A

ON

(KORAPUT CENTRAL CO-OPERATIVE BANK LTD.) {In Partial Fulfillment Of The Requirement For The Award Of Master

Degree In Business Administration Of Biju Pattanaik University Of

Technology(BPUT), Rourkela}

Submitted By

Manoj Kumar Sahu

Registration No:-0706277026

Session:-2007-2009

Under the Guidance Of Mr. Biswajit Prasad chattoi Faculty, CENTRE FOR MANAGEMENT STUDIES,OEC BHUBANESWAR

Mr.Lakshmidhar Sukla Administrative Inspector Koraput Central Co-Operative Bank Ltd. Jeypore

CENTRE FOR MANAGEMENT STUDIES, OEC Nabajyoti Vihar, Nijigarh Kurki, Jatni-752050

ORISSA

I

DECLARATION

I do here by declare that the project entitled “FINANCEING

AND RECOVERY OF LOANS IN KORAPUT CENTRAL CO

OPERATIVE BANK” being submitted by me to Biju Pattnaik

University Of Technology for the partial fulfillment of

course Curriculum of M.B.A represents my own

contribution and effortand has not be submitted or

Published by me or any other in part or full to anywhere

before for the said agree.

DATE:- 15-Aug-2008

PLACE:-Bhubaneswar

Signature

II

ACKNOWLEDGEMENT

This is to acknowledgement that I Manoj Kumar sahu, a

bonafide student of Centre For Management Studies (CMS), OEC

wish to thank Koraput Central Co-Operative Bank Ltd. jeypore

for giving me a chance to do my summer project in such a

reputed organization.

I am grateful to Mr. Biswajit Prasad Chhatoi, faculity of Centre

For Management Studies (CMS), OEC for her assistance and

advice before and during the course of this project.

I am also grateful to Mr. Lakhmidhar Sukla Administrative

Inspector of Koraput Central Co-Operative Bank (KCCB.) for

spending his valuable time & invaluable guidance and

encouragement given by him during the course of this project.

-Manoj Kumar Sahu

III

PERFACE It is said that only theoretical knowledge about a subject is not

sufficient but when we go for practical aspect of that we can gain deep

knowledge about the subject matter and can able know what actually

happened. Because there is some difference between theory and practice.

My six week practical training in Koraput Central Co-Operative Bank Ltd.

Jeypore provided me with precisely such an experience, giving me the

opportunity to access the concept of theory against the drops of

practicality.

Though there is the scope to go through each and every function

such as Finance Marketing, Administration and Production but as a student

of Finance entire connection was made only on Financing and recovery

management of the bank with the help of past five years data.

The information is gathered through the help of the reports of the bank,

personnel discussion with the official and books& magazines. All the

information is interpreted in this project report in a simple form and in such

a manner so that even a layman can understand the Financing And

Recovery Management of Koraput Central Co-Operative Bank Ltd. Jeypore.

Aug. 15, 2008

-Manoj Kumar Sahu mk_2248667@yahoo.in

IV

CONTENTS

Chap. Pages 1. INTRODUCTION 5-9

About The Topic

About The Co-Operative Society

Need For The Study

Objective Of The study

Method Of The study

Limitations

2. KORAPUT CENTRAL CO-OPERATIVE BANK

-THE PROFILE 10-16

Origin & History

Branch Network

Membership

Share Capital

Management

Unique Achievements

Key personals

3. RESULTS OF THE STUDY 17-28

Financing Management Of K.C.C.B

Recovery Management Of K.C.C.B

4. DISCUSSION AND CONCLUSION 29-35

Analysis & Interpretation

Summary & Suggestions

BIBLIOGRAPHY XXXVII

ABBREVIATIONS XXXVIII

- 5 -

CHAPTER.1

INTRODUCTION

ABOUT THE TOPIC: The literal meaning of “loan “is lending of some money and return of which earn something

extra i.e. interest. The loan is given for a stipulated period and at a fixed rate of interest. In this

process there are two people the lender and borrower. The lender is the person who gives

the money and borrower is the person who takes money. After the stipulated period the lender

ask for return back his money with interest. So the lending of money is known as Financing”

ask for return back of money is known as “Recovery”. This whole process is not new to our

society. In the old days the Jamindars lends money to the farmers at a very high rate of

interest. And at the time of recovery when they are not able to pay their dues all the properties

are taken by the Jamindar in lieu of interest; as because at the time of lend ling the Jamindars

mortgage their property. But the technique applied by the Jamindars is illegal and the farmers

not happy with this. So the role of Jamindars in money lending is going on diminishing and

after independence they are totally disappeared. Now the role of Jamindars performed by Co-

Operative banks with a service motive rather not to earn profit.

So before move to our study we should aware about the co-operative society.

ABOUT THE CO-OPERATIVE SOCIETY:

The Co-operative movement introduced in our country by the British Government in 1904 was by

and large confined to organization of Co-operative society. The subsequent legislations have

facilitated organization of District Central Co-operative Banks and State Co-operative Banks to

support the lending activities of Primary Agricultural Co-operative Societies. In order to garner

resources, these organizations mobilized deposits from public. In spite of all these developments

the co-operative credit institutions are kept out of the preview of control by the Central Banking

Authority i.e., Reserve Bank of India until March 1966. Only after the amendment of Banking

Regulation Act 1965, some important provisions of these act has been extended to the Co-

operative banks engaged in mobilization of deposits of money from the public. In pursuance of the

relevant provisions of the act, the Reserve Bank of India assumed sweeping powers to control the

- 6 -

functionality of the Co-operative banks in respect of deposits, loans and advances. Thereafter,

circulars and directives have been issued by the Central Bank to streamline the functioning of

these banks in the interest of the stakeholders. Development financial institutions like the

erstwhile Agriculture Refinance and Development Corporation (ARDC) and the National Bank for

Agriculture and Rural Development (NABARD) were set up and delegated powers under the

Banking Regulation Act to issue circulars relating to the loans and advances. With the introduction

of financial sector reforms in 1991, interest on deposits and loans were deregulated and the

management of concerned banks has been asked to decide on the interest rates deposits and

loans basing on the market conditions. Pursuant to these reform measures, the Orissa State Co-

operative Banks has also issued certain instructions in respect of loans and advances,

supervision of District Central Co-operative Banks at District level and Primary Agricultural Co-

operative society at grass root level from time to time.

Where as Reserve Bank of India has been issuing directives for maintenance of deposit accounts

the NABARD has issued various circulars concerning their policy on reference for Short-term

Agriculture Loans, investment credit, financing of Handloom Weavers co-operative societies etc.

Orissa State Co-operative Bank has also issued a number of circulars on interest rates on loans,

deposits, supervisions of DCCB and PACs. The general structure of co-operative bank in India is

as follows,

RESEARVE BANK OF INDIA

NABARD

SHORT-TERM LONG-TERM

SCBs

SCARDNS

DCCBs

PCARDBs

PACs

No. of Outlets

- 7 -

NEED FOR A STUDY:

To understand about Co-operative Banking, Co-operative movement, co-operative role as well as

the meaning of Co-operative and it’s origin in India, need for such type of study is vital and

enormous which is followed by the following statements.

The Co-operative movement has an illustrious past In India. Farmer’s Co-operative, sugar and

cotton mills in the Co-operative sector have been around for a few decades. The movement was

started with a view to encouraging and empowering groups of individuals to form a society; which

could take care of the needs of its members. It was on the line that the concept of Co-operative

Banking was introduced to look after the financial and credit needs of the members of such Co-

operative societies. Today, the geographical landmass of the country is well connected by a large

number of Co-operative banks. Co-operative Banks are important constituents of the Indian

financial system, judging by the role assigned to them; the expectations they are supposed to fulfill,

their number and numbers of offices they are operate. 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 Urban areas also has increased in recent years mainly due to the sharp increase in the

number of primary Co-operative banks are in an immediate position between the institutions just

mentioned on the one hand and the Co-operative banks on the other.

The State Co-operative Banks co-ordinates and regulate the working of CCBs. They act as

custodians of surplus funds of the central Co-operative Banks and supplement them by attractive

deposits and by obtaining loans from the Reserve Bank of India. The Central Co-operative Banks

mobilize resources in the districts to finance their members and they also canalize funds from the

State Co-operative Banks (SCB) to Primary Credit Societies, the PACs at the village level from

the base of the Co-operative Banking. Although they are expected to be multi-purpose societies,

they mostly deal in credit. The slogan of Co-operative Banking may be “EACH FOR ALL AND ALL

FOR EACH”.

OBJECTIVES: The Financing and recovery of loans in a co-operative bank is a important task and a big

challenge to its members. So the research must summarize the objectives of this study in brief.

i. To understand about various financing schemes of Koraput Central Co-operative Banks

Ltd., Jeypore.

- 8 -

ii. To aware about the different income groups and earning capacity of the people

belonging to the undivided Koraput district covering area of 17 branches in the

iii. Rayagada, Malkanagiri, Nabarangapur, and the Koraput revenue district.

iv. To interact with the tribal and people bellow poverty line to understand them about the

financing scheme, subsidary an -other financial amenities provided from time to time.

v. To extend its microfinance operation through self-help group, continuous interaction

with people at grassroots level to make them adamant with group formation with desired

destination.

vi. To reach at every have not only to encourage the individuals to garner deposits but to

preserve the market share in banking industry.

vii. To comply with various recovery criteria of the bank.

viii. To motivate the loanee for early recovery by awaring the reward / punishment

associated with such recovery.

ix. Interaction with young unemployed to participate with the financial packages granted

not only for general business but also for small-scale industry purposes.

x. Interaction with the 17 branch heads, through “Branch Inspection Programme”, for early

recovery, action on defaulters / activation of execution preceding files by initiating

DRCS, Jeypore Division fro smooth regulation of authority.

xi. Arrangement of loan fairs for increasing trend not only in financing, but also in early

recovery.

xii. Finally to reduce the level of Non Performing Assets / maintain the necessary Cash

Reserve Ratio, initiation with branch heads to keep regular co-ordination with Secretary

KCCB Ltd. (Head Office), and DRCS, Department of Co-operation for Government

Administration.

METHODOLOGY:

Research Methodology is the systematic design, collection, and analysis of data and reporting

of information and finding relevant to a specific marketing situation facing the company. After

deciding upon the research objectives, next step was collection of data. There are two types of

sources available for collection of data i.e. Primary & Secondary source. In this research study

both types of data are used.

- 9 -

Primary data:

Bank Officials and members were personally visited and interviewed and the data was

collected with help of a Questionnaire. The questionnaires were so designed so as to contain

appropriate number of question and to satisfy all research objectives. The questionnaire

contained both open-ended and close-ended questions. Special care was taken to ensure that

question were simple. So personnel interview method was adopted for data collection.

Secondary Data:

Secondary data was collected from various files, records, books, journals, and from other

printed materials supplied by the Bank during research study.(Refer:Bibilography)

LIMITATIONS: There are some difficulties faces by me during survey which cause main limitations for

my research study. The limitations are as follows,

1) Absence of some branch heads during inspection programme, caused difficulties in

getting proper data.

2) Nepotism of Bank Official to become pragmatic in maintaining their day-to-day

obligation which leads in data insufficiency for the preparation of the project.

3) During conduction of SHG programme, people hesitated to communicate their motives

in a precise manner.

4) We did not get sufficient time to visit all the branches of KCCB Ltd. Because lack of

time.

5) Only two months is not sufficient to get knowledge on every aspect of Co-operative

societies.

6) Overly the lack of time of Bank officials also creates some limitations on preparing the

project.

- 10 -

CHAPTER.2

KORAPUT CENTRAL CO-OPERATIVE BANK

-THE PROFILE

ORIGIN & HISTORY: The Koraput Central Co-Operative Bank Ltd. Jeypore Came into the existence in the year

1950 and started it’s functioning w.e.f march 1950 and completed 58 years of service to the

people of undivided Koraput district as central co-operative credit agencies for S.T co-op credit

structure. The bank bears the Registration No.K-15 dated 15/03/1950.The area of operation of

the Bank is confined to four Revenue district namely Koraput, Nabarangapur, Rayageda and

Malk-angeri, in the state with the sole motive of catering to the needs of the small and marginal

Farmers for their overall socio-economic development. It also undertake to fulfill the needs of

rural artisian,land less labor as well as needy person with an aim to cause of co-operation.

BRANCH NETWORK:- The bank having 17 branches at various places covering 54 lamps and 1 MPCS (at Rayagada)

under undivded Koraput district. The name of the CCBs and number of lamps/Mini banks cove-

ered by each branch is given below,

SL. NO.

Name of The Dist./Branch No. Of LAMPS/

Societies

No. Of Mini Banks Under the Societies

Remarks/Defunct Closed

(A) KORAPUT DISTRICT:

1 Sadar Branch,Jeypore 4 3 -

2 Main Branch,Jeypore - - -

3 Mahila Branch,Jeypore - - -

4 Evening Branch,Jeypore - - -

5 Borigumma Branch 3 2 1

6 Koraput Branch 4 2 -

7 Semiliguda Branch 5 4 1

- 11 -

8 Laxmipur Branch 4 3 1

Total: 20 14 3

(B) NABARAGGPUR DISTRICT

9 Nabarangpur Branch 4 2 -

10 Papadahandi Branch 4 2 -

11 Umerekote Branch 5 5 -

Total: 13 9 -

(C) RAYAGADA DISTRICT:

12 Ryagada Branch 6 3 -

13 Muniguda Branch 4 1 1

14 Gunupur Branch 4 4 -

Total: 14 8 1

(D) MALKANGRERI DIST:

15 Malkangiri Branch 3 3 -

16 Balimela Branch 3 3 -

17 M V 79 Branch 2 2 -

Total: 8 8 -

Grand Total(A+B+C+D) 55 39 4

{Table No. 2.1}

MEMBERSHIP:- The membership position of the bank which was stood at 3554 as on 31/03/2003 has been

increased to 7073 by 31/03/2007. The growth in membership is tabulated as follows, Year Government Societies Individuals Total % Of Growth Over

Previous Year

2002-03 1 207 3346 3554 18.51%

2003-04 1 205 4959 5165 45.53%

2004-05 1 207 5544 5752 11.37%

2005-06 1 211 6456 6668 15.93%

2006-07 1 213 7049 7263 8.92%

2007-08

(31.12.07)

1 213 7537 7751 6.72%

{Table No. 2.2}

- 12 -

SHARE CAPITAL:- The paid up share capital of the bank as on 31/03/2007 gone up to Rs.1574.20 lakhs from

Rs.1441.96 of corresponding period of last year. The growth over last year records 9.17%.The

Shares of the co-operative bank is not issued to general public rather the loonies are only the

Share holders of the bank.

MANAGEMENT:- As per provision u/s28,clause 2 ,sub clause (1)and u/s 31 of OCS Act 1962, the management

of the bank shall rest with a committee consisting of directors out of which 15 shall be elected

from different constitute and Deputy Registrar Of CO-Operative Societies Jeypore has been

nominated by Registrar of Co-Op societies Orissa, Bhubaneswar vide letter No.5194 dated

27/02/2008 as government representative .The following persons were elected to the

committee of management of the bank.

1. Smt. Indira Nanda -President 2. Sri Hemant Kumar Nayak -Vice-President

3. Sri Ramakanta Raul - Member

4. Sri Binod Chandra Patra - Member

5. Sri Jhadeswar Khadanga - Member

6. Sri Hemant Kumar Sadangi - Member

7. Sri Arun Kumar Bhattamishara - Member

8. Smt. Bijuli Patra -Member

9.Smt. Ritarani Gouda - Member

10.Smt. Basanti Harijan - Member

11. Smt. Malati Majhi - Member

12 Sri Jogendra Swain - Member

13.Sri B.Tripathi - Member

14.Sri Raj Kishore Nayak - Member

15. SriJadu Gorada - Member

16 Deputy Registrar of Co-Op society, Jeypore. -Member

UNIQUE ACHIVEMENTS:-

The main objective of the bank is to mobilize deposits and to provide credit support to its

affiliated societies inclusive of individuals through KCC, SHG, SGSY and other government

sponsored programme for development of Agriculture, Allied to Agriculture, Non-agriculture

- 13 -

sector. The detail achievement and working result of the bank under various important

parameters for last some year is given as follows,

1. DAP/M.O.U. FOR LAST 3YEARS:

(Rs.In Lakhs)

{Table No. 2.3}

2. Deposit Position Of The Bank:- The deposit position of the bank, which was stood at

Rs.7624.49 Lakhs as on 31.03.2002, has been increased to Rs.12801.67 by 31.03.2007. The

District wise and year wise position of deposit and its growth rate is given below for last five

year for perusal,

(Rs In Lakhs.)

Year District Wise Position Grand

Total

% Of

Growth Koraput Nabarangapur Rayagada Malkangiri

sl

no

.

Particulers 2004-05 2005-06 2006-07

Target Achieve

ment

% Target Achiev

ement

% Target Achieve

ment

%

LIABILITY

1 Own Fund 2791.6 3037.1 108.7 3210.37 3431.1 106.8 3491.9 3896.1 111.5

2 Deposits 10440.0 10763.6 103.1 12006.0 12515.8 104.2 13806.9 12801.5 92.7

3 Borrowing 6612.0 6211.3 93.9 7273.2 7788.3 107.8 8145.9 8371.1 102.7

4 Other Liability 1371.3 1957.8 142.7 1907.6 1771.2 90.8 2612.4 2090.7 80.0

Total: 21215.0 21969.8 103.5 24397.2 25506.5 104.5 28056.8 27159.5 96.8

ASSETS

1 Cash/Bank 600.1 1412.6 235.3 660.2 1027.5 155.6 693.2 1452.9 209.5

2 Advances 12528.0 12203.1 97.4 14407.2 15062.7 104.5 16568.2 17542.3 105.8

3 Investment 5800.0 6382.4 110.1 6670.0 7413.5 111. 7670.5 5956.8 77.6

4 Other Assets 2286.9 1971.6 86.2 2659.8 2002.75 75.3 3124.8 2207.5 70.6

Total: 21215.0 21969.8 103.5 24397.2 25506.5 104.5 28056.8 27159.5 96.8

- 14 -

2002-03 3390.13 1420.19 1352.03 1462.14 7624.49 20.31%

2003-04 4335.79 1712.43 1703.31 1668.88 9420.41 23.55%

2004-05 4937.27 2034.70 2023.31 1768.36 10763.64 14.26%

2005-06 5679.48 2227.91 2303.03 2305.42 12515.84 16.28%

2006-07 5483.62 2264.60 2497.92 2625.42 12801.57 2.28%

2007-08

(31.12.07)

5190.54 2153.68 2232.33 2704.22 12280.77 -

{Table No. 2.4}

3. Maintenance Of C.R.R/S.L.R:-The bank has maintained CRR/SLR as per RBI norms

stipulated for the Bank. The year ending maintenance position of CRR/SLR is given below,

Year CRR To Be

Maintained

Actual

Maintained

Excess/

Deeficit

SLR To

Be

Maintained

Actually

Maintained

Excess/

Deficit

2002-03 232.86 576.58 (+)343.73 1940.53 3755.67 (+)1815.14

2003-04 247.27 388.31 (+)141.04 2060.57 4256.60 (+)2196.03

2004-05 285.35 1194.13 (+)908.78 2377.95 6205.97 (+)3828.02

2005-06 305.98 3027.15 (+)2721.77 2549.79 9280.28 (+)6730.49

2006-07 384.16 1452.93 (+)1068.77 3201.30 5632.35 (+)2431.05

{Table No. 2.5}

A. Cash Reserve Ratio

The position of liquidity maintained by the bank is shows clearly that the bank has

maintained the said reserve over and above the prescribed limit. This has resulted in income

loss to the bank. The bank should invest the excess amount beyond CRR requirement in other

profitable portfolios to earn more profit and to avoid idleness of borrowed capital.

B. Statutory Liquid Reserve

Maintenance of SLR also found in excess throughout the year. This is considered to be

the idleness of resources for which the profitability of the bank has affected substantially. But

the bank did not take any tangible action on this observation. For the interest of the bank, it is

- 15 -

once again advised to take immediate remedial measures for judicious development of

borrowed fund.

KEY PERSONALS:-

There are 33 officers including secretary working to implement the policies and programme

and also to carry out day-to-day transaction of the bank. Simultaneously administration,

supervision and follow up action are also being taken up by them. They are known as the key

personnel of the bank. Their duties and responsibilities are out lined there under,

A. Secretary:-

He is the Chief Executive of the Bank is fully responsible for day-to-day administration of the

bank subject to the control of president. The secretary is authorized to handle the balances

with other banks in joint signature of Manager (Accounts & Operation) / Manager (Loans &

Supervision) and the Branch Manager of the head office counter. At present, Sri James Barla

is acting as the secretary of the bank from 15-07-2008.

B. Assistant Secretary:-

In absence of the secretary, the Assistant Secretary will remain in charge of the secretary and

discharge his function. He is empowered to pass voucher up to Rs. 50.00 and vouchers

exceeding Rs. 50.00 will be passed through him by the secretary for final pass order. He will

be in charge of monitoring investment and collection of MTNA loan to salary earners societies.

At present, Sri Purna Chandra Panigrahi promoted to the rank of Assistant Secretary and is

working i.e. 02-12-2002 in the head office.

C. Manager (Administration & Establishments):-

He is the group officer of the Establishment Section. At present, Sri Bijaya Ch.Sahu is acting

as the Manager (Administration & Establishment) of the bank.

D. Manager (Loans & Supervision):-

He is the group officer of loans and statistics section. He is responsible for submission of

reports and returns and information to the concerned quarters. He is also to attend the

meetings of loan sub-committee meetings. At present, Sri Hrusikesh Biswal is holding this

post.

E. Manager (Accounts & Operation):-

He is the group officer of accounts section of head office along with custodian of double lock of

10 of iron chest, strong rooms, safe deposits locker,cheque, securities and debentures etc. He

- 16 -

is empowered to handle the amounts held in different bank up to 1 lakh with joint signature of

branch manager (Loans & Supervision). He is also to see smooth mobilization of funds of the

bank. At present, Sri Narasingh Moharana is holding this post.

F. Manager (Recovery Cell):-

He is the group officer of recovery cell. He is responsible for correspondence with the affairs of

LAMPS and other co-operative societies. At present, Sri Radhamohan Bisoye in the rank of

manager is holding this post.

G. Manager (Group – VI):-

He is the group officer of cadre section of the bank. He is to attend the minutes of the

appointment sub-committee meeting of the cadre scheme and its follow up action. At present,

Sri Bijay Chandra Sahu (Establishment & Administration) is in charge of this section.

H. Manager (Internal Audit Cell):-

He is the group officer of internal audit cell of the bank. He is to visit and inspect all branches

and head office at regular intervals. At present, Sri Kamal Charan in the grade of branch

manager is acting as manager of Internal Audit Cell.

- 17 -

CHAPTER.3

RESULTS OF THE STUDY

FINANCEING MANGEMENT OF KCCB:

Koraput Central Co-Operative Bank is advancing all types of agricultural & Non-agricultural

loans to its ultimate borrowers through various schemes.The required amount of financing is

not totally fulfilled by NABARD rather only 30% of total financing KCCB approved from

NABARD and another 30% is borrowed from OSCB and balance 40% met KCCB from its own

resources. If a person taken a loan of Rs100 then Rs60 contributed by NABARD & OSCB

Rs.40 by KCCB. The borrowing position of KCCB from OSCB for last 5 years is as follows.

BORROWINGS

Year Achievement % Of Growth Over Previous Year

2002-03 4670.25 9.23%

2003-04 5170.82 10.72%

2004-05 6211.32 20.12%

2005-06 7788.31 25.39%

2006-07 8371.14 7.48%

{Table No.3.1}

The rate of interest charged by NABARD to OSCB is 3.5% and from OSCB to KCCB it is 4%

and from KCCB to LAMPS is 5.5%. So the margin retained at the level of SCB varies from

scheme to scheme, ranging from 0.50% to 1%. In case of default in repayment of installment

the penal interest @ 2% is charged in addition to the normal rates. The interest on such loan is

payable by CCB to SCB at half yearly intervals ending with 30th September and 31stMarch. At

last the rate of interest charged to ultimate borrowers as fixed by Government is 7%. This

whole system of finance is known as confession finance. This system applicable to S.T (SAO)

loans. But expect this loan other loans financed by KCCB is fully (100%) refinance by

NABARD.

- 18 -

Ways Of Financing:- The KCCB may advance its loans in two ways; one way is through its LAMPS & another way is

by direct financing. As direct financing may have problems of staff constraint, cost effective risk

factor etc. For which major portion or almost all loans financed through LAMPS/PACS.In

present situation up to 20% of total financing is done through direct financing and forwhich no

difficulties faced by KCCB till now.

Objectives Of Financing:- There are mainly two objectives available with KCCB regarding financing of loans. One is the

main objective and the other one is diversified objective.

Main Objective: - The main objective of financing in KCCB is to provide short term

agriculture loan to the farmers for growing different crops which is shortly known as

ST(SAO)i.e. short term seasonal agricultural operation. Here the bank is service motive. The

loan may be sanctioned in cash component or in kind component. In former case loan amount

is paid in cash and in later case loan issued in kind i.e. fertilizers pesticides, seed cost, etc

should be issued. The crop loan is advanced as per scale of finance. The scale of finance per

acre for different crops grown in the area are to be fixed at the District level by the technical

committeformed for the purpose before the close of December each year. It is desirable to fix

scale of finance for Cash and kind component loan in multiple of hundreds. The periodicity of

lending and recovery of crop loan disbursed during Khariff and Rabi season at PACS/CCB

level are given as under,

Particulars

of the Crops Loaning Period Due date fixed for recovery of loan at

PACS level CCB level

Khariff 1st April to 30th Sept. 25th March 31st March

Rabi 1st October to 31st March 25th June 30th June

Sugar cane Whole year 28th February 31st March

{Table No.3.2}

Diversified Objective: - To expand its business bank is undertaking other loaning operationlike medium term and long term loan for farming and non farming sector. Here the main motive is to get sufficient margin of profit sustain its expenditure.

- 19 -

FINANCING Norms (Fixes By NABARD):- The NABARD has fixed some rules and regulations as regards to advancing of loans to KCCB.

The norms are as follows,

(1) Total borrowing from OSCB/NABARD should be utilized in financing of loans and not used

any other way. Along with that the bank may use 65%-70% of total deposit in financing loans.

(2) The recovery must be 60% of total financing. If the bank unable to recover this much then

refinancing from NABARD has stopped.

(3) The third norm is default free from higher financing agency.

(4) The ST (SAO) loan i.e. crop loan must be financed as per scale of finance and other then

crop loan all other loans should be financed as per unit cost of the product,.

Financing Schemes:-

The KCCB has applied many schemes for financing loans to its ultimate borrowers in both

farming and non-farming sectors. These schemes are as follows,

KISSAN CREDIT CARD

Credit plays a vital role for agricultural production. Many of the farmers are reluctant to avai

lcredit from societies due to various factors like non-availability of adequate credit in time and

cumbersome procedure for sanction and disbursement of loan. The Central Co-operative

Banks are also facing lot of difficulties for frequent sanction of limits every yearcoming in

batches from societies. In the above back drop, the Kissan Credit Card Scheme was

introduced in the state during 1998-99 Rabi Season to simplify the loaning procedure

considering its distinct advantages over the traditionally credit delivery system. The prime

objective of KCC scheme is to ensure timeliness and adequacy in credit delivery at the ground

level.Under the scheme, the PACS/LAMPS can provide better service to the farmers and

enhance their credit business enabling them to attain financial viability. The credit

management of farmers is left to their own wisdom and they are free to draw the credit at their

own discretion at the time of need. So this card is also known as “Any Time Operation Card”.

The year wise K.C.C issued position in Koraput Central Co-Operative Bank for last 5 year is as

follows,

- 20 -

{Table No.3.3}

KALINGA KISAN GOLD CARD

The OSCB has designed the unique Kalinga Kisan Gold Card scheme to recognize and rew-

ard farmers showing good repayment habit. A package of facilities are provided which includes

interest incentives on all types of loans, free accident insurance of Rs.25000/-, annual lottlery,

exposure visits, freedom to purchase fertilizer and pesticides from any retail outlets and

schematic lending on a priority basis, educational loan for the children of the card holders. The

KCCB has implemented this scheme w.e.f April -2001. The year wise position of Gold

Card/consumption loan of the bank for last 5 years is as follows,

{Table No.3.4}

Eligibility:-A farmer member of the PACS satisfying the following criteria shall be eligible to

get a KALINGA KISSAN GOLD CARD.

a) Member of the PACS for past 2 years.

b) Should have availed loans from the PACS at least for a period of 2 years.

c) Should not be a defaulter for the last 2 years.

SWAROJAGAR CREDIT CARD

In addition to introduction of KKCG to retain the existing clientele base among the farming

community, the bank has been attaching considerable importance for implementation of the

Year Target Achievement % Of Achievement

2002-03 120000 114300 95.25%

2003-04 142000 150895 106.6%

2004-05 190000 190000 100.81%

2005-06 210000 212426 101.16%

2006-07 240000 226799 94.50%

Year Gold Card Issued

Gold Card In Operation

Consumption Loan Issued

No. No. No. Amount

2002-03 1639 1588 480 15.39

2003-04 2325 2151 680 28.18

2004-05 4659 4333 1384 61.45

2005-06 6328 5768 1931 88.73

2006-07 8145 7301 2212 100.56

- 21 -

Swarojagar Credit Card scheme launched by the Union Government to provide hassle free

credit to the small artisans, weavers, small businessmen and those who depend upon service

sector for earning their livelihood. Under this scheme each individual get a loan of Rs.25000/-

only. The year wise position of Swarojagar Credit Card of the bank for last five years is as

follows,

Year Application

Received Sanctioned Loan Disbursed Of Which

Weavers

No. Amount No. Amount No. Amount No. Amount

2004-05 87 19.25 87 19.25 71 13.80 35 6.50

2005-06 423 103.80 423 103.80 423 103.80 - -

2006-2007 302 71.45 302 67.18 282 56.90 - -

2007-08

(31.12.2008)

132 30.30 132 25.05 106 23.80 - -

{Table No.3.5}

SELF HELP GROUPS

In Orissa, the SHG programme was mostly implemented by the nationalized banks and the

RRBs through NGOs till the year 2000. The participation of the DCCBs were almostinsignifi-

cant. The OSCB took the initiating by deputing one officer to study the functioning of SHGs

organized by the District Central Co-operative Banks in West Bengal in North 24 Praganaand

Hooghly Districts during the month of August, 2000. Basing on the study report, it was decided

to replicate the model of West Bengal in Orissa with objective of enlarging the borro-wing

membership of the PACS and to provide credit to the poorest of thepoor. Accordingly the

guidelines were issued for the organization and linking of theSelfHelp Group by the

DCCBs.The branch managers of District Central Co-operativeBanks may organize the Self

Help Groups on the basis of common economics status, homogeneity and common economic

interest. Selected Primary Agricultural Co-operative Societies (PACS) may also organize Self

Help Groups. Besides, the oral lessees and sharecroppers can organize Self Help Groups

exclusively for availing loans from DCCBs/PACS for seasonal agricultural operations. The

overdue of availing this loan facility is mentioned in the Master Circular on “Sanction of limit for

Seasonal Agricultural Operations”. In case of necessity, the DCCSs/ PACS may take the help

of Non-Government Organizations(NGOs),Extensions Officers of the Blocks and District

Development Manager of NABARD for mobilizing and organizing the groups. The group size

- 22 -

shall be limited to 20 with a minimum number of 5. Under no circumstances, the minimum and

maximum number of members should be divided.

Eligibility:-

The Self Help Groups shall be eligible to get credit support only after 6 months from the date

of organization and mobilization of savings on the basis of their ratings. After ascertaining the

eligibility on the basis of the ratings, the proportion of savings to credit may be decided, which

would vary from 1:1 to 1:4 depending on the assessment of the performance and need of the

group members.This proportion is to be decided by the DCCB branch by their own prudence

To start with, the financial support may be extended in the ratio 1:1 or 1:2, which would

subsequently increase to 1:4, depending on the performance. In case of Self Help Groups

organized by oral lessees/sharecroppers, the deposit credit ratio shall be 1:10. For this

purpose the savings mobilized by the group should be taken as base and not the amount

deposited in the PACS/DCCB branches. To illustrate, if an SHG has mobilized Rs.5,000/- as

deposit, lent Rs.3,000/- among its members and deposited the balance amount of Rs.2,000 in

the PAC /LAMPS/FSS or Branch of DCCB, the credit support will be considered on the basis

of Rs. 5,000/- and not on the basis of the amount of Rs2,000/- deposited by the group.

Purpose Of The Loan:-The group members should democratically decide the income generating economic activities peruse after availing credit support. At the initial stage, the officials of the PACS and DCCB branch may guide the group in the decision make process. But, under no circumstances, they should force the group members to carry on any specific activities. Repayment Period:- The DCCBs may decide the repayment period of loans advanced to the

groups subject to a minimum period of two years to a maximum period of ten years. The

groups may decide the repayment period of loans advanced to their members at the initial

stage, the repayment period from the members to the groups may be limited to a period of one

to two years.

- 23 -

RECOVERY MANAGEMENT OF KCCB:

The Short Term Co-operative Credit Structure in the state is playing a pivotal role in dispensing

rural credit for agriculture and allied activities. More than 70% of the total corp loan disbursed

in the State is being provided by the Co-Operative Credit Societies. Due to low level of

recovery, the health of many of the primary societies and CCBs is deteriorating and they are

finding it difficult to extend sufficient credit support to the farmers. The prime importance of

recycling of funds need not be over emphasized. To attain sustainable growth in credit

delivery, the recovery position should be at least 80% of the demand whereas it has remained

at the level of 50% to 55% due to varies factors like natural calamities, willful defaulters not

repaying in time and lack of adequate effort by the field machinery to recover the loans in time.

NABARD is gradually moving towards fixing the rate of interest on refinance basing on the

level of NPAs. In the above backdrop, the CCBs have to boost the recovery position and

reduce the level of NPA to maintain their eligibility for availing concessional financial support

from NABARD. The NPA position of the KCCB is as follows,

Year Total Loans & Advances Total N.P.A % To Loans Outstanding

2002-03 9413.23 1019.69 10.83%

2003-04 10413.08 1157.09 11.45%

2004-05 12203.15 1293.44 10.60%

2005-06 15062.70 1364.63 9.06%

2006-07 17542.31 1552.35 8.85%

{Table No.3.6}

The KCCB has adopted following strategies much ahead of the peak harvesting and marketing

season of crops to achieve better recovery performance.

STRATEGIES FOR RECOVERY

1. Preparation Of Demand List:- The society shall prepare a village wise demand list of all the borrowers. The list shall contain

the information of over dues at the beginning of the year i.e. 1st April; loans falling due for

repayment are subsequent months up to March. The total demand for the year should be

- 24 -

arrived at on basis of demand falling due in different months. The demand register shall be

prepared by 30th November by the Secretary of the society which shall be test checked by the

Supervisor in at least 10% cases.The list of defaulters shall be displayed in the notice board of

the society, gram panchayat and at conspicuous places in the village for information of the

borrowers. A copy of the list shall be supplied to the Area Directors and President of the

society to pursue with the defaulting members for repayment.

2. Service Of Demand Notice:-

The demand notice to members shall be prepared by the Secretary and service of the

notices on the members completed by 31st December. In case of KKGC and KKSC holders,

the demand notice shall be served by the Bank Supervisor. As regards other members, the

Secretary of the society shall personally have the notices and obtain the dated

acknowledgement of the borrowers on the reverse of the duplicate copy. In case the borrower

is absent from the village, the notice shall be served on his purpose or any adult member of

the family. In no case the demand notice shall be allowed to be served on the borrowers

through the Peon/Watchman of the society.

3. Fixation Of Target:-

Fortnightly target for recovery should be fixed for each society/branch month wise

starting from December onwards and communicated to all concerned. Normally the target for

recovery should be 15% of the demand by December, 20% in January 25% in February and

30% in March. The achievement against the target shall be monitored and reviewed every

month in branch level meetings of PACS and branch Managers meeting at the Head Office of

the CCBs. The shortfall in achievement during the month shall be added to the next month’s

target. Fortnightly report of recovery of loans shall be submitted by the CCBs to OSCB in the

prescribed format from January to March on the 3rd day of the succeeding fortnight to which it

relates.

4. Recovery Squard :-

A recovery squard for each branch shall be formed with 2 to 3 staff comprising an officer

from Head office, Field Officer of the branch who will attend recovery of loan and contact big

defaulters of Rs. 5,000.00/- and above. In case of shortage of staff, a recovery squard may be

formed to cover the loanees of 2 to 3 branches. The squard shall draw up programme in

advance to visit specific areas/society on a definite date. The achievement in recovery of loans

shall be reported to the Secretary of CCB on the subsequent day of visit. The squard shall be

giving more attention for recovery of NPA loan accounts. The loan accounts likely to become

- 25 -

NPA by end of the year shall be extracted by Dec. 3 and also pursued for recovery. The

recovery squard shall also assist in execution of E.P. cases in the area.

5. Display Of Default List:-

The names of top 20 defaulters shall be displayed prominently by painting in black color

on the wall in the branch/PACS premises. This should be updated twice a year i.e. in April and

October.

6. Recovery Camp:-

Recovery camps shall be organized at strategic places for a cluster of societies. The

detail schedule of holding such camps should be drawn up much in advance and

communicated to all concerned. The senior officers of Head Office shall attend those camps

unfailingly for which mobilization of the loanees should be done by the field staff of the

Society/branch at least 2 weeks prior to the date of the camp. The District Collector and other

senior officers like P.D., DRDA, DDA, DAO, DRCS, and BDO may be invited to attend such

camps. The non-official Directors and President of societies may also be associated in

recovery of loans. Other line department officers should also be invited to attend the recovery

camps. The CEO of CCBs shall attend at least 15 recovery camps in a month during the

recovery drive (January-March and May-June).

7. Supervise Of Field Movement:-

The CEOs/Senior Officers of CCB should contact surprise check on the movement of

the field staff and take exemplary against the erring employees. The secretary of PACS shall

display his tour programme on the notice board/wall of the society when leaving HQs.

8. Legal Action:-

All defaulted loan accounts of Rs. 2,000/- and above crop seasons shall be covered by

disputes. In case of direct lending by KCCB, all NPA accounts shall also be covered under

dispute. The dispute cases shall be prepared and filed by 31st August. The KCCB would

arrange for holding camps at the branch level for preparation and filing of dispute cases in

consultation with DRCS and Circle ARCS. In such camps the societies will attend the branch

with relevant records and after scrutiny by Branch/Department Officer, the dispute cases will

be filled before the appropriate authority in the camp itself. The decree copies already received

shall also be covered by E.P. cases in in those camps. All dispute and E.P. cases should be

routed through the branch managers to ensure that all required formalities are complied with

before the case is filed. RCS (O) in his letter No. 4641 dated 27-03-2003 has issued instruction

to the Circle ARCS to send a copy of the decree to concerned branch manager so as to enable

- 26 -

them to ensure filing of E.P. cases with in 15 days from the date of award of decree. The

Branch Manager should also keep close contact with the Principle Officer/Arbitrator/Sale

Officer for expeditious disposal of cases filed. The progress of disposal of dispute and E.P.

cases shall be reviewed in close coordination with the Divisional DRCS and Circles ARCS in

the monthly meetings. Dispute cases filed by the societies pending for more than three months

and E.P. cases more than one year should be identified and brought to the notice of concerned

ARCS and DRCs with copy to RCS, Orissa and Managing Director, OSCB. Similarly in direct

advance cases disputes pending for more than six months and E.P.S pending for more than

one year should be identified and reported to proper quarter.

INCENTIVE SCHEME FOR RECOVERY OF LOANS:-

The expansion credit depends on effective credit disbursal as also on its recovery. Whereas

mounting overdue in the Short Term Co-operative Credit structure in the state is one of the

major reasons attributable to no-viable functioning of many of the PACS/LAMPS despite

implementation of various loan and interest waiver schemes in the past, qualitative lending

coupled with sustainable recovery performance at PACS/LAMPS/FSS are the twin measures,

which would improve the situation. Keeping in view the above objective, the Short Term Credit

Structure, at the instance of GOI and NABARD, has introduced Kissan Credit Card scheme for

providing adequate and timely credit support to the farmers. Simultaneously, Orissa State Co-

operative Bank has also introduced innovative schemes like Kalinga Kissan Gold Card

providing a package of benefits to the borrowers to motivate them to remain default free and

repay their dues regularly. Considering overall recovery scenario, it is considered expedient to

introduce a suitable incentive scheme for the employees who are directly interacting with the

borrowers of PACS/LAMPS for recovery of loans. An incentive scheme linking the recovery

performance with the issue of KKGC and KKSC would ensure improved higher recovery on a

sustained basis apart from creating a conductive climate for recovery by rewarding timely

repayment of the good borrowers.

SHORT TITLE AND COMMENCEMENT:-

The scheme shall be called as “Incentive Scheme for Recovery of Co-operative Loan. ”The

scheme will be applicable to the PACS/branches of CCBs and cover the following employees.

However, the scheme will not be applicable to the PACS/LAMPS/FSS having annual demand

of less than Rs. 5.00/- lakhs.

i) Chief Executive of the PACS/LAMPS and Branch Managers of LAMPS.

- 27 -

ii) Employees of the PACS/LAMPS

iii) Administrative Inspectors/Supervisors of CCB

iv) Branch Managers of CCBs

v) Staff of DCCB/Co-operation Department functioning as Sale Officers.

Norms Of Incentive & Amount:-The amount eligible for incentive shall be determined on the

basis of the Gold Card / Silver Card issued by the Society up to the end of the year and its

percentage to the borrowing members of the preceding year as per the details bellow.

Gold Card (% of KKGC

holders to borrowing

members)

Silver Card**

(% of KKSC holders to borrowing members)

30% 40% 50% 60%

5.00% Amount of incentive (in Rupees)

3000.00 3500.00 4000.00 5000.00

7.50% 5000.00 5500.00 6000.00 7000.00

10.00% 6500.00 7000.00 7500.00 8000.00

15.00% 8500.00 9000.00 9500.00 10,000.00

{Table No.3.7}

** The silver card was eliminated from previous year i.e. 2006-07

Eligibility:- Only the following categories of societies/CCB branch shall be eligible for the

incentive. The amount of incentive shall be as per norms fixed above,

a) The annual demand of the society under principal shall not be less than Rs. 5.00/-

lakhs. (April-March)

b) The society/Branch of the CCB should have recovered and remitted minimum 60% of

principal and 70% of interest demand during the year.

c) The society/Branch of CCB should have been able to retain the Gold Card Holders not

less than 95% of those covered during the preceding year.

Sharing Of Incentive:- The incentive amount shall be shared by the Chief Executive of

theSCS and other staff at the rate of 70% and 30% respectively. If other staff is not engaged in

recovery of dues and increasing the coverage of Silver / Gold card holders, entire incentive

- 28 -

shall be awarded to the CEO of SCS. In case of more than one staff, the incentive shall be

equally shared among them. In case of LAMPS, the incentive shall be shared as under:

1. Managing Director of LAMPS 30% of the incentive

2. Branch Manager / branch I/c 40% of the incentive

3. Other employees engaged in recovery 30% of the incentive

In case there are no branches, the entire incentive shall be awarded to the staff of

LAMPS.

Special Award:- In addition to the above, it has been decided to award special incentive of

Rs. 15,000.00/- to the PACS/ LAMPS/ FSS which has recovered 80% of the principal and 90%

of the interest demand for the year as well as covered 15% and 60% of the borrowing

members of preceding year by issue of KKGC & KKSC respectively. The special award will be

presented to the eligible PACS in the State Level Krushak Samabesh.

DIFFICULTY IN RECOVERY

After allowing various schemes for recovery also due to following causes recovery is not up to

satisfaction level,

I. Natural calamities

II. Political Interference

III. Debt Waiver/Relief

IV. No Restriction against LAMPS

V. Absent Of Post Disbursement Supervision (due to staff shortage)

- 29 -

CHAPTER.4

DISCUSSION & CONCLUSION

-ANALYSIS AND INTERPRETATION -

Now all the necessary data available with us and by analyzing we need to make proper

interpretation. We should make analysis both financing and recovery position individually. So

lets starts with financing position

Loan Financing Position Analysis:-

The financing position of the bank can be analyzed from various point of view which are as follows,

Issue & Outstanding:- The loan issued position of the bank is for last five years and up to date is as follows ,

Year Achivement % of Growth Over Previous Year

2002-03 5612.99 -

2003-04 6942.29 23.68%

2004-05 9459.20 36.25%

2005-06 11174.04 24.48%

2006-07 13339.94 13.30%

2007-08

(31.12.07)

6438.47 -

{Table No. 4.1}

If we analyze the loan issued position of the bank for last five years then we will found that it

has increased gradually. In the year 2002-03 which was stood at Rs.5612.99 lakhs has been

increased to Rs.13339.94 lakhs by 31.03.2007 ,but the % increase is in a decreasing rate

from the year 2004-05 onwards. Against which the loans outstanding position of the bank is in

the same situation. It can easily traced from the under mentioned table,

Year Achievement % Of Growth Over previous Year

2002-03 9413.23 19.57%

2003-04 10103.08 7.33%

2004-05 12203.15 20.79%

2005-06 15062.70 23.43%

- 30 -

2006-07 17542.31 16.46%

2007-08

(31.12.07)

18870.90 7.57%

{Table No. 4.2}

The achievement is in an increased position but the growth rate is changing randomly. In all

together the loan issue and outstanding position of the bank is sound and at a satisfactory

level.

Kissan Credit Card:-

If analyzed the Kissan Credit Card issued position from last five year records (Page

No.17,Table No.3.3) then it maintain a very sound position from its year of implementation.

Again from last three years (except 2006-07)the achievement is more then 100% which is a

very good sign for the bank.

Khariff & Rabi Investment:- The investment on Khariff & Rabi loan during last 5 years is as follows, (Rs In Lakhs)

{Table No.4.3}

If we analyzed Khariff and Rabi loan issued position individually then in khariff loan

achievement against the target is more then 90% over all the year except in 2003-04 which

was only 84.52%. And in the year 2004-05 it was more then 100%. Again the Rabi loan issued

position is very sound as compared to khariff loan and in the last 2 years it has maintained

more then 100% achievement, but in the current year(2007-08) the achievement is as low as

60.60% only because of target fixed i.e. the target included shortfall in khariff-2007 target. In

all together the total Khariff & rabi Loan issue position of the bank has maintained more then

90% So the bank is, maintained a very sound position and able to meet its target.

Year KHARIFF RABI TOTAL

Target Achieve

ment

% Target Achieve

ment

% Target Achieve

ment

%

2002-03 2200.00 2033.20 92.42% 1900.00 1469.34 77.33% 4100.00 3502.54 85.43%

2003-04 2400.00 2028.42 84.52% 2000.00 2236.65 111.83% 4400.00 4265.07 96.93%

2004-05 2400.00 2766.81 115.3% 3000.00 2547.86 84.93% 5400.00 5314.67 98.41%

2005-06 4000.00 3826.19 95.65% 4000.00 4150.48 103.76% 8000.00 7976.67 99.70%

2006-07 4500.00 4391.56 97.59% 4308.00 4808.24 111.61% 8808.00 9199.80 104.45%

2007-08 5500.00 3700.77 67.29% 6300.00 2419.59 38.41% 10100.00 6120.36 60.60%

- 31 -

Kalinga Kissan Gold Card:-

If we analyzed Kaling Kissn Gold Card issued position from last 5 year records (Page No.18,

Table No.3.4) then we will found that the number of issue has going on increasing and it is a

good sign for the bank as because Gold card is issued to those person who has satisfied some

stipulated condition and one of which is “defaulted free” .So it indicates the no. of defaulter is

going on decreasing. But becoming a gold card holder is not so important rather maintaining

that position is more important. So if we calculate the card is in operation as against issue %

then on the very next year from its implementation it achieved highest percent and later on

also it able to maintained more then 90%. But in the last 2 years it goes down to below 90%.

Overly the card in operation position is sound and up to exception.

Loan To SHG:-

(Rs In Lakhs) Year Cumulative SHG Formed &

Deposit Tapped Credit Linkage Including Revolving Credit

No. Amount No. Amount.

2002-03 4344 124.85 1747 189.92

2003-04 6346 3130.29 2763 360.46

2004-05 6967 379.12 3923 532.71

2005-06 7666 437.61 4741 667.90

2006-07 8461 513.45 5237 780.71

2007-08(31.12.07) 9007 637.66 5472 835.16

{Table No.4.4}

If we analyze the loan to SHG position of the bank for last 5 years records from the above

table then we will found that the credit linkage as against the SHG formed and deposit tapped

is becoming sound i.e. in an increasing trend. So the loan issue position to SHG is up to a

satisfaction level.

Overly the loan financing position of the bank is sound and maintains a satisfaction level. For

which it get the certificate of “A” class bank.

Loans Recovery Position Analysis:- Bank Vrs. PACs:- The recovery position of the loan at the bank level during last 5 years is as follows, Year Demand Collection % Of collection

2002-03 8893.81 4013.60 45.13%

- 32 -

2003-04 11106.30 6082.69 54.77%

2004-05 12785.71 7308.94 57.16%

2005-06 14272.01 8796.16 61.65%

2006-07 17744.20 10749.98 60.585

2007-08(31.12.07) 17621.81 4929.54 27.97%

{Table No. 4.5}

If we analyze the recovery position of loan at the bank level from the above table then we will

found that the it is not so sound. The collection against demand has maintained between

50%to 60% only. But if we see it positively then we will found that the collection % going on

increasing year by year and try to maintained the recovery norms as fixed by NABARD. But in

the year 2007-08 the recovery % is very low i.e. only 27.97% as because there is a balance of

3 months and during those months only collection is more as compare to previous months. So

it may accept that the same level of recovery is maintained this year also.

PACs Vrs. Members:- The recovery position of loan at members level during last 5 years and up to date is as follows,

Year Demand Collection % Of Collection

2002-03 6063..77 3209.15 55.92%

2003-04 7431.02 4962.86 66.79%

2004-05 8058.47 5365.10 66.58%

2005-06 9108.80 7024.43 77.12%

2006-07 10960.70 8106.55 73.96%

2007-08(31.12.07) 12086.53 3845.60 31.82%

{Table NO. 4.6}

If we analyze the recovery position at members level from last 5 years records then we will

found that collection is 65% to 75% as against demand overall all the year except in 2002-

03.And in the year 2007-08 the collection is very low as because there is a balance of three

months and that 3 months is on-season for recovery. But here one more thing can be pointed

out that is recovery percent is more at member level as compare to bank level only because of

imbalance in recovery. How we can easily understand from the following example,

Suppose bank finance a loan of Rs.50,000 to PACs and the same financed by PACs its

members .But at the time of recovery only Rs.35000 has recovered. So collection is 70% at

members’ level. But at the time of recovery at bank level the PACs send onlyRs.30,000 and

balance Rs.5,000 utilized otherwise and recovery is only 60% at bank level.

- 33 -

So because of this imbalance only the collection is more at member level as compare to bank

Level which is misappropriation of money and now the bank is try to minimize this as per as

possible. So this is all about financing and recovery position of the Koraput Central Co-

Operative Bank. And by analysis it can be concluded that even though the financing position of

the bank is in a satisfactory level but further improvement is required. Again the recovery

position of the bank is not up to the satisfaction level and much improvement is required to

cope up with the competitive world i.e. with other commercial banks.

- 34 -

-SUMMARY & SUGGESTION-

Summary:-

Since 1950 the bank has gone through several ups and downs and at present its financial

condition is sound. In order to make the bank more active and better, it is imperative to reduce

the gap of imbalance since the situation is in alarming stage. Surplus staff at PACS level be

identified and terminated. Cost of management of PACS need to be reduced by adopting

austerity measures. Business of PACS is augmented to a substantial extent. Vigorous drive

need be taken up for realization of audit recoveries and misappropriation amount. The

disciplinary procedures have been dealt in a very causal manner. Shortfall in achievement of

projected targets under important portfolio like collection has posted problems in the

profitability and operational efficiency of the bank. Both coercive and persuasive action should

be taken for realization of O.D. loans. Potentially non-viable PACS are adopted by Senior

Officers of the bank. Sincere endeavor be put into achieve viability by diversification of

business adopting remedial measures.

Many-fold improvements in major portfolios like strengthening share capital base,

augmented investment with adequate and qualitative securities, improving collection and own

fund can held to achieve all time viability and profitable.

SUGGESTIONS:-

i. Retention of heavy cash balance on many occasions beyond CRR limit are noticed at

the branch level beyond insured limit as a result of which the bank is sustained income

loss. This also indicates imprudent fund management. So necessary steps should be

taken t invest that cash in a profitable manner.

ii. Since imbalance is major factor of loss of the bank due care is not being taken to arrest

the imbalance. The rising trend of imbalance is an immediate loss to the bank, the in

action of bank is unfortunate.

iii. Despite Successive comments, the bank has not taken any step for realization of

advances and other un-productive assets, which affect the financial health of the bank.

iv. The bank has not furnished the details of loss assets in the audit report, which need be

furnished before next audit.

- 35 -

v. Steps need be taken to ensure proper fund flow analysis for justicious deployment of

funds. During this year 15.14 of the deployable capital is invested under non-income

generating sources which affect the profitability of the bank.

vi. Due care need be taken for realization of loan outstanding under non-farm or non-

agricultural sector as this contributes a major portion of NPA and O.D. interest.

vii. Payment of Bonus/Ex-gratia to employees need be paid as per provisions of Staff

service rule with due consideration of provisions under Minimum Bonus Act and OCS

Act.

viii. Austerity measures need be taken to keep the revenue expenditures with in 50% of real

income.

ix. All out steps also are made to cover all the defaulted loaners under legal action.

x. Management need to ensure inters branch inspection at regular interval to plug the

loopholes in right time.

xi. Internal control system need be strengthened.

xii. Proper credit appraisal and documentation be ensured for making any finance.

xxxvi

BIBLIOGRAPHY &

ABBRIVATIONS

XXXVII

BIBILIOGRAPHY

I. Financial Accounting, 2005, By S.P JAIN & K.L

NARANG.

II. Management Accounting, 2003, By R.K

SHARMA & SHASHI K. GUPTA.

III. Financial Management, 2005, By R.P

RASTOGI.

IV. Research Methodology, 2002, C.R KOTHARI.

V. Final Audit Report- 2007-08, KCCB, Ltd.

VI. Scale of Finance, 2007-08, KCCB Ltd.

VII. Compendium Of Master Circular,2007 ,OSCB

VIII. Annual Report 2006-07, OSCB

XXXVIII

ABBREVIATIONS

i. KCCB:-Koraput Central Co-Operative Bank

ii. DCCB:-District Central Co-Operative Bank

iii. OSCB:-Orissa State Co-Operative Bank

iv. NABARD:-National Bank For Agricultural And Rural Development

v. SCARDBs:- State Co-Operative Agricultural Rural Development Banks

vi. PCARDBs:- Primary Co-Operative Agricultural And Rural Development Banks

vii. LAMPS:- Large Sized Multipurpose Co-Operative Societies

viii. PACS:-Primary Agriculture Co-Operative Societies

ix. MPCS:-Multi Purpose Co-Operative Societies

x. ST (SAO):-Short Term(Seasonal Agricultural Operation)

xi. NPA:-Non Performing Assets

xii. DAP/M.O.U:-Development Action Plans/Memorandum Of Understanding

xiii. K.C.C:- Kissan Credit Card

xiv. K.K.G.C:- Kalinga Kissan Gold Card

xv. S.H.G:- Self Helf Group