SCHOOL OF MANAGEMENT STUDIES

HYDERABAD CENTRAL UNIVERSITY

SUMMER INTERNSHIP PROGRAM 16TH MAY - 9TH JULY ORISSA STATE COOPERATIVE BANK LTD BHUBANESWAR

ROLE OF NON PERFORMING ASSETS AND CREDIT RISK MANAGEMENT In Orissa State Cooperative Bank ltd

SUBMITTED BYANURADHA SAMAL 10MBMA36 SCHOOL OF MANAGEMENT STUDIES HYDERABAD CENTRAL UNIVERSITY

UNDER THE GUIDANCE OF PROF-MARY JESSICA (Internal Guide) DGM- P.K.BEHERA (External Guide)

HODS CERTIFICATE
This is to certify that Ms ANURADHA SAMAL, Roll No10MBMA36 of SCHOOL OF MANAGEMENT STUDIES has completed her project titled Role of Non Performing Assets and Credit Risk Management in special reference to Orissa State Cooperative Bank Ltd in partial fulfilment for the award of MBA program and has submitted the project report. To the best of my knowledge, this project work is original and is not any part of any earlier work by ANURADHA SAMAL or anybody else. This report has not been the basis for the award of any degree or diploma by any University or any other Institution.

DECLARATION
I, Ms ANURADHA SAMAL student of the School Of Management Studies, Hyderabad Central University , do hereby declare that the project report entitled Role of Non Performing Assets and Credit Risk ManagementA case study submitted to the school of management studies SMS as a partial fulfilment of the requirement for awarding of master of business administration degree is my own work and it has not been submitted to any other university or institution , nor published anywhere else earlier.

Anuradha Samal 10MAMB36, SMS,HCU

ACKNOWLEDGEMENT

I like this opportunity to thank Dr. Chetan Srivastava , Placement coordinator of SMS , HCU for having granted me the permission and providing me the support and motivation during the tenure of my MBA degree course and project work . My sincere thanks to my teacher and internal guide Mrs Mary Jessica , Faculty member MBA, SMS, HCU for her valuable support guidance and cooperation in making this project work a highly useful and knowledge based experience .I wish to extend my deep sense of gratitude to Mr P.K Behera, DGM of OSCB Ltd for granting permission to undergo this project. My sincere and profound thanks to Mr P.K.Behera for his valuable support, guidance and cooperation during this course of my project work.

Anuradha Samal 10MBMA36 SMS, HCU.

DEPOSIT MOBILISATION 1. Deposits During the year 2009-10, the Bank succeeded in increasing its deposit portfolio to Rs 3385.00 crore as against Rs 2310.22 crore at the end of the year 2008-09 registering a growth rate of 46.52% on the face of stiff competition from Commercial counterparts . i\It has computerised its operation including ATM and provided anywhere and anytime banking facility to provide customer services. DEPOSIT PACS/CCBs/OSCB Year PACS Total % Deposit growth CCB of Total %of Deposit growth OSCB Total % of Deposit growth

during the year 1999- 238.97 42 00 2000- 321.58 30 01 2001- 425.47 10 02 2002- 432.75 2 03 2003- 446.82 3 04 2004- 494.85 11 05 2005- 516.33 4 06 2006- 557.07 8 07 2007- 614.66 10.34 08 2008- 733.03 19.25 09 2009- 922.71 25.88 10 2126.8 951.33

during the year 24 560.06 731.27 874.82 886.12

during the year 34 31 20 1

1188.96 25 1406.85 18 1569.25 13 1761.25 12 1853.48 5 1955.75 6

1026.01 16 1078.32 5 1213.16 12

1295.86 7 1566.27 20.86 2310.22 47.51 3385 46.52

2437.00 13.93 2949.51 21.03 3693.93 25.24

DEPOSIT POSITION OF OSCB FOR LAST 3 YEARS (in crores)

Year

Total Deposit

Amount of increase over previous year

% of growth

2007-08 2008-09 2009-10

1566.26 2310.22 3385.00

270.40 743.95 1074.78

20.86% 47.51% 46.52%

SOURCES OF DEPOSIT OF OSC BANK FROM 2007-08 TO 2009-10(in crores) SOURCE 2007-08 Amount CCB Other Coop Individual 522.37 Total 33% 488.82 21% 633.32 18.72 1566.26 100% 2310.22 100% 3385.00 100% 823.69 220.20 % of deposit 53% 14% 292.48 2008-09 Amount % of deposit 1528.91 66% 13% 373.19 2009-10 Amount % of deposit 2378.28 70.26% 11.02%

Market share of cooperative banks/commercial banks in deposit mobilisation (in crores)

Year 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Commercial banks Coop. Banks 6190.69 7412.62 8979.5 9314.85 12653.12 14818.66 18689.18 20347.87 23359.86 27372.64 31966.97 41037.16 52272.25 67766.26 74495.75

370.09 500.24 617.95 710.63 945.05 1180.95 1423.73 1569.25 1761.25 1863.49 1877.95 2126.8 2422.06 2914.3 3652.62

Total Deposit Share of Coop BanksShare of Comm Banks 6560.78 6% 94% 7912.86 6% 94% 9597.45 6% 94% 10025.48 7% 93% 13598.17 7% 93% 15999.61 7% 93% 20112.91 7% 93% 21917.12 7% 93% 25121.11 7% 93% 29226.13 6% 94% 33844.92 5.50% 94.50% 43163.96 4.90% 95.10% 54694.31 4.60% 95.40% 70680.56 4.13% 95.87% 78148.37 4.67% 95.33%

BORROWINGS In order to meet the resorces gap between the demand and its own resources , the bank continued to borrow from RBI/NABARD/NCDC and State Government .During the year 2009-10,the bank borrowed Rs 500.00 crores from NCDC for the purpose of meeting higher credit needs under Agricultural sector.The total borrowing outstanding from all sources amounted to Rs 2235.86 crore as on 31st March,2010 as against Rs 1722.73 crore as on the corresponding date of the previous year . The borrowings formed 36% of the working capital on 31.03.2009. Borrowings Year Total amount borrowed Increased rate Growth rate over previous

year 2005-06 2006-07 2007-08 2008-09 2009-10 95434.17 125141.37 166593.25 172273.10 223586.54 26282.99 29707.20 41451.88 5679.85 51313.44 38% 24% 33% 3% 30%

Sector wise Borrowings from NABARD .RBI,State Government and NCDC during last three years Particulars (borrowings from NABARD) ST SAO Short Term(SAO) Short Term(OPP) ST/DTP Total ST(SAO) ST Handloom CCB for Mktg and production of cloth Demand loan from NABARD Total ST Borrowing from NABARD 88780.69 100542.62 125000.00 8393.69 3500.00 582.62 582.62 63313.72 1422.01 15068.65 79804.38 80517.04 1967.96 13975.00 96460.00 100360.00 2140.00 22500.00 125000.00 2007-08 2008-09 2009-10

MTC/RMTC MT Farm Sector MT Non Farm LT Farm Sector LT Non Farm Sector Total NABARD Borrowing RBI Demand Loan Loan from State Govt including World Bank assistance Loan from NCDC/SIDBI/Other inst Grand Total Short Term Borrowings:

18444.27 1634.25 7147.92 1289.01 19204.32 2160.41 8189.43 1477.03 24849.70 2739.35 11875.46 2493.13 31431.52

136500.46 137219.19 173539.46

92.79

53.91

47.08

30000.00

35000.00

50000.00

166593.25 172273.10 223586.54

NABARD continued to be the main refinancing agency of the bank during the year 2009-10 and the total borrowing outstanding from them under Short Term stood at Rs 1250.00 crore constituting 72% of total borrowings of Rs 1735.39 crore from NABARD for various purposes. NABARD Sanctioned ST(SAO) credit limit of Rs 125000.00 lakh in favour of all 17 Central Cooperative Banks for the year 2009-10 for financing crop loan.

All the dues were cleared off in that year . INVESTMENT AND FUNDS MANAGEMENT Investments Comparative position of bank during last three years

Type of investment Investment in Central/ State Government securities Other Trustee Securities Shares in Coop instution Other investment Total Total interest yield on investment during the year

2007-08 53690.13

2008-09 60351.84

2009-10 91505.29

2684.00 13.20 86846.68 143234.01 6224.06

2304.00 13.10 166461.42 229130.3 13689.51

1204.00 13.10 236643.42 329365.82 18251.23

Comparative Growth Rate of Investments

Year 2005-06 2006-07 2007-08 2008-09 2009-10

Amount 71145.28 78598.88 143234.01 229130.36 329365.82

Growth over previous year 2950.17 7453.60 64635.13 85896.35 100235.46

Growth rate 4.33% 10.47% 82.23% 59.97% 43.75%