bank consist of share

capital, deposits, loans and overdrafts from state cooperative banks and joint stocks.

These banks finance member societies within the limits of the borrowing capacity of

societies.

FEATURES OF CCBs

These operate at district level and these are at the middle level in the three-tier

structure.

Their main function is to lend money to primary societies. The duration of loan varies

from 1 to 3 years.

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It can be divided into two parts:

Cooperative Bank Union: Members are only Cooperative societies

Mixed control Cooperative Bank: Members are cooperative societies and

individuals

Their working capital derives from deposits, borrowings and other liabilities and

owned funds.

The share capital is raised from affiliated cooperative societies and the rest from state

governments.

About 75% of the loans of CCBs are short-term and the rest medium-term and mostly

for agricultural purposes.

3) PRIMARY AGRICULTURAL CREDIT SOCIETIES (PACS)

Cooperatives have played a major role in the supply of finance to agricultural sector for

the development of land, irrigation system and for its mechanization. The agricultural

cooperative credit in Punjab is divided into two sectors mainly, one dealing with short

and medium-term credit and the other with the long-term credit. The long term credit is

awarded from the Punjab State Cooperative Land Mortgage Banks at the apex and the

Primary Cooperative Land Mortgage Banks at district/tehsil level.

FEATURES OF PACS

These operate at village level covering about 90% of villages and are in direct

contact with the borrowers.

Minimum 10 persons of the village can form a primary credit society. Their

membership covers about 65% population of the rural households. More than half of

the members of PACS are persons of small means- small farmers, agricultural

laborers and rural artisans and about 25% of them belong to the STs/SCs.

PACS gives loan to ultimate borrowers and collect repayments of loans given.

These societies grant short-term loans (generally 1 year period) for productive

activities but this period may be extended to 3 years under special conditions.

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PACS act mainly as distributional channels for funds mobilized elsewhere. They

suffer from a very high ratio (more than 40%) of over dues to loans outstanding/

demand.

Only members of a PACS are entitled to borrow from it. Most loans are for

agricultural purposes as sinking or repair of wells and purchase of machinery and

cattle.

To attract more deposits, these societies must be in a position to pay higher

interest rates on their deposits than offered by other institutions and must inspire

greater confidence regarding safety of deposits with them.

4) PRIMARY COOPERATIVE BANKS (PCBs)

They are non-agricultural societies. These are of two types:

1. Urban cooperative banks

2. Salary earners’ societies

Development of PCBs is looked after by the RBI. The RBI and IDBI offer them

concessional refinance facility on a selected basis.

They operate in urban and semi-urban areas. They provide housing finance and loans

and advances for various purposes such as petty trade and industry.

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REVIEW OF LITERATURE

Prof. Gursharan Singh Kainth (1996) carried on a survey regarding the

dynamics of cooperatives in Punjab. In this study, he said that cooperatives have

played an important role in the development and growth of rural Punjab. The only

need of the cooperatives is to be manned by the highly competent and motivated

people. According to his study the membership of the cooperative societies in Punjab

continued to increaseat the annual growth rate of 2.62% during the period1970 to

1996. During the study period share capital per society increased at the growth rate of

+9.67% per annum. As a result of growth in share capital as well as owned funds,

working capital per society showed an increase of +12.31% annually. The main cause

of failure of the un-successful societies was dishonest and inefficient management.

The only need of the cooperatives is to be manned by the highly competent and

motivated people. All that needs to be done is running of cooperatives on the basis of

business principles. The profits can then be channelised in whichever way as required

to meet the social goals.

Daman Prakash (1999) studied the contribution of cooperatives to social

development. He said that cooperative institutions as a vital component of civil

society with strong ties to local communities, form a particular important vehicle for

the development of marginalized sections of the society. They, however, suffer from

lack of both financial and human resources. Their effectiveness can be substantially

enhanced through personnel training, member’s education, the exchange of

experiences with counterparts in other countries, and access to regional and

international information sources in their fields of interest.

Prof. N.K. Sinha states that cooperative bank serves the needs of the rural sector

in general and the agricultural sector in particular. The cooperative banks work on the

principles of cooperation that is the reason why cooperative banks get financial

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assistance from RBI on concessional rate. Cooperative bank can operate its activities

only within a limited area and cannot open its branches in foreign countries. Despite

several organizational weaknesses, village level primary cooperative credit societies

are best suited to the socio-economic conditions of Indian Village.

According to Prof. L.M.Bhole cooperative banks suffer from many weaknesses,

for example,

They are too small in size to be economical and viable

With the expanding credit needs of the rural sector, commercial banks have come

in actively to meet the credit requirements of this sector

They suffer from infrastructural weaknesses and structural flaws

They suffer from too much officialisation and politicization

Prof.L.M.Bhole favors the recommendations made by Khusro Committee saying that

it rightly felt that cooperative banks must work as a total system and develop self-

reliance. Prof. Bhole says that there is much scope for further improving deposit

mobilization and this is a key to self-reliance.

R.Ganesan in his article “Procurement of agricultural and minor forest produce-

Problems and Prospects” stated that the real progress of the cooperatives at the

grass-root level is not good. Hence, the marketing cooperatives have to formulate

new strategies to create employment opportunity in its area, by undertaking

processes by which they can arrest the migration of rural youth to urban areas.

Koeva (2003) examined a variety of financial indicators of banks and concluded

that ownership has a significant effect on some of the performance indicators and

deregulation has led intermediation costs and to lower profitability.

Bhaumik and Dimova (2004) studied the presence of bank competition in Indian

states. They found that competition from foreign banks has been very small as

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compared to the established presence of public sector banks. Bhaumik and

Dimova, using profitability indicators in their analysis, have observed that for

cooperative banks during the period 1996 to 2000, “size of the banks seem to

have had a negative impact overall on their performance.”

Views of some famous personalities regarding cooperatives

Mr. Ivano Barberni, president, International Cooperative Alliance (ICA) said

that the cooperative principles can help corporates build up trust in the time of

economic crisis

Shri G.H.Amin, President, National Cooperative Union of India, said that in the

times of economic recession the cooperatives are strong enough to fulfill the

needs of the common man. He further added that liberalization of the cooperative

movement by providing greater autonomy to cooperatives would be the most

befitting tribute to the memory of late Mehta who was true architect of

cooperative movement.

Shri Sharad Pawar, Union Agriculture Minister, said that one of the serious

problems of the cooperative institutions is that there is too much government

interference.

Shri Krishna Lavekar, State Commissioner for Cooperation and Registrar,

Cooperative societies said “The task force would serve as an advisory board and

would comprise of technical experts and professionals to monitor and ensure

transparency in the management and administration of cooperative societies. The

task force would also serve as a think tank and provide inputs for the management

of the cooperatives.”

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Punjab Cooperation Minister, Captain Kanwaljit Singh said “Rural cooperatives

have a collective bargaining power that individuals do not.”

Punjab Chief Minister Shri Prakash Singh Badal stated,”Professional

cooperative leaders could well be the answer to the ills being faced by the

cooperative movement which needed to be taken out of the control of

bureaucrats.”

In the inaugural address Shri Vepa Kamesam, Deputy Governor, RBI, talked

about strengthening corporate governance in the cooperative banks of India.

Some of the highlights of his speech were as follows:

Corporate governance especially in the co-operative sector has come into

sharp focus because more and more co-operative banks in India, both in urban

and rural areas, have experienced grave problems in recent times which has in

a way threatened the profile and identity of the entire co-operative system.

These problems include mismanagement, financial impropriety, poor

investment decisions and the growing distance between members and their co-

operative society.

Professionalism reflects the co-existence of high level of skills and standards

in performing duties entrusted to an individual. The absence of a proper

system of placement and skill upgradation inputs constrain professional

management in co-operative banks.

The cooperative banks should indeed work like professional organizations on

sound managerial systems in tune with the needs of the time taking care of

future projections of requirements to retain and improve their market share

and identity in the long run.

One of the areas which requires focused attention is greater transparency in

the balance sheets of co-operative banks

One prime component of the investment portfolio of the co-operative banks

which has attracted a lot of attention -unfortunately for all the wrong reasons -

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is their transaction in government securities. So much so that it has even

triggered the holding of today’s Convention.

The One important issue that has engaged much attention in the recent past is the

duality of control over co-operative banks. The core principles of supervision in

relation to co-operative banks have thus to be formulated and implemented by the

Reserve Bank in respect of UCBs and by NABARD in respect of SCBs and

DCCBs

Punjab State Cooperative Bank Chairman Jasjit Singh Bunny said that the

cooperative banks in Punjab would be soon interlinked through networking and

all its branches would be computerized soon. He was addressing a press

conference after taking over as the Chairman of the bank on December 20, 2007.

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BANKING IN INDIA

Without having sound and effective banking system India cannot have healthy economy.

The banking system of India should not only be hassle free but it should be able to meet

new challenges posed by the technology and any other external and internal factors.

Banking in India originated in the last decades of the 18th century. The oldest bank in

existence in India is the State Bank of India, a government-owned bank that traces its

origins back to June 1806 and that is the largest commercial bank in the country. Central

banking is the responsibility of the Reserve Bank of India, which in 1935 formally took

over these responsibilities from the then Imperial Bank of India, relegating it to

commercial banking functions. After India's independence in 1947, the Reserve Bank

was nationalized and given broader powers. In 1969 the government nationalized the 14

largest commercial banks; the government nationalized the six next largest in 1980.

Currently, India has 293 scheduled commercial banks (SCBs) - 27 public sector banks

(that is with the Government of India holding a stake), 30 private banks (these do not

have government stake; they may be publicly listed and traded on stock exchanges) and

40 foreign banks.

The oldest bank in existence in India is the State Bank of India, which originated in the

Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal.

This was one of the three presidency banks, the other two being the Bank of Bombay and

the Bank of Madras, all three of which were established under charters from the British

East India Company. For many years the Presidency banks acted as quasi-central banks,

as did their successors. The three banks merged in 1925 to form the Imperial Bank of

India, which, upon India's independence, became the State Bank of India

24

STRUCTURE OF INDIAN BANKING

RESERVE BANK OF INDIA (RBI)

SCHEDULED BANKS IN INDIA

COMMERCIAL BANKS COOPERATIVE BANKS

REGIONAL RURAL BANKS (196)

PRIVATE SECTOR BANKS (30)

PUBLIC SECTOR BANKS (27)

FOREIGN BANKS (40)

NEW (8)

OLD (22)

NATONALIZED BANKS (19)

SBI AND ASSOCIATE BANKS (8)

URBAN COOPERATIVES (52)

STATE COOPERATIVES(16)

25

EARLY HISTORY

The period between 1906 and 1911, saw the establishment of banks inspired by the

Swadeshi movement. The Swadeshi movement inspired local businessmen and political

figures to found banks of and for the Indian community. A number of banks established

then have survived to the present such as Bank of India, Corporation Bank, Indian Bank,

Bank of Baroda, Canara Bank and Central Bank of India.

FROM WORLD WAR 1 TO INDEPENDENCE (1914-1947)

The period during the First World War (1914-1918) through the end of the Second World

War (1939-1945), and two years thereafter until the independence of India were

challenging for Indian banking. At least 94 banks in India failed between 1913 and 1918

as indicated in the following table:

Table 1

Years

Number of

banks

that failed

Authorized

capital

(Rs. Lakhs)

Paid-up Capital

(Rs. Lakhs)

1913 12 274 35

1914 42 710 109

1915 11 56 5

1916 13 231 4

1917 9 76 25

1918 7 209 1

POST-INDEPENDENCE

The partition of India in 1947 adversely impacted the economies of Punjab and West

Bengal. The Government of India initiated measures to play an active role in the

economic life of the nation, and the Industrial Policy Resolution adopted by the

26

government in 1948 envisaged a mixed economy. The major steps to regulate banking

included:

In 1948, the Reserve Bank of India, India's central banking authority, was nationalized,

and it became an institution owned by the Government of India.

In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of

India (RBI) "to regulate, control, and inspect the banks in India."

The Banking Regulation Act also provided that no new bank or branch of an existing

bank could be opened without a license from the RBI, and no two banks could have

common directors.

NATIONALISATION

By the 1960s, the Indian banking industry has become an important tool to facilitate the

development of the Indian economy. At the same time, it has emerged as a large

employer, and a debate has ensued about the possibility to nationalize the banking

industry.

In July 1969, 14 largest commercial banks were nationalized. Nationalization of 6 more

commercial banks followed in 1980. The stated reason for the nationalization was to give

the government more control of credit delivery.

LIBERALISATION

In the early 1990s, the then Narsimha Rao government embarked on a policy of

liberalization, licensing a small number of private banks which later amalgamated with

Oriental Bank of Commerce, Axis Bank (earlier as UTI Bank), ICICI Bank and HDFC

Bank. This move, along with the rapid growth in the economy of India, revitalized the

banking sector in India, which has seen rapid growth with strong contribution from all the

three sectors of banks, namely, government banks, private banks and foreign banks.

In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake

in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor

27

has been allowed to hold more than 5% in a private sector bank since the RBI announced

norms in 2005 that any stake exceeding 5% in the private sector banks would need to be

vetted by them.

Currently (2007), banking in India is generally fairly mature in terms of supply, product

range and reach-even though reach in rural India still remains a challenge for the private

sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks

are considered to have clean, strong and transparent balance sheets relative to other banks

in comparable economies in its region. The Reserve Bank of India is an autonomous

body, with minimal pressure from the government.

28

ORIGIN OF COOPERATIVE BANKS IN INDIA

The origins of the 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 banks are an important constituent of the

Indian financial system. They are the primary financiers of agricultural activities, some

small-scale industries and self-employed workers. The Anyonya Cooperative Bank in

India is considered to have been the first cooperative bank in Asia.

Cooperative movement is quite well established in India. The first legislation on

cooperation was passed in 1904. In 1914 the Maclagen committee envisaged a three tier

structure for cooperative banking viz. Primary Agricultural Credit Societies (PACs) at the

grass root level, Central Cooperative Banks (CCBs) at the district level and State

Cooperative Banks (SCBs) at state level or Apex Level. The first urban cooperative bank

in India was formed nearly 100 years back in Baroda.

Cooperative Institutions are engaged in all kinds of activities namely production,

processing, marketing, distribution, servicing, and banking in India and have vast and

powerful superstructure. Cooperative Banks are important cogs in this structure.

In the beginning of 20th century, availability of credit in India, more particularly in rural

areas, was almost absent. Agricultural and related activities were starved of organized,

institutional credit. The rural folk had to depend entirely on the money lenders, who lent

often at usurious rates of interest.

The cooperative banks arrived in India in the beginning of 20th Century as an official

effort to create a new type of institution based on the principles of cooperative

organization and management, suitable for problems peculiar to Indian conditions. These

banks were conceived as substitutes for money lenders, to provide timely and adequate

short-term and long-term institutional credit at reasonable rates of interest. In the

formative stage Cooperative Banks were Urban Cooperative Societies run on community

basis and their lending activities were restricted to meeting the credit requirements of

29

their members. The concept of Urban Co-operative Bank was first spelt out by Mehta

Bhansali Committee in 1939 which defined on Urban Cooperative Bank. Provisions of

Section 5 (CCV) of Banking Regulation Act, 1949 (as applicable to Co-operative

Societies) defined an Urban Cooperative Bank as a Primary Co-operative Bank other than

a Primary Cooperative Society was made applicable in 1966.

STRUCTURE OF COOPERATIVE BANKING

SCBs: State Cooperative Banks

SLDBs: State Land Development Banks

UCBs: Urban Cooperative Banks

CCBs: Central Cooperative Banks

CLDBs: Central Land Development Banks

PACS: Primary Agricultural Credit Societies

PLDBs: Primary Land Development Banks

RBI

NABARD

SCBs SLDBs UCBs

CCBs CLDBs

PLDBs BRANCHES OF SLDBs

PACS

30

The Punjab State Cooperative Bank Ltd., Chandigarh

The Punjab State Cooperative Bank was established at Shimla in the year 1949 at Apex

of three tier short term Cooperative Credit structure as a principle financing institution of

the cooperative movement in Punjab. In 1951 its Head Office was shifted to Jalandhar

from where it moved in 1963 to its present building at Chandigarh. In the cooperative

Banking structure, the position of the Punjab State Cooperative Bank is extremely

important as the whole credit system revolves around it. It has 3 Divisional Offices at

Amritsar, Bhatinda and Jalandhar. It has 19 branches and 3 extensions counters operating

in the city of Chandigarh. Besides this, there are 20 District Central Cooperative Banks

having 805 branches and 23 extension counters in the State of Punjab affiliated with it.

The bank was established to help to provide timely and adequate flow of credit to the

farmers for agriculture and allied activities through PACS.

OBJECTS :

The objects for which the Bank is established are as under :-

1. To serve as a balancing center for cooperative societies (herein called the

society/societies) in the State of Punjab registered under the Act for the time being in

force.

2. To promote the economic interest of the members of the Bank and Cooperative

Societies in the State in accordance with cooperative principles and to facilitate the

development and funding of any Cooperative Society registered under the said Act.

3. To establish and support or aid in the establishment of and support to association,

institutions, funds, trusts and convenience designed to benefit the employees or ex-

employees of the Bank or the dependents or connections of such persons to grant

pensions and allowances and make payment toward insurance.

4. To provide long term loan for the maximum period of 15 years to the individuals,

Coop. House Building Societies, Federation of Coop. House Building Societies and

members of Group Housing Societies for purchase of house or construction thereof

31

by enrolling member/nominal members so as to read as 4.4. To carry on banking and

credit business not repugnant to the provisions of the Act and the Rules framed there

under for the time being in force and in particular to provide credit facilities to the

members. Providing Long Term Loan for the maximum period of 15 years to

individuals, Coop. House Building Societies and members of Group Housing

Societies for purchase of house or construction thereof by enrolling members/nominal

members.

5. To adopt such measures as are conducive to the spread of cooperative education and

training.

6. To promote and develop Cooperative Societies in the State.

7. To do all such other things as are incidental or conducive to the promotion or

advancement or objects of the Bank.

8. To solicit or procure insurance business as a Corporate Agent.

Main activities/functions of the bank

To accept deposits of money from the public for the purpose of lending and

investment.

Services provided by the Bank:

I. Deposits

1. Saving Bank Account

2. Current Account

3. Fixed Deposits

4. Long Term Deposits

5. Recurring Deposit

6. Collection of drafts, cheques and various other instruments.

II. Loans

Loans to Public:

32

i) Consumer durable loans

ii) Personal Loan to salary class

iii) Housing Loan

Loans to Central Cooperative Banks: (Re-finance)

i) Short term agriculture loan

ii) Medium term agriculture loan.

iii) Short term non-agriculture loan (Consumption Loan)

iv) Non farm sector loan

v) Rural and Urban Housing Loan

vi) Two wheeler loan

vii) Revolving cash credit limit to farmers (RCC)

viii)Cash Credit Fertilizer

ix) Cash Credit Limit to Cooperative Sugar Mills

Loans to other cooperative Apex Institutions:

i) To Housefed Pb.

ii) To IFFCO

ORGANISATIONAL STRUCTURE

The bank operates in the city of Chandigarh having 19 branches and 3 extension

counters. It has 3 Divisional Offices in Punjab at Amritsar, Jalandhar & Bathinda.

The organizational structure is as under:-

Divisional Offices

Amritsar

Jalandhar

Bathinda

33

District Central Cooperative Banks

1. Amritsar 1. Jalandhar 1. Bathinda

2. Tarantaran 2. Hoshiarpur 2. Fazilka

3. Gurdaspur 3. Kapurthala 3. Faridkot

4. Ferozepur 4. Ludhiana 4. Mansa

5. Moga 5. NawanShahar 5. Muktsar

6. Patiala 6. Sangrur

7. Ropar

8. Fatehgarh Sahib

COOPERATIVE CREDIT POLICY 2001-2006

The Cooperative Credit Institutions are distinctively structured to provide for short-term

and long-term credit needs of the farmers in the State. The Punjab State Cooperative

Bank (PSCB) and its constituent 20 Central Cooperative Banks (CCBs) and 4000

Primary Agricultural Cooperative Service Societies (PACS) direct and deliver short-term

production credit to the farmers. The Punjab State Cooperative Agricultural Development

Bank (PSADB) and its constituent 84 Primary Cooperative Agricultural Development

Banks (PADBs) cater to long term credit needs of the farmer. These institutions are

committed to promote and sustain economic interests of their members and customers in

keeping with the principals of self-help, self-responsibility and self-administration. They

facilitate development of their members by providing easy, timely, cost-effective and

quality services.

Short-term Cooperative Credit in the State has increased from Rs.7.60 crore in 1965

to Rs.2364.00 crore in 2000.

Similarly, Long-term Cooperative Credit has increased from Rs.1.64 crore in 1965 to

Rs.375.00 crore in 2000.

Estimates indicate that nearly 70% of credit needs of the farmers are met by

Cooperative Financing Institutions. They have been able to do so with a very high

34

rate of recovery, which was 96.30% in case of PSCB, 90.7% in case of CCBs and

80% for PADBs in 1999-2000.

35

PERFORMANCE EVALUATION

Performance of PUNJAB STATE COOPERATIVE BANK

ACHIEVEMENTS & AWARDS

DEPOSITS

The deposits of Central Cooperative Banks have touched Rs.577784.57 lacs as on

31.03.2008, showing an increase of 13.17 over the last year upto this date. The deposits

of the State Coop. Bank have increased from Rs.138775.06 lacs as on 31.3.2007 to

Rs.156564.46 lacs upto 31.3.2008, showing a net increase of 12.82% .

AGRICULTURAL ADVANCES

Short Term Agricultural advances

During the year 2007-2008, the Punjab State Cooperative Bank has advanced loans of

Rs.1950.49 crore upto 31.12.2008 against the target of Rs.1550.00 crore for financing

agro-inputs for crop production.

Medium Term Agricultural advances

The Central Cooperative Banks have advanced Rs.6.80 crore as Medium-term

Agricultural advances in the State upto 31.10.2008. This loan is given to farmers for

undertaking activities allied to agriculture.

REVOLVING CASH CREDIT

Under the scheme, the Central Cooperative Banks have sanctioned credit limits of

Rs.655.55 crore to 69620 farmers upto 31 January 2001. The rate of interest is 15 –

15.5%.

36

NON-FARM SECTOR LOAN

The most important feature of the cooperative banks in the State is that they started

advances of Non-Farm Sector during the year 1993. The Central Cooperative Banks have

advanced Rs.5546.13 lacs in 2007-2008. These loans are mainly given to rural youth for

self-employment.

The Punjab State Cooperative Bank is providing non-agricultural loans to Sugar Mills,

Spinning Mills, HOUSEFED, MARKFED, MILKFED and Central Cooperative Banks.

Rs.321.65 crore have been sanctioned to these institutions.

LOANS FOR CONSUMER DURABLES TO SALARY EARNERS

With a view to provide credit facilities to their customers, the Cooperative Banks

introduced a scheme of loans for purchase of consumer durables. Under the scheme,

every Government/semi-Government employee is provided loan upto Rs.50000/-

repayable in 3-5 years in easy monthly installments. The loan can be utilized for purchase

of TV, Refrigerator, Scooter, Furniture etc. A significant section of the salaried class has

benefited from the scheme. More than Rs.174 crore have been advanced under the

scheme upto 2008.

CASH CREDIT TO BUSINESSMEN AND TRADERS

With a view to diversify and benefit the small retail traders/ businessmen, the

Cooperative Banks started a cash credit scheme in the year 1997. Under this scheme, a

Cash Credit Limit is sanctioned upto Rs.10.00 lakh to small businessmen and traders,

depending upon their business turnover on easy terms at a normal rate of interest. Small

shopkeepers and petty traders, who were earlier deprived of institutional finance, are

covered under the scheme, particularly, in rural and semi-urban areas where other banks

37

are not advancing such type of loans. During the current year, more than Rs.50.00 crore

have been advanced under the scheme.

COLLECTION OF ELECTRICITY BILLS

Keeping in view the difficulty faced by rural people in paying of electricity bills at far off

places and Cities, it has been decided that from 1 February 2001, all branches of CCBs in

the State will accept payment of Electricity Bills on behalf of Punjab State Electricity

Board.

38

PERFORMANCE OF DISTRICT CENTRAL COOPERATIVE BANKS

Share of Deposits in PUNJAB

Table 2

As on 31/03/2007 As on 31/03/2008 As on 31/03/2009

% age share of Deposit

of CCB in district. 3.64 3.72 3.20

Growth rate to total

deposits in district 11.49 14.38 29.11

Growth rate of deposits

of CCB -5.44 Due to

Mohali

16.30 11.16

From the above table it is clear that growth rate of deposits of the central cooperative

banks have been decreasing since last year though it has shown an increase on

31/03/2008.

GRAPHICAL PRESENTATION OF SHARE OF DEPOSITS

%age share of deposit of CCB

Growth rate to total deposits

Growth rate of deposits of CCB

39

-10

-5

0

5

10

15

20

25

30

35

2007 2008 2009

YEARS

GR

OW

TH

PERFORMANCE OF AMRITSAR CENTRAL COOPERATIVE BANK

The cooperative movement in the district was started after the enactment of the

Cooperative Societies Act, 1904, and the subsequent Act of 1912. The first two

cooperative Societies in the district were organized and registered in 1908 in the villages

of Pakharpura and Ramdewali, Tahsil Amritsar. The movement gained momentum with

the passage of the Acts of 1954 and 1961. Consequently, a number of co-operative

societies came into being at various places in the district.A Central Co-operative Bank

also functions at Amritsar, with branches at Rayya, Patti and Tarn Taran. Most of the

funds for industrial co-operative societies are available from co-operative banks. Credit

facilities are also given by private entrepreneurs. The co-operative societies also get

subsidies, grants-in-aid and loans from Government for the purchase of machinery,

equipment, raw materials, etc.

The total borrowings of the bank are increasing at a faster pace than the owned funds.

This is clear from the percentage change over last year for both the particulars i.e. total

borrowings change has been calculated as 43.39% as compared to 29.04% change for

owned funds. The profits of the bank are found to be decreasing. It was found that there

has been profits in negative terms since last two years i.e. a total loss of about 1400.42

[(-86.82) + (-1313.60)]. Total Advances Outstanding are increasing every year.

40

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 3

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS 0N

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST

YR.

SHARE

CAPITAL 331.85 335.99 362.30 411.72 482.53 17.20

OWNED

FUNDS 1357.79 1612.14 2023.09 2137.49 2758.34 29.04

DEPOSITS 24617.46 24862.95 27199.06 29769.13 32687.71 9.80

TOTAL

BORROWINGS 8746.45 8543.94 8542.25 10232.57 14672.04 43.39

TOTAL

INVESTMENTS 7044.95 6518.98 7201.86 8528.49 10560.64 23.83

TOTAL

ADVANCES

OUTSTANDING

25334.74 26691.86 28037.02 30877.40 36461.86 18.09

PROFITS 252.46 58.18 78.65 -86.82 -1313.60 --

LOSSES -- -- -- -- 1400.42

41

PERFORMANCE OF BATHINDA CENTRAL COOPERATIVE BANK

Central Cooperative Bank at Bathinda has a network of 46 branches all over the district.

The main activity of the bank is raising of deposit of loans to its member cooperative

societies. There are 4 Primary Cooperative Land Mortgage Banks functioning in the

district one each at Bathinda, Mansa, Talwandi Sabo and Rampura Phul.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 4

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS 0N

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST YR.

SHARE

CAPITAL 540.92 544.53 588.25 619.59 700.77 13.10

OWNED

FUNDS 1778.98 2195.71 2215.53 2578.50 2683.79 4.08

DEPOSITS 18067.51 20915.01 23014.75 24942.73 28805.60 15.48

TOTAL

BORROWINGS 9639.92 11370.30 13994.09 17872.21 21875.40 22.40

TOTAL

INVESTMENTS 4218.60 4563.02 5445.33 5862.97 7786.23 32.80

TOTAL

ADVANCES

OUTSTANDING

21765.02 25717.47 30111.23 36316.74 42641.00 17.41

PROFITS 333.50 418.00 354.66 24.80 41.11 --

LOSSES -- -- -- -- -- --

The owned funds of the bank though increasing every year but at a very slow rate as

compared to total borrowings. If we see the change for last year then it is found that rate

42

of increase of owned funds (4.08%) is almost negligible in comparison to (22.40%)

increase in total borrowings. The profits of the bank for the year 2005 were observed to

be Rs.418 lacs and in 2008 this amount has fallen to Rs.41.11 lacs. No losses have been

faced by the bank as yet. The total advances have increased from 21765.02 in 2004 to

42641.00 in 2008.

PERFORMANCE OF FATEHGARH SAHIB CENTRAL COOPERATIVE

BANK

The progress made by cooperative institutions in the Fatehgarh Sahib District has been

impressive, they compete with the commercial banks in mobilizing savings and also

providing credit facilities to the agricultural sector. There is 1 Central Cooperative Bank

with 24 branches, 4 Primary Agricultural Development Banks in the district. The

Fatehgarh Sahib Central Cooperative Bank Ltd., Fatehgarh Sahib came into existence on

1 April 1993 after the formation of the Fatehgarh Sahib District, prior to that it was a

Primary Cooperative Bank.

The bank advances short and medium term loan to individual members through its

affiliated cooperative societies for seasonal agricultural purposes and for the marketing of

the crops. The working capital of the bank is derived mostly from the share capital

contributed by the cooperative societies and their deposits. The cooperative bank in turn

arranges finances to meet the requirements of the members of the cooperative societies.

The Fatehgarh Sahib Cooperative Bank has experienced highly fluctuating profits in last

five years. If it raised to Rs.418.99 lacs from Rs.331.86 lacs in 2005, in 2007 it decreased

to 23.98 and again increased to Rs.204.14 lacs in 2008.

In 2008 total borrowings have shown long jump from Rs.12162.57 lacs to Rs.17578.52

lacs with a percentage change over last year of 44.52%. The total advances outstanding

have been constantly increasing through these five years and a change of 28.88% was

seen over the last year in 2008. The deposits were increased from Rs.8751.89 lacs in

2004 to Rs.14176.31 lacs in 2008.

43

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 5

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS 0N

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST

YR.

SHARE

CAPITAL 337.82 337.25 338.97 348.90 406.06 16.38

OWNED

FUNDS 1517.85 1818.46 2129.82 2312.41 2985.23 29.09

DEPOSITS 8751.89 9169.02 11918.84 12970.14 14176.31 9.30

TOTAL

BORROWINGS 9694.24 10401.15 9713.56 12162.57 17578.52 44.52

TOTAL

INVESTMENTS 2405.57 2610.62 3186.87 3439.88 3654.86 6.25

TOTAL

ADVANCES

OUTSTANDING

16481.39 17753.94 19474.52 22817.60 29407.69 28.88

PROFITS 331.86 418.99 363.25 23.98 204.14 --

LOSSES -- -- -- -- -- --

PERFORMANCE OF FAZILKA CENTRAL COOPERATIVE BANK

The Fazilka Central Co-operative Bank, Fazilka, came into existence in 1915. The

number of branches of the bank is 30 spread throughout the district. Out of these

branches one is found to be in loss. Since this district is located near the border its

working has been affected to a great extent.

44

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 6

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS 0N

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST YR.

SHARE

CAPITAL 387.34 393.07 411.56 441.36 453.55 2.76

OWNED

FUNDS 1811.33 2105.36 2356.10 2454.72 2543.12 3.60

DEPOSITS 9392.78 10279.15 11272.07 12743.44 15080.09 18.34

TOTAL

BORROWINGS 10341.48 9675.33 9881.64 13005.54 16126.21 23.99

TOTAL

INVESTMENT

S

2865.52 2894.73 2970.90 3533.47 3856.57 9.14

TOTAL

ADVANCES

OUTSTANDING

17828.72 17877.67 19126.09 23170.86 28873.43 24.65

PROFITS 306.30 318.67 250.58 5.69 8.72 --

LOSSES -- -- -- -- -- --

As can be seen from the table the profits have been decreasing at a faster rate in last five

years, from Rs.306.30 lacs it has dropped to Rs.8.72 lacs in 2008. The owned funds have

increased but at a very low rate as compared to total advances outstanding and total

borrowings. The share capital increased at a negligible rate.

45

PERFORMANCE OF FEROZEPUR CENTRAL COOPERATIVE BANK

The Commission on Agriculture recommended the starting of the co-operative movement

and, consequently, the first Co-operative Societies Act was passed in 1904. Under this

Act, the first co-operative credit society in the District was registered on 4 October 1911,

in the village of Khilichi Qadim (Ferozepur Tehsil). The progress of co-operative

societies in the Punjab encouraged the Government to pass the Co-operative Societies

Act, 1912, which widened the scope and permitted the registration of secondary societies.

Thus there came into existence the Fazilka Central Co-operative Bank, Fazilka, in 1915,

followed by the Ferozepur Central Co-operative Bank, Ferozepur, in 1924.

Table 7 FINANCIAL STATISTICAL DATA OF 5 YEARS

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS 0N

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST YR.

SHARE

CAPITAL 430.95 427.50 424.24 442.65 480.88 8.63

OWNED

FUNDS 1593.45 1743.49 1798.43 1703.18 1873.21 9.98

DEPOSITS 4844.20 4957.89 6023.85 7095.71 8719.39 22.88

TOTAL

BORROWINGS 10124.52 10854.21 12603.33 15699.88 19870.74 26.56

TOTAL

INVESTMENTS 1855.94 1939.78 1991.79 2109.84 2483.58 17.71

TOTAL

ADVANCES

OUTSTANDING

14382.82 15178.45 17462.31 21449.59 26180.74 22.06

PROFITS 162.22 162.04 81.05 -99.72 6.23 --

LOSSES -- -- -- -- 93.49 --

46

Total borrowings increased with a percentage change over last year of 26.56%. The

financial position of the bank is not at all satisfactory as it experienced a loss of Rs.93.49

lacs till 2008. The owned funds have increased last year at a rate of 9.98%

PERFORMANCE OF FARIDKOT CENTRAL COOPERATIVE BANK

Cooperatives have played a significant role in the economic development of the district.

The cooperative movement has really proved to be a boon for the industrial as well as

agricultural sectors of the district which have acquired a marvelous achievement in the

post green revolution period by availing the cooperative infrastructure. It has not only

created ample employment opportunities for the unemployed rural people but also have

encouraged the local enterprise which otherwise would not have been possible.

A very negligible increase in owned funds of the bank has been observed in last five

years. Profits have converted into losses in last two years. A total loss of Rs.186.80 lacs

have been faced by the bank till 2008.

47

FINANCIAL STATISTICAL DATA OF 5 YEARSTable 8

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS 0N

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST

YR.

SHARE

CAPITAL 245.13 256.50 278.13 292.50 313.23 7.08

OWNED

FUNDS 1476.94 1671.68 1692.16 1715.28 1746.65 1.83

DEPOSITS 6854.80 7513.28 8448.66 9264.14 11017.39 18.92

TOTAL

BORROWINGS 10817.75 7970.60 8536.59 10687.14 12193.36 14.09

TOTAL

INVESTMENTS 1836.81 2151.20 2233.63 2550.40 2793.23 9.52

TOTAL

ADVANCES

OUTSTANDING

16498.50 14540.65 15710.84 18141.61 21134.74 16.50

PROFITS 181.78 201.27 18.21 -52.62 -134.18 --

LOSSES -- -- -- -- 186.80 --

PERFORMANCE OF GURDASPUR CENTRAL COOPERATIVE BANK

The co-operative movement was introduced in the Gurdaspur District in 1906, when an

Agricultural Co-operative Credit Society was registered in the village Bhaini Milwan

(Tahsil Gurdaspur). Two Central Co-operatives Banks function at Gurdaspur and Batala,

with branches at different places in the district. The Central Co-operative Banks are the

48

main financing agencies for the co-operative marketing societies. These societies, like

other trading groups and agencies, undertake the marketing operation.

The bank is found to incur losses of about Rs.56.58 lacs during the period of 2007 –

2008. Advances outstanding increased slowly till 2007 but in 2008 the difference in

growth rate was 20.68%. The deposits increased by 22.13% between 2007 – 2008.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 9

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS 0N

31.3.2007

%AGE

CHANGE

OVER

LAST YR.

SHARE

CAPITAL 379.54 379.26 384.12 424.52 9.49

OWNED

FUNDS 2962.95 3309.00 3533.49 3689.82 3.37

DEPOSITS 21534.37 22554.49 22759.04 23908.20 22.13

TOTAL

BORROWINGS 14303.76 14041.14 14006.70 17194.28 16.93

TOTAL

INVESTMENTS 5025.99 5242.72 5510.92 6020.25 18.23

TOTAL

ADVANCES

OUTSTANDING

30293.92 31506.87 32340.96 36311.90 20.68

PROFITS 356.83 307.95 306.09 19.45 --

LOSSES

-- -- -- 56.58 --

49

PERFORMANCE OF HOSHIARPUR CENTRAL COOPERATIVE BANK

Hoshiarpur district is known to have been the first to put the principles of cooperation

into practice. It was here that even before the passage of the first Cooperative Societies

Act,1904, the first Agricultural Credit Society was formed in the village Panjwar, the

then part of Hoshiarpur. Hoshiarpur central cooperative bank was established here in July

,1910. it could not fulfill the requirements of the people so it was converted into a full-

fledged CCB after the enactment of Indian Cooperative Societies Act,1912. Central

Cooperative Bank functions at Hoshiarpur with 22 branches at different places in the

district.

The investments of the bank have been showing a negative growth over last five years.

The profits have been fluctuating but overall there is decrease in profits. The deposits of

the bank have increased from Rs.39860.88 lacs in 2004 to Rs.61964.55 lacs in 2008.

50

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 10

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS 0N

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST

YR.

SHARE

CAPITAL 3758.88 392.38 411.09 458.08 496.19 8.32

OWNED

FUNDS 4389.83 5054.54 5742.89 6015.90 6394.35 6.29

DEPOSITS 39860.88 43383.34 48329.42 54585.22 61964.55 13.52

TOTAL

BORROWINGS 627.39 679.99 437.40 5041.71 9605.06 90.51

TOTAL

INVESTMENTS 17241.10 18222.06 20584.68 29370.94 29056.79 -1.08

TOTAL

ADVANCES

OUTSTANDING

24461.13 27528.80 30318.84 32744.85 45054.35 37.59

PROFITS 786.22 803.33 7131 270.40 346.76 --

LOSSES -- -- -- -- -- --

51

PERFORMANCE OF JALANDHAR CENTRAL COOPERATIVE BANK

The co-operative movement was launched in our country with the passage of the Co-

operative Credit Societies Act, 1904. Since then, the progress made by these societies in

Jalandhar District was very impressive and this helps a lot in eliminating the malpractices

of private money landers. The money – landers use to cheat the farmers by charging

exorbitant rate of interest and the using many malpractices.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 11

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS 0N

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST YR.

SHARE

CAPITAL 481.82 509.12 540.10 592.55 644.54 8.77

OWNED

FUNDS 4739.39 6813.76 7449.44 8133.37 8890.03 9.30

DEPOSITS 57590.47 58615.13 61512.37 66588.51 74224.82 11.47

TOTAL

BORROWINGS 3989.09 2263.54 1537.16 6939.66 10468.57 50.85

TOTAL

INVESTMENTS 30021.13 36181.47 39567.02 45077.39 38508.30 -17.05

TOTAL

ADVANCES

OUTSTANDING

34709.48 28965.43 27833.39 33533.73 50425.94 50.37

PROFITS 1276.56 889.61 667.65 675.55 759.30 --

LOSSES -- -- -- -- -- --

52

PERFORMANCE OF KAPURTHALA CENTRAL COOPERATIVE

BANK

With the most private and public sector banks having reduced the lending rates on retail

loans, UCBs are expected to follow their lead. The cooperative banks are expected to take

a decision on lending rates after the announcements of the RBI’s credit policy later this

month. Most cooperative banks are small in size and it is difficult for them to lend at

lower rates of interest. However if these lower lending rates continue to remain low in the

market for a while, the cooperatives may be forced to reduce the rates to stop customer’s

from switching over to other banks.

Total investments though increased from Rs.15651.23 lacs in 2004 to Rs.29394.91 lacs in

2007 but it reduced to Rs.27061.87 lacs in 2008. Total advances outstanding increased

from Rs.13859.21 lacs in 2004 to Rs.33969.69 lacs in 2008. The borrowings are observed

to reduce from Rs.301.27 lacs during the period of 2004 -2006 to Rs.142.67 lacs but

suddenly increased in 2007-2008 to Rs.6195.20 lacs.

53

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 12

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS 0N

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST YR.

SHARE

CAPITAL 235.01 249.19 278.29 299.60 346.12 15.52

OWNED

FUNDS 4475.29 5302.09 5984.14 6397.07 7637.70 19.39

DEPOSITS 32496.80 36112.08 39736.89 45321.59 49852.68 10.00

TOTAL

BORROWINGS 301.27 227.56 142.67 3484.01 6195.20 77.82

TOTAL

INVESTMENTS 15651.23 20106.72 23089.88 29394.91 27061.87 -8.62

TOTAL

ADVANCES

OUTSTANDING

13859.21 19936.94 24985.92 26010.00 33969.69 30.60

PROFITS 838.37 748.92 621.60 258.83 329.18 --

LOSSES -- -- -- -- -- --

PERFORMANCE OF LUDHIANA CENTRAL COOPERATIVE BANK

The co-operative movement in this distric twas started after the enactment of All India

Co-operative Societies Act, 1904, and the subsequent Act of 1912. The first co-operative

society in the district was organised and registered in 1910. The movement gradually

gained momentum and made much headway with passage of the Acts of 1954 and 1961.

54

The financial health of the bank is not strong as observed from data available for

financial analysis of the bank since profit of the bank has been continuously decreasing as

it was Rs.1280.95 lacs in 2004 to Rs.219.95 lacs in 2008. And total investments have

shown a negative percentage change in 2008 over last year. There have been very little

increase in owned funds as revealed from the data of last five years

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 13

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS ON

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST

YEAR

SHARE

CAPITAL 714.91 728.92 762.10 805.31 897.64 11.46

OWNED

FUNDS 7837.09 8844.67 9444.74 9895.41 9958.03 0.63

DEPOSITS 28515.25 31351.57 37749.18 39358.81 41357.30 5.08

TOTAL

BORROWINGS 6123.02 3779.61 5114.65 13000.11 20089.79 54.54

TOTAL

INVESTMENTS 8984.58 11033.53 16861.06 22613.84 19242.64 -17.52

TOTAL

ADVANCES

OUTSTANDING

31799.43 31271.84 33145.50 37891.84 50708.06 33.82

PROFITS 1280.95 1299.02 569.68 194.64 219.95 --

LOSSES -- -- -- -- -- --

55

PERFORMANCE OF MANSA CENTRAL COOPERATIVE BANK

The progress made by cooperative institutions in the Mansa District has been impressive,

they compete with the commercial banks in mobilizing savings and also providing credit

facilities to the agricultural sector. The cooperative credit institutions provide facilities

for short and medium-term credit under crop loan scheme for fertilizers, improved seeds,

agricultural implements, marketing storage, and extension of advanced agricultural

techniques.There were 1 Central Cooperative Bank with 22 branches, 3 Primary

Agricultural Development Banks and 8 Regional Rural Banks in the district. The Mansa

Central Cooperative Bank Ltd., Mansa came into existence on 25 February 1993. The

bank advances short and medium term loan to individual members through its affiliated

cooperative societies for seasonal agricultural purposes and for the marketing of the

crops. The working capital of the bank is derived mostly from the share capital

contributed by the cooperative societies and their deposits. The cooperative bank in turn

arranges finances to meet the requirements of the members of the cooperative societies.

Total borrowings of the though increased from Rs.8667.65 lacs to Rs.17242.52 lacs

during 2004 – 2008 but in 2008 the bank records have shown a negative percentage

change over last year. However, profits have been decreasing during these last years

56

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 14

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS ON

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST YR

SHARE

CAPITAL 320.56 319.04 321.19 334.77 366.20 9.38

OWNED

FUNDS 1149.32 1369.09 1564.09 1643.08 1775.96 8.09

DEPOSITS 6017.52 6841.96 7399.68 6737.65 10528.69 56.27

TOTAL

BORROWINGS 8667.65 11175.08 13940.99 17312.85 17242.52 -0.40

TOTAL

INVESTMENTS 1740.16 2251.97 2193.44 1961.87 2529.03 28.91

TOTAL

ADVANCES

OUTSTANDING

12522.62 15861.81 19423.24 22483.20 25221.15 12.18

PROFITS 216.12 166.47 135.30 26.98 13.91 --

LOSSES -- --

.

-- -- -- --

57

PERFORMANCE OF MOGA CENTRAL COOPERATIVE BANK

Moga District is the 17th District drawn on the map of Punjab State on 24th day of

November 1995. Before this, Moga was the sub-division of Faridkot District. Moga town

the head quarter of the District is situated on Ferozpur-Ludhiana road.

Share capital remained almost constant in five years period 2004 – 2008. The investments

of the central cooperative bank in moga have been raised upto Rs.27941.44 lacs till

31.03.2008.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 15

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS ON

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST YR

SHARE

CAPITAL 401.02 403.82 431.45 471.50 492.81 4.52

OWNED

FUNDS 1854.98 2191.28 2457.46 2545.82 2727.49 7.14

DEPOSITS 13128.96 14054.95 16065.48 16324.40 19673.21 20.51

TOTAL

BORROWINGS 6332.19 8162.57 7997.44 10952.91 12978.28 18.49

TOTAL

INVESTMENTS 3880.69 4204.46 4430.24 4991.77 6106.96 22.34

TOTAL

ADVANCES

OUTSTANDING

16491.65 19062.21 20770.20 23485.34 27941.44 18.97

PROFITS 329.93 366.19 222.62 19.68 24.26 --

LOSSES -- -- -- -- -- --

58

PERFORMANCE OF MUKTSAR CENTRAL COOPERATIVE BANK

The investments of the bank have been increasing till 2007 but in 2008 it has shown a

decline of 10.42%. On the other hand borrowings and advances outstanding have

increased continuously.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 16

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS ON

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST YR

SHARE

CAPITAL 367.75 385.18 403.11 425.11 432.02 1.62

OWNED

FUNDS 2538.21 2884.94 3178.56 3409.26 3651.16 7.10

DEPOSITS 5293.79 5843.03 6209.15 7986.04 8361.46 4.70

TOTAL

BORROWINGS 11751.33 12115.42 13013.42 15466.47 17830.83 15.28

TOTAL

INVESTMENTS 1865.97 1895.04 1919.71 2432.48 2202.87 -10.42

TOTAL

ADVANCES

OUTSTANDING

16197.72 17442.95 19934.35 23087.19 26569.41 15.08

PROFITS 339.71 391.58 289.78 38.72 42.74 --

LOSSES -- -- -- -- -- --

59

PERFORMANCE OF NAWANSHAHR CENTRAL COOPERATIVE BANK

Nawanshahr district was carved out of Hoshiarpur and Jalandhar districts of Punjab in

November 7, 1995 on the auspicious occasion of birthday of Sh. Guru Nanak Dev Ji as

the sixteenth district of Punjab State. District name has been derived from the head-

quarter town of Nawanshahr. The cooperative movement in the Nawashahr District was

started in 1934. The district has 153 Cooperative Credit Societies besides 1 Central

Cooperative Bank with 45 branches and 3 Primary Agricultural Development Banks.

Table 17 FINANCIAL STATISTICAL DATA OF 5 YEARS

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS ON

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST YR

SHARE

CAPITAL 241.80 250.48 321.11 381.86 437.30 14.52

OWNED

FUNDS 9505.41 10548.94 11094.75 11820.55 12514.31 5.87

DEPOSITS 39109.92 41451.20 44176.51 50206.34 55285.56 10.12

TOTAL

BORROWINGS 4835.57 2086.45 1127.07 7551.12 7231.99 -4.23

TOTAL

INVESTMENTS 28036.19 34064.25 35439.68 46674.06 45229.92 -3.09

TOTAL

ADVANCES

OUTSTANDING

23274.39 18054.04 19069.78 21124.37 27931.49 32.22

PROFITS 1322.82 1046.46 796.75 741.75 658.58 --

LOSSES -- -- -- -- -- --

60

Total advances outstanding were Rs.23274.39 lacs in 2004 which have increased to

Rs.27931.49 lacs in 2008 with 32.22% change over last year. Total borrowings of the

bank have been decreasing during the period 2004 – 2008 and has shown a negative

change in 2008 over last year indicating that the bank is financially strong enough to not

depend on borrowings from other financial institutions.

PERFORMANCE OF PATIALA CENTRAL COOPERATIVE BANK

With taking over the assets and liabilities of the then Patiala Cooperative Union, the

Patiala Central Cooperative Bank Ltd., Patiala was registered on 28/09/1949 under the

Cooperative Societies Act, 1912. The Bank is presently serving in its 59th year. There

exists imbalances between the loan outstanding towards PACS and loan outstanding

towards members amounting to Rs.1029.08 lacs.

The business turnover of the bank for the year 2008-09 was Rs.804067.55 lacs. There is a

network of its 43 branches spread all over the district. The investments of the bank have

been increasing at a very negligible rate of growth. Fluctuations were observed in getting

profits through these five years. The share capital was almost constant during the period

of 2004 – 2007 and suddenly increased by 7.70% in 2008.

61

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 18

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS ON

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST YR

SHARE

CAPITAL 859.47 863.65 871.21 897.10 966.23 7.70

OWNED

FUNDS 2823.85 3602.15 4324.38 4524.04 5239.28 15.80

DEPOSITS 20250.47 20995.42 25407.81 24026.00 27943.61 16.30

TOTAL

BORROWINGS 21699.74 26585.47 28181.46 38173.38 42895.27 12.37

TOTAL

INVESTMENTS 5174.48 6005.00 6673.73 6993.22 7326.98 4.78

TOTAL

ADVANCES

OUTSTANDING

37117.80 43072.40 48609.42 57525.58 66634.85 15.83

PROFITS 601.87 906.28 796.75 741.75 658.58 --

LOSSES -- -- -- -- -- --

62

PERFORMANCE OF ROPAR CENTRAL COOPERATIVE BANK

The Co-operative Movement took root in the Ropar District in 1920 with the formation of

thrift/credit co-operative society at Kharar. The Central Co-operative Bank, Ropar has 25

branches at different places in the district.

FINANCIAL STATISTICAL DATA OF 5 YEARSTable 19

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS ON

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST YR

SHARE

CAPITAL 288.11 305.62 316.51 224.60 265.18 18.06

OWNED

FUNDS 4074.54 4912.95 5688.88 4883.30 5449.10 11.59

DEPOSITS 21990.15 24036.15 30748.21 18160.31 19625.28 8.07

TOTAL

BORROWINGS 3730.99 3426.84 3762.78 8491.41 8255.78 -2.77

TOTAL

INVESTMENTS 8586.32 10237.85 13205.55 12373.22 8403.00 -47.25

TOTAL

ADVANCES

OUTSTANDING

19958.46 20629.79 24748.77 18157.08 23414.90 28.96

PROFITS 816.19 865.66 818.60 149.95 230.22 --

LOSSES -- -- -- -- -- --

The share capital of the bank has increased as on 31.03.2008 from Rs.224.60 lacs in 2007

to Rs.265.18 lacs with a growth rate of 18.06. In 2008, though a decrease in borrowings

63

of the bank has been seen but this decrease is very small as compared to decrease in

investments

PERFORMANCE OF SANGRUR CENTRAL COOPERATIVE BANK

The district of Sangrur was formed in 1948. The Balian Co-operative Credit Society in

village Balian (Tahsil Sangrur) was the first co-operative society registered in the District

in 1916. It has a membership of 15 and a share capital of Rs 150. Since this area

comprised a major portion of the Princely State of Jind, the movement did not make

much progress as the necessary laws could not be framed speedily. However, after the

independence, when this area became a part of the PEPSU, the Co-operative Movement

made a considerable progress. In 1956, with a merger of the PEPSU in the Punjab, the

area of present Sangrur District also became a part of the Punjab, and the Co-operative

Movement made further progress under the Five-Years Plans. The Central Co-operative

Bank functions at Sangrur with 30 branches at different places in the District.

Though profits have decreased a lot but growth is observed in 2008 as compared to year

2007 from Rs.51.71 lacs to 83.38 lacs a change of almost Rs.31.67 lacs.

64

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 20

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS ON

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST YR

SHARE

CAPITAL 842.60 865.85 888.34 1013.03 1130.98 11.64

OWNED

FUNDS 2482.88 3327.13 3983.47 4309.39 4800.17 11.38

DEPOSITS 21960.42 23178.11 26507.47 28943.37 32772.38 13.23

TOTAL

BORROWINGS 24332.13 24907.07 27903.96 38341.09 40232.49 4.93

TOTAL

INVESTMENTS 7177.20 6847.68 7143.44 7622.92 8971.61 17.69

TOTAL

ADVANCES

OUTSTANDING

38532.39 42071.98 48287.35 61496.18 66403.41 7.98

PROFITS 551.80 573.83 353.87 51.71 83.38 --

LOSSES -- -- -- -- -- --

65

PERFORMANCE OF TARN TARAN CENTRAL COOPERATIVE BANK

Central Cooperative Bank was established at Tarn Taran, violating the guidelines of the

RBI. Funds worth Rs 5 crore were diverted from the state Cooperative Bank to the Tarn

Taran Bank. However, as it was not opened with due approval, it was unable to secure

loans at cheaper rates from the National Bank for Agriculture and Rural Development.

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 21

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS ON

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST YR

SHARE

CAPITAL 365.49 367.72 371.84 370.00 384.65 3.96

OWNED

FUNDS 2338.14 2844.46 3132.26 3158.6 3236.76 2.47

DEPOSITS 11526.65 11794.13 12507.79 13628.9 15845.37 16.26

TOTAL

BORROWINGS 11249.37 11509.92 13126.86 13294.32 16034.80 20.61

TOTAL

INVESTMENTS 3080.88 3198.68 3319.37 3762.74 3995.89 6.20

TOTAL

ADVANCES

OUTSTANDING

21465.99 22232.26 23698.70 25353.23 29713.11 17.20

PROFITS 197.46 406.99 70.00 22.30 44.04 --

LOSSES 403.78 -- -- -- -- --

66

Profits of the bank have been reduced in four years but last year an increased was noticed

from Rs.22.30 lacs to Rs.44.04 lacs i.e. an increase of Rs.21.74 lacs. The bank faced the

loss of Rs.403.78 lacs in 2004 and in the following years this loss was overcome by the

bank. Deposits of the bank have shown a constant growth in last five years, though

owned funds and share capital have been increasing at a slower rate

PERFORMANCE OF SAS NAGAR CENTRAL COOPERATIVE BANK

Mohali district is one of the twenty districts in the state of Punjab in north-west India. It

is the most currently created district of Punjab introduced in 2006. the cooperative bank

in this district is named as SAS NAGAR COOPERATIVE BANK.

Since SAS Nagar Cooperative bank has been recently formed only two years data was

available for the study. Though recently created its progress as compared to already

existing banks have been satisfactory. This bank mainly lacks behind in investments. The

percentage change for owned funds of the bank over last year has been found to be

greater than the borrowings.

67

FINANCIAL STATISTICAL DATA OF 5 YEARS

Table 22

AS ON

31.3.2004

AS ON

31.3.2005

AS ON

31.3.2006

AS ON

31.3.2007

AS ON

31.3.2008

%AGE

CHANGE

OVER

LAST YR

SHARE

CAPITAL -- -- -- 138.54 147.33 6.34

OWNED

FUNDS -- -- -- 1780.85 2316.39 30.07

DEPOSITS -- -- -- 17953.81 20664.97 15.10

TOTAL

BORROWINGS -- -- -- 2450.00 3015.00 23.06

TOTAL

INVESTMENTS -- -- -- 11620.00 11031.99 - 5.33

TOTAL

ADVANCES

OUTSTANDING

-- -- -- 9528.30 13872.80 45.59

PROFITS -- -- -- 85.72 257.54 --

LOSSES -- -- -- -- -- --

68

PERFORMANCE OF COOPERATIVE BANKS IN PUNJAB

The consumption loan available to non-agriculturist members in the state through

cooperatives has been increased from Rs.10000 to Rs.25000.

The revolving cash credit limit had been enhanced to Rs.6 lakhs.

The union agricultural debt waiver scheme could provide only marginal relief to

Punjab farmers.

The number of credit societies has been decreased due to the reorganization of

Primary Cooperative Agricultural Credit Societies into Agricultural Credit Societies.

Refinancing of 5 District Central Cooperative Banks has been started which was

stopped due to creation of new district.

Due to non release of 40% share of NABARD in advancements made by District

Cooperative Banks, they are compelled to provide crop loan at the rate of 7% either

out of their own resources or loan raised from Punjab State Cooperative Bank which

costs more than the rate of interest being charged.

The immediate problem is not that of access to credit, but the unbearable burden of

payment of interest and repayment of loans. The Government of Punjab has reduced

interest on co-operative loans from 14.5% to 7% and has also offered OTS for settling

sticky loans. We also propose to enact a law for providing relief from rural

indebtedness. No debt relief on the basis of Vaidyanathan Committee Report or

Vidharaba like Package has been given to farmers of Punjab. Therefore, a special

package for debt relief to Punjabi Farmers is proposed. A sum of Rs.544 crore has

been requested from the Union Government - Rs.211 crore for OTS for Cooperative

Loans, Rs.199 crore for Losses of Cooperative Banks and Rs.134 crore for financial

support to District CCBs for providing crop loans at the reduced rate of 7% during the

next five years. Aggregate Deposits and Gross Bank Credit of State and District

Central Co-operative Banks till March 2007 is as under:

69

Table 23

STATE/DISTRICT CCBs DEPOSITS CREDIT

STATE COOPERATIVE BANK 1,38,775 3,40,391

DISTRICT CENTRAL COOPERATIVE BANKS    

1 Amritsar 29,648 30,859

2 Bhatinda 24,443 36,316

3 Faridkot 9,264 18,142

4 Fatehgarh Sahib 12,970 22,818

5 Fazilka 12,625 23,184

6 Ferozpur 7,096 21,450

7 Gurudaspur 24,774 36,312

8 Hoshiarpur 54,585 32,745

9 Jalandar 66,589 33,534

10 Kapurthala 45,322 26,010

11 Ludhiana 39,359 37,892

12 Mansa 6,738 22,483

13 Moga 16,324 23,485

14 Muktsar 7,923 23,087

15 Nawanshahar 49,919 21,124

16 Patiala 24,027 57,526

17 Ropar 18,160 18,157

18 Sangrur 28,943 61,496

19 Tarn Taran 13,629 25,270

TOTAL 4,92,338 5,71,890

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GRAPHICAL PRESENTATION OF PROFITS OF DISTRICT COOPERATIVE BANKS

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DISTRICTS

PR

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ITS

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Performance of the PUNJAB STATE COOPERATIVE

AGRICULTURAL DEVELOPMENT BANK LTD

ACHIEVEMENTS

There are number of factors which led to the making of tremendous business progress &

winning of prestigious Awards, continuously for the last many years by the Punjab State

Cooperative Agricultural Development Bank Limited, Chandigarh. Briefly, the quality

lending, excellent recovery consistent profits, simplification of loaning procedures for the

benefit of the borrowers etc. are some of the important aspects enabling the long term

cooperative credit structure in Punjab , to achieve these prestigious awards.

 The Long Term Cooperative Structure in Punjab is a Federal structure consisting of the

Punjab State Cooperative Agricultural Development Bank Ltd., (SADB) at Apex level,

with its member Primary Cooperative Agricultural Development Banks (PADBs), at the

base level, which meet the Long Term credit requirements of the farmers in the State.

The bank was established in the year, 1958. The federal structure , however, started its

functioning in 1962, when 14 PADBs were set up at District Headquarters. Subsequently,

the PADBs were further brought to the level of Tehsil Headquarters and thereafter to the

Sub- tehsil level in some of the areas with objective to serve the farmers easily and

nearest to their door-steps. The number of PADBs were consequently increased to 82 as

on 31.3.2000. This had ultimately resulted in the increase of membership of the bank at

the base level, which was very small in 1962. The individual membership at the PADBs

level as on 31.3.2008 is as under:- 

Total Membership                        689000

Borrowing members                     445000

Non-borrowing members            244000

It   may   be   pertinent   to mention here that the geographical area of Punjab State is only

1.5%, whereas   its advancement of long-term loans, amongst the Cooperative

Agricultural Development Banks in the country is nearly 15%. The

sizeable flow of credit has helped the State in contributing nearly 40% of the food

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production of the country and also in ushering white revolution in the State. Besides the

factors like availing of free flow of credit from NABARD, there are various other internal

and external factors also to which the success of the bank is attributed.

INTERNAL FACTORS

RECOVERY: The success of any Institution and its future advancement is mainly

dependent on the better recovery of the loans. In the sphere of recovery of loans, the

bank has always been particular and its recovery results have generally been

excellent. It is pertinent to mention here that inspite of various natural calamities

causing large scale damage to the crops, the bank had been able to maintain its

recovery of 100% at the State level and 83.0% at PADBs level in the State

BUSINESS PLANNING & MONITORING: In the sphere of advancement and

recovery of loans the targets are fixed in a planned way, purpose-wise, keeping in view

the potential for each purpose. These targets are conveyed to the PADBs generally at the

start of the year with specific instructions to achieve  the same in  a phased   manner  in

accordance with the quarter-wise percentage fixed by the SADB. While   conveying   

these  targets, the District Managers appointed at the District Headquarters and the

Regional Officers posted at Division level are also  advised to  ensure the achievement of

targets by the PADBs in the phased manner. Monitoring   of   the progress in this regard

is also made by the Head office in review meetings, being held with the Managers,

District Managers and Regional Officers   on   regular   basis. During   such meetings, the

purpose-wise progress made by the PADBs, is also reviewed.

PROMOTION / PUBLICITY: The publicity on large scale is made about the

schemes being implemented by the bank for the benefits of the farming

community/unemployed persons, through advertisements in the Press and by

publishing and distributing free of cost pamphlets etc.

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DELEGATION OF POWERS: Powers of sanction of loans have been decentralized

and under such decentralization all loans are finally sanctioned and disbursed by the

PADBs.

TRAINING TO STAFF: The staff is given regular training to enlighten them with the

latest techniques and benefits of the schemes who in turn inform the members of the

PADB / farming community.

SIMPLIFICATION OF LOAN POLICY AND PROCEDURE: Since the borrowers

look forward to higher standards of customers service and that the PADBs are directly

positioned against the Commercial Banks etc. the bank has taken steps to ensure

timely and more easy flow of credit to the farmers.

EXTERNAL FACTORS

The success of the bank in the fulfillment of its objectives can predominantly be  

attributed to the appreciable role being played by NABARD, which in fact treats the bank

as its extended arm. All  the  required technical  help   in the formulation of the scheme is

extended   by   NABARD. To   facilitate the formulation  and   the implementation

of the scheme, the potential linked credit plan is prepared by NABARD and discussed in

the State Credit Plan Seminar which is convened by it every year with the participation of

all the concerned departments of the State Government. This helps the bank in identifying

the potential pockets for various activities.

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CONCLUSION

Indiscipline and lack of commitment in these banks make people’s trust in the

cooperative sector a casualty.

The Cooperative Credit Policy, both for short-term and long term requirements of

the farmers, needs to be restructured.

Some of the co-operative banks are quite forward looking and have developed

sufficient core competencies to challenge state and private sector banks.

There is shortage of staff in some of the cooperative banks which is affecting the

business and customer services.

The supervision over the working of the various branches of the CCBs in the State

is not proper.

The overall performance of the cooperative banks in Punjab is not satisfactory.

Though there are some banks that have shown growth in their financial position,

some others are showing losses.

The cooperative banks are highly dependent on borrowings from NABARD and

other financial institutions.

People are still unaware of the services provided by the Cooperative Banks.

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SUGGESTIONS

1. There is also an urgent need for clarity in defining the roles of various control

institutions by streamlining processes, procedures, etc. for removing overlapping of

controls over cooperative banks presently vested with State Governments, the

Reserve Bank and NABARD, as the may be.

2. There is a need to analyse and pick up early warning signals, if any, in respect of any

such irregularities in the investment portfolio of these banks from the periodic review

reports on such transactions which are received from them.

3. A change is needed today in the co-operative banks which is built on confidence in

human capital - the most important of all resources - in commitment, creativity and

innovation brought about by proactive management, membership and employees.

Strong corporate governance that takes its obligations seriously can truly be a source

of strength to the management. The ability to capture knowledge and wisdom gives

co-operative banks their competitive advantage. A prerequisite is that participants

from all parts of a co-operative organisation know and understand its purpose, core

values and visions.

4. Banks have also been advised to have proper internal control measures for monitoring

the transactions in government securities.

5. More Branches should be opened in the Rural and Urban Areas to achieve the targets.

Samana sub-division is neglected in this Area as only Samana and Gajewas Branches

are functioning.

6. Since 1980 no recruitment made in this Bank. Staff should be recruited for smooth

working.

7. Branches may be computerized.

8. Rate of interest may be reviewed periodically.

9. 11 Single men Branches are functioning so, there is a great operation risk in the Bank.

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10. Individual Loans overdue are increasing in the Loan Portfolio N.F.S/C.C.T./

Consumer Loan.

11. ATM may be installed, locker facility is provided in all the Branches.

12. The Banks should strictly follow the rules and regulations of the RBI and the

government.

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LIMITATIONS

Time for research was limited.

There was not much literature available on the similar kind of study for guidance.

A single person has conducted the research

All the districts could not be visited

Data for the period 2008-09 was not available

78

BIBLIOGRAPHY

BOOKS

Bhaumik, S.K. and Dimova R. (2004);” How important is Ownership in a Market

with Level Playing Field? The Indian Banking Sector Revisited”, Journal of

Comparative Economic, pp. 165-180.

Ganesan R., ”Procurement of Agricultural and Minor Forest Produce-Problems and

Prospects” ; Indian Cooperative Review, Vol. XXXVII,No.1, pp.32-37

Ghuman,B.S., Monga, A., Department of Public Administration, Punjab University,

Chandigarh, India., Indian Cooperative Review

Kainth Gursharan Singh,” Dynamics of Cooperatives in Punjab”; Indian Cooperative

Review, Vol. XXXVII, No.1,pp. 38-52.

Prakash Daman,” The Contribution of Cooperatives to Social Development”, Indian

Cooperative Review; Vol. XXXVI, No.3, pp.183-192.

Sinha N.K.,” MONEY, BANKING AND FINANCE”; Kalyani Publishers, pp.104-

109.

EDITORIAL

THE COOPERATOR

SEARCH ENGINES

WWW.GOOGLE.COM

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WWW.WIKIPEDIA.COM

INTERNET SITES

www.punjabrevenue.nic.inwww.banknetindia.com/html/free reg.html.http:// en.wikipedia.org/wiki/banking_in_India #cite_note_2http:// en.wikipedia.org/wiki/bankhttp:// en.wikipedia.org/wiki/The_Cooperative_Bankhttp://pbcooperatives.gov.in/Pscadb_achiev.html

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