fund management in nabard

7/31/2019 Fund Management in Nabard

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G.T. COLLEGE OF ADVANCED STUDIES 1

CHAPTER :01

INTRODUCTION


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INTRODUCTION TO CO-OPERATIVE BANKING

Cooperative banks were established in India to facilitate rural credit, and to cater to the

needs of small farmers and businessmen. They were popular with middle and lower income

groups because of the high interest rates they offered as compared to commercial banks. groups

because of the high interest rates they offered as compared to commercial banks.

However, with the passage of time, most co-operative banks lost their purpose. Excessive state

control and politicization further led to their deterioration. By the 1990s, none of the public or

private sector banks were willing to deal with cooperative banks and thus even otherwise healthy

cooperative banks were facing a tough time. In 2001-2002 many cooperative banks were rocked

by scams that exposed the malpractices in these banks.

The Cooperative credit system was introduced in India in 1904, when the co-operative credit

society Act was passed. The institutional source of credit for agriculture and related activities

was very inadequate source of credit for agriculture and related activities was very inadequate at

that time. The money lenders would provide some credit at very high rates of interest. The co-

operative banks were expected to substitute such unorganized money market agencies and

provide short and long term credit at reasonable rates of interest. It was expected that they would

co-ordinate the activities of unorganized and organized segments of Indian money market.

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 fulfill, their number, and the number of officers they operate.

The cooperative movement originated in the west, but the importance that such banks have

assumed in India is rarely paralleled anywhere else in the world. Their role in rural financing

continues to be important even today, and their business in the urban areas also has increased


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phenomenally in recent years mainly due to the sharp increase in the number of primary

cooperative banks.

While the cooperative banks in rural areas mainly finance agricultural based activities including

farming, cattle, milk, hatchery, personal finance etc. along with some small scale industries and

self-employment driven activities, the cooperative banks in urban areas mainly finance various

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

finance, personal finance, etc.

Some of the cooperative banks are quite forward looking and have developed sufficient core

competencies to challenge state and private sector banks.

According to NAFCUB the total deposits & lending of cooperative banks is much more than old

private sector banks & also the new private sector banks. This exponential growth of cooperative

banks is attributed mainly to their much better local reach, personal interaction with customers,

and their ability to catch the nerve of the local clientele.

Though registered under the cooperative societies Act of the Respective states (where formed

originally) the banking related activities of the cooperative banks are also regulated by the

Reserve Bank of India. They are governed by the Banking Regulations Act 1949 and Banking

Laws (cooperative societies) Act, 1965.

Co-operative banks are promoted to meet the banking requirements of consumers. They are

established not only in the urban areas but also in the rural areas. In rural areas these banks

supply finance to agriculture, while in the urban areas they are started to provide finance to buy

consumer goods. They provided short and medium term loans. They provide loans at a lower ratecomparatively. They are formed on the co-operative society principles as such are more service

oriented than profit oriented.


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DEFINITIONS AND MEANING OF CO-OPERATIVE BANKS.

In the words of HENERY WOLFF Co-operative banking an agency which is in a position deal

with the small means on his own terms. Accepting the security he has and without drawing in the

protection of the rich.

DEVINE defines A mutual society formed composed and governed by working people

themselves for encouraging regular savings and generation miniature loans on easy terms of

interest and repayments.

FEATURES OF CO- OPERATIVE BANKS

1. They are organized and managed in the principal of co-operation self help and mutualhelp. They function with the rule of one member one vote.

2. Co-operative banks perform all the main banking function of deposit mobilization, supplyof credit and provision for remittance of deposit mobilization, supply of credit and

provision for remittance facilities.

3. Co-operative banks belong to the money market as well as the capital market.4. Co-operative banks accept current, savings, fixed and other types of time deposit from

individuals and intuitions including banks.

5. Co-operative banks do banking business mainly in agriculture and rural sector.6. Co-operative banks also required complying with requirement of statutory liquidity ratio

and cash reserve ratio liquidity requirements as other scheduled and non scheduled banks.

Co-operative banks are the banks which are registered under the Karnataka co-operative act

1959. Co-operative banks are a part of the vast and powerful super structure of co-operative


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institutions, which are engaged in the task of production, marketing, and distribution, servicing

and banking in India.

STRUCTURE OF CO-OPERATIVE BANKING IN INDIA

The co-operative banking is federal in character with three tie linkage between state, district and

village level institutions. At the state level we have development banks. At the district level the

central co-operative banks or the district central co-operative banks then at the village level, the

primary land development banks. The lower tiers are the members and the shareholder of the

immediate higher ties. Besides, there are urban co-operative banks or the primary co-operative

banks which are outside this federal structure.

Though federal in its nature the system is integrated vertically on the basis of functional

responsibility of various component of the system. The State co-operative banks [SCBs], Central

Co-operative Banks [CCBs] and Primary Agricultural Credit Societies [PACs] form the short

term and medium term credit. Structure and it is the same in all the states. The Land

Development Banks [LDBs] at various levels make the long term credit structure which is not

uniform in all states.

The state level co-operative banks are said to be the apex institution in their federal structure.

However, the apex institutions from the point of view of promotion, supply or resources and

supervision are controlled by the government. NABARD and National co-operative banks of

India, SCBs and State Level Development Banks [SLDBs] are in the immediate position

between the institution just mentioned on the one hand and the co-operative banks on the other.

The SCBs co-ordination and regulate the working of acts. They act as custodian of surplus funds

of the CCBs act as supplement them by attracting deposits and by obtaining loans from the RBI.

The CCBs mobilize resources in districts to finance their members and they also canalize funds

from the SCBs to primary credit societies.


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The PACs at the village level from the base of the co-operative banking. Although they are

expected to be multipurpose societies, they mostly deal in credit. Unlike the short and medium

term credit structure, the arrangements forth provisions of long term are not uniform in all states

however a majority states have a federal set up for this purpose also. These states have SLDBs at

the state level affiliated to primary land development banks at the district and the taluk levels. In

other states the operational units below the SLDBs at the state level affiliated to primary land

development banks at the district and taluk levels. In other states the operational units below the

SLDBs are the branches of SLDBs. The SLDBs obtain funds by issuing ordinary debentures and

special development debentures. The PDBs Obtain funds mainly from SLDBs. The LDBs do not

accept deposit and therefore, they are not banks in strict sense. They give long term loans.

The Urban Co-operative Banks [UCBs] are like commercial banks in their operations. The

banking commission had opined that the UCBs have not been uniformly and clearly defined in

all states. The UCBs are normally restricted under their bylaws and confines their business to

metropolitan, urban and semi urban centers. More than one UCBs may function in the same town

area. They cater mainly to the needs of the small borrowers and owners of small scale units,

retail traders, professional and salaried class. The RBI is licensing authority for new banks and

new branches of the existing banks.


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STRUCTURE OF CO-OPERATIVE BANKS:

SALARY EARNERS CO-

OP CREDIT

EMPLOYEES CO-OP.

BANKS

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PACCS

ST & MT CREDIT LT CREDIT

RESERVE BANK OF INDIA

NABARD

CO-OPERATIVE BANKS

PCA & RD BANK

SCA & RD BANKSTATE CO-OP. BANKS

NON-AGRI, BANKSAGRI. CO-OP. BANKS

URBAN CO-OP.

BANKS


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MEANING OF BANK

A bank is a business organization which provides money services to its customers.

According to Banking Regulation Act 1949 defines banking as the accepting for the purpose of

lending or the investment of deposits of money from the public, repayable on demand or

otherwise and with drawable by cheque, draft, and orders or otherwise.

DEFINITION OF BANKS

According to the Banking Regulation Act 1949, defines Banking as the accepting for

the purpose of lending or investment of deposits of money from the public, repayable on demand

or otherwise and withdraw able by cheques, draft, and orders or otherwise.

An organization, usually a corporation, chartered by a state or federal government, which

does most or all of the following: receives demand deposits and time deposits, honorsinstruments

drawn on them, and paysinterest on them; discountsnotes, makesloans, and invests in securities;

collectschecks, drafts, and notes; certifiesdepositor's checks; and issues drafts and cashier's

checks.

IMPORTANCE OF BANKS

Banks plays an important and significant role in economic development of a country. The

economic importance of banks are as follows:

1. Bank mobilizes the small scattered and idle savings of people.2. It provides safety and security to surplus money and deposits.3. Bank directs flow of the funds into productive channels.4. It mobilizes funds from surplus place to deficit place.5. Banks serve as the best financial intermediary between savers and investors.6. Banks keep trade and commerce, industry and agriculture by meeting their

financial requirements.
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7. Bank influences the rate of interest in the money market.8. Banks provide a convenient and economical means of payment.9. Banks influence employment, income and the general price level.10. Banks facilitates fuller utilization of resources.11. Bank helps in creation of credit.12. Banks provides not only general utility services but also someagency services.13. Banks facilitates uniform growth of all regions.14. Encourages the right type of industries.15. Banks finance to government.16. Banks provides various advanced facilities to the customers.

CLASSIFICATION OF BANKS:

Banks are classified into several types based on the functions they perform.

They are:

1. Commercial Banks2. Investment Banks or industrial Banks3. Exchange Banks4. Co-operative Banks5. Land mortgage Banks6. Savings Banks7. Central Bank.


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1. COMMERCIAL BANKS:

Commercial banks perform all the business transactions of a typical bank,

This accepts three types of deposits-the savings bank deposits, fixed deposits and current

deposits. They accept these deposits, which are repayable on demand or on short notice.

Commanding at most public confidence and established them as a corporate body with share

holdings, but subsequently there has been a drift towards central ownership and control. They

provide funds only for short term needs of trade and commerce the commercial banks confine

their activities to day-today functions of trade and industry. Since the commercial banks are

expected to meet immediate requirements of depositors, they cannot invest creditors andoverdrafts. They provide credit card facilities to customers for easy purchase and also ATM

cards to withdraw money as and when required by the customers.

Functions of Commercial Banks:

1. Accepting deposits from the public: Fixed deposits, Savings deposits, Current Deposits etc.,

2. Making loans and Advances.3. Agency Service.

Popularizing the cheque system. General Utility services such as safe deposits Lockers, discounting the foreign

exchange bill drawn, accepting the bills drawn by the foreign exporters, remitting

the funds from one place to another in the form of funds from one place to

another in the form of drafts, letters of draft, credit notes and travelers cheque

and underwriting the issue of and securities.


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4. Non Banking Functions:1. Setting up Mutual Funds, Hire Purchase Subsidiaries. Lease Financing Business

and Factoring Services. New instruments of trading among banks have been

developed such as participation certificates, commercial paper and certificate and

deposits.

2. INVESTMENT BANK OR INDUSTRIAL BANK

Investment banks are those banks which provide funds on long-term for industries. The

investment banks are also called industrial banks. These banks have specialized in providing

long term loans to industries with a view to but plant and machinery. The investment banks

obtain funds through share capital, debenture and long term deposits from the public.

Functions of Investment Banks

1. It mobilizes the funds to finance industries.2. It underwrites or issue new shares and debentures of industrial companies and it also

purchases the entire issue of new securities of companies later sell them to the public at

a higher price.

3. It also obtains funds through share capital, debentures and long-term deposits from thepublic and provides it to the industries as long term loans.

4. It helps industries to purchase the huge plant and machinery for the purpose of tradeand commerce.

3. EXCHANGE BANKS:


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These are known as foreign banks or foreign exchange banks which provides foreign

exchange for import trade. Their main function is to make international payment through the

purchase and sale of exchange bills.

Functions of Exchange Banks:

1. They convert home currency into foreign currency and vice-versa.2. They discount foreign exchange bills which are used in foreign currency and vice-versa.

4. CO-OPERATIVE BANKS:

Co-operative banks is an association of person who have voluntarily joined together to

achieve a common economic end through the formation of a democratically controlled

organization. These are promoted to meet the banking requirements of consumers not only in

urban areas but also in the rural areas. They are formed on the co-operative principles and as

such they are more service oriented than profit-oriented.

Functions of Co-operative Banks:

1. These Banks functions like commercial banks like receiving deposits and lending money.2. It provides finance to agriculture, industry, trade and transport.3. They provide short-term and medium-term loans.4.

They provide credit at lower rates of interest to people of small means, like smallcultivators and artisans, petty shopkeepers, etc.,

5. They provide crop loans and also arrange for warehousing, grading and marketing.6. It has open membership with common interest.


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5. LAND MORTGAGE BANKS:

These Banks provide Long-term loans on the security of the land to initiate permanent

improvement on the lands and to but agricultural machineries.

Functions of Land Mortgage Banks:

1. These banks raise resources by means of selling debentures in the money market.2. It functions co-operative principles and also as investment banks.

6. SAVINGS BANKS:

These are specialized financial institutions established to mobilize savings from the

people. Generally they pool the savings of the small incomes of the community. The Primary

objective is to promote thrift among the low and middle income groups.

Functions of Savings Banks:

1. The banks offer interest on the deposits and are allowed to withdraw from their accountas and when necessary.

2. They not provide facilities like withdrawals, rates of interest, use of cheques and businesshas become more prominent than other forms.

7. CENTRAL BANKS:

Central bank is an Apex bank in the country, which brings the entire banking system

unified, controlled and regulated. In fact, the central bank is the main source of an efficient


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banking system in the country. The monetary policy of a country is formulated and enforced by

the central bank. These banks are responsible for monetary stability in the country.

Functions of Central Banks:

1. Issuing of currency notes is under the purview of the RBI.2. It acts as an agent and adviser of the Government.3. It acts a Bankers bank as it regulates the banking operations of the other banks.4. It fixes the rate and interest to be charged and paid on advances and deposits which

should be followed by the other banks.

5. RBI directly deals in foreign exchange markets and ensures the stability of the currencyat international level.

6. RBI being the central bank of the country regulates the flow of the credit by exercisingcredit control functions.

8. APEX BANKS:

At the top of the co-operative credit is the state Co-operative bank at theState level,

known as the Apex bank. It controls the working of Co-operative societies. It also acts as

a link between the RBI from which it borrows.


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On the liability side it focuses on wholesale source of funds, including credit advances from a

federal RBI or federal home bank and hedging techniques such as interest rate future and

interest rate swaps control these balance sheet exposures also called balance management.

MEANING OF FUNDS:

All transaction whether capital or revenues have an effects on cash. Some transactions increase

the cash balance and some decrease it. To the extent of tool receipts of cash there are item of

payments and balance left. Unspent. A statement showing these can be designated as a cash flow

statement but it is wrong to designate it as a funds flow statement .however some define funds as

cash and concern themselves only with the movements as the cash accounts. The meaning offunds is different from cash .funds is broad term than cash.

Another interpretation of funds is that is sum of cash and marketable securities, another one

is quick assets usually defined as cash plus marketable securities plus accounts receivable minus

current liabilities.

OBJECTIVES OF FUNDS ARE:

To summarize the finanancing and investing activities of the entity, including the extent

to which the enterprise has generated funds from operation during the period


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To complete the disclosure of changes of financial position during the period

SOURCE OF FUNDS

1) Share capital bad reserves2) Loan funds

a) Secured loanb)

Unsecured loan

a) Secured loan consist of;I. Debenture

II. Term loanIII. Cash credit.IV. Bills discountedV. Hypothecation

b) Unsecured loanI. Deposits

II. Loan from director


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Debenture issued are secured by first charge against mortgage of immovable property of and

machinery of the company

Term loan from banks are secured by exclusive first charge on all the companies movable and

immovable properties of the present and future along with the personal guarantee of managing

director of the company.

Cash credit and working capital loans from banks are secured by first charge on inventories if

raw material, components, stores ,work in progress , finished goods and books debt, second

charge on movable and immoveable properties of the company and by personal guarantee of

managing directors of the company.

APPLICATION FUNDS

Application of funds constitute of important aspects of funds management . the fund raised

from different sources should be utilized in an efficient and productive way to increase the

earning capacity

Vehicle loans are secured by should be utilized in an efficient and productive way to increase

the earning capacity

If the effect of financial results in decrease of funds ,it is known as application of funds .

The funds are raised to meet both long term objectives long term funds are required to large

extent for meeting fixed capital requirement the business. Sort term funds are required ti meet

the needs of day-to-day operation s. also these are required in sense to meet working capital

requirements.

The major part of source for the bank the deposits from the public or institutions as indicated

in the table , which varying from bank to bank may be as high be as high as80% to 90%.which

defining regulation act 1949 specifies that banking means accepting for purpose of lending or


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investment of deposits of money from the public ,repayable on demand or otherwise and

withdrawal on demand or otherwise by cheque, draft, or order .

FUNDS MOBILIZATION POLICY:

An appropriate funds mobilization policy has take that :

a) Adequate funds are mobilization keeping in view the banks deployment requirement .b) The cost of funds mobilized in term of interest cost is least and is reduced from year to

year.

c) The servicing /operational cost these funds is also low with emphasis on volumes.d) The funds should come from diversified sources ,so that setbacks in one area do not

affect the overall funds availability.

The management of cost of funds mobilizes in the present day banking is an important as their

mobilization .while setting the in the memorandum of understanding document, one of the

measures for liability management is the establishment of a high power liability management

committee of top bank executives in a bank .the committee, among other aspects ,would provide


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policy guidelines regarding each liability product the ratio of rate sensitive aspects to rate

sensitive liabilities ,the cost and use of volatile deposits and borrowed funds.

FUNDS DEPLOYMENT POLICY:

An effective deployment policy must aim at:

a) Making arrangement /provision for meetings statuary requirement like cash reserve/statutory.

b) Maximization of the yield or return various components of the invested funds.c) Maintenance of sufficient liquidity through appropriate mix of fund investment.d) Spread of investments in such a manner that the losses suffered on one or two components

of the investments,. Do not tak away the major portions of revenue and bring down the

average return sharply to an unaffordable level.

e) Investment with prudence based on risk perception with sole objectives that it should noyturn out to be non-performing.


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FUNDS MANAGEMENT IN AGRICULURE AND RURAL

DEVELOPMENT BANKING:

FUNDS MANAGEMENT IN LAND DEVELOPMENT BANKS:

Management of funds is an essential ingredient in profitability management. It is

imperative for all business organization to endeavor to increase the earning and to reduce

the expenditure .income can be increase by better management of funds ,etc.,and by

efficient and effective cash and funds management.

Land development funds management takes place at state development banks and primary

unit levels in the manner indicated below:

PROVISION OF FUNDS PRIMARIES:

In many states the system of advances supply of to primary land development banks /

branches for disbursement of loans is in vague. Under this system state land development


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banks sanction a credit limit to primary land development banks out of the facility from

state co-operation banks. The

System envisages requisition for funds in the prescribed to be sent district office of the state

land development banks every week or fortnight depending upon the need. The primary

land development banks /branch has to give following information in the prescribed

from ,whenever they need funds.

1) Opening balance in the current account at the beginning of previous week.2) Remittance received from state land development banks during the week.3) Disbursement made during the week in request of loans.4) Closing balance.5) Amount programmed to be disbursed during ensuring week.

a) Number of mortgage deeds already executed .b) Number of cases of II EC already obtained mortgage is yet to be executed .c) Number of cases already sanctioned where II EC is yet obtained and mortgage

deeds is not executed .

d) II & subsequent installments due for disbursement .e) Amount required to be remitted.

INVESTMENT POLICY OF THE KARNATAKA STATE CO-OPERATIVE

APEXBANK LIMITED :

Institution engaged in banking business have to ensure prudent ways and means of

funds deployment .liquidity, safely and marketability of the investment are of


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paramount significant to any banker. Day to day obligations are met out of cash tht a

banker maintains and any surplus will have to be deployed to earn maximum profits.

Besides the banking regulation act of RBI determines, which in turn stipulates a banker

to look appropriate government and other approved securities ,etc., further, there are

non SLR securities in the from various publics sectors bonds guaranteed by the

concerned state government.

INVESTMENT POLICY GUIOF KARNATAKA STATE CO-OPERATIVE APEX BANK

LIMITED:

1) OBJECTIVES:a) To manage liquidity position of the bank efficiently .b) To maximum income by judicious investment of surplus funds in profitable

.safe and secure avenues. While ensuring liquidity.

c)

To meet statutory reserved requirements like CRR and SLR.

2)SURPLUS FUNDS:

Co-operative banks are establishment mainly for meeting the credit

requirements for agriculture and rural development. Hence , surplus funds

means long term surplus and short term surplus funds available after


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meeting the legitimate needs of all credit requirement of district credit co-

operative banks and other constituents and liabilities on a monthly basis.

3) LIQUIDITY:

When sufficient funds can be raised either by increasing liabilities or converting

assets at a reasonable cost, the bank is said to have adequate liquidity.

Therefore, it is necessary to have short term investment like treasury bills

certificate of deposits ,fixed deposits of public sector banks as a of total

investment assets which could be converted into cash and generate liquidity in

short term tenor between 3-12 months as corollary to borrowings .

4)TYPES OF IMPROVED INVESTMENT:

a) SLR investment :the apex bank shall maintain the securities in the form of Central government securities. State government securities . Trust securities and other approved securities. Treasury bills

b)NONSLR investment : the apex bank shall in requirement in the form of-

Shares in co-operative institution . Certificate of deposits of deposits issued by scheduled commercial banks and

IDBI.

Fixed deposits of IDBI and EXIM BANK.


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India VikasPatra . Debenture and bonds of public sector unites guaranteed by state government. Bonds of financial institution.

5) RISK MANAGEMENT SYSTEM:

The shall make its own risk analysis of the investment portfolio ,in addition to relying

on

The rating of external agencies:

a) Entry level minimum ratings :a + credit ratings .b) Maturity pattern :maximum 5-10 years.c) Sectors wise exposure :with in the guidelines it is better to speard in more sectors

instead of concentrated in one sector.

d) Dealing through broker: as per RBI guidelines ,transaction entered into throughindividual brokers during a year shall not exceed 5% of the total transactions and if for

any reasons it becomes necessary to exceeds this limit for any broker ,the specific

reasons therefore the deals and the boards should be informed of this post-factor .

e) Non SLR portfolio :should be marked to market that is securities shall be valued atmarket prices.

6) PROCEDURE FOR SLR INVESTMENT :

a)the apex bank shall maintain all investment in government securities only in SLG

/CSGL account with RBI.


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b) The apex bank shall ensure the under no circumstances SLG/CSGL transfer form

issued by the apex bank in favor of another bank would bounce for want of sufficient

balance in the SLG/CSGL account.

c) At the time of purchase of securities the bank shall issue the cheques only after the

receipt of the SGL/CSGL transfer forms from the selling banks authorized dealers . For

all transaction delivery versus payments shall be insisted upon.

d) The SLG/CSGL transfer forms issued by the apex bank shall be signed by two

authorized offials of the bank whose signature are recorded with public debt office of

RBI Bangalore.

e) The SLG/CSLG transfer form used by the apex bank be in the standard format

prescribed by RBI and semi-security paper of uniform size.

7) NONSLR INVESTMENT:

a) In PSU bonds :the bank can invest their genuine surplus funds to the extent of 10%of their deposits as on 31

stmarch of previous year in PSU bonds.

b)

Discretionary investment : the bank at the discretion of its management can investonly to the extent of 5%of its non- SLR surplus funds ,keeping in view the

profitability and security of investments.

c) Bank deposits :the bank shall invest its temporary surplus of liquidity in interbankdeposits /certificate of deposits only in scheduled commercial bank /IDBI for an

period as decided by the investment committee /board with the banks which were


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approved by the banks. The bank has to call the quotes from the approved banks

whenever such investment are made.

d) Call money investment : the bank when having a very temporary surplus funds fortwo /three days shall invest in the call money market through discounts and finance

and house of India limited or with primary dealers in the money market which

offers competitive rates the bank may also invest in notice money for 14days.

e) REPO,S the bank shall also deals in REPO transaction in treasury bills and otherspecific government stocks through SGL account.

Apex bank shall not issues bank receipts any circumstances in respect of any transaction in

government :

8) BANK RECEIPTS :

a)

The bank shall buy and sell on market movement. The decision to buy /sell shall betaken based on yield movement in the market.

b) Bank shall specify maximum holding period. The bank shall specify the % andcategory of securities which can be held in permanent category and which can be

traded .

c) The bank shall prescribed the cut loss policies.


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d) Valuation policies as disguised cut loss policy shall be mentioned by the bank .e) Portfolio returns to be seen. The bank shall distinguish between investments and

trading.

f) The bank should ensure trading is done differently in a rising market stable market.

9) ACCOUNTING PROCEDURES:a) All investment shall be valued at a price determined in accordance with such one

or more of or combination of the following methods of valuation nam,ely.

Valuation with reference to cost price, market price, book value or face value as

may specified by the reserve bank /NABARD from time to time.

b) The bank shall make adequate provisions depreciation in investments portfolio asper prudential norms by RBI.

c) Interest on all investment shall be taken to profit and loss account on realizedbasis as indicated in sec 22 (a)of Karnataka state co operative rules 1060.

CHAPTER :02


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RESEARCH DESIGN:

The research design is the conceptual structure which research is conducted. It

constitutes the blue print for the collection, measurement and analysis of data. A research design

is a basic plan, which guides the data collection and analysis of the phases of the project. It is the


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framework, which specifies the type of information to collect the source of data collection

procedure. Data was collected from primary and secondary source.

Research design adapted for the study:

Explorative research is used in the study:-

Study of secondary information i.e., Annual reports of the company.

TITLE OF THE STUDY:

A STUDY on FUNDS MANAGEMENT In banking sector with respect to KARNATAKA

STATE CO-OPERATIVE APEX BANK LTD

. STATEMENT OF THE PROBLEM:

To analyze the efficient acquisition and optimum utilization of funds, to identify the resources

gap between source and application of funds and find the means of bringing the gap

NEED FOR THE STUDY:

To know the sources and uses of fund. To indicate the increase / decrease in the working capital during the specific period. To plan the sound dividend policy .

OBJECTIVE OF THE STUDY:


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To study the existing system and trend of managing funds in Karnataka state co operative Apex bank limited

To assess the effectiveness of financial management in raising and utilizing funds duringthe specific period.

To ascertain the liquidity position. To analyze the operational efficiency. To suggest the ways and means to improve management of funds.

SCOPE OF THE STUDY

The study is going to conduct in Karnataka State Co-operative Apex Bank , which covers entire

Bangalore city ;it includes 31 braches of apex bank. The study covers in-depth analysis of funds

management with regards to Karnataka State co-operative bank limited. The study is an attempt

to find out the total magnitude of funds management of the apex bank limited.

METHODOLOGY OF THE STUDY :

This study is basically an analytical study. As the analysis is required to find out the bank

position as regard to various funds management ,types of funds management as given

general norms were studied and analyzed.

Sources of data:

Primary data


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The primary data has been collected by obtained information from bank officials through

interaction, discussions on their in-depth knowledge and work experience in the concern.

Secondary data:The secondary data was obtaining by referring books, journals, annual reports of the bank

journals ,magszines textbooks & bank website

Annual Reports of KSCABL www.Karnatakaapex.com

TOOLS AND TECHNIQUES :
http://www.karnatakaapex.com/http://www.karnatakaapex.com/http://www.karnatakaapex.com/


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The tools and technique is used for the analyzing the data, which includes Table, Pie-diagram,

Bar-chart and simple percentage method have been used for the purpose of analysis and

presentation.

PERIOD OF STUDY

The study was done during the year 2012from FEBRUARY TO MARCH for a period of 6

weeks. The Analysis has been done by considering the data of the year 2006-2007, 2007-

2008, 2008-2009, 2009-2010 and 2010-2011 annual reports of the company.

LIMITATIONS OF THE STUDY

The study is limited to information provided by the bank and restricted to Bangaloreonly.

The study of funds management constitutes only to a particular department.

AN OVERVIEW OF CHAPTER SCHEME


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1. CHAPTER ONE:

INTRODUCTION

This chapter includes an introduction to finance, introduction to credit management, meaning,

forms of bank lending, lending principles &policies, credit analysis, investigation &evaluation.

2. CHAPTER TWO:

RESEARCH DESIGN

This chapter provides a plan of the study and it includes

Statement of problem, Objectives of the study, Scope of the study, Tools and techniques for

collection of data, Limitations of the study, An overview of chapter scheme,

3. CHAPTER THREE:

PROFILE OF Karnataka state co-operative apex bank ltd

This chapter contains a complete profile of the organization including history, nature of business,

products and services, competitors, turnover and number of branches etc.

4. CHAPTER FOUR:

DATA ANALYSIS AND INTERPRETATION

This chapter provides an analysis of the data collected with interpretation with tune with the

objectives.

5. CHAPTER FIVE:

This chapter provides summary of Findings, suggestions and conclusion.


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CHAPTER :03

COMPANY FROFILE


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PROFILE OF KARNATAKA STATE CO-OPERATIVE APEX BANK

LIMITIED

The Karnataka state co-operative apex bank Ltd., established in the year 1915 is extending its

continued service for the last 94years to its members and customers. The bank which had a

humble beginning in the year 1915 grew over the years and achieved a noticeable development

in the co-operative banking sector and has been functioning as a pioneer co-operative bank. The

contribution of apex bank in the state co-operative sector and vary particularly in the agricultural

credit sector is rather very great and invaluable. The bank is known for its commitment for the

development of state farmers and credit co-operative institutions. The primary objective of the

bank is to provide short and medium term loans through various co-operative institutions, to the

farmers so as to help them in managing their agricultural. Further, Apex Bank as a scheduled

bank is carrying out all other banking activities.

Apex bank has 31 branches in Bangalore; it is on the anvil to open more branches of the bank in

Bangalore city to provide its customers the facilities of deposit mobilization, lending collection

of bills and drafts and such other banking activities.

Co-operative field has a long history of nearly a century and this field came into being to prevent

the exploitation of poor farmers and to provide suitable assistance to the eligible farmers. Credit

sector in the co-operative field has acquired a special importance .The Karnataka state co-

operative Apex bank ltd., has occupied a pioneering position among all other co-operative

institutions and has become a prestigious bank by its very working style.

The Karnataka state co-operative Apex bank in its past 93years of long and remarkable history,

is growing for strength to strength each year and thus has occupied a sound financial position,

besides being a model institution in its functional style as compared to all other co-operative

institutions. The apex bank has come forward to extend the needed financial assistance to all

institutions. The Apex bank is functioning as a model institution in the co-operative field. Yet, in

recent years the co-operative banks are facing stiff competition from public and private sector

banks and multinational banks and this is an inevitable situation. Despite all these hurdles, Apex


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bank with determination and spirit of service is forgoing ahead year by year as a sound,

stablefinancial institution in order to help the rural farmers in meeting their needs.

History of Karnataka state co-operative Apex bank

Karnataka has been in the forefront of cooperative endeavors and has produced several

outstanding cooperatives. ShriSiddanagowda s/o RamangowdaPatil, organized the first

agriculture credit cooperative society in 1905 in the village of Kanaginal in Gadag District.

Initial Stages of Cooperative Movement:

The co-operative movement in the old Mysore area was first introduced in 1905 when the firstMysore cooperative societies act was passed. The progress of the movement was slow up to

1910-11. However, in the course of next few years, there was rapid development. There were

111 societies with the membership of 9043 and working capital of Rs. 3.71 lakhs at the close of

1910-11. By the end of financial year 1914-15, there were 725 societies with a membership of

56267 and their working capital went up to Rs.30.85 lakhs.

The Bank was registered on 10th November 1915 under the name and style of The Mysore

Provincial Cooperative Bank Limited, under the Mysore Co-operative Societies Act of 1905.Then, the Bank was not an Apex institution, as it was not exclusively meant for financing the co-

operatives in the then State of Mysore. Another Bank called the Bangalore Central Co-operative

Bank Limited, Bangalore (which was later converted into an urban bank), which was registered

in 1905, was also financing the co-operatives. The bank owes its origin to Sri. M.A. Narayan

Iyengar, B.A., B.L., who was the Registrar of Co-operative Societies at that time.

The Bank was founded with the objective of financing, inspecting and supervising the co-

operative societies in the Mysore State. Subsequently, several district co-operative central banks

with the jurisdiction of a district were registered. Five such district central banks were started.

But their working was not satisfactory and they became defunct. As such, the provincial bank

started financing the societies directly. Besides granting of loans, the Bank served as an outlet for


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investment of the surplus finds of the co-operative societies in the State. The Bank thus acts as

the balancing centre of the Co-operative Movement in the State, safeguarding its interests.

Nature of business

The business carried by the bank is generally related with providing short term and medium term

loans through various co-operative institutions to the farmers for their agricultural activities. It

also accepts deposits from the publics and lending funds for various purposes. it also provides

loans to farmers for allied activities like sugar production, marketing and such other activities.

Further, Apex bank as a Scheduled Bank is carrying out other banking activities.

VISION, MISSION & OBJECYIVES OF THE ORGANIZATION

VISION:

The Banks vision is to Excel among the Apex co-operative Banks of the country. Apex Bank

shall be a dominant financial institution in the state, leading the state to economic

prosperity.

MISSION:

The Bank mission is to reach finance to all the farmers in the state. Ensuring the best quality of

life and success of their formers, primary agricultural cooperative societies, district central

cooperative banks, clients and employees are reasons for their being.

Reorganization of Provisional Co-operative into an Apex Bank

At the time of inception of The Mysore Provincial Co-operative Bank, there was also another co-


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operative organization, The Bangalore Central Co-operative Bank, which was working on

similar lines. This was an anomaly, which led to mutual competition unnecessarily in the matter

of financing of co-operative societies. In order to remove this anomaly and to have only one

institution as an Apex institution exclusively for financing the co-operatives in the State, the

Government appointed an Enquiry Committee known as the Mysore Co-operative Enquiry

Committee, 1920-22 presided over by Mr. LallubhaiSamaldas and the Committee after

reviewing the position of these two banks, made the following three alternative

recommendations to the Government:

To amalgamate the Mysore Provincial Co-operative Bank and the Bangalore Central Co-operative Bank.

To create a new Apex Bank. To convert the Central Co-operative Bank into an urban bank dealing only with the individuals

and to reorganize the Provincial Co-operative Bank into a new Apex Bank.

Fortunately for the bank, consequent to the amendment to the Reserve Bank of India Act during

1953-54, the RBI suggested that the State Government should step into strengthen the capital

structure by contributing Rs. 5 lakh towards share capital of Apex Bank. Accepting the proposal,

the State Government contributed Rs. 5 lakh towards share capital and rehabilitation grand of Rs.

4 lakh to meet anticipated bad debts.

The Bangalore central co-operative bank opposed the amalgamation with the provision co-

operative bank. Thus the creation of a new Apex Bank was out of question the government

therefore accepted the third suggestion made by the committee.

Accordingly, the Government passed orders on 14/15.9.1925 permitting the Mysore Provisional

Bank to get itself converted into an Apex Bank with the jurisdiction extending over the entire

state for financing the co-operative societies exclusively and the bank thereafter was named as

The Mysore provisional co-operative Apex bank ltd., popularly known as Apex bank.


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In the beginning, the bank was advancing long term loans through agricultural credit co-

operatives for land improvements and redemption of prior debts. Large amounts were given for

the above purpose. After the organization of central co-operative land mortgage bank in the year

1929 and primary land mortgage banks at the Taluk level, the bank had to give up this model of

business. On account of depression between the years 1925-30, the value lands and the price of

agricultural fell very steeply and the bank had to face a lot of difficulties in the recovery of long

term loans advanced. However, during Second World War, there was rise in the land value and

agricultural prices and the bank could therefore recover a major portion of its dues.

In order to meet the loss of business on account of stoppage of long term loans for land

improvements and redemption of prior debts consequent on the organization of central land

mortgage bank, the bank started financing of long term loans for construction of houses through

house building and house construction societies. Besides, on account of Second World War,

there was great stimulus for consumer stores activities for distribution of essential commodities

through co-operatives. The bank undertook the financing of these consumer societies in the form

of cash credit loan. The financing of house building societies continued up to the year 1950 when

a separate Apex institution called the Mysore State co-operative house building cooperation was

registered. The government there upon directed the bank not to issue loans to the housing

building societies. This was a period of crisis in the history of Bank. The Bank had to satisfy

itself by financing a few marketing societies by way of crop and produce loans and a few store

societies.

Fortunately for the Bank, consequent to the Amendment to The Reserve Bank of India Act

during 1953-54, the RBI suggested that the State Government should step in to strengthen the

capital structure by contributing Rs.5 lakh towards share capital of Apex Bank. Accepting the

proposal, The State Government contributed Rs.5 lakh towards share capital and rehabilitation

grand of Rs.4 lakh to meet anticipated bad debts.

During the year 1956-57, States were reorganized on linguistic basis and the new Mysore State

with 19 districts came into existence. Since there were District Cooperative Central Banks in all


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the integrated districts, all the District Cooperative Central Banks came under the jurisdiction of

Apex Bank. Further the State Government notified the Apex Bank as the State Cooperative Bank

for the entire state and with the expansion, the responsibility of the Bank increased considerably.

The Bank stopped financing of primary societies directly. The membership and share capital held

by primary societies in Apex Bank was transferred to the respective District Cooperative Central

Banks. There was all round progress in the cooperative movement with the reorganization of the

State and also in all spheres of activities of the Apex Bank like share capital, reserves, deposits,

borrowings, lending, profit etc.

OBJECTIVE S OF THE BANK

The Apex Bank is a pioneer in agricultural finance and allied activities in Karnataka. The Bank,

thanks to its broad spectrum of activities and a proven track record, is ranked as one of the

premier State Cooperative Banks in the country. The Banks main objectives are to serve the

farmers in the State by providing short and medium term agricultural loans, carry on general

Banking business and function as a leader of Co-operative Banks in the State.

The Bank also provides Cash Credit loans to agro processing and marketing activities, consumer

cooperatives and sugar factories in Karnataka. It provides term loans to sugar factories under

consortium arrangements and working capital loans to state level and national level co-operative

institutions.

The main aims and objectives of the Bank defined in the Bank Bye Law No. III are given below:

To serve as a State Co-operative Bank and as a balancing center in the State of Karnatakafor registered co-operative societies

To raise funds by way of deposits, loans, grants, donations, subscriptions, subsidies etc.for financing the members by way of loans, cash credits, over-drafts and advances

To develop, assist and co-ordinate the member DCCBs and other Co-operative Societiesand secure financial assistance for them


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To arrange/hold periodical Co-operative Conferences of the DCCBs and other membersof the bank and to take action for the growth & development of the Co-operative Credit

Movement

To participate in financing Co-operative and other institutions who are members of thebank, directly or through consortium of Bankers

To participate in the schematic lending and to provide loans for which refinance facilityis available with term lending institutions

To arrange for the inspection and supervision of the affiliated DCCBs and other Co-operative Societies and guide them in their working

To buy and sell securities for the legitimate investment of surplus funds and act as agentsfor buyers and sellers of securities of Central/State

To carry on general business of Banking and other banking activities to the members andcustomers

To purchase, acquire or raise or otherwise obtain moveable or immoveable property forthe own use of the Bank and also to dispose them of when not required

To take measures to help Co-operative Education To promote and undertake Co-operative Research and Co-operative Development To manage, sell or release any property which may come into the possession of the bank

in satisfaction of or part satisfaction of any of its claims

To promote economic interest of the members of the Bank in accordance with theprinciples of Cooperation

To do such other things as are incidental or conducive to the promotion and advancementof the business of the Bank


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MAJOR ROLE PLAYERS IN THE MARKET:

SBI Commercial & International Bank Nationalized Banks in India

Bank of Baroda

Federal Bank Bank of India

HDFC Bank Bank of Maharashtra

ICICI Bank Canara Bank

ING Vysya Bank Central Bank of India

Karnataka Bank Corporation Bank

KarurVysyaBanK Indian Bank etc.


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The ACSTI Introduction:

The Agricultural Co-operative Staff Training Institute of the Karnataka State Co-operative ApexBank Limited was established in the year1985 to impart the requisite knowledge, professional

skill and attitude of the personal working in Apex Bank, District Central Co-operative Banks,

Urban Co-operative Banks, and Primary Agricultural Co-operative Societies in the state.

They are in the midst of challenges which have not been faced by the Co-operative hitherto I the

wake of economic liberalization and globalization. The Co-operatives are required to be

professional to remain competitive to efficiency cater to the needs of the rural community. It is

necessary that the Bank should utilize the available man power effectively to this end.

The institute is dedicated to improve and utilize the available man power at Apex Bank, DCC

Banks, Urban Co-operative Banks and Primary Agricultural Co-operative Societies effectively.

The institute is offering all the training programs at subscribed cost with the assistance of

NABARD. Only nominal delegation fee is being collected from the client intuitions for all the

training programs conducted by the Institute.


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BRANCHES AT BANGALORE:

Head office Branch- Chamarajpet. Kalpatharu Super Bazaar

Ashoka Pillar. Koramangala.

Banashankari. Kengeri Satellite Town.

Basaveshwaranagar. Lakkasandra.

Girinagar. Magadi Road.

Vivekananda College (Ext. counter). Ganganagar.

Gokula. Padmanabhanagar.

Gandhinagar. Public Utility Building.

Vijayanagar. Rajajinagar.

VidhanaSoudha. R.P.C Layout.

Agra- HSR Layout. Legislators Home.

Indiranagar. M.S Building.

Jayanagar Market Complex. Mahalakshmipuram.

Jayanagar 9th

Block. Vyalikaval.

J.P nagar. Chandra Layout.

R.T Nagar.


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OWNERSHIP PATTERN

Apex bank is state co-operative bank established by the state government in the year

1915 under the organization of Primary Agricultural Co-Operative Credit Societies (PACS) in

villages and Urban Co-Operative Banks in towns and cities offer passing the co-operative credit

societies at 1904 to meet mainly short and medium term financial needs of farmers.

ACHIEVEMENTS/AWARDS:

1) Bank is able to lend 75% of the farmers in the state and it covers all sugar factories in

Karnataka.

2) Apex Bank is habituated to get awards at National levels year after year. Similarly NABARD

has been giving best performance award and even PACS have not have logged behind in getting

National recognition. All DCC banks and merely 80% of PACS have proved themselves to be

financially viable.

PRODUCT/SERVICE PROFILE OF THE BANK:

The Karnataka State Co-Operative Apex Bank Limited provides following services to the

societies:

Financing of short term loans Financing of medium term loans Financing of Kisan credit card scheme/loan Credit facilities to self help groups. Advancing medium term loans economic

development and providing cash loans


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Advancing workshop capital loans Collection of cheques and drafts Loans through various schemes Personal banking

SERVICES PROVIDED BY THE BANK IN DETAIL:

Financing of short term loans:

Financing of short term loans for seasonal agricultural operations and for marketing of crops.These loans are repayable within one year.

Financing of medium term loans:

These loans are sanctioned for agricultural purpose and non-agricultural purpose

.Financing of Kissan Credit Card Schemes/loan:

Kissan credit card aims at providing timely and adequate credit support to farmers for their

cultivation including investment credit needs in a flexible and cost effective manner. All DCC

banks in the state have implemented the kisan credit scheme.

Credit facilities to self help groups:

All the DCCBs have taken keen interest in the formation of self help groups in co-ordination

with PACS. Self help groups mobilize their savings and avail credit facilities from DCCBs and

PACS.

Advancing medium term loans with economic development:


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These loans are advanced for the agricultural infrastructures such as lift irrigation, diary, poultry,

plantation, gobar gas etc that constitutes schematic lending.

Providing Cash Credit loans:

Providing cash credit loans to processing marketing and consumer co-operatives as well as sugar

factories in Karnataka and also term loans to sugar factories under consortium agreement,

Advancing Working Capital loans:

Advancing working capital loans to state level co-operatives like CAMPCO, MARKFRED,

KCCF and to the national level co-operatives like IFFCO and KRIBHCO. The Bank provide

similar facilities to public sector undertakings like Karnataka Silk Marketing Board, Karnataka

Handloom Development Corporation, Karnataka Small Scale Industries Development

Corporations, Food Corporations of India directly and also through consortium arrangements

through commercial banks.

Collection of Cheques and Drafts:

The bank extends finance to the non-farm sector and to the development of cottage industries,

small scale industries and rural artisan weavers. It is a scheduled bank in all aspects including

remittance of funds, demand drafts, mail transfers, collection of cheques and drafts.


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LOANS THROUGH VARIOUS SCHEMES:

Vehicle Loans Housing Loans Mortgage Loans Installment Loans Jewel Loans Apex Cash Apex Education Apex Travel Apex Rent Apex BDA (Bangalore Development Association) Apex Overdraft Apex Retail Apex women Apex self employed Apex Gold Other loans


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Personal Banking:

Apex Bank provides the following deposit schemes to the customers:

Term Deposits:

In this account, the customer deposits money period maximum up to 10 years.

Current deposits:

In this type, the individuals or businessmen operate. This account is kept open for the entire day.

AGRICULTURAL CO-OP STAFF TRAINING INSTITUTE:

Our bank continues to provide appropriate training and values enhancement to ensure the highest

degree of professionalism and integrity. The bank has conducted various training programme in

co-ordination with NABARD for the employees of Apex Bank, District central co-op banks .

During the year 2010-11, training programmed were conducted for the benefit of

1172 participants. The training programmed covered Business Development project valuation,

Modern Banking Financing of small scale industries, Development Action plan, schematic

lending, computer applications, prudential norms, workshop on management information system,

self help groups, inter-personal relationship and customer services, etc.

ACKNOWLEDGEMENT:


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The management wishes to place on record its sincere thanks for the financial assistance,

guidance and co-operation received from the government of Karnataka, Reserve Bank of India,

National Bank for Agriculture and Rural development Bank (NABARD), National co-operative

Development Corporation (NCDC), National Federation of State Co-operative Banks and

National Co-operative Union of India. The Board of Directors of the Bank are thankful to the

chief secretary to Government of Karnataka, Additional chief secretary and Development

Commissioner, Government of Karnataka, Secretary to government, co-operation department,

register of co-op societies and chief general manager, NABARD, Regional office, Bangalore for

their valuable guidance extended from time to time in carrying out the business of the banks

successfully.

The management also wishes to express its sincere and heartfelt thanks to the valued customers

of the bank. It also places on record its sense of appreciation for the loyal and devoted service

rendered by all the staff members at all levels during the year. Finally the management wishes to

thank all the members of the bank for their support and guidance provided. We are confident of

getting your continued support and patronage in the coming years as well.


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ORGANISATION STRUCTURE OF THE APEX BANK:

PRESIDENT

VICE PRESIDENT

MANAGING DIRECTOR

CHIEF GENERAL

MANAGER (F & A)

CHIEF GENERAL

MANAGER (A & D)

SECRETARY

GENERAL

MANAGER

(BANKING)

GENERAL

MANAGER

(INSPECTOR)

GENERAL MANAGER

PRINCIPAL, ACSTI

GENERAL MANAGER

(P & D)

A/C BR.

MGR

DGM

(HOB)

DGM

(AO)

DGM

(BC)

DGM

(INSPECTOR)

CHIEF

STATISTICIAN

DGM

(P&D)

DGM

(DAP)

AGM

(INSPECTOR)

AGM

(AO)

AGM

(DAP)

AGM

(P&D)

AGM

(HOB)

AGM

(BC)


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CHAPTER: 04

DATA ANALYSIS AND INTERPRETATION


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DATA ANALYSIS AND INTERPRETATION:

Table-1

Table showing the freereserve collected by the KSC Apex Bank Ltd., during the past five

years track record

Years 2006-07 2007-08 2008-09 2009-10 2010-2011

Free Reserves(in

crores)

163.97 179.2 210.18 233.52 255.06

Chart-1

Chart showing the Free reserve collected by the KSC Apex Bank Ltd., during the past five

years track record


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ANALYSIS:

From the above table 4.1 it can be seen that the companys free reserves was Rs.163.97Cr

in the year 2006-2007, Rs.179.2Cr in the year 2007-2008, Rs.210.18 Cr in the year 2008-2009

,Rs.233.52 Cr in the year 2009-2010.and 2010-2011 Cr in the year Rs255.06

INTERPRETATION:

As per the above analysis it can be observed that the free reserve has been increased to255.06. crores, because increase in profit every year, which company need to maintain minimum

of 25% as statutory reserve and cash reserve ratio of 5%. The total optimum reserve kept by the

bank up to 35%. It indicates the strong position on the banking sector. The bank as maintain

proper reserves for the future needs.

(2006-07)163.97

(2007-08)

179.2

(2008-09)

210.18

(2009-10)

233.52

(2010-11)

255.06

0


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Table-2

Table showing the Deposits taken by the KSC Apex Bank Ltd., during the past five years

track record

Year Deposits Percentage

2006-07 1977.49 14.21

2007-08 2264.95 16.27

2008-09 2664.14 19.14

2009-10 3119.37 22.41

2010-11 3892.42 27.96

Chart-2

Chart showing the Deposits taken by the KSC Apex Bank Ltd., during the past five years

track record


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ANALYSIS:

From the above table it can be seen that the companys Deposits was Rs.2264.95Cr in

the year 2006-07, Rs.2664.4 Cr in the year 2007-08, Rs.3100.43 Cr in the year Rs.3119.37 Cr in

the year 2009-10, Rs 3892.42 Cr in the year 2010-2011.

Interpretation:

From the above table it is indicates that the Bank has increased its deposits collection from thecustomers. During the year the percentage of the deposits stood at 14.21% during the year 2006-

07 and it has been increased to 27.96% during the year 2010-11.

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

1977.492264.95

2664.143119.37

3892.42

DEPOSITS


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Table-3

Table showing the borrowings taken by the KSC Apex Bank Ltd., during the past five

years track record

Rs. In Crores

Years Borrowings

2006-07 925.862007-08 1034.17

2008-09 1141.02

2009-10 1347.72

2010-11 1966.68


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Chart-3

Chart showing the barrowings taken by the KSC Apex Bank Ltd., during the past five

years track record

14%

16%

18%21%

31%

BORROWINGS

2006-07

2007-08

2008-09

2009-10

2010-11


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ANALYSIS:

From the above table it can be seen that the companys Borrowings was Rs.925.86Cr in the

year 2006-2007,Rs.1034.17Cr in the year 2007-2008, Rs.1141.02 Cr in the year 2008-2009

Rs.1347.72 Cr in the year 2009-2010 , and Rs1966.68 Cr in the year2010-2011.

Interpretation:

The above table showing that it is considerably increased its borrowings from various sources.

Borrowing percentage has considerably during the year 2006-07 14.43% during the year 2010-

2011 increased to 30.65%.


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Table-4

Table showing the investments made by the KSC Apex Bank Ltd., during the past fiveyears track record.

Year Investment

2006-07 1535.43

2007-08 1454.81

2008-09 1230.35

2009-10 1539.9

2010-11 2696.53


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Chart-4

Chart showing the investments made by the KSC Apex Bank Ltd., during the past five

years track record:

ANALYSIS:

18%

17%

15%18%

32%

INVESTMENT

2006-07

2007-08

2008-09

2009-10

2010-11


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From the above table it can be seen that the companys Investments was Rs.1535.43Cr

in the year 2006-07, Rs.1454.81Cr in the year 2007-08, Rs.1230.35 Cr in the year 2008-09

Rs.1539.9 Cr in the year 2009-10. And Rs 2696.53 Cr in the year 2010-11.

Interpretation:

From the above table it is clearly indicates that the investment made by the apex bank has

considerably increased. During the year 2006-07 the investment stood at Rs 1535.43 and the

percentage is 16.61 and it is increased to Rs 2696.53 and the percentage is 31.89 during the year

2010-2011.

Table-5

Table showing the Owned Funds of KSC Apex Bank Ltd., during the past five years track

record

Year Owned funds

2006-07 204.46

2007-08 242.35

2008-09 262.96

2009-10 307.41

2010-11 346.6


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Chart-5

Chart showing the Owned funds of the KSC Apex Bank Ltd., during the past five years

track record

ANALYSIS:

From the above table it can be seen that the companys Owned Funds was Rs.204.46Crin the year 2006-07, Rs.244.2Cr in the year 2007-08, Rs.263.91 Cr in the year 2008-09,

Rs.309.21 Cr in the year 2009-10, Rs309.21.67 and Rs 348.67 Cr in the year 2010-11.

Interpretation:

0

50

100

150

200

250

300

350

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

OWNED FUNDS


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The above table showing that the Bank considerably increased its owned funds from past five

years of track record. It was stood at 14.99% during the year 2006-07 and quantum in increased

to 25.41% during the year 2010-11.

Table-6

Table showing the Working Capital Investment by the KSC Apex Bank Ltd., during the

past five years track record.

Years Working capital

2006-07 3298.69

2007-08 3754.35

2008-09 4332.69

2009-10 5022.34

2010-11 6438.35


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Chart 6

Chart showing the Working Capital Investment by the KSC Apex Bank Ltd., during the

past five years track record.

ANALYSIS:From the above table it can be seen that the companys Working Capital was ,

Rs.3298.69Cr in the year 2006-07, Rs.3754.35Cr in the year 2007-08, Rs.4332.69 Cr in the year

2008-09 , Rs.5022.34 Cr in the year 2009-10.and Rs 6437.26 Cr in the year.2010-11.

3298.69

3754.35

4332.695022.34

6438.35

Working capital

2006-07

2007-08

2008-09

2009-10

2010-11


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Interpretation:

The above table showing that the KSC Apex Bank ha considerably increased the working

capital. It was stood at 14.12% during the year 2006-11 increased to 27.58% during the year

2010-11.

Table-7

Table showing that the Net Profit made by the KSC Apex Bank Ltd., during the past five

years track record

Rs. In Crores

Year Net Profit

2006-07 5.96

2007-08 27.28

2008-09 13.35

2009-10 10.02

2010-11 12.5


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Chart-7

Chart showing the Net Profit of the KSC Apex Bank Ltd., during the past five years track

record

0

10

20

30

2006-072007-08

2008-09

2009-10 2010-11

5.96

27.28

13.35

10.02 12.5

NET PROFIT


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ANALYSIS:

From the above table it can be seen that the companys Net profit was Rs.5.96Cr in the year

2006-07, Rs.27.27Cr in the year 2007-08, Rs.13.35 Cr in the year 2008-09, Rs.10.02 Cr in the

year 2009-10.Rs 12.50 Cr in the year.2010-11

Interpretation:

The above table showing that clearly indicates that the Bank has considerably increased the Net

Profit during the past five years of performance. The percentage of the Net Profit has

considerably increased from 8.62% during the year 2006-07 to 18.08% during the year 2010-11.

Table-8

Table showing the Loans & Advances made by the KSC Apex Bank Ltd., during the past

five years track record:

Year Loans & Advances

2006-07 1640.89

2007-08 1785.75

2008-09 2237.66

2009-10 2804.84

2010-11 3492.55


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chart-8

chart showing the Loans & Advances made by the KSC Apex Bank Ltd., during the past

five years track record:

1640.89

1785.75

2237.66

2804.84

3492.55

LOANS & ADVANCES

2006-07

2007-08

2008-09

2009-10

2010-11


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ANALYSIS:

From the above table it can be seen that the companys Advances Rs.1640.89Cr in the

year 2006-07, Rs.1785.75Cr in the year 2007-08, Rs.2237.66 Cr in the year 2008-09 and

Rs.2804.84 Cr in the year 2009-10, Rs 3492.55 Cr in the year 2010-11

Interpretation:

From the above show that the Karnataka state co-operative Apex Bank Ltd. Has considerably

increased the Loans & Advances to the society where it stood at Rs 1640.89 and the percentageis 13.71 during the year 2006-07 and increased to Rs 3492.55 and the percentage is 29.19 during

the year 2010-11.

\

Table-9

Table showing that the Borrowings made by the KSC Apex Bank Ltd., during the past

three years track record from various institutions

Institutions Last 3yrs aggregate amount Percentage

NABARD 757 93

Central State Co-op Bank 39.33 5

NCDC 20.41 1.998

State Govt. 1.13 0.002


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Chart-09

Chart showing that the Borrowings made by the KSC Apex Bank Ltd., during the past

three years track record from various institutions.


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Table-10

Table showing that the Average Growth the KSC Apex Bank Ltd., during the past five

years

Parameters Average growth

Owned Funds 272.76

Last 3yrs aggregate amount

NABARD

Central State Co-op Bank

NCDC

State Govt.


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Deposits 2783.67

Borrowings 1283.09

Investments 1691.404

Loans and Advances 2392.338

Working Capital 4669.29

Net profit 13.82

Chart -11

Chart showing that the Average Growth the KSC Apex Bank Ltd., during the past five

years


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FINDINGS:

i. NABARD is the major re-financer to apex bank.ii. The apex bank provides short and medium term loans to agricultural purpose.

272.76

2783.67

1283.09

1691.404

2392.338

4669.29

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Average growth

Average growth


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iii. The karapex bank provides loans to a agriculture and non agriculture sectors.iv. The bank built up a strong capital base & is ranked as one of the premier state co-

operative banks in the country.

v. The major customers of the bank are farmers through DCCBs & PACS.vi. The bank lends at lesser interest compare to other banks.

vii. Apex bank is the leader for all other co-operative banks in the state.viii. Karapex bank is maintaining 25%of net profit as a statutory reserve ratio&3% of cash

reserve ratio.it shows strong position in the banking sector.

ix. The reason for rapid increase in the profit due to recovery of accumulated interest andloans.

x. The karapex banks provide safe deposit locker facility is available in all most all thebranches.

xi. 90% of the farmers avail loans facilities from the co-operative and DCC banks.xii. Nearly 40% of the loans have gone to weaker section in agricultural field.

xiii. The bank provides every year cash rewards to the best performing DCCBs.xiv. The overdue were mainly concentrated in various credit facilities extended to DCCBs.xv. The karapex bank follows the rules and regulations laid by the NABARD for granting of

loans and advances.

xvi. The karapex bank provides regular training to its staff through agricultural co-operativestaff training institute.

xvii. The karpex is not adopted the ATM technology to provide facilities to their customers


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SUGGESTION:

1) It is advisable for the bank to reduce the interest on deposits.2) Though there is increase in profit every year there is constant variation hence it is hear by

suggested to improve its long term solvency and see that improvement is made every year.

3) It is advisable for the bank to reduce the other liabilities.4) Bank can improve further profitability by reducing management cost.5) Net worth of the bank should further increase by creating more and more reserves.


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6) The expenditure of the bank can be reduced by introducing high level technology.7) The interest paid on borrowings should be reduced by using other means of funds.8) The advised to bank invest on highly liquid assets namely money market instruments.9) The bank offer attractive interest rate to collect more and more deposits from the public it

helps in lending loans and advances by this profit increases.

10)The bank should take effective measures to improve efficiency and profitability of thebank.

11)The Bank should also give more emphasis on interest Banking in order to keep up with thechanging trends in International Banking

12)The bank has to adopt the ATM facility to their customers there by it attracts thecustomers and reduce the transaction burden of the bank. Today all the banks are

implement this technology; the publics know the importance of the ATM facility (24*7).

CONCLUSION:

It can be concluded that finance is the lubricant , which help in running the wheeler of every

economics activity ,without funds no business can finish . Funds are the backbone of the

economy .The business needs both long term and short sterm finance .The Karnataka state co

operative bank is playing a impartment role dispersal of credit facilities of different section of

thye economy specifically the agricultural sector the existence and development of any depends


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upon mobilization& deployment of funds very important role in economic development in the

country.

The banks play performing very well in every aspect ,of its dealing .From the past 93 years the

bank has grown in leaps and bounds .All the branches of the bank are computerization .The

working capital as well as profit of the bank has gone up tremendously.

From the study I can conclude that the Karnataka state cooperative apex bank mobilizes and

deploys its funds in funds management in short term co-operative banks in every efficient and

systematic way giving a good scope for the growth and development of the apex bank . The

bank follows all the rules and regulation of RBI and NABARD The balance sheet discloses

good condition of the bank borrowings statement ;recovery statement are and better performance

from past five years .

BIBLIOGRAPHY:

Books:

01)Prasanna Chandra, Fundamentals of Financial management, TATA MC GRAW-HILLpublishing co.ltd


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3rd

edition, Delhi 2001

02) P.V.kulkarni, B.G sathya Prasad, Financial management, Himalaya publication, Mumbai,

11th

Edition 2002

30) Reddy and Appaniah, Banking Theory and Practice, Himalaya publication, 3rd edition

2004

Journals and magazines:

Annual Reports of KSCABL Journals of the company

Website:

www.karnatakaapexbank.co
http://www.karnatakaapexbank.co/http://www.karnatakaapexbank.co/http://www.karnatakaapexbank.co/

fund management in nabard

Documents