CHAPTER- 1

INDUSTRY PROFILE

1
1.1 Cooperative movement in India

The Indian cooperative movement, like its counterparts in other countries of the world has
been essentially a child of distress. Based on there commendation so Sir Frederick
Nicholson (1899) and Sir Edward Law (1901), the Cooperative Credit Societies Act was
passed in 1904, paving the way for the establishment of cooperative credit societies in rural
and urban areas on the patterns of Raiffeisen and Schulze Delitzch respectively. The
Cooperative Societies Act of 1912 recognized the formation of non-credit societies and the
central cooperative organizations/federations. The state patronage to the cooperative
movement
continued even after 1947, the year in which India attained freedom. The independent India
accepted the concept of planned economy and cooperative organizations were assigned an
important role.

The policy of the Government towards the cooperative movement was guided by there
commendation so the Saraiya Committee, which stated that. The cooperative society has
an important role to play as the most suitable medium for the democratization of economic
planning. Various expert committees, which examined the problem of rural credit
subsequently, have come to the same conclusion, without exception, that in the Indian
context, there is no alternative from the point of view of structural appropriateness, to
cooperatives at the village level. The Rural Credit Survey Committee (1954), the first
comprehensive enquiry into problems of rural credit, after a detailed examination of the
entire gamut of issues including the social ethos of rural society, summed up its findings in
the celebrated dictum that cooperation has failed, but cooperation must success Since
1950s, the cooperatives in India have made remarkable progress in the various segments of
Indian economy. During the last century, the cooperative movement has entered several
sectors like credit, banking, production, processing, distribution/marketing, housing,
warehousing, irrigation, transport, textiles and even industries. In fact, dairy and sugar
cooperatives have made India a major nation in the world with regard to milk and sugar
production. Today, India can claim to have the largest network of cooperatives in the world
numbering more than half a million, with a membership of more than 200 million. Of the
primary (village) level cooperatives, around 28 percent with 137 million memberships are
agricultural cooperatives, dealing directly or indirectly with agricultural sector.

2
 Thecooperativenetworkinthecountryisratherstrongcoveringallthevillagesin the country and
more than 67 percent of the households have been brought under cooperative hold.
Historically, Governments and policy makers have paid more attention to agricultural
cooperatives and thus, the growth and development of the Indian cooperative movement is
heavily tilted in favour agricultural cooperatives in general and in particular, credit
cooperatives. In some areas like dairy, urban banking and sugar, the cooperatives have
achieved success to an extent but there are larger areas where they have not been so
successful.

The cooperative credit movement in modern India, curiously, is a state initiated movement.
The state partnership is, perhaps, the unique feature of the Indian cooperative movement.
As of today, Government contribution to the share capital of primary agricultural
cooperatives accounts for about 7.5 percent of the total.

Paradoxically, the state partnership which was conceived as a measure for strengthening
the cooperative institutions had paved the way for ever-increasing state control over
cooperatives, their increasing officialisation and politicization culminating in virtually
depriving the cooperatives of their vitality as well as their democratic and autonomous
character.

Dormant membership, lack of active participation of the members in the management, lack
of professionalism (and absence of corporate governance), undue political and bureaucratic
intervention, have made majority of the cooperatives at the primary level almost moribund.
Understandably, this has resulted in weakening of the cooperative edifice. The upwardly
transmission of the weaknesses of the primary societies have affected the capabilities of the
higher level cooperative federations in so far as their usefulness to the former is concerned.

With regard to agricultural cooperative credit structure, although the quantitative expansion
has been somewhat satisfactory, the movement continues to suffer from structural defects
and operational deficiencies. The acknowledged operational deficiencies of the cooperative
credit structure have been (I) weak recycling of credit, (ii) poor resource mobilization, (iii)
ineffective lending and (IV) poor recovery.

Credit cooperatives are the oldest and most numerous of all the types of cooperatives in
India. The cooperative credit institutions in the country may be broadly classified into
urban credit cooperatives and rural credit cooperatives.

3
There are about 2090 urban credit cooperatives and these societies together constitute
for about 10 percent of the aggregate banking business and therefore regarded as an
important segment of the banking system. The urban credit cooperatives are also
popularly known as Urban Cooperative Banks.

4
1.2 Structure of Banking in India

RBI

NABARD

Cooperative credit
institution

Rural cooperative
Urban
credit institutions
cooperative bank

Scheduled Non- Long

scheduled Short
UCB’s term
UCB’s term

District Primary
State
central agriculture
cooperative
cooperative credit
banks
banks societies

Multi Single
state state

SCARRD
Bs PCARDBs
Multi Single
state state

5
1.3 Role of Reserve Bank of India in cooperative movement

TheReserveBankofIndiawasestablishedonApril1,1935inaccordancewiththe provisions of
the Reserve Bank of India Act,1934.
TheCentralOfficeoftheReserveBankwasinitiallyestablishedinCalcuttabutwas permanently
moved to Mumbai in 1937. The Central Office is where the Governor sits and where
policies are formulated.
Though originally privately owned, since nationalisation in 1949, the Reserve Bank is fully
owned by the Government of India.
The Preamble of the Reserve Bank of India describes the basic functions of the Reserve
Bank as:
"...to regulate the issue of Bank Notes and keeping of reserves with a view to securing
monetary stability in India and generally to operate the currency and credit system of the
country to its advantage."

Central Board: The Reserve Bank’s affairs are governed by a central board of directors.
The board is appointed by the Government of India in keeping with the Reserve Bank of
India Act.
• Appointed/nominated for a period of four years
• Constitution:
o Official Directors
▪ Full-time: Governor and not more than four Deputy Governors
o Non-Official Directors
▪ Nominated by Government: ten Directors from various fields and
two government Officials
▪ Others: four Directors - one each from four local boards

Financial Supervision:
The Reserve Bank of India performs this function under the guidance of the Board
forFinancialSupervision(BFS).TheBoardwasconstitutedinNovember1994asa committee of
the Central Board of Directors of the Reserve Bank of India.
Objective:
Primary objective of BFS is to undertake consolidated supervision of the financial sector
comprising commercial banks, financial institutions and non-banking finance companies.

6
Constitution :
The Board is constituted by co-opting four Directors from the Central Board as members
for a term of two years and is chaired by the Governor. The Deputy Governors of the
Reserve Bank are ex-officio members. One Deputy Governor, usually, the Deputy
Governor
incharge of banking regulation and supervision, is nominated as the Vice-Chairman of the
Board.

Monetary Authority :
• Formulates implements and monitors the monetary policy.
• Objective: maintaining price stability and ensuring adequate flow of credit to
productive sectors.

Regulator and supervisor of the financial system:

• Prescribes broad parameters of banking operations within which the country’s
banking and financial system functions.
• Objective: maintain public confidence in the system, protect depositors'' interest
and provide cost-effective banking services to the public.
• Regulator and supervisor of the payment systems
o Authorizes setting up of payment systems
o Lays down standards for operation of the payment system
o Issues direction, calls for returns/information from payment system
operators.

Manager of Foreign Exchange

• Manages the Foreign Exchange Management Act,1999.

• Objective: to facilitate external trade and payment and promote orderly

development and maintenance of foreign exchange market in India.

Issuer of currency:
• Issues and exchanges or destroys currency and coins not fit for circulation.
• Objective: to give the public adequate quantity of supplies of currency notes and
coins and in good quality.
Developmental role
• Performs a wide range of promotional functions to support national objectives.

Related Functions
• Banker to the Government: performs merchant banking function for the central and
the state governments; also acts as their banker.
• Banker to banks: maintains banking accounts of all scheduled banks.

7
RBI policies for co-operative banks:
The RBI appointed a high power committee in May 1999 under the chairmanship of
Shri. K. Madhava Rao, Ex-Chief Secretary, Government of Andhra Pradesh to review
the performance of Urban Co-operative Banks (UCBs) and to suggest necessary
measures to strengthen this sector. Withreference to the terms given to the
committee, the committee identified five broad objectives:
• To preserve the co-operative character of UCBs
• To protect the depositors’ interest
• To reduce financial risk
• To put in place strong regulatory norms at the entry level to sustain the
operational efficiency of UCBs in a competitive environment and evolve
measures to strength in the existing UCB structure particularly in the context of
ever increasing number of weak banks
• To align urban banking sector with the other segments of banking sector in the
context of application or prudential norms in to and removing the irritants of
dual control regime

8
1.4 Introduction of Co-operative Banks

A co-operative bank is a financial entity which belongs to its members, who are at the same
time the owner send the customers of their bank. Co-operative banks are of ten created by
persons belonging to the same local or professional community or sharing a common
interest. Co-operative banks generally provide their members with a wide range of banking
and financial services (loans, deposits, banking accounts etc.). Co-operative banks differ
from stockholder banks by their organization, their goals, their values and their
governance. In most countries, they are supervised and controlled by banking authorities
and have to respect prudential banking regulations, which put them at a level playing field
with stockholder banks. Depending on countries, this control and supervision can be
implemented directly by state entities or delegated to a co-operative federation or central
body.

Co-operative banking is retail and commercial banking organized on a co-operative basis.

Co-operative banking institution stake deposits and lend money in most parts of the world.
Co-operative banking, includes retail banking, as carried out by credit unions, mutual
savings and loan associations, building societies and co-operatives, as well as commercial
banking services provided by manual organizations (such as co-operative federations) to
co-operative businesses.

According to the International Co-operative Alliance Statement of co-operative identity, a

co-operative is an autonomous association of persons united voluntarily to meet their
common economic, social, and cultural needs and aspirations through a jointly-owned and
democratically-controlled enterprise. Co-operatives are based on the values of self-help,
self-responsibility, democracy, equality, equity and solidarity. In the tradition of their
founders, co-operative members believe in the ethical values of honesty , hopenness, social
responsibility and caring for others.

The 7 co-operative principles are:

1. Voluntary and open membership
2. Democratic member control

9
 3. Member economic participation
4. Autonomy and independence
5. Education, training and information
6. Co-operation among Co-operatives
7. Concern for Community

Type of cooperative Banks

The co-operative banks are small-sized units which operate both in urban and non- urban
centres. They finance small borrowers in industrial and trade sectors besides professional
and salary classes. Regulated by the Reserve Bank of India, they are governed by the
Banking Regulations Act 1949 and banking laws (co- operative societies) act, 1965. The
co-operative banking structure in India is divided into following 5components:

Primary Co-operative Credit Society: The primary co-operative credit society is an

association of borrowers and non-borrowers residing in a particular locality. The funds of
the society are derived from the share capital and deposits of members and loans from
central co-operative banks. The borrowing powers of the members as well as of the society
are fixed. The loans are given to members for the purchase of cattle, fodder, fertilizers,
pesticides,
etc.

Central co-operative banks: These are the federations of primary credit societies in a
district and are of two types-those having a membership of primary societies only and those
having a membership of societies as well as individuals. The funds of the bank consist of
share capital, deposits, loans and overdrafts from state co- operative banks and joint stocks.
These banks provide finance to member societies within the limits of the borrowing
capacity of societies. They also conduct all the business of a joint stock bank.

State co-operative banks: The state co-operative bank is a federation of central co-
operative bank and acts as a watch dog of the co-operative banking structure in the state. Its
funds are obtained from share capital, deposits, loans and overdrafts from
the Reserve Bank of India.

Land development banks: The Land development banks are organized in 3 tiers namely;
state, central, and primary level and they meet the long term credit requirements of the

10
 farmers for developmental purposes. They are governed both by the state government and
Reserve Bank of India. Recently, the supervision of land development banks has been
assumed by National Bank for Agriculture and Rural development (NABARD). The
sources of funds for these banks are the debentures subscribed by both central and state
government.

Urban Co-operative Banks: The term Urban Co-operative Banks(UCBs), though not
formally defined, refers to primary co-operative banks located in urban and semi- urban
areas. These banks, till 1996, were allowed to lend money only for non- agricultural
purposes.
Functions and problems of co operative Banks

Functions: Co-operative banks also perform the basic banking functions of banking but
they differ from commercial banks in the following respects:
• Commercial banks are joint-stock companies under the companies’ act of 1956, or
public sector bank under a separate act of a parliament where as co- operative
banks were established under the co-operative society’s acts of different states.
• Commercial bank structure is branch banking structure whereas co- operative banks
have a three tier setup, with state co-operative bank at apex level, central / district
co-operative bank at district level, and primary co- operative societies at rural level.
• Onlysomeofthesectionsofbankingregulationactof1949(fullyapplicable to
commercial banks), are applicable to co-operative banks, resulting only in partial
control by RBI of co-operative bank sand
• Co-operative banks function on the principle of cooperation and not entirely on
commercial parameters.

Problems: However, concerns regarding the professionalism of co-operative bank

Gave rise to the view that they should be better regulated .Large co-operative banks with
paid-up share capital and reserves of Rs.1 lakh were brought under the purview of the
Banking Regulation Act 1949 with effect from 1st March, 1966 and within the ambit of the
Reserve Bank’s supervision. This marked the beginning of an era of duality of control over
these banks. Banking related functions (viz. licensing, area of operations, interest rates etc.)
were to be governed by RBI and registration, management, audit and liquidation, etc.
governed by State Governments as per the provisions of respective State Acts.

11
Towards the late 1960s there was debate regarding the promotion of the small scale
industries. CB’s came to be seen as important players in this context. The working group
on industrial financing through Co-operative Banks, (1968 known as Damry Group)
attempted to broaden the scope of activities of co-operative banks by recommending these
banks should finance the small and cottage industries. This was reiterated by the Banking
Commission in 1969.

12
2 Company Profile

2.1 Introduction and History of KCC Bank

The Kangra central co-operative bank ltd. Started in a very humble way as a small credit
society in march,1960’s by a few friends of Himachal Pradesh. Twenty three years there from
in june 1995 it was granted s license to carry out the banking business by the RBI. The
Kangra central co-operative bank ltd. Dharamshala was registered on 18.03.1920.It was
established
To facilitate the operations of primary co-operative societies, affiliated with it by raising
resources and acting as a balancing centre.

This history can be understood easily in this brief way :

• Come into existence on 17h march 1920 (license no. Rpcd.09/2009-10).

• Indora banking union was merged and 2nd branch of the bank opened at Nurpur in
jan’1956.

• Palampur banking union was merged and 3rd branch of the bank opened at Palampur
in jan’1957.

• Nanaon banking union was merged and 4th branch of the bank opened at Hamirpur in
oct,1958.

• The bank suffered losses because of the partition in 1947 to the tune at rs.10.64 lakhs.

• Govt. also provided interest free relief loan of rs.3.98 lakhs and govt. of India loan of
rs. 4.97 lakhs @ 3.87% in 1962.

• The bank entered into the deposit mobilisation scheme of pong dam area aggressively
and secured maximum share pf deposits increased from rs.256 lakhs in 1971-72 to rs.
1054 lakhs in 1973-74

13
2.2 Organisation structure

The General Body shall determine the General policy of the bank. The management of
affairs of the bank is defined in the laws in the following bodies and officers:

BOARD OF DIRECTORS

MANAGING DIRECTOR

GENERAL MANAGER

BRANCH MANAGERS

Board of Directors includes Chairman, Vice Chairman & Govt. appointed Directors in which
some of them are :

Chairman : Mr. Jagdish Sipahiya

Managing Directors : PC Akela

14
2.3 Offices of Kcc Ltd
The offices of this bank have been divided as their place in the hierarchy. These are
interrelated & interconnected to the head office. This classification is given below :

OFFICES

ZONAL BRANCH
HEAD OFFICES OFFICES
OFFICES

Head offices : It is situated at Kachehri Chowk, Dharamshala. It includes offices of Managing

Director & General Manager. It is the supreme office of all branches & zonal offices. It also
has statistical & information technology branch in it branch in which has all th confidential
records about bank.

Zonal offices : Based on the different zones, it has 14 zonal offices situated at Baijnath, Amb,
Kangra, Hamirpur, Galore, Nurpur , Samirpur, Banjar, Dehra, Indora, Kullu, Nagrota
Bagwan, Palampur & Una.

Branch offices different district have different number of branch offices. It operates only in 5
districts as mentioned in the license i.e. Hamirpur (37), Kangra (96), Kullu (20),
Lahaul&Spiti(5) , Una (26). Total number of branch offices in all these districts is 184
including branches of head offices.

15
 FINANCIAL POSITION OF THE BANK DURING THE
LAST FIVE YEARS

2012-13 2013-14 2014-15 2015-16 2016-17

Membership 37599 38648 39634 40782 41459

Clientele other
115814 119395 125474 132570 136594
than membership

(Figures In lacs)
Share Money 2305 2012 2374 2765 3108
Reserves/ Other funds 2409 2716 5063 5717 6261
Deposits 48290 54865 62004 73676 92422
Loans/Advances 30776 35582 41563 45993 49340
Working Capital 57227 63501 71325 84401 104657
Net Profit Before Tax 921 976 1057 1347 1416
Net Profit After Tax 684 724 715 855 958

OTHERS

Net NPA 0.96% 0.96% 2.29% 1.40% 2.19%

CRAR 14.08% 12.58% 13.01% 12.76% 12.51%

Table No.- 2.1

16
Mission
KCCbank’s began operation in 1995 with a simple mission to be a world class Indian bank.
We realized that only a single minded focus on product quality and service excellence world
help us get there. Today the bank is on the way towards that goal. It is extremely gratifying
that its efforts towards providing customer convenience have been appreciated both
nationally and internationally.
The bank’s aim is to build a sound customer franchise across distinct business to as to be the
preferred provider of banking services in the niche segments that the bank operates in and to
achieve healthy growth in profitability, consistent with the bank’s rise appetite.

17
 Vision document for 2014-15, 2015-16,
2016-17

1. Membership 41000
2. Dividend Efforts will be made to maintain the
highest percentage of dividend
3. Clientele 1.40 lacs
4. Share Money 30 Crores
5. Deposits To increase deposit from Rs. 548 cr. to
Rs. 850 cr.
6. Advances To increase advances from Rs. 355
cr. to Rs. 560 cr.
7. Working To increase working capital from Rs.
Capital 635 cr. to Rs. 1000 cr.
8. Net worth To increase the net worth of the bank to
Rs.55 crores
9. ATM Card 15000 Card Holders

10. To purchase two buildings

11. To be eligible for scheduled status
12. To computerize HO and CRD

13. To open two branches.

14. To strengthen HO working

15. To get "A" RBI inspection rating
16. To hold minimum two customer meetings in a year, six in
three years in different parts
17. To open onsite ATMs in all branches
18. To make customer service quick and satisfactory
19. To arrange minimum two lectures in a year on important topics
such as investments, NPA, customer service, credit appraisal,
KYC norms, CRAR, ALM, Internal Control, Profitability etc.
20. To maintain net NPA 0% and gross NPA not more then 4.5%

18
Deposit Product -

Saving Product Interest Type Payable Frequency

Saving Bank Account Compounded Half Yearly

Fixed Deposit Simple Monthly/Quarterly/Half Yearly/On Maturity

Term Deposit Compounded Monthly/Quarterly/Half Yearly/On Maturity

Recurring Deposit Compounded Monthly

19
Interest Rates on Deposits w.e.f. 01.01.2017

Deposit Scheme Public(%) Societies(%) Sr.Citizen(%)

Saving Bank Account 4.00% 4.00% 4.00%

Term/Fixed Deposits

7 days to 14 days 4.50 4.50 4.50

15 days to 45 days 5.00 5.00 5.00

46 days to 90 days 6.00 6.00 6.00

91 days to 364 days 6.50 6.50 6.50

1 year to less than 2 years(365 days to 729 days) 6.50 7.00 7.00

2 years to less than 3 years(730 days to 1094 6.45 6.95 6.95

days)

3 years to less than 5 years(1095 days to 1824 6.00 7.00 6.50

days)

5 years to less than 10 years 6.00 7.00 6.50

Reccuring Deposit

1 year to less than 2 years 6.50 7.00 7.00

2 years to less than 3 years 6.45 6.95 6.95

3 years to less than 5 years 6.00 7.00 6.50

5 years to less than 10 years 6.00 7.00 6.50

Table No- 2.2

20
Loan Products :

Co-Op. Socities Individuals

Agriculture Agriculture

Non Farm Sector Non Farm Sector

Personal Vehicle Personal Vehicle

Weavers/Industrial/Housing Housing

Cash Credits Cash Credits

21
 INTEREST RATE ON LOAN & ADVANCES – 08.03.2017

SOCIETY PUBLIC SOCIETY PUBLIC

S.No TYPE CATG TYPE CATG Scheme / Product

1 6027 1011 6027 1012 KISAN CREDIT CARD

UP TO RS.300000 6.00% 7.00%

ABOVE RS.300000 6.00% 10.500%

2 7040 1028 7040 1029 MT AGRICULTURE &

ALLIED ACTIVITY(ALL
AGRICULTURAL RELATED
ACTIVITIES)

UP TO RS.50000 9.75% 10.25%

ABOVE TO RS.50000 10.00% 10.50%

3 7004 1013 7004 1014 MT Dairy

UP TO RS.50000 9.50% 9.75%

ABOVE RS.50000 10.00% 10.25%

4 7042 1031 TRACTOR/Farm 10.25%

MECHNIZA/IRRIGATION

5 7013 1019 SHORT TERM LOAN OTHER 10.50% 11.00%

PURPOSES

6 7021 1024 TERM LOAN SHG

UP TO RS.50000 10.50%

Rs.50001 TO Rs.200000 10.50%

ABOVE RS. 200000 10.50%

7 6003 1003 CCL SHG

22
 UP TO RS.50000 10.50%

Rs.50001 TO Rs.200000 10.50%

ABOVE RS. 200000 10.50%

8 7008 1016 PERSONAL LOAN 12.00%

9 7008 1017 CONSUMER LOAN 11.50%

10 6029 1029 GCC LOAN 12.00%

11 6023 1023 ECC LOAN 12.00%

12 7019 1023 COMPUTER LOAN 12.00%

13 7014 1041 LOAN AGAINST PROPERTY 10.50%

14 7006 1015 TL-PERSONAL VEHICLE

LOAN

UP TO 3 YEARS 8.75%

ABOVE 3 YEARS TO 5 YEARS 8.75%

ABOVE 5 YEARS TO 6 YEARS 8.75%

15 7006 1016 TL-VEHICLE LOAN GOVT

EMP

UP TO 3 YEARS 8.75%

ABOVE 3YEARS TO 5 YEARS 8.75%

ABOVE 5 YEARS TO 20 YEARS 8.75%

16 7026 1026 COMMERCIAL VEHICLE

UP TO RS.300000 10.25 %

ABOVE RS 300000 TO 500000 10.25 %

ABOVE RS 500000 TO 2000000 10.25 %

23
SWOT ANALYSIS

Strength :
• Right strategy for the right products.
• Good place to work.
• Great brand image in rural.
• Fewer formalities to avail services.

Weakness:
• Unawareness about all direct banking channels due to less advertisement.
• One should have the knowledge of the operation of the computers and of course the
internet.
• Limited to particular region.

Opportunities:
• Centralized banking makes easy for KCC bank to provide services to customers.
• Huge markets of shareholders.
• Profit margin will be good.
• Adoption pf new technologies.

Threats:
• Vulnerable to reactive attack by competitors.
• Attacks of web hackers.
• Lack of infrastructure in urban areas.
• High volume/low cost market is intensely competitive.

24
 CHAPTER -2

REVIEW OF LITRATURE

25
Review of Literature

SUMMARY :

• After going through previous studies of Financial analysis of organisation I came to

conclude that financial analysis plays an important part in running in organisation.

A Review of the Theoretical and Empirical Basis of Financial Analysis

Published as TimoSalmi and TeppoMartikinan (1994)

This paper provides a critical review of the theoretical and empirical basis of four central
areas of financial ratio analysis. The research areas reviewed are the functional form of the
financial ratio, distributional characteristics of financial ratios, classification of financial
ratios, and the estimation of the internal rate of return from financial statements. It is
observed that it is typical of financial ratio analysis research that there are several
unexpectedly distinct lines with research traditions of their own. A comman feature of all the
areas of financial ratio analysis reseach seems to be that while significant regularities an be
observed , they are not necessarily stable across the different ratios, industries, and time
period. The leaves much space for the development of a more robust theoretical basis and for
further empirical research.

“ A Review of the Theoretical and Empirical Basis of Financial Ratio Analysis”, The Finnish
Journal of Business Economics 4/94, 426-448. Also published on the World Wide Web as
http://www.uwasa.fi/~ts/ejre.html

Patel and sayed (1980) of the national institute of banking management made a valuable
analysis of performance and prospects of Regional Rural Banks. The also gave a comparative
picture of performance in deposits, branch expansion and credit deployment of the
cooperative banks, commercial bank and Regional Rural Banks in a specified area. This was
an eye opener for many research engaged in this field of rural credit.

26
Financial express (1986) published a study on REGIONAL RURAL BANKS viability,
which was conducted by agriculture finance corporation I 1986. The study revealed that
viability of Regional Rural Banks was essentially dependent upon the fund management
strategy, margin between recourse mobility and their deployment and on the control
exercised on current and future costs with advance. The proportion of the establishment cost
to total cost and expansion of branches were the critical factor, which affected their viability.
The study further concluded that Regional Rural Banks incurred losses due to defects in their
systems and as such area where Regional Rural Banks were already in operation.

Sindhu (2005) carried out a study on the topic financial analysis on the basis of the study of
all REGIONAL RURAL BANKS of Kangra it is found that there was an enormous increase
in deposits and outstanding advance. The researcher felt the need to increase the share capital
and to insure efficient use of distribution channels of finance to beneficiaries.

Sameer (2011) polices of current phase of financial year liberalization have had
animmendiate, direct, and dramatic effect on rural credit. There has been a contraction in
rural banking in general and in priority sector landing and preferential landing to the poor in
particular.

27
 CHAPTER – 3

RESEARCH METHDOLOGY

28
4.1 Research Methdology

Research methodology is way to systematically save the research problem. The research
methodology includes the various methods and technique for conducting research.Researchis
a careful investigation or inquiry especially through search for new facts in branch of
knowledge.

scope of research project

Problem definition:
Financial analysis is an important part of banking system because most of people connected
with bank who deposits money in bank and who take loan from bank. So financial analysis is
the result which shows the financial position of bank and it also help to predict the future
advantages of bank. Investors are very interested in financial analysis because the want to
invests your money who give the high return. So this is the study which give the idea to
check the financial position of an organization.
Research design:
Research design constitutes the blue print for the collection, measurement and analysis of
data. The present study seeks to identify the financial position of Kangra central cooperative
bank in Kangra. The research design is exploratory in nature. The research has been
conducted within Kangra. For the selection of the sample, convenient sampling method was
adopted and an attempt has been made to include all the age groups and gender within
different occupation.
Type of research:
The present study will adopt the exploratory approach where in, there is a need to gather
large amount of information before making a conclusion.

29
4.2 Objectives of the study
This project is based on the study of financial statements of kangra central co-operative bank.

Objectives of the study are :

• To study the origin and growth of KCCB.

• To study and analyse the various financial ratio of KCCB.

• To study and analyse the profitability position of the KCCB.

• To study the factors affecting the financial position of organization.

• To measure the awareness level of people regarding the financial position of KCC
Bank.

30
4.3 Collection of data:

Secondary Data: It was collected from internal sources. The secondary data collected on the
basis of organization file, official records, news paper, magazines, management books,
preserved information in the company’s database and website of the company. My research is
also depend on the secondary data.

Source of Data : The source of data are from the annul reports of the bank from the year
2001 to 2016.

Limitation of the study

Time: the time of around 45 days was too short to study as wide subject like Financial
Analysis.
Confidential Information: One of the factors of the study was lack of availability of ample
information. Most of the information has been kept confidential and as such as not assed as
art of policy of company. The executives were hesitant to reveal complete information since
it was confidential.
Busy Schedule of concerned Executives: the concern executive were having very busy
schedule because of which they were reluctant to give appointment.

31
 CHAPTER – 4

ANALYSIS AND
INTERPRETATION

32
5.1 INTRODUCTION OF FINANCIAL ANALYSIS & ANALYSIS OF
FINANCIAL PRODUCTS

INTRODUCTION:

Financial analysis is to classify the data in simple form given in financial statement and to
compare with each other to find out the strong points and weakness of the business and to
take decisions for future. For instance, if all items relating to current assets are placed in
one group while all items relating to current liabilities are placed in another group, the
comparison between the two groups will provide useful information. Actually the figures
given in financial statements do not speak themselves. The analysis of these figures helps
the interested reader by given tongue to these mute heaps of figures.

In the words of Finney and miller:

“Financial analysis consists in separating facts according to some definite plan, arranging
them in groups according to certain circumstances and then presenting them in a
convenient and easily read and understandable form.”

In the words of John N. Myres:

“Financial statement analysis is largely a study of relationships among the various

financial factors in a business, as disclosed by a single set of statement and a study of the
trends of these factors as shown in a series of statement.”

33
5.2 BALANCE SHEET OF KCCB AS ON 31-3-2015 To 31-3-2016
LIABILITIES SCH.NO. 31-3-2015 31-3-2016

CAPITAL 1 21196 21505

RESERVE AND 7165233 7209351

SERPLUS

DEPOSITS 3 59824826 66145142

BORROWING 4 1999737 1938991

OTHER 5 1660401 55299407

LIABILITIES AND
PROVISIONS

TOTAL 70671394 80914398

ASSETS

CASH IN HAND 6 337306 341144

BALANCE WITH 174146 173889

RBI

BALANCE WITH 7 1195267 3222557

BANKS AND
MONEY AY CALL

INVESTMENT 8 35993098 40804411

ADVANCES 9 28553370 31417786

FIXED ASSETS 10 303455 275715

OTHER ASSETS 11 3892634 4678893

TOTAL 70449280 80914398

CONTINGENT 12
LIABILITIES

TABLE NO.5.2

34
5.3 ANALYSIS AND INTERPRETATION

Geographical Coverage
At present the Kangra Central Co-operative Bank is functioning in five district of the state.
Kangra, Hamirpur, Kullu, Lahaul & Spiti and Una. The Kangra Central Co-operative Bank
was having 129 branches in 2001-02. At present this bank is functioning through 182
branches and 17 extensions counters with the strength of 1,598 employees.

Sr. No. Name Of Zone No Of

District Branches

1 Hamirpur Hamirpur 13

Nadaun 13

Samirpur 11

2 Kangra Baijnath 13

Dehra 14

Indora 11

Kangra 10

Nagrota 13
Bangwan

Nurpur 15

3 Kullu, Banzar Kullu 9

16

4 Lahul&Spiti Daulatpur 11
Chowk(Amb)

5 Una Una 18

Total 182

Palampur 15

35
 No. Of Branches
lahul &spiti
5%
kullu
9%

una kangra
20% 50%

hamirpur
16%

5.4 Share Capital

Next table indicates the composition of share capital of the Kangra Central Co-operative
Bank Limited. It shows that the State Government was the main contributor to the share
capital of the Bank. The Government has decreased its contribution by 4.64 percent over the
year 2001-02. But overall share of Government was more than 50% of total paid up capital.
The second major contributor to the share capital of the bank was cooperative Societies. The
Cooperative Societies increased their participation about 36.83 per cent over the year 2001-
02. Average contribution of Societies and State Government were Rs.92.89 lakh (42.89
percent) and 123.59 lakhs (57.07 percent) during the study period. On the basis of above
analysis, it can be concluded that the main contribution was made by the State Government
and secondly by the co-operative societies.

36
Year Ownership of Share Capital (lakhs) Total

Individual Co-operative State Government

Societies
Amount % age of total Amount % age of Amount % age of Amount
Lakhs Lakhs total lakhs total Lakhs
2001-02 0.09 0.05 74.44 39.20 115.35 60.75 189.88

2002-03 0.10 0.05 83.21 40.27 123.35 59.69 206.65

2003-04 0.10 0.04 84.94 38.02 138.35 61.95 223.38

2004-05 0.10 0.04 87.80 38.81 138.35 61.15 226.24

2005-06 0.10 0.04 92.56 40.28 138.35 59.89 231.00

2006-07 0.10 0.04 95.38 37.25 160.35 62.68 255.82

2007-08 0.10 0.04 96.90 44.89 122.00 55.71 219.00

2008-09 0.10 0.05 98.41 47.38 107.00 52.07 205.50

2009-10 0.10 0.05 99.12 47.57 110.00 52.58 209.22

2010-11 0.10 0.05 99.89 47.63 110.00 52.38 209.99

2011-12 0.10 0.05 100.12 47.57 110.00 52.33 210.22

2012-13 0.10 0.05 101.86 48.06 110.00 51.89 211.96

2013-14 0.10 0.05 102.34 49.94 110.00 50.45 201.34

2014-15 0.10 0.05 100.98 47.09 110.00 52.35 237.98

2015-16 0.10 0.05 101.56 48.06 110.00 51.89 276.56

2015-16 0.10 0.05 101.56 48.06 110.00 51.89 276.56

MEAN 0.096 92.89 123.59 216.57

S.D. 0.001 8.148 6.0432 15.7755
C.V. 0.579 8.77 12.98 7.28
C.G.R. 0.15 2.94 1.51 1.01

37
 0.579
Individual Amount
Individual Amount

0.15
0.09 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.096
0.001

co-operative societies amount

120

100

80

60

40

20

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36

Amount Year

state government amount

180
160
140
120
100
Amount
80
Year
60
40
20
0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35

38
5.5 Deposits of bank
The co-operative banking system aims at mobilization of saving from the middle-income
groups and provides credit requirement of the middle and economically weaker sections of
the society. Thus, it occupies an important position in the financial system of the economy.

Year Deposits Increases/decrease Growth rate

2001-02 133289 100

2002-03 173780 40491 130.38

2003-04 202398 28618 151.85

2004-05 222944 20546 167.26

2005-06 228559 5615 171.48

2006-07 246925 18366 185.26

2007-08 280425 33500 210.39

2008-09 328178 47753 246.22

2009-10 380864 52686 285.74

2010-11 439346 58482 329.62

2011-12 520067 80721 390.18

2012-13 598248 78181 448.84

2013-14 661451 63216 345.23

2014-15 741982 80531 389.25

2015-16 751965 9983 213.93

39
 deposits
800000
700000
600000
500000
400000
300000 deposits
200000
100000
0

Growth rate
500
450
400
350
300
250
200 Growth rate
150
100
50
0

5.6 ADVANCE
The Kangra Central Co-operative Bank Limited provides loans and advances for short term,
medium term and long term to the co-operative societies and individuals. In addition to it, net
credit facility is provided against the cash credit limits to the cooperative societies. The main
objective of the bank is focus on rural development. In order to achieve this objective, the
bank is providing the credit facilities through the cooperative sector in the rural area. The
growth of aggregate loans and advances of the bank shows that this witnessed an increase of
532.47 percent during the periods over the year 2001-02.The short-term loans of the bank
registering an increase of about 744.85 per cent over the period of 2001-02. In case of

40
medium-term loans which were Rs. 29,852 lakh in 2001-02 increased to Rs. 1,26,475 lakh in
the year 2012-13 which is 4.24times of the amount of medium-term loans in the year 2001-
02. On the other hand a long term loan which was Rs. 3,388 lakh in 2001-02 increased to Rs.
58470.04 lakh. The compound growth rate of short term, medium term and long term loans
was observed 23.31 percent, 14.89 percent and 34.18 percent respectively. The co-efficient of
variation was observed highest in case of long term loans i.e. 81.41 percent and lowest in
medium term loans (38.39%). In 2015-16 it increesed41,563 to 45,993. It shows that long
term loans are less consistent against medium term loans which are more consistent.

YEAR ADVANE (lakhs)

Short term Medium term Long term Total

2001-02 11906 29852 3388 45146

2002-03 21882 36378 5267 63528

2003-04 21825 47636 7452 76913

2004-05 24313 52980 11026 88320

2005-06 29603 49771 14570 94124

2006-07 35201 58615 15742 109558

2007-08 35791 60901 18348 115040

2008-09 40687 70526 21610 132128

2009-10 47065 75976 26689 149730

2010-11 69325 82228 30957 182669

2011-12 93451 84412 64296 242158

2012-13 100588 126470 58470 285534

2013-14 101523 128853 73291 314178

2014-15 123653 132982 96106 352741

2015-16 145562 138563 131538 455663

41
 Short term
Short term

145562
123653
101523

69325

35791
24313
11906

2001-02 2004-05 2007-08 2010-11 2013-14 2014-15 2015-16

Medium term
Medium term

132982 138563
128853

82228
60901
52980
29852

2001-02 2004-05 2007-08 2010-11 2013-14 2014-15 2015-16

Long term
Long term
131538

96106
73291

30957
18348
11026
3388

2001-02 2004-05 2007-08 2010-11 2013-14 2014-15 2015-16

42
 Total
Total

415663
352741
314178

182669
88320 115040
45146

2001-02 2004-05 2007-08 2010-11 2013-14 2014-15 2015-16

Advance (Loan) 31 march 2017

long term advance short term advance

32% 35%

medium term
advance
33%

5.7 Purpose-Wise Advances

the purpose-wise outstanding loans and advances. Agricultural and Non Agricultural loans.
Table shows that maximum proportion of outstanding loans was made with Non-Agricultural
loans with 83.74 percent to 96.04 per cent during the study period. Agricultural loans
remained 3.97 percent to 16.26 percent per cent of total outstanding loans during the study
period. Agricultural loans registered 31.3 per cent compound growth rate. On the other hand
Non Agricultural Loans shows 17.14 percent compound growth rate. The coefficient of
variation of agriculture loans was observed to be the highest in case of agriculture loans
which indicates that agriculture loans are less stable in comparison to non-agriculture loans.

43
 Purpose-Wise Advance Of The KCC Bank

YEAR Agricultural loan Non-agricultural Total loan

loan

2008-09 15354.49 99685.60 132128

2009-10 21592.73 111230.64 149730

2010-11 21250.75 128479.47 182669

2011-12 20211.05 162157.81 242158

2012-13 24039.11 218119.21 285534

2013-14 39526.00 246008.00 314178

2014-15 45276.56 307464.44 352741

2015-16 48872.05 366791.95 415663

MEAN 13551.30 118652.66 132203.96

S.D. 11485.20 58902.43 64444.34

44
 Advance Of The Kcc Bank
400000

350000

300000

250000

200000 Agricultural loan

150000 Non-agricultural loan

100000

50000

0
2008- 2009- 2010- 2011- 2012- 2013- 2014- 2015-
09 10 11 12 13 14 15 16

5.8 Recovery performance

Recovery performance of the bank in the year 2001-2002, the bank had collected rs. 5270
lakh against the demand of rs. 6434 lakh which amounts to 81.91 percent of the total dues.
On the other hand, the total demand in 205-2006 was rs. 10269 lakh out of which rs 8471
lakh was recover which was amount 82.49 percent of the total demand. 9in the year 2012-13,
the bank had total dues. The maximum percentage of the overdue was recorded25.62 percent
and minimum 10.69 percent in the years 2003-04 and 2007-08 respectively. The compound
growth rate of demand and collection was recorded at 25.93 percent and 24.90 percent
respectively.

Period Demand Recovery Overdues

2003-04 12195 9071 3124

2005-06 24013 21482 2531

2008-09 31168 27319 3849

2010-11 58743 51261 7882

2013-14 64556 48675 15881

2015-16 66781 52821 13564

45
 80000

70000

60000

50000
Demand
40000
Recovery
30000 overdues

20000

10000

0
2003-04 2005-06 2008-09 2010-11 2013-14 2015-16

5.9 Profitability
The performance of the bank is decided on the basis of the profit earning capacity. Exhibits
the growth of total income, expenditure and profit of the bank during the study period. The
growth rate of the profit of Bank fluctuated during the period of study. The compound growth
rate of profit of bank for the period under study was -6.25 percent. The compound growth
rate of income and expenditure of the bank for the study period was 11.11 percent and 14.07
percent respectively. This shows that the expenditures of the bank increased with the highest
growth in comparisons with income of the bank. The result of which reflected in the
profitability level of the bank. In the financial year 2011 the net profit before tax of kangra
central cooperative bank was 1208 and after tax was 882.After that in the year 2015-2016 it
increased to 1347 and net profit after tax was 855. And i fond that the average of net profit
before tax is 1101.8 lakhs and the net profit after tax was 772 lakhs. Following table shows
the profitability performance of the kangra central cooperative bank.

46
 Period Net profit before tax Net profit after tax
(lakhs) (lakhs)

2011-2012 1208 882

2012-2013 921 684

2013-2014 976 724

2014-2015 1057 715

2015-2016 1347 855

average 1101.8 772

47
 Net profit before tax
Net profit before tax

1347
1208
1057
921 976

2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

Net profit after tax

Net profit after tax

882 855
724 715
684

48
CHAPTER-5

CONCLUSION

49
CONCLUSION
It is very much clear that co-operative banks have very much importance in national
development. Without the help of co-operative banks, millions of people in India would be
lacking the much needed financial support.Co-operative banks take active part in local
communities and local development with a stronger commitment and social responsibilities.
These banks are best vehicles for taking banking to doorsteps of common men, unbanked
people in urban and rural areas. Their presence in the social, economic and democratic
structure of the country is essential to bring about harmonious development and that perhaps
is the best justification for nurturing them and strengthening their base. These banks are sure
to win in the race because they are from the people, by the people and of the people.

The preceding discussion brings out that the Kangra Central Co-operative Bank Limited is

working efficiently and increasing the profit level. State government is contributing more in

paid up share capital, deposits and advances increased with a high rate which shows the

efficiency of management. The bank is functioning for more than years and providing credit

facility for agricultural and allied activities so it is recommended that it should retain its

present members. The bank must try to increase number of its members for increasing the

amount of share capital. It should control expenses so the profits will be increased. The

overdue situation shows unfavourable condition so it is recommended that bank must adopt

safe lending practices to reduce over dues. The bank can effectively utilize its resources in a

better way through long-term advances with higher interest rates. Overall it can be concluded

that Kangra Central Co-operative Bank is performing efficiently in the state of

Himachal pradesh.

50
BIBLOGRAPHY

51
BOOK REFERED

1 Maheshwari, S.N.; Financial Management, principle And Practices, sultan

chand & sons,9th edition 2004.

2 Maheshwari, S.N.;Element of Financial Management,Sultan Chand &

Sons,2003 7th edition.

3 Pandey, I.M.; Financial Management, Vikas Publishing House,8th edition

2001.

OTHER

Annual Report of Bank.

Journals and manuals.

Report by Branch Manager.

History book of bank.

WEBSITES

1 WWW.KCCB.IN

2 WWW.WIKIPEDIA.ORG/J&K BANK3

3 WWW.WIKIPEDIA.ORG/HOME LOAN

4 WWW.SCRIBD.COM/RATIOANALYSIS

52