CHAPTER – I

INTRODUCTION

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1.1 INTRODUCTION

Banking is the life blood of Indian economy. After commerce and the arts had
revived in Italy, the business of banking was resumed. The word "bank" is derived
from the Italian word “Bancus or Banque “which means bench. The early bankers the
Jews transacted their business on their benches in the market place. There are others
who are of the opinion that the word ‘Bank’ is originally derived from the German
word ‘Banca’ meaning joint stock fund which channelized into bank when the
Germans weRe masters of a great part of Italy.

Financial agencies have to play vital role in the socio economic

development of any nation. It is true that without sound banking facilities under
developed countries cannot improve their economic growth. Although commercial
banks have been functioning for over a century their area of operation cross
particularly neglected. At the juncture the relevance of Co-operative bank in our
country becomes more concrete

Co-operative banks play very important role in providing banking services to

common man. Co-operative banks are important constituent of the Indian financial
system, judging by the role assigned to them, the expectations they are supposed to
fulfill, their number and the number of offices they operate. Their role in rural
financing continues to be important even today and their business in the urban areas
also increased in recent years. The co-operative banks have a history of almost 100
years. 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 co-operative banks. Some of the
co-operative banks are quite forward looking and have developed sufficient core
competencies to challenge state and private sector banks. The essential functions of
banks are borrowing and lending of money. Borrowing is done by accepting deposits
and lending is done by providing loans and advances. The major risk factor lies in
non-repayment of loans. The bank incurs heavy losses due to the non-repayment of
principal and interest.

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 A non-performing asset is a credit facility for which instalment of principle remains
outstanding for a period of 90 days after the due date. A non-performing asset is one
which causes to generate no income for the bank. Thus non- performing asset can be
explained as an advance, as on the date balance sheet, in respect of which in interest
has been remain unpaid for a period of 90 days. Non-Performing Asset [NPA] of
nationalized banks and private banks are comparatively very low. It accelerates their
lending capacity. Huge rate of NPA is the hesitation of cooperative banks to lend
more for agriculture sector.

The study is carried out in Thiruvananthapuram District Co-operative Bank which is a

leading Co-operative bank in Kerala. It is the Central bank in the district aimed for the
development of primary co-operative societies affiliated to it. The accumulation of
Non-Performing Assets in banks especially. Co-operative Banks are found to be a
consistent problem since 1997. The proposed study throws light to a major problem
faced by Co-operative Banks. In this era of modernization and advanced technology
where new banks are emerging with effective systems of operations, the Co-operative
banks have their own traditional systems and limitations. There is clear evidence that
the major defaulters of the problem of accumulation of NPA’s in banks, NPA’s in
banks are the big borrowers belonging to non-priority sector. It is the banks or the
financial institutions who need to take initiative to bring down NPAs in a time-bound
strategic approach. NPAs are calculated on a gross basis and net basis. Gross NPA
refers to all NPAs stated in the bank balance sheet including provisions. Net NPA
refers to all NPAs excluding provisions. Gross NPA consists of all non-standard
assets (substandard. doubtful and loss assets).

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 1.2 STATEMENT OF THE PROBLEM

The study entitled “A STUDY ON NON-PERFORMING ASSET

MANAGEMENT AT THIRUVANANTHAPURAM DISTRICT CO-
OPERATIVEBANK”, is an attempt to evaluate the non-performing asset in order to
evaluate statistical tools like trend analysis. Trend analysis is a tool used to predict
the future events and also used to estimate uncertain events in the past.

Management of NPAs is an issue of relevance not only in commercial banks

but also in co-operative banks. Recovery of debts due to banks requires efforts from
the management point of view. Thus recovery management is a specialized
operational function for the banks today. The classification of NPAs into sub-
standard, doubtful and loss assets have been purposefully undertaken with a view to
regulate and manage recovery. Banks consistently put in efforts to manage their NPAs
and reduce the requirement of provisioning. The major fact is that the co- operative
banks serve the interest of the lower income and middle income group and hence
recovery pertains to management of debt from these classes. The current study
analyzes the composition pattern and factors that create NPAs in TDCB. The study
focus on the rating of banks on NPA management

1.3 SIGNIFICANCE OF THE STUDY

The problem of losses and lower profitability of Non-Performing Assets (NPA) and
liability mismatch in banks and financial sector depend on how various risks are
managed in their business. Nonperforming Assets (NPA) are the smoking gun
threatening the very stability of Indian banks. NPA wreck a bank’s profitability both
through a loss of interest income and write-off of the principal loan amount itself. In a
bid to stem the lurking rot, RBI issued in 1993 guidelines based on recommendations
of the NPA. Ever increasing NPAs have a direct impact on profitability, liquidity and
solvency. Since Indian banking industry is largely dominated by Public sector banks
with almost two third share of total advances in the economy it is facing an acute
problem with regard to NPAs. There is a need to manage the ever increasing level of
NPAs. Keeping this issue in view the present study has undertaken.

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1.4 OBJECTIVES OF THE STUDY

➢ To analyze the position of Non-Performing Asset in the bank.

➢ To have an assessment over the profitability of the bank
➢ To study the NPA of the bank in terms of asset management criteria
➢ To findout which year has the lowest NPA and which year has the highest
NPA
➢ To study the influence of NPA on the financial position of the bank.

1.5 RESEARCH METHODOLOGY

Research methodology is way to systematically solve the research problem. It

may be understood as a science of studying how research is done scientifically. The
study is based on mainly the primary data which is collected from the annual report of
Thiruvananthapuram District Co-operative Bank for the period from 2012-2018. The
methods for study include collection of data from various sources such as primary
source and secondary source. Audit note of the bank is used for the purpose.

Both primary and secondary data have been used for the study.

Research Design

The study is descriptive and analytical in nature.

Data collection from Primary data

Primary data are those collected by the investigator himself for the first time
and thus are original in character. Primary data are truthful and further suit for the
purpose. They are collected for a particular purpose.

Primary data has been collected from the interviews with the concerned authority of
co-operative bank.

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Data collection from Secondary data

Secondary data are those which have already been collected by some other persons
for their purpose and published. So an investigator is said to make use of the data
already compiled by some other person. Secondary data are usually in the shape of
finished products. Collection of secondary data has the advantage of being less
expensive and less time consuming. Secondary data may be collected from published
or unpublished sources.

The secondary data has been collected from journals magazines websites and
company own records. The annual reports of the Bank were also taken for this study.
Balance sheet were also taken for the study.

Tools of Analysis

➢ Comparative statements
➢ Percentage analysis
➢ Trend analysis
➢ Graphs and Diagrams

1.6 SCOPE OF THE STUDY

Period of the study

The period of the study is from 16-04-2018 to 30-05-2018

➢ This study enables to improve knowledge about the banking sector,

specifically on account of NPAs.
➢ The study concentrates mainly on the current position of NPA in
Thiruvananthapuram District Co-operative bank.
➢ The study was helpful to know more about the working and progress of the
bank.
➢ The study gives a clear picture of the financial stability of
Thiruvananthapuram District Co-operative Bank.
➢ The study helped to get a detailed study about NPA.
➢ The study focus on the causes that lead to creation of non–Performing Asset

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1.7 LIMITATIONS OF THE STUDY

➢ The information required for the study is limited to the head office.
➢ The study is made on the basis of financial statements since the limitations of
financial statement may also affect the study.
➢ Time available for the study was limited. So an in depth study was not
possible.
➢ Since the primary data & secondary data used in this study are collected from
the officers of DCBs and published annual reports of DCBs respectively, they
have inherited limitations.

1.8 CHAPTERISATION

Chapter 1: Deals with Introduction, Statement of the problem, Significance of the

study, Objectives of the study, Research methodology, Scope of the study,
Limitations of the study and Chapterisation.

Chapter 2: Deals with Literature Review

Chapter 3: Deals with Theoretical framework

Chapter 4: Deals with Industry and Company profile

Chapter 5: Deals with Data analysis and Discussion.

Chapter 6: Deals with Findings, Conclusions and Suggestions

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 CHAPTER -II

LITERATURE REVIEW

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2.1 Literature Review

Non-performing Asset is a debt obligation where the borrower has

not paid any previously agreed upon interest and principal repayments to the
designated lender for an extended period of time. The nonperforming asset is
therefore not yielding any income to the lender in the form of principal and interest
payments

1. Luther (1976) - chaired the committee appointed by Reserve Bank of India to

study the productivity, efficiency and profitability of commercial banks. The
committee analyzed the various issues related to the planning, budgeting and
marketing in commercial banks.
2. Swamy (2001) - studied the comparative performance of different bank
groups since 1995-96 to 1999-2000. An attempt was made by researcher to
identify factors which could have led to changes in the position of individual
banks in terms of their share in the overall banking industry. He analyzed the
share of rural branches, average branch size, trends in bank’s profitability,
share of public sector assets, share of wages in expenditure, provision and
contingencies, net non- performance assets in net advances, spread, has been
calculated. He concluded that in many respects nationalized public sectors
banks much better than private banks, even they are better than foreign banks.
3. Bloem and Gorter (2001) - suggested that a more or less predictable level of
nonperforming loans, though it may vary slightly from year to year, is caused
by an inevitable number of ‘wrong economic decisions by individuals and
plain bad luck (inclement weather, unexpected price changes for certain
products, etc.). Under such circumstances, the holders of loans can make an
allowance for a normal share of nonperformance in the form of bad loan
provisions, or they may spread the risk by taking out insurance. Enterprises
may well be able to pass a large portion of these costs to customers in the form
of higher prices. For instance, the interest margin applied by financial
institutions will include a premium for the risk of nonperformance on granted
loans. At this time, banks’ non-performing loans increase, profits decline and
substantial losses to capital may become apparent.

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 Eventually, the economy reaches a trough and turns towards a new
expansionary phase, as a result the risk of future losses reaches a low point,
even though banks may still appear relatively unhealthy at this stage in the
cycle
4. Rajeshwari Krishnan (2002) - focused on the problem of swelling non-
performing assets in banks and financial institution of the country becomes
more and more unmanageable and created threats for the financial sector. She
found that securitization can be used for the liquidating the illiquid and long
terms debut like loan receivables of the financial institutions or bank by
issuing marketable securities against them. She concluded that the SARFAESI
act is defiantly and big leap forward not only in the filled of NPA management
but also promoting the securitizing market in India. The act may be required to
fine tuned to bring in ‘natural justice’.
5. Rituparna Das (2002) - performed a research on Managing the Risk of Non-
Performing Assets in the Small Scale Industries in India. In this article the
researcher tries to seek a solution to the problem of NPA in the small scale
industries under the present circumstances of banking and insurance working
together under the same roof. What is stressed in this article is the pressing
need of the small-scale entrepreneur for becoming aware and educated in
modern business management holding a professional attitude toward rational
decision making and banks have to facilitate that process as a part of the credit
policy sold by them.
6. Prashanth K. Reddy (2002) - in his research paper on the topic, “A
comparative study of Non- Performing Assets in India in the Global context”
examined the similarities and dissimilarities, remedial measures. Financial
sector reform in India has progressed rapidly on aspects like interest rate
deregulation, reduction in reserve requirements, barriers to entry, prudential
norms and risk-based supervision. The study reveals that the sheltering of
weak institutions while liberalizing operational rules of the game is making
implementation of operational changes difficult and ineffective. Changes
required to tackle the NPA problem would have to span the entire gamut of
judiciary, polity and the bureaucracy to be truly effective. This paper deals
with the experiences of other Asian countries in handling of NPAs. It further
looks into the effect of the reforms on the level of NPAs and suggests

10
 mechanisms to handle the problem by drawing on experiences from other
countries.
7. U.N. Lakshman (2003) - in his study pointed out the reasons for NPA’s in
Indian bank. He started the reasons could be, diversion of the bank fund,
time/cost overrun while implementing the project, business failures like
product failing to capture market, inefficient management, strained labor
relations, old technology and product obsolescence, recession in some foreign
countries and adverse exchange rate government policies toward excise,
imports and exports , willful default frauds, misappropriations, deficiencies in
the system of credit appraisal monitoring and follow up, delay in settlement/
subsidies. He further mentioned some of the methods to recover NPAs they
are Recapitalization and asset reconstruction fund. He highlighted the steps
taken 15 contain NPAs they are as following RBI stressed the need for credit
appraisal and credit supervision since the basic problem is at lone decision
stage, stressed the need to monitor stock and operation and end use statements,
detailed guidelines have been issued to take steps to avoid sickness and also to
nurse bake the align units, stressed the need to constitute recovery cells, NPA
management departments and fixed recovery target for banking units, the debt
recovery tribunal should depose off the issues within six months. It should be
given freedom to regulate its own Procedure subject to the provision of the
Act of 1993, on the filling of suit in court law; the following guidelines are
prescribed which registered and the enforceable. He made suggestions that
areas which created the problem, in most costs the barrowers are ot be found.
The documents charging should with the bank including the location map of
properties. Must avoid expert’s orders to eliminate scopes for reopening the
mater and also further litigation cost memo should be filled within 7 days from
the date of court order which includes application fee, advocate fee, insurance
/go down /storage charges and other expenses incurred by a bank.
8. G. Chandrashakar Rao (2003) - studied the present and most critical issue
faced by the banking system has been hug pile-up of nonperforming assets
which the bank have come to be saddled with. As result the survival of many
weak bank managements and unions of their employees. He noticed that the
main reasons for the banking units to become weak leading to mounting NPAs
in diversification of funds by promoters, the other region is the tardy legal

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 system and the inadequate legislation for recoveries. The reasons stated for the
increasing NPAs in the primary sector are directed and preapproved loans
sanctioned under sponsored programmers’, absence of any securities, lack of
effective follow up etc. In view of this, it is not desirable to expect the other
hand, they have to work as promoted of the economic development on the
other hand this call for effective risk return approach to be adopted by the
banks. It is found that majority of the defaulters are willful defaulters and
hence criminal proceedings against corporate defaulters are to be issued to
recover this national wealth. Government shall ensure proper legal foundation
for enforcement of contracts and recovery of dues by bank
9. P. Rajaseker Reddy and D. Ramana Reddy (2003) - made a conceptualized
study in Andhra Pradesh in nonperforming asset. They noticed that the internal
and external courses for NPAs have included are many sector of industry.
Failures to introduce financial management, managerial deficiency over the
estimation demand, underestimation of capital costs, delay in implementing
project which result is cost acceleration, of finance and working capital,
surplus labor, recession in demand, inadequate availability of resources like
relation caused heavily industrial sickness which paned the way to the
evaluation of NPAs in industrial sector. They figured out the problem of NPAs
in state and made some suggestion they are extending role of banks and
financial institutions not to keep their activity limited to financing but also to
monitor the functioning of industry from time to time, introducing
entrepreneur training, counseling and guidance for the new entrepreneurs.
Establishing a separate department of rehabilitation of NPAs which
concentrates on diagnosing the reason for NPAs and to detect rehabilitation
process by catering to economic, administrative, technical and infrastructural
help. They concluded that the growing industrial sickness among private,
public an co-operative endeavors, certain selections were suggested to
encounter industrial sickness and to minimize the chances of evolution of
NPA in any industry. The suggestions are promotion and encouragement to
traditional industrial depending upon the skill and workmanship of the
workers engaged, reforming the role of financial institutions not restricted
only to lend finances but to act as guide and co-oordinator in functioning of
the industry so as to help them thrive, establishment of a separate and special

12
 department for rehabilitation of NPAS which mainly concentrates on and
diagnoses the reasons to economic, administrative, technical and infrastructure
help.
10. C.Sivarami Reddy and Smt.V.Kalavathi (2003) - studied the reasons
remedies of non-performing assets, they found that the reasons for NPA were
diversification of funds, mostly for expansion / diversification of business like
product / market failure, failure, inefficient management, inappropriate
technology, labor unrest etc., changes in the macro environment like recession,
infrastructural bottle necks etc., time / cost over runs during project
implementation, changes in government policies, and delay in release of
sanctioned limits by banks. They highlighted various steps for reducing NPAS
they are, study the Problems of NPA branch wise, amount wise and age wise,
prepare loan Recovery policy and strategies for reducing NPA, create special
cells at the Head office / zonal office level to look after critical branches where
NPAs are on the high side, select prepare technique suitable for the NPA and
monitor it in a time bound action plan. They concluded that NPA is not just a
problem for banks they are bad for the economy. The money locked up in
NPA is not available for productive use and to that extent the banks seek to
make provisions for NPA or write them off.
11. Amitabh Joshi (2003) - conducted a survey on “Analysis of Non-Performing
Assets of IFCI Ltd”. The study found that Profitability and Viability of
Development Financial Institutions are directly affected by quality and
performance of advances. The basic element of Sound NPA Management
System is quick identification of Nonperforming advances, their containment
at minimum levels and ensuring that their impingement on the financials is at
low level. Excessive reliance on Collaterals has led Institutions to long drawn
litigations and hence it should not be sole criteria for sanction. Banks should
manage their exposure limit to few borrower(s) and linkage should be placed
with net owned funds for developing control over high leverages of borrower
level. Study also revealed that exchange of credit information among banks
would be immense help to them to avoid possible NPAs. Management
Information system and Market intelligence should be utilized to their full
potential.

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12. Milind Sathya (2005) - examined the effect of privatization of banks on
performance and efficiency. The data taken was for five years (1998-2002)
and it was analyzed by using difference of means test. The banking sector in
India includes domestic banks (privately owned, partially privatized banks,
fully PSB’s) as well as foreign banks, and objective of this study is to study
the impact of privatization on the banking firms. It was concluded that
partially privatized banks have performed better as compared to fully PSB’s in
respect of financial performance and efficiency. Partially privatized banks
have continued to show improved performance and efficiency in the year after
privatization.
13. Datta Chaudhuri (2005) - examined the “Resolution Strategies for
Maximizing Value of Non-Performing Assets (NPAs)”. The article indicates
that declining capital adequacy adversely affects shareholder value and
restricts the ability of the bank/institution to access the capital market for
additional equity to enhance capital adequacy. So, if a resolution strategy for
recovery of dues from NPAs is not put in place quickly and efficiently, these
assets would deteriorate in value over time and little value would be realized
at the end, except may be its scrap value. The purpose of this paper is to
indicate the various considerations that one has to bear in mind before zeroing
on a resolution strategy and provides a State - Resolution - Mapping (SRM)
framework. However, the paper has not specifically discussed about the
various resolution strategies that could be put in place for recovery from
NPAs, and in particular, in which situation which type of strategy should be
adopted.
14. Ved Pal and Malik (2007) - in their empirical paper examined the difference
in financial characteristics of public, private and foreign sector banks based on
factors such as profitability, liquidity, risk and efficiency. Sample of 74 Indian
commercial banks consisting of 24 public sector, 24 private sector and 23
foreign banks was taken for the period of 2000- 2005. Multinomial regression
analysis was used and results revealed that foreign banks proved to be high
performer in generating business with a given level of resources and they are
better equipped with managerial practices and in terms of skills and
technology. Foreign banks were more consistent with market system as
reflected in terms of net interest margin. The public banks emerged as the next

14
 best performer after foreign banks. There were giving a higher return on
equity in comparison to foreign and private banks. It was high performer in
economizing their expenses which was reflected from expense rate and
efficiency ratio. The private sector banks emerged with a better utilizer of
resources as compared to PSB’s.
15. Bhatia (2007) - in his research paper entitled, “Non-Performing Assets of
Indian Public, Private and Foreign Sector Banks: An Empirical Assessment”,
explores an empirical approach to the analysis of Non-Performing Assets
(NPAs) of public, private, and foreign sector banks in India. The NPAs are
considered as an important parameter to judge the performance and financial
health of banks. The level of NPAs is one of the drivers of financial stability
and growth of the banking sector. This paper aims to find the fundamental
factors which impact NPAs of banks. A model consisting of two types of
factors, viz., macroeconomic factors and bank-specific parameters, is
developed and the behavior of NPAs of the three categories of banks is
observed.
16. Thomas P. Ferguson (2007) - conducted a research on “Observations on the
Securitization of Non-Performing Loans in Russia”. Asset securitization is a
burgeoning trend in Russia as companies burdened by poor credit ratings seek
access to capital at lower costs than they would be allowed in traditional
equity or debt markets. Study indicates that securitization of these bad loans
has not occurred in Russia at the levels one might expect. This has been due to
both a relatively small amount of loans that under-perform as well as legal and
regulatory impediments that have discouraged investors and lenders alike. The
study has been conducted to examine the expansion of consumer credit in
Russia and the circumstances under which it is occurring indicate that the level
of non-performing loans is due to rapidly increase and as the rationale for
maintaining the impediments that stand in the way of securitizing these loans
is being re-examined, those impediments are being scaled back to make way
for market participants to engage in such securitizations. Thus, this article
anticipates a significant rise in the level of non-performing loans, which will
be logically paired with an increased interest of Russian lenders in securitizing
these assets.

15
17. Karunakar M., Vasuki K.and Saravanan S., (2008) - made an attempt is
made in the paper about factors contributing to NPA, the magnitude of NPA,
reasons for high NPA and their impact on Indian banking operations. Besides
capital to risk weightage assets ratio of public sector banks, management of
credit risk and measures to control the menace of NPAs are also discussed.
The lasting solution to the problem of NPAs can be achieved only with proper
credit assessment and risk management mechanism. It is better to avoid NPAs
at the market stage of credit consolidation by putting in place of rigourous and
appropriate credit appraisal mechanisms.
18. M. Karunakar et.al (2008) - Study the important aspect of norms and
guidelines for making the whole sector vibrant and competitive. The problem
of losses and lower profitability of Non-Performing Assets (NPA) and liability
mismatch in Banks and financial sector depend on how various risks are
managed in their business. Besides capital to risk Weightage assets ratio of
public sector banks, management of credit risk and measures to control the
menace of NPAs are also discussed. The lasting solution to the problem of
NPAs can be achieved only with proper credit assessment and risk
management mechanism. It is better to avoid NPAs at the market stage of
credit consolidation by putting in place of rigorous and appropriate credit
appraisal mechanisms
19. Nelson M. Waweru et.al (2009) - study that many financial institutions that
collapsed in Kenya since 1986 failed due to non- performing loans, this study
investigated the causes of nonperforming loans, the actions that bank
managers have taken to mitigate that problem and the level of success of such
actions. Using a sample of 30 managers selected from the ten largest banks the
study found that national economic downturn was perceived as the most
important external factor. Customer failure to disclose vital information during
the loan application process was considered to be the main customer specific
factor.
20. Bhavna Vashisht & Monica Bansal (2009) - in the research on “An
Analytical Study of Growth of Credit Schemes of Selected Banks” analyzed
and compared the performance (in terms of loan disbursement and non-
performing assets) of credit schemes of selected banks for the last five years.
This paper is divided into two parts. In the first part, bank-wise as well as

16
 year-wise comparisons are done with the help of Compound Annual Growth
Rate (CAGR), mean and standard deviation; and in the second part, a positive
relationship is found between total loan disbursement and total NPA O/S of
selected banks with the help of a correlation technique. The study found a
positive relationship between total loan disbursement and total Non-
Performing Assets Outstanding (NPA O/S) of selected banks
21. Vikas and Tandon Sunman (2010) - attempts to analyze the financial
performance of public sector banks in India. Public sector banks form major
part of total banking system in India so there is a need to evaluate the
performance of these banks. The study is based upon secondary data covering
the period from 1997-2007. For analyzing the performance Compound Annual
Growth rate and Coefficient of Variation of advances, deposits, total assets,
return on assets, and return on equity and spread ratio are calculated. Decline
in growth of nonperforming assets ratio is also considered for this evaluation.
It is concluded the CAGR of various variables have shown variation s from
bank to bank. State Bank of Indore has shown maximum CAGR in case of
total advances, total deposits and total assets. Punjab & Sind Bank has shown
least growth of deposits and advances and State Bank of India has least growth
of deposits. CAGR of return on equity and return on assets was at peak of
United Bank of India whereas Dena Bank, Punjab& Sind Bank and Indian
Bank have shown negative trend in these ratios. Decline of NPA’s ratio was
highest in case of State Bank of Hyderabad and least in case of Dena Bank.
22. Meenakshi Rajeev, H P Mahesh (2010) - studied banking sector reforms and
NPA’S in Indian commercial banks to examine the trends of NPA‟S in India
from various dimensions and to explain how immediate recognition and self-
monitoring has been able to reduce it to a great extent. The study analysed the
different aspects of NPA‟S like NPA in India comparative to other countries,
NPAS of Indian banks as per the different sectors and recovery of naps
through various channels. It was found that NPAS in the contributory factor
for crisis in the economy and root cause of the recent global financial crisis. It
was observed that NPA‟S in priority sector is still higher than that of the non-
priority sector due to socio economic objectives of banks

17
23. Ashok Khurana and Mandeep Singh (2010) - stated that issue of mounting
NPAs is a challenging to public to public sector banks. The study found that
the asset wise classification of PSBs is in right direction and there is
significant variation in the recovery of NPAs in the different sector. The
research observed that PSBs should not be loaded with the twin object of
profitability and social weal fair.
24. Jaya Shukla and Gaurav Bajpai (2010) - in their paper presents a
mathematical model for problem of stability of non- performing assets
(NPA’s) growth in banking sector. The various variables leading to high NPA
are identified. A sufficient criterion which ensures the damping out of the
effects arising out of the perturbations in the variables is obtained. The model
assumes prevalence of normal conditions in banking sector in terms of
liquidity, political interference and other external factors affecting the stability
of NPA. The model emphasizes on growth of NPA’s at stable rate to improve
banks asset portfolio and quality of service assured by banks.
25. Goyal Kanika (2010) - observed increase in gross as well as net NPAs in
absolute terms and improved asset quality of banks. The public sector banks
have managed its assets proficiently; however, the study observes that
increased NPA’s in the agriculture sector is a matter of great concern. The
study is analytical in nature, and it is based on the secondary retrieved from
Report on Trend and Progress of Banking in India, Report on Currency and
Finance etc. The scope of the study is limited to the analysis of NPAs of the
public sector banks for the period 2002-03 to 2008-09. It examines trend of
NPAs; quality of assets; health of several loan assets; sector wise NPAs etc.
The data has been analyzed by statistical tools such as descriptive statistics,
correlation, regression analysis, one-way ANOVA, and post-hoc Tukey HSD
procedure.
26. Hosmani. A.P and Jagadish Hudagi (2011) - examine the existing position
of banks in respect of Non- performing assets, ascertain the causes of the
problem and its remedial measures. Loan assets of banks are classified in to
four categories i.e. standard assets, sub-standard assets, doubt full assets, and
loss assets. Standard assets being the good quality of loan assets on the other
hand sub-standard assets, doubt full assets, and loss assets put together
constitutes non- performing assets. All the other three categories of NPAs as a

18
 percentage to loan assets are recorded a decline trend over the study period of
20005-06 to 2009-10.
27. Kamalpreet Kaur and Balraj Singh (2011) - consider that the Non-
performing assets are one of the major concerns for banks in India. NPAs
reflect the performance of banks. A high level of NPAs suggests high
probability of a large number of credit defaults that affect the profitability and
net-worth of banks and also erodes the value of the asset. The NPAs growth
involves the necessity of provisions, which reduces the overall profits and
shareholders’ value. The issue of Non- performing assets has been discussed at
length for financial system all over the India. The problem of NPAs is not only
affecting the banks but also the whole economy. In fact high level of NPAs in
Indian banks is nothing but a reflection of the state of health of the industry
and trade. The Indian banking sector is facing a serious problem of NPAs. The
extent of NPAs is comparatively higher in public sectors banks. To improve
the efficiency and profitability, the NPAs have to be scheduled. Various steps
have been taken by government to reduce the NPAs. It is highly impossible to
have zero percentage NPAs. But at least Indian banks can try competing with
foreign banks to maintain international standard. The problem of losses and
lower profitability of Non-Performing Assets (NPAs) and liability mismatch
in banks and financial sector depend on how various risks are managed in their
business. An attempt is made in the paper that what is NPAs? The factors
contributing to NPAs, the magnitude of NPAs, reasons for high NPAs and
their impact on Indian banking operations. Besides capital to risk weight age
assets ratio of Public and Private sector banks, management of credit risk and
measures to control the menace of NPAs are also discussed
28. Ramesh.K.V, Sudhakar.A., (2012) - investigated the NPA management in
public sector banks a case study of canara bank and state bank of India to
analyse the NPA of former mentioned banks. Data was collected for a period
of ten years between 2000 to 2010.It is concluded that if the proper
management of the NPAs is not undertaken it would be hampers the business
of the banks. The NPAs would affect business cycles, legal framework, ethical
standards, regulatory and supervisory system and bank specific factors like
credit appraisal system, credit recovery procedures risk management system
and the motivational level of employees. It is found that there is down trend in

19
 NPAS of selected banks by establishing appropriate systems internally to
reduce and eliminate at the earliest.
29. Sandeep and Parul Mital (2012) - analysed the comparative position of non-
performing assets of selected public and private sector banks in India to find
their efficiency through comparative study. Data has been collected from
various secondary sources for period of 10 years and analysed with descriptive
statistics and ANOVA. All the banks are making polices trying for the
containment of NPA‟S for improving their asset quality and profitability. PNB
and HDFC banks are found superior in management of NPA‟S comparative to
SBI and ICICI and private sector banks are much comfortable and efficient
comparative to public sector banks.
30. Gurumoorthy T.R. AND SUFHA B, (2012) - analyzes the classification of
loan assets in PSBs, composition of NPAs in different sectors and NPAs
position in PSBs. In this study, it is observed that PSBs exercised stringent
control measures to reduce the level of NPAs. The author concludes that Non-
Performing Assets may not turn banks into Non-Performing Banks; instead
steps should be taken to convert Non-Performing Assets into Now-Performing
Assets. As far as old NPAs are concerned, a bank can remove it on its own or
sell the assets to Asset Management Companies (AMCs) to clean up its
balance sheet. For preventing fresh NPAs, the bank itself should adopt proper
policies. It is better to avoid NPAs at the budding stage of credit consideration
by putting in place of rigorous and appropriate credit appraisal mechanisms.
PSBs should be well versed in proper selection of borrower or project and in
analyzing the financial statement

20
2.2 REFERENCES

➢ Luther, J.C.1976. Report of JC Luther, Committee on Productivity,

Efficiency & Profitability in Commercial banks, Bombay 1976.

➢ Swamy, B.N.A.2001, New Competition, Deregulation and Emerging

Changes in Indian Banking, Bank Quest, 729(3) pp.3- 22.

➢ Bloem, A.M., Goerter C.N (2001), ‘The Macroeconomic Statistical

Treatment of Non-Performing loans’, Discussion Paper, Statistics
Department of the IMFDecembere1, 200.

➢ Rajeshwari Krishnan Sarfaesi act 2002 as a tool for NPA Management,

Professional Banker, Vol.4 May 2002, pp. 21 - 32.

➢ Das, Rituparna, Managing the Risk of Non-Performing Assets in the

Small Scale Industries in India (June 15, 2002). Available at
SSRN:http://ssrn.com/abstract=1330798

➢ Reddy, Prashanth K., A comparative study of Non-Performing Assets

in India in the Global context - similarities and dissimilarities, remedial
measures (October 2002). Available at SSRN:
http://ssrn.com/abstract=361322 ordoi:10.2139/ssrn.361322.

➢ U.N. Lakshaman, “Management of NPAs some issues, Management of

Nonperforming assets in Banks and Financial Institutions”, Vol. 1,
Serials publications, New Delhi , 2003, pp. 35 to 40.

➢ G. Chandrasekra Rao, NPA- The Malady and the Remedy,

Management of Nonperforming assets in Banks and Financial
Institutions, vol. 1, Serials Publications, New Delhi, 2003, pp. 282 to
283.

➢ P. Rajsekhara Reddy, D. Ramana Reddy, Evolution of Non-Performing

Assets a Conceptualized study in Andhra Pradesh, Management of
Non-performing assets in Banks and Financial Institutions, Vol. 1,
Serials Publications, New Delhi, 2003, pp. 284-293.

21
➢ C.Sivarami Reddy, Smt. V. kalavathi, Non- performing assets in banks
– Causes and remedies, Management of Non-performing assets in
Banks and Financial Institutions, vol. 1, Serial Publications, New Delhi
, 2003, pg. 60 to 70.

➢ Joshi, Dr. Amitabh, Analysis of Non-Performing Assets of IFCI Ltd

(2003). Available at SSRN: http://ssrn.com/abstract=921860.

➢ Milind Sathya .2005. Privatization, Performance, and Efficiency: A

study of Indian Banks, Vikalpa, (1):23-28.

➢ Datta Chaudhuri, Tamal, Resolution Strategies for Maximising Value

of Non-Performing Assets (NPAs) (December 19, 2005). Available at
SSRN:http://ssrn.com/abstract=871038.

➢ Pal Ved & Malik N.S .2007.A Multivariate Analysis of the financial
characteristics of Commercial Banks in India. The Icfai Journal of
Bank Management .VI (3).

➢ Bhatia, “Non-Performing Assets of Indian Public, Private and Foreign

Sector Banks :An Empirical Assessment “,Icfai Journal of Bank
Management, Vol. 6, No. 3, 2007, pp. 7-28.

➢ Ferguson, Thomas P., Observations on the Securitization of Non-

Performing Loans in Russia (September 1, 2007). Bucerius Law
Journal, Bucerius Law School, Hamburg, Germany, March 2008.

➢ Karunakar M., Vasuki K.and Saravanan S., “Are non - Performing

Assets Gloomy or Greedy from Indian Perspective?” Research Journal
of Social Sciences, Vol.3,2008, pp.4-12.

➢ M. Karunakar et.al (2008), Are non - Performing Assets Gloomy or

Greedy from Indian Perspective, Research Journal of Social Sciences,
3: 4-12, 2008.

➢ Nelson M. Waweru et.al (2009), Global Journal of Finance and

Banking Issues Volume 3, No. 3, 2009.

22
➢ Arora, Usha Vashisht, Bhavna and Bansal, Monica, An Analytical
Study of Growth of Schemes of Selected Banks (March 26, 2009). The
Icfai University Journal of Services Marketing, Vol. VII, No. 1, pp. 51-
65, March 2009.

➢ Vikas and Tandon Sunman, “Performance Evaluation of Public Sector

Banks in India”, Asia Pacific Journal of Research in Business
Management, Vol.1, No.1,October 2010, pp.1-17.

➢ Meenakshi Rajeev and H P Mahesh, “banking sector reforms and

NPA: a study of Indian commercial bank”s, working paper
252,institute for social change and economic change, Bangalore, ISBN
978-81-7791-108-4,,2010.

➢ Ashok Khurana and Dr.Mandeep singh, NPA management: A study of

new private Sector Banks in India, Indian Journal of Finance,
September 2010, pp.174-185.

➢ Jaya Shukla and Gaurav Bajpai, “Mathematical Criteria for Stability of

NPA growth Improving Quality of Service for Banks”, International
Journal of Trade, Economics and Finance, Vol. 1, No. 2, August, 2010,
pp.211-214.

➢ Goyal Kanika, “Empirical Study of Non-Performing Assets

Management of Indian Public Sector Banks” Asia Pacific Journal of
Research in Business Management, Vol.1, No.1, October 2010,
pp.114-131.

➢ Hosmani.A.P and Jagadish Hudagi, “Unearthing The Epidemic Of

Non-Per Forming Assets -A Study With Reference To Public Sector
Banks In India” International Journal of Multidisciplinary Research,
Vol.1 Issue 8, December 2011, pp.447-459.

➢ Kamalpreet Kaur and Balraj Singh, “Non-Performing Assets of Public

and Private Sector Banks (A Comparative Study)”, S o u t h A s i a n J
o u r n a l o f M a r k e t i n g & M a n a g e m e n t R e s e a r ch , Vol.
1,No. 3,December, 2011, pp.54-72.

23
➢ Ramesh. K.V, Sudhakar.A, “NPA Management in Public Sector
Banks: A Study of Canara Bank and State Bank of India”, International
Journal of Research in Commerce & Management, Vol. 3(11), 2012,
pp 44-49, ISSN 0976-2183.

➢ Sandeep Aggarwal, Parul Mittal (2012) “Non - Performing Assest:

Comparative Position of Public and Private Sector Banks in India”,
International Journal of Business and Management Tomorrow Vol. 2
No.1 pp 1-7.

➢ Gurumoorthy T.R. AND SUFHA B.” Non-Performing Assets (A

Study with Reference To Public Sector Banks)”, Indian Journal of
Applied Research, Vol.2,No.2, November 2012, pp.7-9.

24
 CHAPTER – III

THEORETICAL FRAMEWORK

25
3.1 Subject Details

Commercial Banks are banking institutions that accept deposits and grant short-term
loans and advances to their customers. In addition to giving short-term loans,
commercial banks also give medium-term and long-term loan to business enterprises.
The commercial banks in India are classified into scheduled and non- scheduled
Banks Indian and foreign banks, Public sector and private sector banks and regional
rural banks.

A scheduled bank is a bank which is included in the second schedule of the Reserve
bank of India Act 1934. Some conditions are to be satisfied to be eligible for this for
example a bank must be a corporation and not a partnership or a single owner firm.
These banks enjoy certain facilities like borrowing from the RBI and in return
maintaining a part of their cash reserves with the RBI.
Indian banks are ones which are incorporated in India and have their head offices in
India. Some huge banks have their branches in foreign countries. Foreign banks are
incorporated in foreign countries with their head offices outside India. These would
be scheduled banks specialized in foreign exchange.
Public sector banks are those banks those banks which are government owned which
started with the amalgamation of three old banks known as the presidency banks to
form the Imperial bank of India and later converting to State Bank of India in 1955.
By 1980 a total of 20 more banks were nationalized. The other banks which were not
nationalized (under the ownership of the government) are called private banks.
The regional rural banks were started in 1975 to cater to the needs of rural economy
of India. They give more attention to small farmers, artisans and agricultural workers.
They operate mainly at district level.
People who come together to jointly serve their common interest often form a
co-operative society under the Co-operative Societies Act. When a co-operative
society engages itself in banking business it is called a Co-operative Bank. The
society has to obtain a license from the Reserve Bank of India before starting the
banking business.

26
 Any co-operative bank as a society is to function under the overall supervision of
the Registrar, Co-operative Societies of the State. As regards banking business, the
society must follow the guidelines set and issued by the Reserve Bank of India. Co-
operative banks in India have completed existence of more than 100 years. These
banks were introduced with the enactment of the Agricultural Credit Co-operative
societies Act in 1904. These banks operate in the rural areas concentrating on the
agricultural sector.
Co-operative banks helped in initiating the saving process of the rural public from
idle savings to effective one. They were responsible in creating banking habits among
the lower and middle-income group in the older days. They mobilize the deposits and
use to for agricultural and rural credit. These banks help in breaking the monopoly of
moneylenders.
The financial reforms implemented had a great impact on other commercial
banks except co-operative banks. The basic objectives and instruments of reforms for
all banks are the same but the co-operative banks have started the transformation
process very late and the changes are yet to produce.
Computerization started during the year 1983-84 after setting up a committee
under the chairmanship of the deputy Governor of R.B.I. Dr. C. Rangarajan. The
committee was set up to study the possibilities and stages involved in bank
computerization and to prepare guidelines for the same. The four major objectives of
computerization in banking are to improve: customer service, housekeeping, decision-
making, productivity and profitability. The main objectives of computerization at the
branch level should be to improve customer service quality of housekeeping and
generation of data for better management control. At the regional and head office
levels the purpose of computerization should be to store analyze and retrieve data
received from branches so as to generate information speedily for strengthening
internal control over branches for policy formulation.

Know your customer (KYC) guidelines

Know your customer guidelines (KYC) should be given more consideration as

more NPA`s are increasing. The objectives of KYC are:

➢ To ensure appropriate customer identification and

➢ To monitor transactions of a suspicious nature.

27
 These are guidelines made by the recommendations made by the Financial
Action Task Force (FATF) on Anti-money laundering (AML) standards and
Combating Financing of Terrorism (CFT). In March 31 2004 the time period for
reckoning an advance as non-performing have been reduced from 180 days to 90
days. However small a loan up to 1 lakh have been give the right of 180 days for co-
operative banks, but was given only till March 31st of 2006.
The frauds are classified into 7 – misappropriation and criminal breach of trust
fraudulent encashment through forged instruments manipulation of books of accounts
operations of fictitious accounts and conversion of property unauthorized credit
facilities extended for reward or for illegal gratification negligence and cash shortages
cheating and forgery irregularities in foreign exchange transactions and any other
types of fraud.

Primary Agricultural Credit Societies (PACS)

PACS can be considered the basic foundation for co-operative credit system. These
societies interact directly with the customers such as the individual farmers providing
short and medium term loans supplying of agricultural inputs etc. PACS continue
heavily on external support and it is not self reliant with mobilizing the deposits of the
rural public and in turn affecting their growth and expansion of business activities.
This problem can be solved to a greater extent by improving the volume of business.

Micro Credit

Due to the vastness of the land physical outreach to all the population especially the
rural area was very difficult. Bigger institutions had difficulties in dealing with a large
number of small borrowers whose credit is frequent small and with minimal or no
security likes the individual farmers in the rural areas. Micro credit enables the poor
section of the society to avail credit and other financial services in a better way for the
improvement of their income and standard of living.
NABARD introduced a (self-help group) SHG-BANK Linkage Program with full
support from the Reserve Bank of India in the year of 1992 in which they encourage
voluntarily to manage their own finances i.e. the weaker section of the society is to
come forward together to save small amounts regularly and extend micro loans among
themselves. After this group attains the maturity of handling big amounts the bank is
given credit.

28
 The co-operative societies have various weaknesses that hamper their
performance. The increase in default payments and finally the evolving of NPA`s has
decreased the reputation of these societies. Even though co-operative societies have
been brought out to stop the monopoly of the village moneylenders the influential
people in the rural area seem to benefit from the schemes and policies of these
societies rather than the poor. Human resource management is a field where not much
importance has been given in Co-operative banks. There is no specific HR policy in
many co-operative banks. There is no specific policy and recruitment of staffs is not
based on merit and competence. The co-operative banks unlike commercial banks
have local identity and they prefer to recruit local candidate particularly for the
managerial post due to the fact that they are well-adjusted to their local environment.
One drawback is that they are not able to attract professionally qualified candidate
because of the poor salary structure. Co-operative banks have not used any
sophisticated methods to evaluate their employee’s performance.

3.2 CAMELS

In 1994 the RBI established the Board of Financial Supervision (BFS) which
operates as a unit of the RBI. The entire supervisory mechanism was realigned to suit
the changing needs of a strong and stable financial system. The offsite monitoring and
surveillance system (OSMOS) was introduced in 1995 as an additional tool for
supervision of commercial banks.

In that year under the chairmanship of Shri. S. Padmanabhan RBI had set up a
working group to review the banking supervision system. They introduced a rating
system for domestic and foreign banks based on the international CAMELS model
combining financial management and systems and control elements and it was
introduced for the inspection cycle commencing from July 1998. It recommended that
the banks should be rated on a five point scale (A to E) based on the lines of
international CAMELS rating model. CAMELS evaluate banks on the following six
parameters.

29
 ➢ Capital Adequacy: Capital adequacy is measured by the ratio of capital to
risk-weighted assets (CRAR). A sound capital base strengthens confidence of
depositors

➢ Asset Quality: One of the indicators for asset quality is the ratio of non-
performing loans to total loans (GNPA). The gross non-performing loans to
gross advances ratio is more indicative of the quality of credit decisions made
by bankers. Higher GNPA is indicative of poor credit decision-making.

➢ Management: The ratio of non-interest expenditures to total assets (MGNT)

can be one of the measures to assess the working of the management. . This
variable which includes a variety of expenses such as payroll workers
compensation and training investment reflects the management policy stance.

➢ Earnings: It can be measured as the return on asset ratio.

➢ Liquidity: Cash maintained by the banks and balances with central bank to
total asset ratio (LQD) is an indicator of bank's liquidity. In general banks with
a larger volume of liquid assets are perceived safe since these assets would
allow banks to meet unexpected withdrawals.

➢ Systems and Control: The System and Control installed in the Bank. Each of
the above six parameters are weighted on a scale of 1 to 100 and contains
number of sub-parameters with individual weightages

3.3 ANALYSIS

In Thiruvananthapuram District Co-operative bank the scene of default payment is

that the same as all other co-operative banks with rise in Non-performing assets but
there has been tremendous efforts from the bank to reduce the NPAs. The non-
payment of the loans that has been provided to the customers would affect the
recycling of funds and chances of getting credit (savings and loans) of prospective
customers also tend to fall. The bank should take more care and detailed evaluation
before providing loans to customers.
One of the issues is that usually senior citizens above the age of 50 are the customers
of TDCB. The loans taken by the individuals are mainly for the marriage of their
children or the construction of their houses.

30
There is not much age limiting policy. Customers are the senior citizens of which
most of them who may be public sector employees and reaching retirement or have
already crossed the age of retirement. Interest which is not paid for more than 3
months is automatically converted to NPA. Service is the prime motto of the bank. As
it is bank which has increased social commitments maintaining NPA`s is a very
difficult issue.
In this era of globalization and privatization co-operative banks are having a hard time
to catch up with the competition from other commercial banks Public over the years
has shown minimal interest in banking with co-operative banks. Co-operative banks
are allowed to offer high interest rates on savings and current account deposits even
still the outreach to the public is less when compared to commercial banks. The
biggest strength of TDCB is that their customers mainly consist of the agricultural
class. Thereby the bank was not much affected by the financial crisis as the impact on
the agricultural sector was minimum.

OVERDUE AND NPA

Rural credit is suffering from the bane of overdue. The syndrome of overdue
affects the bank in fulfilling the objectives assigned by government in promoting rural
development. Overdue is closely linked to the liberal granting of loans and lack of
strict program of recovery of loan. Agriculture operations are very much risk in
nature. Mounting rate of Overdue is the cancerous disease to the co-operative
institutions especially the PACS. Non- Performing Asset [NPA] of nationalized banks
and private banks are comparatively very low. It accelerates their lending capacity.
Huge rate of NPA is the hesitation of co-operative banks to lend more for agriculture
sector

3.4 MEANING OF NPA

Non-performing asset is a debt obligation where the borrower has

not paid any previously agreed upon interest and principal repayments to the
designated lender for an extended period of time. The non-performing asset is
therefore not yielding any income to the lender in the form of principal and interest
payments.

31
The condition where an asset which ceases to yield income is known as NPA. The
basis of treating a credit facility as NPA.
➢ Term Loan - If interest is in default for 90 days or it principal installment is in
default for 90 days the entire term loan outstanding inclusive of unpaid
installment should be treated as NPA.
➢ Over Draft and Cash Credit – if the amount remains “out of order” for 90
days. Out of Order means the outstanding balance remains continuously in excess
of sanctioned limit or drawing power. The creditors are not enough to cover the
interest during the same period.
➢ Other credit facilities - Where any amount to be received in respect of such a
facility remains in default for 90 days.

Factors affecting Overdue and NPA

Factors affecting overdue and NPA is broadly divided into two heads.

❖ From the part of Institution

➢ No substantive loan schemes

➢ Lack of rescheduling
➢ Inadequacy of loan and improper timing of loan disbursements
➢ Short period of repayment
➢ Absence of moratorium
➢ For closure of standard loans
➢ Faulty classification of small farmers denying them longer loan period.
➢ Defect in project formulation and approvals
➢ Failure of providing adequate amount it leads to him to obtain other costly
finance it will damage his repaying capacity.
➢ Poor utilization/end utilization supervision mechanism

❖ From the part of Borrowers

➢ Loan amount for house hold consumptions.

➢ Poor income generation
➢ Poor net disposable income
➢ Occurrence of natural calamities
➢ Health disorders

32
 ➢ Absence of forward-backward linkage.
➢ Willful default
➢ Political interference

3.5 ACTION PLAN

Agricultural credit has played a vital role in supporting agricultural production
in India. A review of the performance of agricultural credit in India reveals that
through the overall flow of institutional credit has increase over the years there are
several gaps in the system and predominant handicap of existing system is mainly due
to Overdue and NPA. A comprehensive action plan depicts an intervention or strategy
formulated to accomplish the desired results within the shortest span with optimum
cost. Control measures are implemented by thorough evaluation of outcomes and find
out the gap and insert a mechanism for rectification. It is a decision making process
which demands analytical and cognitive capabilities of top level personnel’s i.e. the
board members and the Secretary/MD. An Action plan can be implemented only after
the analysis of data which collected from the effect of “overdue and NPA “. The
effects are;
The Effect of Overdue and NPA can be classified in two major heads
❖ Internal factors
❖ External factors
❖ Internal Effect

That directly influence within the organizational design. It involves:

➢ High Risk Cost

➢ Low retention
➢ Low repayment to apex banks
➢ Demoralizing the approaches of employees
➢ Low level of credit worthiness
➢ Deterioration of Asset Value
➢ High Administrative cost

33
 ❖ External Effect

➢ Incompetent to face the competition

➢ Lose of image
➢ The intervention of Government and financing banks

A permanent solution to the drastic growth of overdue can be found through

providing more autonomy to the lending institution. Constitute of special recovery
tribunal and a special department is needed in this regard. Strong effort must be taken
from bottom line i.e. at each branch level to reduce overdue by fixing target as in the
case of loan repayment. The Vision is always in accordance with the expectation of
all the stake holders. It involves.

❖ Credit Expansion

Higher credit expansion is sowing the seeds of NPA and Overdue. The co-
operative banks suffering from High NPA and Overdue should undertake credit
expansion with caution and develop necessary expertise in managing the credit risk.
Branch level cells to be constituted for overdue collection by providing incentives to
the staff.

❖ Selection of loans

Avoid Binami persons with political clout and support be stopped by

stipulating stringent action to the officials and non-officials involved in loan
sanctioned.

❖ Rescheduling Loans

Wherever possible be adopted in genuine cases to avoid unnecessary legal

action and help him in rejuvenation and reactivations.

❖ Lending Decisions

The lending policy must be in accordance with the economic viability and
efficiency of the organization. It will not fall in line of political and administrative
factions. A decision is deeply related to purpose and need. Delayed decisions always
lead to failure in object achievement.

34
3.6 RECOVERYMANAGEMENT
Effective recovery management means it is a combined effort of board
members and staff members to diagnose the problem and identify the areas of
theoretical factors. Hence it is a joint effort of human beings in a PACS. It involved
two set of actions.
❖ Non- Legal
➢ Frequent reminders through phone/ post
➢ Borrowers house place visit
➢ Conducting Recovery campaign
➢ Participating Lok Adalath
➢ One Time settlement
➢ Restructuring of Loan.
❖ Legal

If the above steps do not result in recovery a bank is constrained to adopt legal
measures by filing a suit in a competent civil court.
➢ Sale Officer

The service of a sale officer is very much desirable in the case of PACS to file suits
and legal steps against the defaulters.

3.7 IDENTIFYING ACCOUNTS AS NPA

RBI has laid down various criteria for the classification of various types of
advances as NPA. They are as follows:

➢ Term loan: While determining the due date of interest to be paid or

the installment amount if either of it becomes overdue for more than 90 days
then the account would become NPA.
➢ Overdrafts/Cash Credit: If an account becomes “out of order”, It is treated as
NPA. The account becomes out of order. If the outstanding balance remains in
excess of the sanctioned limit continuously for 90 days or more. If the
outstanding amount is less than the sanctioned limit but there are no credits in
the account continuously for 90 days as on the date of balance sheet.
If the Credits in the account are not sufficient to cover the interest debited
during the same period

35
➢ Bills purchased/discounted: If the bills purchased or discounted remains
overdue for more than 90 days from its due date it is treated as NPA
❖ Agricultural Advances:
➢ Short duration crops will be treated as NPA if the interest or installment
remains overdue for 2 crop seasons.
➢ Long duration crops will be treated as NPA if the interest or installment
remains overdue for one crop season.

3.8 Showing norms for treating different advances as Non-Performing

Table 3.8

TYPE OF LOAN CONDITION PERIOD

Term Loan Installment of Principal or

interest remains overdue More than 90 days
for

Overdraft / Cash Credit Account remains ‘out of More than 90 days

order ’for

Bills Purchased / Bills Purchased or

Discounted Discounted remains More than 90 days
overdue for

Agricultural Advances: Short duration crops: if 2 crop season

a loan granted for installment of principal or
interest remains overdue
for
Long duration crops: if
installment of principal or 1 crop season
interest remains overdue
for

Other credit facility If the amount to be More than 90 days

received remains overdue
for

36
3.9 PRUDENTIAL NORMS

The Prudential Norms were introduced to strengthen the bank’s balance sheet
and to enhance transparency. It was considered as a milestone measure in the financial
services sector reforms. The health of the banking sector crucially depended on the
implementation of these prudential norms of accounting which were based on
international standards. The prudential norms are related to income recognition asset
classification provisioning for bad and doubtful debts and capital adequacy. These
norms serves 3 great purposes.
➢ The income recognition norms reflect a true picture of the income and
expenditure of the banks.
➢ The asset classification and provisioning norms help in assessing the quality of
the assets portfolio of the banks.
➢ The capital adequacy is based on the classification of assets and suggests
whether the bank is in a visible position to meet any adverse situations due to
the decline of assets.

Guidelines for classification of assets

❖ Accounts with Temporary Deficiencies

The classification of an asset as NPA should be based on the record of

recovery. Bank should not classify an advance as NPA merely due to the existence of
some deficiencies which are temporary in nature such as:
➢ Non availability of adequate drawing power based on the latest available stock
statement.
➢ Balance outstanding exceeding the limit temporarily
➢ Non submission of stock statement and
➢ Non- renewal of the limits on the due date etc.
❖ In the matter of accounts with such deficiencies banks may follow the
following guidelines
Drawing power is required to be arrived at based on the stock statement which is
current. However considering the difficulties of large borrower stock statements
relied upon by the banks for determining drawing power should not be older than
three months. The outstanding in the account based on drawing power calculated
from stock statements older than three months would be deemed as irregular. A

37
working capital borrowal account will become NPA if such irregular drawings are
permitted in the account for a continuous period of 90 days even though the unit may
be working or the borrower's financial position is satisfactory. Regular and adhoc
credit limits need to be reviewed/regularized not later than three months from the due
date/date of adhoc sanction. In case of constraints such as non-availability of
financial statements and other data from the borrowers the branch should furnish
evidence to show that renewal/review of credit limits is already on and would be
completed soon.

In any case delay beyond six months is not considered desirable as a general
discipline. The account where the regular/adhoc credit limits have not been
reviewed/ renewed within 180 days from the due date of adhoc sanction will be
treated as NPA.

❖ Up gradation of Loan accounts classified as NPAs

If arrears of the interest and the principal are paid by the borrower in the case of loan
accounts classified as NPAs the account should no longer be treated as non-
performing and may be classified as ‘Standard’ accounts.

❖ Asset classification to be borrower-wise and not facility-wise

➢ It is difficult to envisage a situation when only one facility to a borrower/one

investment in any of the securities issued by the borrower becomes a problem
credit/investment and not others. Therefore all the facilities granted by a bank
to a borrower and investment in all the securities issued by the borrower will
have to be treated as NPA and not the particular facility/investment or part
thereof which has become irregular.
➢ If the debits arising out of development of letters of creditor invoked
guarantees are in a separate account the balance outstanding in that account
also should be treated as a part of the borrower's principal operating
account for the purpose of application of prudential norms on income
recognition asset classification and provisioning.

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 ❖ Advances under consortium arrangements

Asset classification of accounts under consortium should be based on the

record of recovery of the individual member bank and other aspects that have a
bearing on the recoverability of advances.

❖ Advances against term deposits NSCs KVP/IVP

Advances against term deposits NSCs eligible for surrender IVPs KVPs and
life policies need not be treated as NPAs. Advances against gold ornaments
government securities and all other securities are not covered by this exemption.
❖ Loans with moratorium for payment of interest

➢ In the case of bank finance given for industrial projects or for agricultural
plantations etc where a moratorium is available for the payment of interest
then it becomes 'due' only after the moratorium or gestation period is over.
Therefore such amounts of interest do not become overdue and hence do not
become an NPA with reference to the date of debit of interest. They become
overdue after the due date for payment of interest if uncollected.
➢ In case of a housing loan or similar advances granted to staff members where
the after the recovery of principal interest need not be considered as overdue
from the first quarter onwards. Such loans/advances should be classified as
NPA only when there is a default in repayment of installment of principal or
payment of interest on the respective due dates.
❖ Agricultural advances
❖ A loan granted for short duration crops is treated as NPA if the installment of
principal or interest thereon remains overdue for two crop seasons. A loan
granted for long duration crops is treated as NPA only if the installment of
principal or interest thereon remains overdue for one crop season. The crop
season for each crop means the period up to harvesting of the crop raised
would be as determined by the State Level Bankers’ Committee in each State.

Where natural calamities impair the repaying capacity of agricultural borrowers’

banks may decide on their own as a relief measure conversion of the short term
production loan into a term loan or a rescheduling of the repayment period or the
sanction of a fresh short term loan

39
In such cases of conversion or rescheduling the term loan is treated as current dues
and need not be classified as NPA. The asset classification of these loans would
thereafter be governed by the revised terms and conditions and would be treated as
NPA if the interest and/or installment of principal remain overdue for two crop
seasons for short duration crops and for one crop season for long duration crops

While fixing the repayment schedule in the case of rural housing advances granted to
agriculturists under the 'Indira AwasYojana' and 'Golden Jubilee Rural Housing
Finance Scheme' banks should ensure that the interest/installment payable on such
advances are linked to crop cycles.

❖ Government guaranteed advances

The credit facilities backed by guarantee of the Central Government though

overdue may be treated as an NPA only when the Government repudiates its
guarantee when invoked. This exemption from classification of Government
guaranteed advances as NPA is not for the purpose of recognition of income. The
requirement of invocation of guarantee was delinked for deciding the asset
classification and provisioning requirements in respect of State Government
guaranteed exposures. With effect from the year ending 31 March 2006 State
Government guaranteed advances and investments in State Government guaranteed
securities would attract asset classification and provisioning norms if interest and/or
principal or any amount due to the bank remains overdue for more than 90 days.

❖ Up gradation of restructured accounts

The sub-standard accounts which have been subject to restructuring etc
whether in respect of principal installment or interest amount by whatever modality
would be eligible for upgrading to the standard category only after the specified
period i.e. a period of one year after the date when the first payment of interest or of
principal whichever is earlier falls due subject to satisfactory performance during the
period. The amount of provision made earlier net of the amount provided for the
sacrifice in the interest amount in present value terms as aforesaid could also be
reversed after the one-year period.

40
 During this one year period the sub- standard asset will not deteriorate in its
classification if satisfactory performance of the account is demonstrated during the
period. In case however the performance during the one year period is not evident the
asset classification of the restructured account would be governed as per the
applicable prudential norms with reference to the pre-restructuring payment
schedule.

3.10 PROVISIONING NORMS

Before calculating provisions the following amount is to be deducted from the

balance outstanding:
➢ Interest debited and not collected during the year
➢ Unrealized interest of corresponding previous year in case of new NPA
accounts identified during the year
➢ DICGC/ECGC cover available in the case of Doubtful and Loss assets
➢ Interest on suspense account if any

CLASSIFICATION OF ASSETS AND PROVISIONS ALLOCATED

According to the prudential norms all banks are required to classify their advances or
assets into four i.e. standard sub- standard doubtful and loss assets. The sub- standard
doubtful and loss assets are individually or collectively known as Non- Performing
Assets.

❖ Standard Assets

A standard asset is one which does not disclose any problem and which is not
non-performing and does not carry more than normal risk attached to the business. A
general provision of a minimum of 0.25per cent on standard assets on global loan
portfolio basis is provided for. Advance to specific sectors i.e. personal loans and
advances qualifying as capital market exposures residential housing loans beyond Rs
20 lakh and commercial real estate loans a provision of 1per cent are to be provided.
All other advances not included in the above category 0.40 per cent are to be
provided.

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 ❖ Sub-standard Assets

With effect from March 31 2005 a sub-standard asset is one which has
remained NPA for a period less than or equal to 12 months. A general provision of 10
per cent on total outstanding should be made without making any allowance for
ECGC guarantee cover and securities available. At times bank give loans which are
unsecured ab-initio i.e. the loan is sanctioned without any security. If such account
becomes NPA and is classified as substandard then provision of 20 per cent would be
made. Banks are permitted to phase the additional provisioning consequent upon the
reduction in the transition period from substandard to doubtful asset from 18 to 12
months over a four year ending March 31 2005 with a minimum of 20 per cent each
year.

❖ Doubtful Assets

With effect from March 31 2005 an asset would be classified as doubtful if it has
remained in the sub-standard category for a period of 12 months. 100 per cent of the
extent to which the advance is not covered by the realizable value of the security to
which the bank has a valid recourse and the realizable value is estimated on a realistic
basis. In regard to the secured portion provision may be made on the following basis
at the rates ranging from 20 per cent to 100 per cent of the secured portion depending
upon the period for which the asset has remained doubtful.

❖ Loss Assets

A loss asset is one where loss has been identified by the bank or internal or
external auditors or the RBI inspectors but the amount has not been written off
wholly. In other words such an asset is considered uncollectible and of little value that
its continuous as a bankable asset is not warranted although there may be some
salvage or recovery value. Loss asset should be written off. If the loss assets are
permitted to remain in the books for any reason 100 % of the outstanding should be
provided for.

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 3.11 PROVISIONS UNDER SPECIAL CIRCUMSTANCES
Table3.11
Category of Asset Provision Requirement (in percentage )
Standard Assets 0.25
Sub Standard Assets 10 (if secured)
20 (if secured)
Doubtful Assets
Up to 1 year 20
1 to 3 years 30
More than 3 years 100

Loss Assets 100

➢ With respect to credit facilities granted to SSI units which are identified as
sick and where rehabilitation packages have been drawn by the banks
themselves or under consortium arrangements no provision needs to be made
for a oneyear period.
➢ Advances against term deposits, NSCs eligible for surrender, IVPs, KVPs and
life insurance policies would attract provisioning requirements according to
their asset classification status.
➢ Advances against gold ornaments Government securities and all other kinds of
securities require provisions.
➢ Advances covered by ECGC/CGTSI in the case of advances classified as
doubtful and guaranteed by ECGC/CGTSI provision is required to be made
only for the balance in excess of the amount guaranteed by the Corporation.
The realizable values of the securities are first deducted from the outstanding
balance in respect of the amount guaranteed by the Corporation and thus
the provision is made
➢ Provisioning norms for sale of financial assets to Securitization Company
(SC)/ Reconstruction Company (RC)

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 ➢ If the financial assets are sold to SC/RC at a price below the Net Book Value
(NBV) (i.e. Book value less provisions held) the shortfall should be debited to
the profit and loss account of that year.

➢ If the sale is for a value higher than the NBV the excess provision will not be
utilized to meet the shortfall/loss on account of sale of other financial assets to
SC/RC.

3.12 MANAGEMENT OF NPAs

NPAs have adverse effect over Return on Assets (ROA) and Capital
Adequacy Ratio (CAR) of banks. Hence banks formulate their own NPA management
policies and make efforts to recover NPAs. A reduction in the Gross and Net NPAs
indicates a significant improvement in the management of NPAs.

❖ Resolution Strategy Framework:

➢ Filing suits and BIFR are the two most common approaches used in the
resolution of NPAs in public sector banks. Often the compromise settlement
schemes with the borrowers are found to be more effective than any legal
measure.
❖ Credit Information Bureau:

➢ It was incorporated in January 2001.Credit Information Bureau mainly deals with

information dissemination on defaulters to the financial system. Banks and FIIs
are required to submit the list of suit filed cases of Rs.10 million and suit filed
cases of willful defaulters of Rs.2.5 million and above to RBI as well as CIBIL.
CIBIL shares this information with the banks. This would prevent the lending
institution to borrow large amount against the same asset and property which
often contributed to an increase in the NPAs of banks The RBI has defined
the term ‘willful defaulters’ as on who has not used bank funds for the purpose
for which it was taken and who has not repaid loan despite having adequate
liquidity.

❖ Legal Measure: The following legal and regulatory measures are instituted for
settlement of NPAs.

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 ➢ Debt Recovery Tribunal

DRT was set up in 1992 with a view to effectively recover debts but have not
been able to deliver as expected as they got swamped under the burden of
innumerable number of cases filed with them since their inception.
➢ SARFAESI ACT

The SARFAESI Act came into force in 2002.It was brought in as a non-
conventional warfare to the battle against NPA. The Act empowered the banks to take
action to dispose the properties of the defaulters given as securities so as to recover
the dues after giving due notice. The Act could scurry the defaulters in panic but its
progress was affected by several hurdles on its way.
This act gives sweeping power to secured creditors such as taking over the
possession of secured assets of the borrower including the right to transfer by way of
lease assignments of sale take over the management of secured assets. This legal
enactment removes legal hurdles and helps in resolving large number of NPAs
quickly. The credit for the increasing response to OTS settlements goes to the fear
which the defaulters have due to the defaulters by the SARFAESI Act.

➢ LokAdalat

Lok Adalath was set up for recovery of dues in accounts falling in the doubtful and
loss category with outstanding balance up to Rs.5 lakhs by way of compromise
settlements. This mechanism is effective for getting speedy justice and recovery of
small loans.

➢ Corporate Debt Restructuring

CDR is a non-statutory mechanism institutionalized in the year 2001 to

provide timely and transparent system for restructuring of corporate debts of Rs20
Crore and above of viable entities financed by banks and FIIs under consortium or
Multiple Banking Arrangement. It is a voluntary system based on Debtor Creditor
Agreement and Inter Creditor Agreement. CDR system is applicable to the standard
and substandard loan accounts.

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 ➢ Asset Reconstruction Company

Asset Reconstruction Company has been set up in various countries as an

answer to the global problem of bad loans. They are set up as a trust for undertaking
activities relating to asset reconstruction. It would negotiate with banks and financial
institutions for acquiring distressed assets and develop market for such assets.

Various methods involved in the recovery of non-performing assets are the following:
➢ Sending ordinary notice
➢ Registered notice
➢ Recovery notice
➢ Securitization notice under Securitization Act 2002.
➢ There is a Recovery Department specially assigned for the following functions

➢ Recovery of Non-performing asset loans.

➢ Supervising the work of recovery officers requiring statements and returns to
RBI, NABARD etc.

➢ Submission of review reports to board members and higher authorities.

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 CHAPTER -IV

INDUSTRY AND COMPANY

PROFILE

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4.1 INDUSTRY PROFILE

A Co-operative is voluntary association of members of self-help, catering to

the financial on a mutual basis. In India, the co-operative credit movement started
with the chief object of catering to the banking and credit requirements of the urban
middle class, e.g. the small trader or workers, the salaried people with limited fixed
income in urban or semi-urban areas. The co-operative banking system in India is
federal in structure.

Co-operation is the practice of individuals or larger societal entities working in

common with mutually agreed-upon goals and possibly methods instead of working
separately in competition and in which the success of one is dependent and contingent
upon the success of another.

However co-operation may be coerced (forced) or voluntary (freely chosen)

and consequently individuals and groups might co-operate even although they have
almost nothing in common qua interests or goals. Examples of that can be found in
market trade military wars families workplaces schools and prisons and more
generally any institution or organization of which individuals are part (out of own
choice by law or forced). Robert Oven the celebrated social scientist who is the
pioneer of co-operative movement. The successful co-operative principles are
formulated by Roach dale Pioneers.

A Co-operative is generally viewed as a Socio-Economic Organizations that

can fulfill both social and economic objectives of its member’s interest truly at heart
equally for its success International Co-operative Alliance defined “A cooperative is
an autonomous association of Persons united voluntarily to meet their common
economic social and cultural needs and Spirituous through a jointly owned
democratically controlled enterprise.”

The basic principle of Co-operation is “Each for all and All for each” It
depicts the qualities like Loyalty Trust Faith and Fellowship. It is a perfect example of
the democratic institutions run by members for its members.

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 Co-operative sector became the backbone of Indian agriculture and rural
sector. It is the last resort to that priority phases. In India 35% of rural credit supplied
and provide 48% of employees to the rural mob directly indirectly and sponsored
projects through Co-operative sector.

4.2 BANKING IN THE CO-OPERATIVE SECTOR

According to Section 5B, Banking means the accepting of deposit of money

from the public for the purpose of lending or investment, which are repayable on
demand or otherwise and are withdrawable by cheque, draft, and order or otherwise.

According to Oxford English Dictionary, Bank is a establishment for custody

of money received from or on behalf of its customers. Its essential duty is the payment
of the orders given on it by the customers, its profits mainly from the investment of
money left unused by them
Generally speaking co-operation means living thinking and working together.
In its technical sense it denotes a special method of doing business. In its former sense
co-operation existed even before the existence of man. In fact, co-operation is much
older than the man himself. The practice of principle of co-operation contributed the
development of human race more than any other biological and social factor. Ashley
Montague has rightly said without the co-operation of all sociability and mutual aid
the progress of organic life the improvement of the organism and the strengthening of
the species becomes utterly incomprehensible.”
The Indian co-operative movement like its counterpart in other countries of
the world has essentially a child of distress. It has emerged out of that turmoil and
dissatisfaction which prevailed during the last quarter of the 19th century and worked
as a direct consequence of the Industrial Revolution. The Revolution led to the decay
of cottage industries and growing pressure on land making agriculture and
uneconomic venture greater mobility of rich people from villages to towns and of
capitals to channels of investments; the growth of middlemen acting as porosities
to the disadvantage of small producers; new debt legislations which changed
completely the borrowing and the lending system; the change in the method of
payment of land revenue from kind to cash throwing the cultivators into the clutches
of the moneylenders etc.

49
All these destroyed the self-sufficient economy of the villages the failure of rains and
frequent famines added fuel to the fire. The indebtedness of the farmers increased by
leaps and bounds. Their belief in fate strengthened. This fatalism coupled with
illiteracy threw them into the deep ditch of stagnation depression and disappointment.
The government first took indirect steps to the check the growing influence of
Mahajan but large success could not be achieved. Thereafter various legislative
measures were adopted for granting loans and credit facilities to the farmers for their
agricultural pursuits. Among these measures mentioned may be made of the Deccan
Agriculturalists Loans Act of 1879 the Land Improvement Loans Act of 1883 and the
Agriculturalists Loans of 1884. Some thoughtful intelligent persons also strove to
establish an Agricultural Bank in the Purandhar Taluk of the Poona district but they
would not succeed the need of providing cheap credit facilities to the farmers went on
becoming strong and the idea of starting co-operative credit societies were hatched in
1892.

The Madras Government sent Sir Frederic Nicholson and his report was received
in1899 and it was brought to the notice of the Government of India. Nicholson
remarked “Find Raffeisen”. Meanwhile some 200 co-operative societies and Nidhis in
U.P and Madras had already come existence. In 1903 their membership and working
capital stood at Rs36000 and Rs75 lakhs respectively. The Government of India
appointed in 1901 a committee under the president ship of Sir Edward Law to study
the question of starting co-operative credit societies in India. This committee also
recommended the establishment of co-operative societies in Raffeisen Model. The
Famine Committee of 1901recommended the setting up of mutual credit associations.
Accordingly the Co-operative Credit Societies Act was passed in 1904.

This Act provided for the establishment of credit facilities at cheaper rates to
small men living in the same locality. Rural societies were to be organized on the
Raffeisen Model while the urban societies were to be established on the Schulze
Delitzchs patterns. The Modern Co-operative Movement in India thus maybe said to
have started with passing of this Act. The history of origin and growth of the Co-
operative Movement in India can be divided into following periods:

50
 ➢ 1904 to 1911
➢ 1912 to 1918
➢ 1919 to 1929
➢ 1930 to 1938
➢ 1939 to 1946
➢ 1947 onwards

Co-operative Banking was started in this country to remove the proverbial

poverty of the millions of small agriculturists. It was adopted as the most useful
weapon for ending stagnations of the poor masses. The Co-operative Credit Societies
Act of 1904 societies were classified as “rural” and “urban” and while the latter were
left with a fee the former were bound to accept the unlimited liability. The act did not
deal with the organization of central and apex the whole questions were re-examined
and the Government of India passed. “The Co-operative Societies Act 1912”. The
registration of unions the central banking unions and the central banks were for the
time expressly legalized. Since then co-operative banking had rapid progress in the
country.

4.3 ORIGIN AND GROWTH

The Co-operative banks have a history of almost 100 years. The Co-operative banks
are an important constituent of the Indian Financial System, judging by the role
assigned to them, the expectations they are supposed to fulfil their number, and the
number of offices they operate. The co-operative movement originated in the west,
but the importance that such banks have assumed in India is rarely paralleled in the
world. Their role in rural financing continues to be important even today, and
their business in the urban areas also has increased in recent years mainly due to
the sharp increase in the number of co-operative banks.

The co-operative 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 co-operative banks. Some of the co-operative banks
are quite forward looking and have developed sufficient core competencies to
challenge state and private sector banks.

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The urban co-operative credit movement originated in Germany when Herman
Schultz started such societies for the benefit of artisans in the cities. Initially, the
credit of starting such societies goes to Livgi Luzzatti encouraged by the success of
the urban credit institutions in these countries. Social workers in India began to think
in terms as the co-operative as a means of bringing success to middle classes as early
as to close of the 19th century. In India, the first credit society was set up in 1889 at
Baroda. But no proper attention was paid for its development. The government of
India showed the golden seed of the co-operative banking in India in 1904 with
introduction of co-operative society’s act of 1904. In rural areas as far as agricultural
and related activities were concerned, the supply of credit, particularly, institution
credit was adequate and unorganized money marked agencies, such as money lenders,
were providing credit often at exploitatively high rates of interest. The co-operative
banks were conceived in order to substitute such agencies, provide adequate short-
term and long-term institutional credit at reasonable rates of interest and to bring
about integration of the unorganized and organized segments of the Indian money
market. Urban co-operative credit societies and bank occupy a prominent place
among the agencies supplying credit needs of the people residing in the urban areas.
They advance loans mostly to the traders, artisans and salary earn on personal security
as well as against gold and silver. The urban banks cater primarily to the needs of the
lower and middle-income structure of our society.

The beginning of Co-operative banking in this country dates back to about 1904 when
official efforts were initiated to create a new type of institution based on principles of
co-operative organization and management, which were considered to be suitable for
solving the problems peculiar to Indian conditions. In rural areas as far as agricultural
and related activities were concerned, the supply of credit, particularly institutional
credit, was woefully inadequate and unorganized money market agencies such as
moneylenders, were providing credit often at exploitatively high rate of interest. The
co- operative banks were conceived in order to substitute such agencies, provide
adequate short term and long term institutional credit at reasonable rates of interest
and to bring about integration of the unorganized and organized segments of the
Indian money market.

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When national economic planning began in India, Co-operative banks were made an
integral part of the institutional framework of community development and extension
services which areas assigned the important role of delivering the fronts of economic
planning at the grassroots levels. Today co- operative banks continue to be a part of a
set of institutions which are engaged in financing rural and agricultural development.
This set up comprise the RBI, NABARD, commercial banks, regional rural banks and
co-operative banks.

Till 1969, they increasingly substituted the informal sector lenders. After the
nationalization of banks and the creation of RRBs and NABARD, however their
relative share has somewhat declined. All the institutional sources contributed about
4% of the total rural credit till 1954. This contribution increased to 62% by 1990. The
share of co -operative banks in the institutional lending has declined from 80% in
1969 to about 42% at present. The percentage of rural population covered by the
agricultural credit co- operatives was 7.8 in 1951, 36 in 1961 and about 65% at
present.

4.4 Trends of progress of Co-operative banking in India

➢ Formation Stage (1904-1915)

During this period the credit institutions evolved in to a three-tier pyramidal

structure. The principle of limited liability was introduced in the movement and the
old distinction between the rural and urban societies was done away with. A number
of minor improvements with regard to registration audit and administration were also
introduced.

➢ Second Stage (1915-1930)

It was towards the beginning of 1st World War the co-operative movement in
India took shape. War provided stimulus to the organization of certain kinds of
societies. The expansion was quite rapid. The movement faced a number of problems
arising out of hasty expansion and many of the credit societies being exposed to
weakness from within had to face a serious crisis which deepened subsequently
through the world war depression of 30s.

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 ➢ Third Stage – World Wide Depression and Co-operative Banking Crisis
(1930-1940)

The Co-operative Banks suffered a setback in a number of ways like economic

instability heavy indebtedness of member’s competition from the moneylenders and
the peculiar name of agricultural industry. These factors were obviously beyond the
control of the average credit societies. The weakness in their working was also a
dominant factor which was not closely related to any ideological shortcomings but
was attributable to the feature of those associated with the societies to stick the well
accepted co-operative practices

➢ Fourth Stage – Rehabilitation (1940 – 1946)

Second World War broke out the prices of the agricultural products and land
started soaring high that almost doubled the repaying capacity of the farmers. This
plus the financial assistance of the state helped to rehabilitate the co-operative
movement in almost all the provinces. This period marked with increasing repaying
capacity introduction of controlled credit schemes in Madras and expansion of non-
credit activity.

➢ Fifth Stage – Phenomenal Rise (1946 – 1950)

In 1946 the Co-operative Planning Committee took stock of the progress of

the Co-operative Movements and suggested certain plans for its development.

➢ Sixth Stage – Planned Development (1951 – 1980)

The period of planned development witnessed one after epoch – making

events in the field of co-operation. First came the All India Rural Credit Survey
Committee (1959). This committee revealed that the placed occupied by the co-
operative credit in the rural finance of the country was even more significant than the
ordinarily supposed. The committee recommended an integrated program of the rural
credit based on three fundamental principles: State Partnership at different levels
Federal Co-ordination between credit and economic activities especially marketing
and processing and administration through adequately trained and efficient personnel
responsive to the needs of the rural population.

54
 During this period there is a larger flow of credit to the weaker sections
consumption credit to weaker section and reduction of regional imbalances. The RBI
at the instance of the Government of India constituted a committee under the
chairmanship of Shri. B. Shivaraman to review the arrangements for institutional
credits for Agricultural and Rural Developments in 1979. The committee in its final
report that was submitted in 1981 recommended the establishment of NABARD to
look after the credit needs of Agricultural and Rural Development in multiagency
setup. The proposed NABARD started functioning from July 1982.

➢ Seventh Stage – Restructuring (1985 – 1990)

Keeping in view the objectives of the seventh Five Year Plan a number of
events took place with regard to the restructuring and strengthening of the co-
operative movements in various sectors The institutional credit continued to play an
important role in increasing agricultural production and an increase in the standard of
living by helping the rural community to acquire assets for income generation. Co-
operative banks originated in the nineteenth century in Germany. Peasants farmers
and craftsmen were affected by deep social and economic changes. The importance of
money and capital increased. As no real rural financial services were available
craftsmen small and medium enterprises and traders as well as farmers established
their own co-operative banks on the basis of self-help (self-reliance) self-
responsibility and self-administration. The basic mandate of co-operatives is to
generate services to be provided to their members and to ensure sound business
results in order to be able to promote their members’ interests in the longer term.

The co-operative movement originated in the west. It has a history of almost

100 years. These banks are now an important constituent of Indian Financial System.
Co-operative Banks are much more important in India than anywhere else in the
world. It has gained its importance by the role assigned to them the expectations they
are supposed to fulfil their number and the number of offices they operate. Their role
in rural financing continues to be important even today. Due to the sharp increase in
the number of Co-operative banks their business in the urban areas also has increased
phenomenally in the recent years. The Co-operative banks in the rural areas mainly
finance the agricultural based activities which include activities like farming cattle
milk hatchery personal finance etc. This also includes some small scale industries and
self-employment driven activities. These banks mainly finance various categories of

55
peoples for self-employment industries small scale units home finance consumer
finance and personal finance. Some of the forward looking Co-operative banks have
developed sufficient core competencies to such an extent that they are able to
challenge state and private sector banks.

The exponential growth of Co-operative banks is attributed mainly to their

much better contacts with the local people personal interaction with customers and
their ability to catch the nerve of the local clientele. The total deposits and lending’s
of Co-operative banks according to NAFCUB are much more than the Old Private
Sector Banks and the New Private Sector Banks. The banking related activities of the
Co-operative Banks are also regulated by the Reserve Bank of India even though they
are registered under the Co-operative Societies Act of the Respective States where
they were formed originally. These banks are governed by the Banking Regulations
Act 1949 and the Banking Laws (Co-operative Societies) Act 1965.

4.5 Types of Co-operative Banks

There are two types of co-operative banks in India. The first is the short term
lending oriented Co-operative Banks. In this category there are again three sub
categories of banks which are the State Co-operative banks, District Co-operative
banks and the Primary Agricultural Co-operative societies. The second is the long
term lending oriented Co-operative banks. In this second category there are land
developments banks which are at three levels. First is the state level the second is
district level and the third is the village level. Again the Co-operative banking
structure in India is divided into five main categories and these categories are:
➢ Primary Urban Co-operative Banks.
➢ Primary Agricultural Credit Societies.
➢ District Central Co-operative Banks.
➢ State Co-operative Banks.
➢ Land Development Banks.

It is very much clear that co-operative banks have very much importance in
national development. Without the help of co-operative banks millions of people in
India would be lacking the much needed financial support

56
 Primary business is money-related; at the base of the co-operative banking
system are the local financial services co-operatives. They are specially geared to the
financial needs of their members: small and medium-sized enterprises craftsmen
farmers, worker’s members of other professions and private individuals. A co-
operative bank must have constitutions which have to be passed and signed by at least
the number of members required by the Co-operative Act. The constitutions must
clearly state the object of the enterprise and its name must indicate what this object is.
The co-operative is legally established when the signed constitution and the members
of the board of directors have been registered in the Register of Co-operatives which
is kept at the appropriate authority (Registrar of Co-operatives). The board of
directors must consist at least of two members and is responsible for running the
business of the co-operative bank subject to the restrictions imposed by the Banking
Act the Co-operative Act and the constitution of the particular co-operative.

Many countries have introduced a supervisory board that is required to

supervise the work of the management in all aspects of the administration. The
supervisory board’s duty is to check how the management runs the affairs of the co-
operative. If a supervisory board is not required be the co-operative act some kind of
control mechanisms should be put in place. The general meeting is required to pass
resolutions relating to the annual financial statements the distribution of surpluses or
the covering of any losses the election of members of the supervisory board if
foreseen in the Act the ratification of the acts of the management and the supervisory
board. It sets the limits on the size of loans amends the constitution and so on. At the
general meeting each member has only one vote; irrespective of how many shares he
or she may hold in the co-operative and also irrespectively of how high his or her
credit balance may be. Although many co-operative banks deal in e.g. agricultural
products. These activities range from the purchase of products needed for agriculture
to joint maintenance of agricultural machinery and joint marketing of member
produce. At the second tier the co-operative banks may establish regional banks. The
main objective of the regional banks would be to support their member banks through
liquidity management and refinancing facilities in their lending business and in
rendering comprehensive and competitive services.

57
4.6 HISTORY
The term Urban Co-operative Banks (UCBs), though not formally defined, refers to
primary cooperative banks located in urban and semi-urban areas. These banks, till
1996, were allowed to lend money only for non-agricultural purposes. This distinction
does not hold today. These banks were traditionally centered on communities,
localities work place groups. They essentially lent to the small borrowers and
businesses. Today, their scope of operations has widened considerably. Cooperative
societies are based on the principles of co-operation, - mutual help, democratic
decision making and open membership. Co-operatives represented a new and
alternative approach to organization as against proprietary firms, partnership firms
and joint stock companies which represent the dominant form of commercial
organization.

Beginnings

Co-operative banks in India is having a long drawn history being Annoy co-operative
Banks. First co-operative Bank of India which was established in 1889, Co-operative
Banks has successfully completed its 121 years of existence as of now. It is fact that
cooperative banks are functioning before the co-operative act was initiated in India in
1904. The principles and functions of co-operative banking are existed in Indian
History. Kautilya the great Economist & Philosopher in his ‘ARTHSHASTRA’
mentioned that “Guilds of workmen as well as those who carry as any co-operative
work shall divide their earnings either equally or as agreed upon among themselves”.
A Co-operative Bank can be defined as a financial entity which belongs to its member
who is at the same time the owner & the customers of their bank, UCB are often
created by person belonging to the same local or professional community or sharing a
common interest. UCB generally provide their members wide range of Bank&
financial service loans, deposit. The Urban co-operative banking movement as
mentioned earlier is initiated before of cooperative Act 1904. The First cooperative
bank in India was established by shri Vitthal Laxman Karthekar at Baroda in Feb
1889 i.e. ‘AnonyaSahakarMandli’ this mutual aid society was inspired by the
success of co-operative credit movement in Germany & Italy. In the initial stage
urban co-operative banks was working as co-operative credit societies which were
later converted to urban Banks was merely accepting deposits & lending to needy
people.

58
 The first bank in India though conservative was established in 1786. From
1786 till today the journey of Indian Banking System can be segregated into three
distinct phases. They are as mentioned below:

➢ Early phase from 1786 to 1969 of Indian Banks

➢ Nationalization of Indian Banks and up to 1991 prior to Indian banking sector
Reforms.
➢ New phase of Indian Banking System with the advent of Indian Financial &
Banking Sector Reforms after 1991.

➢ To make this write-up more explanatory I prefix the scenario as Phase I Phase
II and Phase III.
Phase I

The General Bank of India was set up in the year 1786. Next came Bank of
Hindustan and Bengal Bank. The East India Company established Bank of Bengal
(1809) Bank of Bombay (1840) and Bank of Madras (1843) as independent units and
called it Presidency Banks. These three banks were amalgamated in 1920 and
Imperial Bank of India was established which started as private shareholders banks
mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians
Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between
1906 and 1913 Bank of India Central Bank of India Bank of Baroda Canara Bank
Indian Bank and Bank of Mysore were set up. During the first phase the growth was
very slow and banks also experienced periodic failures between 1913 and 1948. There
were approximately 1100 banks mostly small. To stream line the functioning and
activities of commercial banks the Government of India came up with The Banking
Companies Act 1949 which was later changed to Banking Regulation Act 1949 as per
amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with
extensive powers for the supervision of banking in India as the Central Banking
Authority.

During those day’s public has lesser confidence in the banks. As an aftermath deposit
mobilization was slow. Abreast of it the savings bank facility provided by the Postal
department was comparatively safer. Moreover funds were largely given to the
traders.

59
Phase II

Government took major steps in this Indian Banking Sector Reform after
independence. In 1955 it nationalized Imperial Bank of India with extensive banking
facilities on a large scale especially in rural and semi-urban areas. It formed State
Bank of India to act as the principal agent of RBI and to handle banking transactions
of the Union and State Governments all over the country. Seven banks forming
subsidiary of State Bank of India was nationalized in 1960 on 19th July 1969 major
process of nationalization was carried out. It was the effort of the then Prime Minister
of India Mrs. Indira Gandhi. 14 major commercial banks in the country were
nationalized.
Second phase of nationalization Indian Banking Sector Reform was carried
out in 1980 with seven more banks. This step brought 80% of the banking segment in
India under Government ownership.
The following are the steps taken by the Government of India to Regulate
Banking Institutions in the Country:
➢ 1949: Enactment of Banking Regulation Act.
➢ 1955: Nationalization of State Bank of India.
➢ 1959: Nationalization of SBI subsidiaries.
➢ 1961: Insurance cover extended to deposits.
➢ 1969: Nationalization of 14 major banks.
➢ 1971: Creation of credit guarantee corporation.
➢ 1975: Creation of regional rural banks.
➢ 1980: Nationalization of seven banks with deposits over 200 core.
Phase III

This phase has introduced many more products and facilities in the banking
sector in its reforms measure. In 1991 under the chairmanship of M Narasimham a
committee was set up by his name which worked for the liberalization of banking
practices. The country is flooded with foreign banks and their ATM stations. Efforts
are being put to give a satisfactory service to customers. Phone banking and net
banking is introduced. The entire system became more convenient and swift. Time is
given more importance than money.

60
 The financial system of India has shown a great deal of resilience. It is
sheltered from any crisis triggered by any external macroeconomics shock as other
East Asian Countries suffered. This is all due to a flexible exchange rate regime the
foreign reserves are high the capital account is not yet fully convertible and banks and
their customers have limited foreign exchange exposure.The nationalization of banks
in India took place in 1969 by Mrs. Indira Gandhi the prime minister. It nationalized
14 banks then. These banks were mostly owned by businessmen and even managed
by them.

➢ Central Bank of India

➢ Bank of Maharashtra
➢ Dena Bank
➢ Punjab National Bank
➢ Syndicate Bank
➢ Canara Bank
➢ Indian Bank
➢ Indian Overseas Bank
➢ Bank of Baroda
➢ Union Bank
➢ Allahabad Bank
➢ United Bank of India
➢ UCO Bank
➢ Bank of India

Before the steps of nationalization of Indian banks only State Bank of India (SBI) was
nationalized. It took place in July 1955 under the SBI Act of 1955. Nationalization of
Seven State Banks of India (formed subsidiary) took place on 19th July 1960.The
State Bank of India is India's largest commercial bank and is ranked one of the top
five banks worldwide. It serves 90 million customers through a network of 9000
branches and it offers - either directly or through subsidiaries - a wide range of
banking services.

61
 The second phase of nationalization of Indian banks took place in the year
1980. Seven more banks were nationalized with deposits over 200 crores. Till this
year approximately 80% of the banking segment in India was under Government
ownership. After the nationalization of banks in India the branches of the public
sector banks rose to approximately 800% in deposits and advances took a huge jump
by 11000%.

➢ 1955: Nationalization of State Bank of India.

➢ 1959: Nationalization of SBI subsidiaries.
➢ 1969: Nationalization of 14 major banks.
➢ 1980: Nationalization of seven banks with deposits over 200 crores.

62
4.7 COMPANY PROFILE

The THIRUVANANTHAPURAM DISTRICT CO-OPERATIVE BANK

LTD NO.4312 is registered as a Co-operative Society under Travancore-Cochin Co-
operative Societies Act X of on 01.08.1958. It is located in Thiruvananthapuram and
its operations shall extend to the whole of the Thiruvananthapuram District.

The Thiruvananthapuram District Co-operative Bank is a leading co-operative

bank in Kerala. It is the central bank in the district aimed for the development of
primary co-operative societies affiliated to it. This bank was registered as a central co-
operative society under the Travancore-Cochin Co-operative Societies Act of 1952
and started functioning on 12.08.1958. It has 67 computerized branches and 1 Mobile
Branch. It has 685 permanent employees.

The Thiruvananthapuram District Co-operative Bank is the Apex of the

primary co-operative societies of the District. There are 116 Revenue villages, 84
Panchayats, 12 Block Panchayats and 4 Municipalities and 1 Corporation in the
district. The population of the district is 29.47 lacs. Average Family members consist
of 5 persons. About 95% of the population is literate. The bank get fund from State
Co-operative banks as loan also from NABARD. NABARD has the right to inspect
and supervise the Co-operative banks according to the Banking Regulation Act. The
bank is under the control of NABARD, State Government and RBI. The board
members are selected on the basis of election. So there is a big political influence. Till
1995 the employees were selected by the Co-operative bank directly. But from 1996
the recruitment is under the control of Public Service Commission. There will be a
written test and interview. The employees have union in political basis. If an
employee has any problem with them they can approach the union and solve the
problem.
As per 2001 Census the population of the District was 32.34 Lakhs. The ratio of
Female and Male as per the census is 1058 to 1000. Average family members are five.
92.68% of the population is Literate. Population in One Square Kilometer is 1476.
Area of the District is 2192 Sq. K.M. The bank gets funds from State Co-operative
banks and from NABARD. The bank is under the control of NABARD, state
government and RBI. The co-operative bank plays an important role even today in
rural financing.

63
 The Bank is having 67 branches including one service Branch. Our Bank is the
one and only one co-operative Bank having service branch in Kerala. Mobile Bank is
Bank on wheels-a unique venture first started in South India. Among the 67 Branches
38 branches having Locker Facility. All Branches are computerized. There is ATM
Facility at East Fort-Head Office Building. The bank provides Insurance coverage for
deposits. Anywhere branch banking (ABB) facility is available in 16 Branches. ABB
accounts can be operated from any of the ABB branches. Personalized cheque books
are also issued for customers. Authorized capital of the bank shall be for the present
30 crores made up of A Class share of - Primary Agricultural Co-operative Societies
B Class share of - State Govt. C Class Shares of – Other Co-operative Societies. The
Membership is restricted to the Primary Agriculture Co-operatives and other co-
operative Societies only.

MISSION

The Thiruvananthapuram District Co-operative Bank is a leading Co-

operative bank in Kerala. It is the Central Bank in the District aimed for the
development of primary co-operative societies affiliated to it. Mission of the bank is
to develop financially viable organizationally vibrant and operationally efficient co-
operatives in the district for providing timely credit for agriculture rural development
and rural industries.
VISION

The Thiruvananthapuram District Co-operative Bank has the vision to provide

maximum services and to expand its banking business

Main Objectives:
➢ Finance co-operatives registered under the Co-operative Societies Act
➢ Raise funds from members and non-members.
➢ Open branches at suitable centers in the district.
➢ Develop assist co-ordinate the work of member societies.
➢ Conduct supervision and inspection of societies.
➢ Carry on general business of banking as per Co-operative Societies Act and
Rules and Banking Regulation Act 1949.
➢ Act as agent of state Govt. LIC Co-operative Insurance society or Local Body.

64
 ➢ Doing all other things as are incidental or conducive to promotion or
advancement for the business of the Bank.
➢ Additional 1% interest to Senior Citizen.
➢ Deposits are insured.
➢ Demand draft facility throughout India.

Membership and Capital:

Every Co-operative Society working in the area of operation of the Bank

referred to bye-law clause No.1 shall be eligible for admission as ‘A’ Class member.
The Kerala State Co-operative Bank and the State Government shall be eligible for
admission as ‘B’ class members. Authorized capital of the bank shall be for the
present 30 Crores made up of A class share of member societies to 23 Crores and B
class share of 7 Crores of State Govt. C Class members are those any other
cooperative societies registered under Co-operative societies Act 1969.

A’ Class Shares shall be allotted to affiliated Co-operative Societies and ‘B’

Class Shares to Kerala State Co-operative Bank or to the Government of Kerala. The
value of Shares shall be paid in full on allotment. The Bank may retire ‘B’ Class
Shares at such time and in such manner and number as may be agreed upon between
the Bank and the Kerala State Co-operative Bank or the Government of Kerala as the
case may be. Authorized capital of the bank shall be for the present 30 Crores made
up of A Class share of - Primary Agricultural Co-operative Societies B Class share of
State Govt. C Class Shares of – Other Co-operative Societies. The Membership is
restricted to the Primary Agriculture Co-operatives and other co-operative Societies
only. Special features of our Bank are

➢ Mobiles bank attached to Fort M/E branch.

➢ Locker facilities at important branches.
➢ Interest rate better than commercial banks.
➢ Additional 1% interest to Senior Citizen.
➢ All deposits are insured.
➢ Demand draft facility throughout India.
➢ Member Thiruvananthapuram clearing centre of RBI
➢ Full automation in short period.
➢ Sunday working branches available.

65
4.8 ORGANIZATION AND MANAGEMENT

General Body: - The ultimate authority on all matters relating to the administration
of the bank shall be the general body. It consists of one representative of the member
society and the nominee of the State Govt.
Board of Management: - Subject to such resolution as the General Body may from
time to time pass the executive management of the affairs of the bank shall vest in the
Board of Directors consisting of not more than 12 members elected by member
societies and 3 members nominated by State Govt. Term of office of the Board
of Directors shall be for 5 years from the date of assuming charge.

The Executive Committee: - There shall be an executive committee consisting of 5

members including President Vice President and 3 other members of the Board
elected by the board members from themselves. In addition to powers and duties that
the board may delegate to it the executive committee shall exercise the power of
admission of members’ allotment of shares sanctioning of loans and advances.

The President: - Subject to such resolution as the Board or the Executive Committee
from time to time pass in this behalf the President shall exercise general control and
supervision over the affairs of the bank and the work of the offices. He shall preside
over the meeting of the general body the board of management and the executive
committee

General Manager: - There shall be a General Manager who shall be appointed by the
Board of Directors with the previous approval of Registrar of Cooperative Societies
on such terms and conditions as the Board may think fit. The General Manager is the
Chief Executive Officer of the bank.

In Addition to the General Manager there are 3 Deputy General Manager for
helping the GM in his day today function.

HO & Branches: - For functional efficiency there are various sections at HO.
The Bank operates through 58 branches located at important locations in the District.

66
BOARD OF DIRECTORS
The general body shall elect the board of directors for the execution of the
bank which consisting not more than 15 members from. Among 12 members are as
follows.

The Board of Directors of the Bank shall consist of twelve members elected
from among ‘A’ class members in the following manner.
Three members representing ‘A’ class members in Neyyattinkara Taluk.
Three members representing ‘A’ class members in ThiruvananthapuramTaluk.
Two members representing ‘A’ class members in Nedumangadu Taluk.
One member belonging to the SC/ST elected by the general body from among
the delegates of any affiliated ‘A’ Class shareholder society of the Bank.
One-woman member elected by the General Body from among the delegates
of any affiliated ‘A’ Class shareholder society of the Bank.

The delegates to represent the societies of a Taluk must be the representatives

of the society of that Taluk.

4.9 ORGANISATIONAL STRUCTURE

The organizational functions has been divided into two heads

➢ Head Office Operations

➢ Branch Level Operations

HEAD OFFICE OPERATIONS

The Head office functions are constituted by the following levels of officials.

➢ General Manager

The General Manager shall be responsible for the general administration of the
bank subject to the control of the president and board members. He shall have the
custody of all the properties of the bank. He is the officer to sue or to be sued on
behalf of the bank.

➢ Deputy General Manager

In order to the General Manager there are three Deputy General Managers in
the HO. They have delegated the responsibilities of:

67
 ➢ Inspector of Branches/Executive Officers

These officials attached to HO they regularly conduct branch supervision and

act as a implementation force of the action and policies of Head Office and intimate
the problems of the branches to HO.

➢ Section Superintendents

The Head Office has its own fifteen competent sections/departments for the
execution of its functions. They are headed by superintendents and they are assisted
Accountants and Clerks.

BRANCH LEVEL OPERATIONS

It has about 67 computerized branches across the district. The branch

functions are controlled by Branch Manager he is assisted with Accountants Clerks
and Other sub-staffs.

4.10 DEPARTMENTALISATION

GM generally controls the functions He is assisted with DGMs. They

coordinated the functions of various departments in the Head Office. The major
sections of Head Office.

➢ Accounts: It maintain various account balances with Head office to branches

and issue statutory statements to apex Banks RBI, NABARD, UTI etc.
➢ Audit: It conducts and coordinates the internal audit among branches and
report to Registrar (Audit) regularly.
➢ Loan and Advances: It deals with approval of various loans through
branches. It includes General Loans to the public.
➢ Establishment: It deal with general administration and employee service
matters
➢ Computer: It acts as supportive functions to the whole computerization of
the bank.
➢ Case and Legal Affairs: It dealing with legal aspect of bank making suits.
Arbitration
➢ Recovery: It co-ordinates Taluk level recovery procedure of the bank. It
conducts teamwork for effective recovery.

68
 ➢ Institutional Development Cell: It provides statutory information about
the performance of bank to various institutions. It includes the MOU and DAP
with the apex inst.; like KSCB NABARD for future degree of actions and to
reasoning about the shortcomings and take effective steps for rectifying.
➢ Planning and Development: It has the overall charges of training and
development of employees. It coordinates the program of propaganda of the
bank.
➢ Reconciliation: It makes sure the authenticity of entries made in the branches
with Head Office (Inter Bank Operations)
➢ Inspection: This section act as controlling measure within the bank it
regularly visits all the branches and inspects and checks whether the branch
operates in accordance with the guideline of Head Office.
➢ Mask: Under Mutual Arrangements Scheme of Kerala (MASK) the section
functioning to the ratification of HO entries with outside Banks. (Intra Bank
Operations)
➢ Industrial Loans: The said section deals the scrutiny and approval of various
loan proposals from branches. These loans are commercial nature loans. It
extent to both public and member societies.
➢ Estate: Estate section denotes the procurement and maintenance of movable
and non- movable assets and fixtures of the bank.

4.11 PRODUCTS AND SERVICES

The Co-operative societies are not free from the direct control of State Government.
The Government can utilize its social commitment programs through the channels of
Co-operatives. Trivandrum District Co-operative Bank is also in the same position. It
constantly makes profit even after meeting these commitments.

The ranges of products are

➢ Loans.
➢ Deposits.

69
LOANS

The bank provides many types of loans to Primary Co-operatives and General Public.

➢ Consumer Loan
➢ Consumptions Loan
➢ Hire Purchase Loan
➢ Housing Loan
➢ Composite Loan
➢ Educational Loan
➢ Agricultural Loan
➢ Aswashavaypa
➢ Current account overdraft
➢ Business cash credit

❖ Consumer Loans

The maximum period for the repayment of such loan shall not exceed 60 months and
the maximum amount shall not exceed Rs.100 000/. The said loan issued against the
security of landed property or salary certificate of govt employee

❖ Consumption Loan

Consumer loan shall be sanctioned subject to the special Sub Rules framed by the
Managing Committee and approved by the Registrar of Co-operative Societies. The
Minimum amount of loan is above one lakhs, maximum is ten lacks. The duration is
60 months.

❖ Housing Loan

The period of repayment of these loans shall not exceed 15 years and the maximum
amount shall not exceed Rs.10 lacks. This kind of loans shall be granted only for the
following purpose

➢ Construction and repairs of residential building.

➢ Purchase of land and buildings.

70
 ❖ Vehicle Loan
Loan issued up the 80% of value of vehicle against security for the period of 5
years.
❖ Gold Loan
Attractive scheme for gold loan is introduced by the bank for its customers for
the period of one year and six month durations.
❖ Educational Loans
Educational loan issued for students those who wish to studies in Professional
courses
❖ Agricultural loan
Bank directly issue a low rated agricultural loans to its member Societies.
❖ Aswasavaypa:
In this scheme aims to provide financially needy persons, they suffered from
serious diseases. There is no interest is charged in this scheme.
❖ Current Account Overdraft
This facility helps the business men to withdraw an amount of Rs100000 from
this loan.
❖ Business Cash Credit
It aims the business men to avail credit facility up to the limit of Rs.25 lakh

DEPOSITS

Deposits are also of different types. They are

➢ Fixed Deposit
➢ Savings Deposit
➢ Recurring Deposit
➢ Cash Certificate

❖ Fixed Deposits

A fixed deposit is the deposit of a fixed amount of money for a fixed period of
time. No fixed deposit shall be received for a sum less than the one fixed by the
Committee of Management from time to time or for a period less than fixed by the
Registrar of Co-operative Societies from time to time. Interest at the rates fixed from
time to time shall be paid at the end of three months in the case of deposits for a
period exceeding three months and in other cases on the expiry of the period for

71
which the deposit was made. The Committees may at its discretion pay interest at
shorter intervals. Maximum rate of interest is 11.25%.

❖ Recurring Deposits

A recurring deposit is a deposit made by a person who undertakes to pay to the

Society every month a fixed amount of one rupee or a multiple thereof for a period of
12, 24 or 48 months. Every recurring depositor shall pay his monthly deposits before
the end of the calendar month to which it relates, failing which he shall be charged for
a fine of one paisa per rupee per month or fraction thereof on every rupee overdue.
Should a recurring depositor be in arrears to the extent of a sum equivalent to or more
than four monthly installment his deposit amount shall at once be closed.

❖ Savings Deposits

The Committee of Management shall frame such rules and regulations for the conduct
of Savings Bank account and make such alterations/amendments from time to time in
conformity with the provisions of the Kerala Co-operative Societies Act, 1969. The
rate of interest is 4%.

SERVICES

As a banking organization it will perform all the banking functions as per BR

ACT. The other area of service issue grants to Co-operative Societies to start
consumer stores to compete with high market prices of commodities. (Sahakarana
Keraleeyam) It shows its charities to grand money to cancer heart deceased patients. It
regularly issue financial assistance to the children for higher education.

The Bank is financing the Primary Co-operatives for the purpose of Short-
Term Medium Term Long Term Agriculture and Non-Agricultural Loans. It has
introduced Self Help Group (SHG) Loans. Presently Bank issued loans more than
1478 groups and also pumped out an amount of Rs.1235 lakhs through them. The
ICDP project launched by the Bank is functioning well and is an aid to member
Societies. The Arrayal Loan Scheme (Daily Collection Scheme) to small merchants
and traders are really useful to them but it attracts more quantum of NPA.

72
Special features of the Bank:

➢ Mobile Bank attached to Fort M&E branch.

➢ Locker Facilities at important Branches.
➢ Interest rate better than commercial banks.
➢ Additional 1% interest to Senior Citizen.
➢ Sunday working branches.
➢ Any Branch Banking (ABB) Facility is available.
➢ Largest volume of loan outstanding within the state.
➢ First position in the case of Agricultural Loan issued in the state.
➢ First Mobile bank in the south India.
➢ 10 First Service Branch in the Co-operative Sector.
➢ Largest number of employees among other DCBs

73
 CHAPTER – V
DATA ANALYSIS AND DISCUSSION

74
 5.1 Analysis of Total Lending

Table 5.1.1 Showing Total Lending of the bank

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

I Total
Outstanding
under Loans 23025895086.09 25870628345.07 26946930020.63 27439756870.04 28855547319.33
and
Advances

II Asset
Classificatio
n
1) Standard 19392676567.09 22064115071.02 23256312762.63 23526420871.46 21699065651.76

2) Sub
Standard
(Overdue up 2111588131 2381230160.43 1835301718 2193702034.34 3992104963.82
to 3 years )
3) Doubtful
overdues 0 0 0 0 0
i) 3 to 4
years 246655003 382183919 386881242 141843649.97 796953542.12
Secured
ii) 3 to 4
years 28046395 151902893.95 231339590 153482600.50 334605579.70
Unsecured
iii) 4 to 6
years 710192109 432184758.55 105449935 81245612.16 201936968.50
Secured
iv) 4 to 6
years 65404335 29450390 211895226 41703664.45 90656484.59
Unsecured
v) Above 6
years 242677216 119956380.92 204782796 94890653.20 180546372.27
Secured
vi) Above 6
years 146631110 223049948.95 534853744 1017108303.35 1361299383.44
Unsecured
4) Loss 82024220 86554522.25 180113007 189353480.61 198378373.1
Assets
Total NPA 3633218519 3806513274.05 3690617258 3913335998.58 7156481667.57

Percentage 16 14.71 13.72 14.26 24.8

75
 Chart 5.1.1
Showing the percentage of NPA in total lending

NPA PERCENTAGE
30
24.8
25
Percentage

20
16
14.71 14.26
15 13.72

10

0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

Year

INTERPRETATION

The total NPA in 2012-2013 was 16%. In the year 2013-2014 the NPA was 14.71%
There is decrease in NPA of about 1.29% because in this year substandard assets are
more secured and loss assets are low. NPA was 13.72% in the year 2014-2015 which
brings another decease of about 0.99%. In the year 2015-2016 NPA was 14.26% with
an increase of 0.54% .In the year 2016-2017 the total outstanding under loans and
advances is high compare with the other years and NPA was 24.8%.

76
 Table 5.1.2 Showing Short Term Seasonal Agricultural Operation (SAO)

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

I Total
Outstanding
under Loans 6397644543 6768529436 5950219155 5288558690.19 4583968012
and Advances
II Asset
Classification
1) Standard 5943999821 6240062847 5586590286 5002114497.19 4331775761

2) Sub
Standard 445294951 524400294 348613020 281518779 232543919
(Overdue up to
3 years )
3) Doubtful
overdues - - - - -
i) 3 to 4 years
Secured 2567052 0 0 0 0
ii) 3 to 4 years
Unsecured 0 47675 11342673 0 8764788
iii) 4 to 6 years
Secured 2924321 0 0 0 2523889

iv) 4 to 6 years
Unsecured 0 0 0 0 0

v) Above 6
years 2791575 2192052 3336512 4588750 3931237
Secured
vi) Above 6
years 66823 1826568 336664 336664 4428418
Unsecured
4) Loss Assets 0 0 0 0 0
Total NPA 453644722 528466589 363628869 286444193 252192251
Percentage 7.09 7.80 6.11 5.41 5.50

77
 Chart 5.1.2

Showing the Percentage of NPA in SAO

NPA Percentage
9
7.8
8
7.09
7
6.11
6 5.41 5.5
Percentage

0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Year

INTERPRETATION

The figure shows that the largest NPA was on the year 2013-2014 of about 7.8
%because in this year substandard secured was very high .The year 2015-2016 shows
the lowest NPA of 5.41% .In the seasonal agricultural loans there was no loss assets
in the 5 years and unsecured assets were less.

78
 Table 5.1.3 Showing Short term Non Seasonal Agricultural Operation(NSAO)

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

I Total
Outstanding
under Loans and 1704969114.70 1536758448.31 1443525041 117776154.18 1380042888.50
Advances
II Asset
Classification
1) Standard 1604840186.70 1456128259.31 1300843977.51 1032533276 1235461011.40

2) Sub Standard
(Overdue up to 3 18299851 10811655 9526742 8030883 10170065
years )
3) Doubtful
overdues - - - - -
i) 3 to 4 years
Secured 1376924 445572 752038 223613 435081
ii) 3 to 4 years
Unsecured 9702396 37504842 57952002 34782713 29165605

iii) 4 to 6 years
Secured 11367880 91994 34024 0 7181

iv) 4 to 6 years
Unsecured 30670505 10491181 28370231 17009075 19078348

v) Above 6 years
Secured 758733 0 4461000 0 843972

vi) Above 6 years

Unsecured 27952639 21284945 41585027 85181987.78 81924639.10

4) Loss Assets 0 0 0 0 2956986

Total NPA 100128928 80630189 142681064 145228271.78 144581877

Percentage 5.87 5.24 9.88 12.33 10.47

79
 Chart 5.1.3

Showing the percentage of NPA in NSAO

NPA Percentage
14
12.33
12
10.47
9.88
10
Percentage

8
5.87
6 5.24

0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Year

INTERPRETATION

The figure shows that NPA for the year 2012-2013 was 5.87% and the year 2013-
2014 it was 5.24% ie 0.63% decreases and the NPA was 9.88% in 2014-2015 which
shows an increase of 4.64% .In the year 2015-2016 the NPA was 12.33% and
decreases of about 1.86% in the year 2016-2017

80
 Table 5.1.4 Showing Total Lending under Cash Credits and Overdrafts

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

I Total
Outstanding
under Loans 2522645817.08 2369074509.75 2982031519.62 3468835706.61 3250399868.08
and Advances

II Asset
Classification
1) Standard 1303379451.08 1638074021.34 1882653152.62 2623618771.55 2370663581.13

2) Sub
Standard
(Overdue up 374524147 79438958.99 489605610 45706243.31 48049009.25
to 3 years )
3) Doubtful
overdues - - - - -
i) 3 to 4 years
Secured 115227945 115825580 2234148 0 1197115.75

ii) 3 to 4
years 6042727 438916 8051181 2606852 3704651.20
Unsecured

iii) 4 to 6
years Secured 577109479 314686638 584534 7354937.53 1511962.50

iv) 4 to 6
years 3195394 3824612 141666435 8447732.45 32697189.09
Unsecured
v) Above 6
years 110386567 71108676.92 82236280 34107022.20 62609664.27
Secured
vi) Above 6
years 32780107 145677105.95 375000179 746994147.57 729966694.89
Unsecured

4) Loss Assets
0 0 0 0 0
Total NPA 1219266366 731000488.41 1099378367 845216935.06 879736286.95

Percentage 48.33 30.85 36.86 24.36 27.06

81
 Chart 5.1.4

Showing the percentage of NPA in under Cash credits and

Overdrafts

NPA PERCENTAGE
60

50 48.33

40 36.86
Percentage

30.85
30 27.06
24.36

20

10

0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Year

INTERPRETATION

The figure shows that NPA for the year 2012-2013 was 48.33% and in the year 2013-
2014 NPA was 30.85% which shows a decrease in NPA 17.48%. In the case of cash
credits and overdrafts NPA shows alternatively increasing and decreasing for the five
years. In the year 2015-2016 NPA was 24.36% and in the year 2016-2017 NPA was
27.06% which shows an increase of 2.7%.

82
 Table 5.1.5 Showing the Total Term Medium Term Loan

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

I Total
Outstanding
under Loans 8812738604.81 11278882315.32 13067732358.44 14075680085.93 16259785726.59
and
Advances
II Asset
Classification
1) Standard 7328717013.81 9378330650.36 11376993308.44 11757019954.32 11072910543.92

2) Sub
Standard
(Overdue up 1049413738 1372409355.76 81571541 1679143073.03 3312972335.22
to 3 years )
3) Doubtful
overdues - - - - -
i) 3 to 4 years
Secured 79991816 167952006 285680747 94847269.97 612863190.37

ii) 3 to 4
years 12138733 110176475 133254939 110226448 281100639.50
Unsecured
iii) 4 to 6
years 68308039 64509683 62605757 29912205 145021255
Secured
iv) 4 to 6
years 27008193 14232967 40562169 16246857 35834897
Unsecured
v) Above 6
years 84347417 34332374 59747018 25395810 68662902
Secured
vi) Above 6
years 80789435 50384281 113059872 173534988 534998576.45
Unsecured
4) Loss
Assets 82024220 86554522.25 180113007 189353480.61 195421387.13

Total NPA 1484021591 1900551664.96 1690739050 2318660131.61 5186875182.67

Percentage 16.83 16.85 12.93 16.47 31.9

83
 Chart 5.1.5

Showing the percentage of NPA in Medium Term Loan

NPA PERCENTAGE
35 31.9
30

25
Percentage

20 16.83 16.85 16.47

15 12.93

10

0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Year

INTERPRETATION

The figure shows that NPA for the year 2012-2013 was 16.83%. In the next year
2013-2014 there is a slight increase of 0.02% and reaches to 16.85%.In the year 2014-
2015 NPA was 12.93% with a 3.92%.In the year 2015-2016 NPA was 16.47% and it
goes on increasing and for the year 2016-2017 NPA was about 31.9%

84
 Table 5.1.6 Showing the Total Long Term Loan

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

I Total
Outstanding
under Loans 3587897006.50 3917383635.69 3503421946.06 3428920839.13 3381350824.16
and
Advances
II Asset
Classification
1) Standard 3211740094 3351519293 3109232038.06 3111134372 2688254754.31

2) Sub
Standard
(Overdue up 224055444 394170196.68 171840805 179303056 388369635.35
to 3 years )
3) Doubtful
overdues - - - - -
i) 3 to 4 years
Secured 47491266 97960761 98214309 46778767 182458155
ii) 3 to 4
years 162539 3734985 20738795 5866587.50 11869896
Unsecured

iii) 4 to 6
years 50482390 52896443 42225620 43978469.63 52872681
Secured
iv) 4 to 6
years 4530243 901630 1296391 0 3046050.50
Unsecured

v) Above 6
years 44392924 12323278 55001986 30799071 44498597
Secured

vi) Above 6
years 5042106 3877049 4872002 11060516 9981055
Unsecured

4) Loss
Assets 0 0 0 0 0
Total NPA 376156912 565864342.68 394189908 317786467.13 693096069.85

Percentage 10.48 14.44 11.25 9.26 20.4

85
 Chart 5.1.6

Showing the percentage of NPA in Long Term Loan

NPA PERCENTAGE
25

20.4
20

14.44
Percentage

15

11.25
10.48
10 9.26

0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Year

INTERPRETATION

The figure shows that NPA for the year 2012-2013 was 10.48%and increased with
3.96% and reached to 14.44% in 2013-2014.The highest NPA for long term loans is
in the year 2016-2017.The NPA for the year 2014-2015 was 11.25%and decreases
with 1.99% and reached 9.26%.

86
 5.2 ANALYSIS OF FIVE TYPES OF LOANS

Table 5.2.1 Showing the Total Loans in the year 2012-2013

STSAO STNSAO OD/CC Medium Term Long Term Total

I Total
Outstanding
under Loans 6397644543 1704969114.70 2522645817.08 8812738604.81 3587897006.50 23025895086.09
and
Advances
II Asset
Classification
1) Standard 5943999821 1604840186.70 1303379451.08 7328717013.81 3211740094 19392676567.09

2) Sub
Standard 445294951 18299851 374524147 1049413738 224055444 2111588131
(Overdue up
to 3 years )
3) Doubtful
overdues - - - - - 0
i) 3 to 4 years
Secured 2567052 1376924 115227945 79991816 47491266 246655003
ii) 3 to 4
years 0 9702396 6042727 12138733 162539 28046395
Unsecured
iii) 4 to 6
years 2924321 11367880 577109479 68308039 50482390 710192109
Secured
iv) 4 to 6
years 0 30670505 3195394 27008193 4530243 65404335
Unsecured
v) Above 6
years 2791575 758733 110386567 84347417 44392924 242677216
Secured
vi) Above 6
years 66823 27952639 32780107 80789435 5042106 146631110
Unsecured
4) Loss
Assets 0 0 0 82024220 0 82024220
Total NPA 453644722 100128928 1219266366 1484021591 376156912 3633218519

Percentage 7.09 5.87 48.33 16.83 10.48 16

87
 Chart 5.2.1
Showing the Percentage of NPA in the year 2012-2013

PERCENTAGE
60

50 48.33
Percentage

40

30

20 16.83 16
10.48
10 7.09 5.87

0
ST SAO ST NSAO OD/CC MEDIUM LONG TERM TOTAL
TERM LENDING
Loans

INTERPRETATION

The figure shows that NPA is very high for overdrafts/cash credits in the year 2012-
2013 with 48.33%. The lowest NPA is for non-seasonal agricultural operations for the
year and is about 5.87%.The NPA for long term loan is 10.48% and NPA for the
medium term loan is 16.83%.NPA for total lending is 16% and for seasonal
agricultural loan is 7.09%.

88
 Table 5.2.2 Showing the Total loans in the year 2013-2014

STSAO STNSAO OD/CC Medium Term Long Term Total

I Total
Outstanding
under Loans 6768529436 1536758448.31 2369074509.75 11278882315.32 3917383635.69 25870628345.07
and
Advances
II Asset
Classification
1) Standard 6240062847 1456128259.31 1638074021.34 9378330650.36 3351519293 22064115071.02
2) Sub
Standard 524400294 10811655 79438958.99 1372409355.76 394170196.68 2381230160.43
(Overdue up
to 3 years )
3) Doubtful
overdues - - - - - 0
i) 3 to 4 years
Secured 0 445572 115825580 167952006 97960761 382183919
ii) 3 to 4
years 47675 37504842 438916 110176475 3734985 151902893.95
Unsecured
iii) 4 to 6
years 0 91994 314686638 64509683 52896443 432184758.55
Secured
iv) 4 to 6
years 0 10491181 3824612 14232967 901630 29450390
Unsecured
v) Above 6
years 2192052 0 71108676.92 34332374 12323278 119956380.92
Secured
vi) Above 6
years 1826568 21284945 145677105.95 50384281 3877049 223049948.95
Unsecured
4) Loss
Assets 0 0 0 86554522.25 0 86554522.25
Total NPA 528466589 80630189 731000488.41 1900551664.96 565864342.68 3806513274.05

Percentage 7.80 5.24 30.85 16.85 14.44 14.71

89
 Chart 5.2.2
Showing the Percentage of NPA in the year 2013-2014

PERCENTAGE
35
30.85
30
25
Percentage

20
16.85 14.71
14.44
15
10 7.8
5.24
5
0
ST SAO ST NSAO OD/CC MEDIUM LONG TERM TOTAL
TERM LENDING
Loans

INTERPRETATION

The figure shows that NPA is very high for overdrafts/cash credits in the year 2013-
2014 with 30.85%. Medium term loan is also high with 16.85%. NPA for long term
loan is 14.44% and total lending is 14.71%.NPA is low for non-seasonal agricultural
operations. The NPA for seasonal agricultural loan is 7.8%.

90
 Table 5.2.3 Showing the Total Loans in the year 2014-2015

STSAO STNSAO OD/CC Medium Term Long Term Total

I Total
Outstanding
under Loans 5950219155 1443525041 2982031519.62 13067732358.44 3503421946.06 26946930020.63
and
Advances
II Asset
Classification
1) Standard 5586590286 1300843977.51 1882653152.62 11376993308.44 3109232038.06 23256312762.63

2) Sub
Standard 348613020 9526742 489605610 81571541 171840805 1835301718
(Overdue up
to 3 years )
3) Doubtful
overdues - - - - - 0
i) 3 to 4 years
Secured 0 752038 2234148 285680747 98214309 386881242
ii) 3 to 4
years 11342673 57952002 8051181 133254939 20738795 231339590
Unsecured
iii) 4 to 6
years 0 34024 584534 62605757 42225620 105449935
Secured
iv) 4 to 6
years 0 28370231 141666435 40562169 1296391 211895226
Unsecured
v) Above 6
years 3336512 4461000 82236280 59747018 55001986 204782796
Secured
vi) Above 6
years 336664 41585027 375000179 113059872 4872002 534853744
Unsecured
4) Loss
Assets 0 0 0 180113007 0 180113007
Total NPA 363628869 142681064 1099378367 1690739050 394189908 3690617258

Percentage 6.11 9.88 36.86 12.93 11.25 13.72

91
 Chart 5.2.3
Showing the Percentage of NPA in the year 2014-2015

PERCENTAGE
40
36.86
35
30
Percentage

25
20
12.93 13.72
15 11.25
9.88
10
6.11
5
0
ST SAO ST NSAO OD/CC MEDIUM LONG TERM TOTAL
TERM LENDING
Loans

INTERPRETATION

The figure shows that NPA is very high for overdrafts/cash credits in the year 2014-
2015 with 36.86%.NPA is very less for seasonal agricultural loan with 6.11%. The
NPA for medium term loan is 12.93% and long term loan is 11.25%.Total lending for
the year 2014-2015 is 13.72%.The NPA for non-seasonal agricultural operations is
about 9.88%.

92
 Table 5.2.4 Showing the Total Loans in the year 2015-2016

STSAO STNSAO OD/CC Medium Term Long Term Total

I Total
Outstanding
under Loans 5288558690.19 117776154.18 3468835706.61 14075680085.93 3428920839.13 27439756870.04
and
Advances
II Asset
Classification
1) Standard 5002114497.19 1032533276 2623618771.55 11757019954.32 3111134372 23526420871.46
2) Sub
Standard 281518779 8030883 45706243.31 1679143073.03 179303056 2193702034.34
(Overdue up
to 3 years )
3) Doubtful
overdues - - - - - -
i) 3 to 4 years
Secured 0 223613 0 94847269.97 46778767 141843649.97
ii) 3 to 4
years 0 34782713 2606852 110226448 5866587.50 153482600.50
Unsecured
iii) 4 to 6
years 0 0 7354937.53 29912205 43978469.63 81245612.16
Secured
iv) 4 to 6
years 0 17009075 8447732.45 16246857 0 41703664.45
Unsecured
v) Above 6
years 4588750 0 34107022.20 25395810 30799071 94890653.20
Secured
vi) Above 6
years 336664 85181987.78 746994147.57 173534988 11060516 1017108303.35
Unsecured
4) Loss
Assets 0 0 0 189353480.61 0 189353480.61
Total NPA 286444193 145228271.78 845216935.06 2318660131.61 317786467.13 3913335998.58

Percentage 5.41 12.33 24.36 16.47 9.26 14.26

93
 Chart 5.2.4
Showing the Percentage of NPA in the year 2015-2016

PERCENTAGE
30
24.36
25
Percentage

20
16.47
14.26
15 12.33
9.26
10
5.41
5

0
ST SAO ST NSAO OD/CC MEDIUM LONG TERM TOTAL
TERM LENDING
Loans

INTERPRETATION

The figure shows that NPA is very high for overdrafts/cash credits in the year 2015-
2016 with 24.36%..Loss assets is only for the medium term loans and NPA is about
16.47%.NPA for long term is 9.26% and total lending is 14.26%.The NPA is very less
for seasonal agricultural operation with 5.41%,For non-seasonal agricultural
operations NPA was 12.33%.

94
 Table 5.2.5 Showing the Total Loans in the year 2016-2017

STSAO STNSAO OD/CC Medium Term Long Term Total

I Total
Outstanding
under Loans 4583968012 1380042888.50 3250399868.08 16259785726.59 3381350824.16 28855547319.33
and
Advances
II Asset
Classification
1) Standard 4331775761 1235461011.40 2370663581.13 11072910543.92 2688254754.31 21699065651.76

2) Sub
Standard
(Overdue up 232543919 10170065 48049009.25 3312972335.22 388369635.35 3992104963.82
to 3 years )
3) Doubtful
overdues - - - - - 0
i) 3 to 4 years
Secured 0 435081 1197115.75 612863190.37 182458155 796953542.12
ii) 3 to 4
years 8764788 29165605 3704651.20 281100639.50 11869896 334605579.70
Unsecured
iii) 4 to 6
years 2523889 7181 1511962.50 145021255 52872681 201936968.50
Secured
iv) 4 to 6
years 0 19078348 32697189.09 35834897 3046050.50 90656484.59
Unsecured
v) Above 6
years 3931237 843972 62609664.27 68662902 44498597 180546372.27
Secured
vi) Above 6
years 4428418 81924639.10 729966694.89 534998576.45 9981055 1361299383.44
Unsecured
4) Loss
Assets 0 2956986 0 195421387.13 0 198378373.13
Total NPA 252192251 144581877 879736286.95 5186875182.67 693096069.85 7156481667.57

Percentage 5.50 10.47 27.06 31.9 20.4 24.8

95
 Chart 5.2.5
Showing the Percentage of NPA in the year 2016-2017

PERCENTAGE
35
31.9
30
27.06
24.8
25
Percentage

20.4
20

15
10.47
10
5.5
5

0
ST SAO ST NSAO OD/CC MEDIUM LONG TERM TOTAL
TERM LENDING
Loans

INTERPRETATION

The figure shows that NPA is very high for medium term loan and is of 31.9%.NPA
of seasonal agricultural loan is very less of 5.5%. The NPA for non-seasonal
agricultural operations is about 10.47%. NPA for overdrafts and cash credit is 27.06%
and long term loan is 20.4% .The NPA for total lending is 24.5%.

96
 5.3 ANALYSIS OF LOANS BETWEEN THE FINANACIAL
YEARS

Table 5.3.1 Comparison of loans between 2012-2013 & 2013-2014

Increase / Increase/
Particulars 2012-2013 2013-2014 Decrease in Decrease in
Amount Percentage

SAO 453644722 528466589 -74821867 -16.49

NSAO 100128928 80630189 19498739 19.47

OD/CC 1219266366 73100048841 71880782475 -58.95

MEDIUM
TERM 1484021591 1900551664.96 -416530074 -28.06

LONG TERM 376156912 565864342.68 -189707430.7 -50.4

TOTAL NPA 3633218519 76175561610 -72542343091 -19.96

INTERPRETATION

The figure shows that between the financial years 2012-2013 & 2013-2014 only non-
seasonal agricultural operations were decreased with 19.47%. The NPA for seasonal
agricultural loan increased with 16.49%, overdrafts and cash credits increases with
58.95%, medium term loan increases with 28.06%, long term loan increases with
50.4%.NPA had increased of about 19.96% between the financial years 2012-2013 &
2013-2014.

97
 Table 5.3.2 Comparative loans between 2013-2014 & 2014-2015

Increase / Increase/
Particulars 2013-2014 2014-2015 Decrease in Decrease in
Amount Percentage

SAO 528466589 363628869 164837720 31.19

NSAO 80630189 142681064 -62050875 -76.95

OD/CC 73100048841 1099378367 72000670474 98.49

MEDIUM
TERM 1900551664.96 1690739050 209812615 11.03

LONG TERM 565864342.68 394189908 171674434.7 30.33

TOTAL NPA 76175561630 3690617258 7248494437 95.15

INTERPRETATION

The figure shows that between the financial years 2013-2014 & 2014-2015 NPA has
increased only for non-seasonal agricultural operations with 76.95%. The NPA
decreased for seasonal agricultural operations about 31.19%. overdrafts and cash
credits decreased with 98.49%, medium term loan decreased with 11.03%, long term
loan decreased with 30.33%. Overall NPA had decreased with 95.15% between the
financial years 2013-2014 & 2014-2015.

98
 Table 5.3.3 Comparative loans between 2014-2015 & 2015-2016

Increase / Increase/
Particulars 2014-2015 2015-2016 Decrease in Decrease
Amount in
Percentage

SAO 363628869 286444193 77184676 21.22

NSAO 142681064 145228271.78 -2547207.78 -1.78

OD/CC 1099378367 845216935.06 254161431.9 23.11

MEDIUM
TERM 1690739050 2318660131.61 -627921081.6 -37.13%

LONG TERM 394189908 317786467.13 76403440.87 19.38

TOTAL NPA 3690617258 3913335999 -222718741 -6.03

INTERPRETATION

The figure shows that between the financial years 2014-2015 & 2015-2016 NPA has
increased for medium term loan with 37.13% and also for non-seasonal agricultural
operations with 1.78%. The NPA decreased for seasonal agricultural operations with
21.22%, overdrafts and cash credits with 23.11%, long term loan with 19.38%.
Overall NPA had increased with 6.03% between the financial year 2014-2015 &
2015-2016.

99
 Table 5.3.4 Comparative loans between 2015-2016 & 2016-2017

Increase / Increase/
Particulars 2015-2016 2016-2017 Decrease in Decrease in
Amount Percentage

SAO 286444193 252192251 34251942 11.95

NSAO 145228271.78 144581877.10 646394.68 0.44

OD/CC 845216935.06 879736286.95 -34519351.89 -4.08

MEDIUM
TERM 2318660131.61 5186875182.67 -2868215052 -1.23

LONG TERM 317786467.13 693096069.85 -375309602.7 -1.18

TOTAL NPA 3913335999 7156481668 -3243145669 -82.87

INTERPRETATION

The figure shows that between the financial years 2015-2016 & 2016-2017 NPA
decreased for seasonal agricultural loan with 11.95% and for non-seasonal
agricultural seasonal loan with 0.44%.The NPA increased for overdrafts and cash
credits with 4.08%,medium term loan with 1.23%,lomg term loan with 1.18%,Overall
NPA had increased between the financial years 2015-2016 & 2016-2017.

100
5.4 TREND ANALYSIS

The year 2013-2014 to fix as a base year and analyze all the loans with the
help of trend diagram.

Table 5.4.1 SHOWING THE TREND ANALYSIS OF SEASONAL

AGRICULTURAL OPERATIONS

Year 2013-2014 2012-2013 2014-2015 2015-2016 2016-2017

(Base year)

Total NPA 528466589 453644722 363628869 286444193 252192251

Percentage 100 85.84 68.82 54.20 47.72

Chart 5.4.1

PERCENTAGE
120
100
100 85.84

80 68.82
Percentage

54.2
60 47.72

40

20

0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Year

INTERPRETATION

The figure shows that highest NPA for seasonal agricultural loan for the year 2012-
2013 with 85.84% and the lowest NPA for the year 2016-2017 with 47.72% In the
year 2014-2015 NPA was 68.82% and for the year 2015-2016 with 54.2%

101
 Table 5.4.2 SHOWING THE TREND ANALYSIS OF NON -SEASONAL
AGRICULTURAL OPERATIONS

Year 2013-2014 2012-2013 2014-2015 2015-2016 2016-2017

(Base year)

Total NPA 80630189 100128928 142681064 145228271.78 144581877.10

Percentage 100 124.18 176.95 180.11 179.31

Chart 5.4.2

PERCENTAGE
200 176.95 180.11 179.31
180
160
140 124.18
Percentage

120 100
100
80
60
40
20
0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Year

INTERPRETATION

The figure shows that highest NPA for non-seasonal agricultural loan for the year
2015-2016 with 180.11% and the lowest NPA for the year 2012-2013 with 124.18%.
In the year 2014-2015 NPA was 176.95 and for the year 2016-2017 NPA was
179.31%.

102
 Table 5.4.3 SHOWING THE TREND ANALYSIS OF OVERDRAFTS/CASH
CREDITS

Year 2013-2014 2012-2013 2014-2015 2015-2016 2016-2017

(Bae year)

Total NPA 731000488.41 1219266366 1099378367 845216935.06 879736286.95

Percentage 100 166.79 150.39 115.62 120.34

Chart 5.4.3

PERCENTAGE
180
166.79
160
150.39
140
120 115.62 120.34
Percentage

100 100
80
60
40
20
0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Year

INTERPRETATION

The figure shows that highest NPA for overdrafts/cash credits for the year 2012-2013
with 166.79and the lowest NPA for the year 2015-2016 with 115.62% In the year
2014-2015 NPA was 150.39% and for the year 2016-2017 NPA was 120.34%.

103
 Table 5.4.4 SHOWING THE TREND ANALYSIS OF MEDIUM TERM LOANS

Year 2013-2014 2012-2013 2014-2015 2015-2016 2016-2017

(Base year)

Total NPA 1900551664.96 1484021591 1690739050 2318660131.61 5186875182.67

Percentage 100 78.08 88.96 121.99 272.91

Chart 5.4.4

PERCENTAGE
300 272.91

250

200
Percentage

150 121.99
100
88.96
100 78.08

50

0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Year

INTERPRETATION

The figure shows that highest NPA for medium term loan for the year 2016-2017with
272.91% and the lowest NPA for the year 2012-2013 with 78.08% In the year 2014-
2015 NPA was 88.96% and for the year 2015-2016 NPA was 121.99%.

104
 Table 5.4.5 SHOWING THE TREND ANALYSIS OF LONG TERM LOANS

Year 2013-2014 2012-2013 2014-2015 2015-2016 2016-2017

(Base year)

Total NPA 565864342.68 376156912 394189908 317786467.13 693096069.85

Percentage 100 66.47 69.66 56.15 122.48

Chart 5.4.5

PERCENTAGE
140
122.48
120
100
100
Percentage

80 66.47 69.66
56.15
60

40

20

0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Year

INTERPRETATION

The figure shows that highest NPA for long term loan for the year 2016-2017with
122.48%and the lowest NPA for the year 2015-2016 with 56.15% In the year 2014-
2015 NPA was 69.66% and for the year 2012-2013 NPA was 66.47%.

105
 CHAPTER -VI

FINDINGS ,CONCLUSION AND

SUGGESTIONS

106
6.1 FINDINGS

1. By comparing all the loans from the year 2012-2017 the highest NPA is for
medium term loans because there was a high loss asset.

2. By comparing all the loans from 2012-2017 the lowest NPA created by
Seasonal agricultural operation as the bank is more concentrating on Seasonal
agricultural operation. So these loans are making profit to the bank.

3. By comparing all the loans from the year 2012-2017 there was no loss asset
for SAO.

4. The highest percentage of NPA in Seasonal agricultural operation was 7.8% in

the year 2013-2014

5. The highest percentage of NPA in Non-Seasonal agricultural operation was

12.33% in the year 2015-2016

6. The highest percentage of NPA in Overdrafts/Cashcredits was 48.33% in the

year 2012-2013

7. The highest percentage of NPA in Medium term loan was31.9% in the year
2016-2017

8. The highest percentage of NPA in Long term loan was 20.4% in the year
2016-2017

9. The lowest percentage of NPA in Seasonal agricultural operation was 5.41%

in the year 2015-2016

10. The lowest percentage of NPA in Non-Seasonal agricultural operation was

5.24% in the year 2013-2014

11. The lowest percentage of NPA in Overdrafts/Cashcredits was 24.36% in the

year 2015-2016

12. The lowest percentage of NPA in Medium term loan is 12.93% in the
year2014-2015

107
13. The lowest percentage of NPA in Long term loan was 9.26% in the year 2015-
2016

14. From the trend analysis the financial year 2012-2013 shows the highest NPA
and 2016-2017shows the lowest NPA for Seasonal agricultural operation

15. From the trend analysis the financial year 2015-2016 shows the highest NPA
and 2012-2013shows the lowest NPA for Non-seasonal agricultural operations

16. From the trend analysis the financial year 2012-2013 shows the highest NPA
and 2015-2016 shows the lowest NPA for Overdraft/Cashcredit

17. From the trend analysis the financial year 2016-2017shows the highest NPA
and 2012-2013shows the lowest NPA for Medium Term loan.

18. From the trend analysis the financial year 2016-2017shows the highest NPA
and 2015-2016shows the lowest NPA for Long Term loan.

108
6.2 CONCLUSION

Co-operative banks play very important role in providing banking services to

common man in their area of co-operation. The co-operative banking sector plays an
important role in expanding rural economy as well as banking structure and its
services to the last man of the society. A small depositor or a small borrower feels
comfortable in dealing with the local staff of co –operative bank than to the staff of
nationalized banks and private sector banks. If co-operative banks go in liquidation
due to abnormal increase of NPA not only customers and staff members of that
particular co-operative bank will suffer but all other co-operative banks will also get a
major setback. Leading to severe damage to the reputation of entire co-operative
sector which is very important for the balance of economic development of our
country

Management of NPAs is an issue of relevance both in commercial as well as

co-operative banks. One important feature of Co-operative Banks is that they serve
the interest of the lower income and middle income group and hence the recovery of
debts pertains to management of debt from these classes. This is one reason why the
issue of NPAs in Co-operative banks is a bit different from other banks although
classification and provisioning norms are similar.

The classification of NPAs into sub-standard doubtful and loss assets have
been purposefully undertaken with a view to regulate and manage recovery. Banks
consistently put in efforts to manage their NPAs and reduce the requirement of
provisioning. The Recovery department plays a major role in the survival of
Thiruvananthapuram District Co-operative Bank. This department ensures the
collection of loans within specific time schedules. The Recovery department assigns
Recovery officers to monitor its functioning.

109
The NPA impact on the performance of the bank in which it reduces its interest
income, the net worth of the bank, demoralized the staff, which also restricts
recycling of fund and hinders the desirable yield. Looking to the situation of
banks it is desirable to take effective measures to reduce the NPAs as low as possible.
Not only reduction but up gradation of quality of such assets would also be desirable
for improvement Managing these Nonperforming assets is required in order to protect
the interest of shareholders, depositors as well as increase the credit worthiness of
bank. It is also advisable to increase the profitability by making the provision as well
as expansion plan. NPA should be reduced for sustaining the economic growth, to
increase the welfare of employees, to maintain reputation of the banks as well as to
create job opportunities for future generation

SUGGESTIONS

1. The bank must analyze the potential customers and identify the repaying
capacity of customers.

2. The bank should increase its activities in recovery of loans, so that the non-
performing assets will be decreased.

3. Introduce more effective methods to evaluate Repay Capacity of customers so

that NPAs can be reduced.

4. Advanced technology has to be utilized for the proper monitoring of principal

amount of loans and their interest to the respective customers.
5. To minimize the events of defaults that lead to non - performing assets
through formulating NPA management policies.

6. NPA should be reduced for sustaining the economic growth.

7. NPA should be reduced to increase the welfare of employees, to maintain
reputation of the banks as well as to create job opportunities for future
generation.

110
 BIBLIOGRAPHY

Books

1. Khan.M.Y Jain.P.K Management Accounting Tata McGraw Hill New Delhi

Third edition 2002
2. Maheshwari S.N (Dr.) Management accounting And Financial Control Sultan
Chand and sons thirteenth Edition 2002
3. Pandey, I. M. 2004. Financial Management, Vikas Publishing House Pvt. Ltd.,
New Delhi.

Reports

Annual Reports of Thiruvananthapuram District Co-operative Bank

2012-2013

2013-2014

2014-2015

2015-2016

2016-2017

Websites

www.thiruvananthapuram-dcb.com
www.rbi.org.in

111
ANNEXURE

112
 ASSET CLASSIFICATION AND PROVISIONING FOR THE YEAR

2012-2013

STSAO STNSAO OD/CC Medium Term Long Term Total

I Total
Outstanding
under Loans 6397644543 1704969114.70 2522645817.08 8812738604.81 3587897006.50 23025895086.09
and
Advances
II Asset
Classification
1) Standard 5943999821 1604840186.70 1303379451.08 7328717013.81 3211740094 19392676567.09

2) Sub
Standard 445294951 18299851
(Overdue up 374524147 1049413738 224055444 2111588131
to 3 years )
3) Doubtful
overdues - - - - - 0
i) 3 to 4 years
Secured 2567052 1376924 115227945 79991816 47491266 246655003
ii) 3 to 4
years 0 9702396 6042727 12138733 162539 28046395
Unsecured
iii) 4 to 6
years 2924321 11367880 577109479 68308039 50482390 710192109
Secured
iv) 4 to 6
years 0 30670505 3195394 27008193 4530243 65404335
Unsecured
v) Above 6
years 2791575 758733 110386567 84347417 44392924 242677216
Secured
vi) Above 6
years 66823 27952639 32780107 80789435 5042106 146631110
Unsecured
4) Loss
Assets 0 0 0 82024220 0 82024220
Total NPA 453644722 100128928 1219266366 1484021591 376156912 3633218519

113
 ASSET CLASSIFICATION AND PROVISIONING FOR THE YEAR

2013-2014

STSAO STNSAO OD/CC Medium Term Long Term Total

I Total
Outstanding
under Loans 6768529436 1536758448.31 2369074509.75 11278882315.32 3917383635.69 25870628345.07
and
Advances
II Asset
Classification
1) Standard 6240062847 1456128259.31 1638074021.34 9378330650.36 3351519293 22064115071.02

2) Sub
Standard 524400294 10811655
(Overdue up 79438958.99 1372409355.76 394170196.68 2381230160.43
to 3 years )
3) Doubtful
overdues - - - - - 0
i) 3 to 4 years
Secured 0 445572 115825580 167952006 97960761 382183919
ii) 3 to 4
years 47675 37504842 438916 110176475 3734985 151902893.95
Unsecured
iii) 4 to 6
years 0 91994 314686638 64509683 52896443 432184758.55
Secured
iv) 4 to 6
years 0 10491181 3824612 14232967 901630 29450390
Unsecured
v) Above 6
years 2192052 0 71108676.92 34332374 12323278 119956380.92
Secured
vi) Above 6
years 1826568 21284945 145677105.95 50384281 3877049 223049948.95
Unsecured
4) Loss
Assets 0 0 0 86554522.25 0 86554522.25
Total NPA 528466589 80630189 731000488.41 1900551664.96 565864342.68 3806513274.05

114
 ASSET CLASSIFICATION AND PROVISIONING FOR THE YEAR

2014-2015

STSAO STNSAO OD/CC Medium Term Long Term Total

I Total
Outstanding
under Loans 5950219155 1443525041 2982031519.62 13067732358.44 3503421946.06 26946930020.63
and
Advances
II Asset
Classification
1) Standard 5586590286 1300843977.51 1882653152.62 11376993308.44 3109232038.06 23256312762.63

2) Sub
Standard 348613020 9526742
(Overdue up 489605610 81571541 171840805 1835301718
to 3 years )
3) Doubtful
overdues - - - - - 0
i) 3 to 4 years
Secured 0 752038 2234148 285680747 98214309 386881242
ii) 3 to 4
years 11342673 57952002 8051181 133254939 20738795 231339590
Unsecured
iii) 4 to 6
years 0 34024 584534 62605757 42225620 105449935
Secured
iv) 4 to 6
years 0 28370231 141666435 40562169 1296391 211895226
Unsecured
v) Above 6
years 3336512 4461000 82236280 59747018 55001986 204782796
Secured
vi) Above 6
years 336664 41585027 375000179 113059872 4872002 534853744
Unsecured
4) Loss
Assets 0 0 0 180113007 0 180113007

Total NPA 363628869 142681064 1099378367 1690739050 394189908 3690617258

115
 ASSET CLASSIFICATION AND PROVISIONING FOR THE YEAR

2015-2016

STSAO STNSAO OD/CC Medium Term Long Term Total

I Total
Outstanding
under Loans 5288558690.19 117776154.18 3468835706.61 14075680085.93 3428920839.13 27439756870.04
and
Advances
II Asset
Classification
1) Standard 5002114497.19 1032533276 2623618771.55 11757019954.32 3111134372 23526420871.46
2) Sub
Standard 281518779 8030883
(Overdue up 45706243.31 1679143073.03 179303056 2193702034.34
to 3 years )
3) Doubtful
overdues - - - - - -
i) 3 to 4 years
Secured 0 223613 0 94847269.97 46778767 141843649.97
ii) 3 to 4
years 0 34782713 2606852 110226448 5866587.50 153482600.50
Unsecured
iii) 4 to 6
years 0 0 7354937.53 29912205 43978469.63 81245612.16
Secured
iv) 4 to 6
years 0 17009075 8447732.45 16246857 0 41703664.45
Unsecured
v) Above 6
years 4588750 0 34107022.20 25395810 30799071 94890653.20
Secured
vi) Above 6
years 336664 85181987.78 746994147.57 173534988 11060516 1017108303.35
Unsecured
4) Loss
Assets 0 0 0 189353480.61 0 189353480.61
Total NPA 286444193 145228271.78 845216935.06 2318660131.61 317786467.13 3913335998.58

116
 ASSET CLASSIFICATION AND PROVISIONING FOR THE YEAR
2016-2017

STSAO STNSAO OD/CC Medium Term Long Term Total

I Total
Outstanding
under Loans 4583968012 1380042888.50 3250399868.08 16259785726.59 3381350824.16 28855547319.33
and
Advances
II Asset
Classification
1) Standard 4331775761 1235461011.40 2370663581.13 11072910543.92 2688254754.31 21699065651.76

2) Sub
Standard
(Overdue up 232543919 10170065 48049009.25 3312972335.22 388369635.35 3992104963.82
to 3 years )
3) Doubtful
overdues - - - - - 0
i) 3 to 4 years
Secured 0 435081 1197115.75 612863190.37 182458155 796953542.12
ii) 3 to 4
years 8764788 29165605 3704651.20 281100639.50 11869896 334605579.70
Unsecured
iii) 4 to 6
years 2523889 7181 1511962.50 145021255 52872681 201936968.50
Secured
iv) 4 to 6
years 0 19078348 32697189.09 35834897 3046050.50 90656484.59
Unsecured
v) Above 6
years 3931237 843972 62609664.27 68662902 44498597 180546372.27
Secured
vi) Above 6
years 4428418 81924639.10 729966694.89 534998576.45 9981055 1361299383.44
Unsecured
4) Loss
Assets 0 2956986 0 195421387.13 0 198378373.13
Total NPA 252192251 144581877 879736286.95 5186875182.67 693096069.85 7156481667.57

117