I

ndust
ryPr
ofi
le
1.
1 Gener
alI
ntr
oduct
ion:

Ther
oleofbanki
ngi
sver
yessent
iali
nanat
ion’
seconomy
.Banki
sani
mpor
tant
i
nst
it
uti
oni
namoder
nsoci
ety
,andi
tiscor
eoft
hemoneymar
ket
.Thewor
dbank
r
efer
stoani
ndi
vidualoror
gani
zat
ionwhi
chact
sasamoneychangerandexchanges
onenecessar
yforanot
her
.Accor
dingt
osomeeconomi
sts,
thewor
d“BANK”i
sder
ived
f
rom t
heGr
eekwor
d“Banque”whi
chmeansa“
bench”peopl
eusedt
otr
ansactt
hei
r
busi
ness behi
nd t
he benches i
nthe mar
ket
place.As ear
ly as 2000 B.
C.,t
he
Baby
loni
an’
shad dev
eloped banki
ng sy
stem.t
het
empl
esofEphesus,Del
phiand
Ol
ympi
awer
eusedasdeposi
tor
iesf
orpeopl
e’ssur
plusf
undsandt
hepr
iest
soft
hese
t
empl
esact
edasf
inanci
alagent
spr
esentbanki
sani
nst
it
uti
oni
nwhi
chpeopl
ekeep
t
hei
rcashbal
ancei
nthef
orm ofdeposi
t

TheOr
igi
nofbanki
ngst
art
edwi
thmoneyl
endi
ngwhi
chmaybet
racedbackt
othe
Vedi
cper
iodi
nIndi
a.peopl
ecov
eraccust
omedt
otheuseofhundi
s,t
henat
ivebi
ll
sof
en5th cent
exchangeev ury
.In12th cent
uryA.
D.,hundi
swer
econsi
der
edascr
edi
t
i
nst
rument
,whi
chl
aidt
hef
oundat
ionofi
ndi
genousbanki
ng.Thehundisy
stem was
consi
der
edasbackbonef
oral
ltr
ansact
ions.Thepr
iest
soft
het
empl
ewer
ekeepi
ng
t
heJewelcashandot
herv
aluabl
eofpeopl
eandr
etur
nedasandwhenr
equi
re.Ev
en
t
hought
her
ewasnobanki
ngassuchcer
tai
nfunct
ionsofbanki
ngwasadopt
edi
nthe
past
.

Kaut
ali
ys’
sAr
thasast
har
asr
efert
otheact
ivi
ti
esofbanki
ng communi
tyknowsas
Vai
syas.I
nthepastbanki
ngbusi
nesshi
gherr
ateofi
nter
estorusur
ywasv
erymuch
pr
eval
enti
nIndi
a.Thei
nst
it
uti
onsofMul
lahsandSher
if
fsdev
elopeddur
ingt
heper
iod
ofMusl
imr
ule,
Jagat
hset
hi(
wor
dbanker
s)pr
esentev
eni
nthesev
ent
eent
hcent
ury

The dev
elopmentofbanki
ng i
n Engl
and,i
srel
ated t
othe act
ivi
ti
es ofLondon
Gol
dsmi
thsdur
ingt
her
eignoft
heQueenEl
izabet
hI.TheLondonbul
li
onmer
chant
s
usedt
okeept
hei
rnot
escont
ainedanunder
taki
ngt
oret
urnt
hemoneyt
othedeposi
tor
ort
obear
erondemand.Gr
adual
lyt
hegol
dsmi
thnot
esbecamepay
abl
etobear
er
addr
essser
vedast
hebanknot
es.Thegol
dsmi
thbegant
oof
feri
nter
estonmoney
deposi
tedi
nst
eadofchar
gingaf
eef
orkeepi
ngser
vice.Theybegant
oat
tractmor
e

1
deposi
tswhi
chconsi
der
edasani
mpor
tantst
epi
nthedev
elopmentofbanki
ngi
n
Engl
and.ThebankofEngl
andwasest
abl
ishedi
n1964.I
twasonl
yin19th cent
uryt
he
adv
ancedcount
ri
esoft
hewor
ld.

Moder
nbanki
ngbusi
nesswasi
nit
iat
edbyt
heBr
it
ishagencyhousessetupi
nCal
cut
ta
andBombay
.Thef
ir
stbankcal
ledofHi
ndust
anwasest
abl
ishedi
n1770.Joi
ntst
ock
banksbegant
obeest
abl
ishedar
ound1860.Wi
tht
heSwadeshimov
ementgai
ning
gr
ound,manyI
ndi
anscamef
orwar
dtost
artj
ointst
ockbanksdur
ingt
heboom per
iod
of1906-13.Thepeopl
e’sbankofI
ndi
aLt
d.,t
hecent
ralbankofI
ndi
ali
mit
ed,andbank
ofBar
odal
imi
tedwer
est
art
eddur
ingt
hisper
iod.Amaj
orchangei
nbanki
ngcamewi
th
t
hest
art
ingofpr
esi
dencybanki
ngi
nCal
cut
ta,Bombayandmadr
as.I
n1919t
heabov
e
t
hreebankswer
eamal
gamat
edi
ntoi
mper
ialbankofI
ndi
a.

TheI
ndi
anmoneymar
keti
ncl
udesbot
htheor
gani
zedandunor
gani
zedcr
edi
tagenci
es,
whi
char
ever
yessent
ialt
omeett
hecr
edi
tneedsofv
ari
oussect
orsoft
heeconomy
.
Theor
gani
zedsect
orconsi
stsoft
her
eser
vebank,commer
cialbanks.For
eignbanks
andco-oper
ati
vebanks.Theunor
gani
zedsect
ori
ncl
udest
heMoneyLeader
s,Pawn
Br
oker
sandI
ndi
genousbanker
s.

I
n1960,t
heSt
ateBanksofI
ndi
awasgi
vencont
rolofei
ghtst
ate-associ
atedbanks
undert
heSt
ateBankofI
ndi
a(Subsi
diar
yBanks)Act
,1959.Thesear
enow cal
ledi
ts
associ
atebanks.I
n1969t
heI
ndi
angov
ernmentnat
ional
ized14maj
orpr
ivat
ebanks,
oneoft
hebi
gbankwasBankofI
ndi
a.I
n1980,
6mor
epr
ivat
ebankswer
enat
ional
ized.
Thesenat
ional
izedbanksar
ethemaj
ori
tyofl
ender
sint
heI
ndi
aneconomy
.They
domi
nat
ethebanki
ngsect
orbecauseoft
hei
rlar
gesi
zeandwi
despr
eadnet
wor
ks.

The I
ndi
an banki
ng sect
ori
s br
oadl
y cl
assi
fi
ed i
nto schedul
ed banks and non-
schedul
edbanks.Theschedul
edbanksar
ethosei
ncl
udedundert
he2ndSchedul
eof
t
heReser
veBankofI
ndi
aAct
,1934.Theschedul
edbanksar
efur
thercl
assi
fi
edi
nto:
nat
ional
ized banks;St
ateBankofI
ndi
aand i
tsassoci
ates;Regi
onalRur
alBanks
(
RRBs)
;for
eignbanks;andot
herI
ndi
anpr
ivat
esect
orbanks.Thet
erm commer
cial
banksr
efer
stobot
hschedul
edandnon-schedul
edcommer
cialbanksr
egul
atedunder
t
heBanki
ngRegul
ati
onAct
,1949.

2
Gener
all
ybanki
ngi
nIndi
aisf
air
lymat
urei
nter
msofsuppl
y,pr
oductr
angeandr
each-
ev
en t
hough r
each i
nrur
alI
ndi
a and t
othe poorst
il
lremai
nsa chal
lenge.The
gov
ernmenthasdev
elopedi
nit
iat
ivest
oaddr
esst
hist
hrought
heSt
ateBankofI
ndi
a
expandi
ngi
tsbr
anchnet
wor
kandt
hrought
heNat
ionalBankf
orAgr
icul
tur
eandRur
al
Dev
elopment(
NABARD)wi
thf
aci
li
ti
esl
ikemi
crof
inance.

RESERVEBANKOFI
NDI
A

Cent
ralbankandsupr
ememonet
aryaut
hor
it
y

Schedul
edbanks

Commer
cialbanks Co-oper
ati
ves

1.
For
eignBanks(
40)
b 1.Ur
banCo–oper
ati
ves(
52)

2.
Regi
onalr
uralbanks(
196) 2.St
ateCo–oper
ati
ves(
16)

Publ
icsect
orbanks(
27) pr
ivat
esect
orbanks(
30)

1.St
atebankofI
ndi
a 1.Ol
d(22)

andassoci
ate’
sbanks(
8) 2.New(
8)

2.
Othernat
ional
izedbanks

3
Thesear
ethest
ruct
ureoft
heI
ndi
anor
gani
zedbanki
ngsect
ori
nIndi
a.

(
Numberofbanksar
einbr
acket
s)

Acooper
ati
vebanki
sani
nst
it
uti
onwher
einper
sonseconomi
cal
lyweakl
ikef
armer
s,
pet
tyt
rader
s,agr
icul
tur
elabor
er’
s,ar
ti
sans,
sal
ari
espeopl
e,t
hepeopl
eofsmal
lmeans,
pr
ofessi
onal
s,et
c.j
oinbasedonequal
it
yondemocr
ati
cbasi
sfort
hepr
omot
ionof
t
hei
reconomi
cint
erest
.peopl
ejoi
nincooper
ati
vebank,obt
ainl
oansandi
nvestt
hei
r
sur
plusf
undsi
nthef
orm ofdeposi
ts.Cooper
ati
vebanksar
eexpect
edt
opr
ovi
de
ser
vicet
othememberandcust
omer
s.ser
vicei
sthemai
nmot
tooft
hesebank.A
cooper
ati
ve bank as i
ts name i
ndi
cat
es i
s an i
nst
it
uti
on consi
sti
ng ofsev
eral
i
ndi
vidual
swhoj
oint
opoolt
hei
rsur
plussav
ingf
ort
hepur
poseofel
imi
nat
ingt
he
pr
ofi
tsoft
hebanker
sormoneyl
ender
swi
thav
iewt
odi
str
ibut
ingt
hesameamongst
t
hedeposi
tor
sandbor
rower
s

Acooper
ati
vebankpr
ovi
desf
inanci
alassi
stancet
othepeopl
ewi
thsmal
lmeanst
o
pr
otectt
hem f
rom t
hedebtt
rapoft
hemoneyl
ender
s.i
tisapar
tofv
astandpower
ful
st
ruct
ure ofcooper
ati
vei
nst
it
uti
on whi
ch ar
e engaged i
ntasks ofpr
oduct
ion,
pr
ocessi
ng,mar
ket
ing,di
str
ibut
ion,ser
vici
ngandbanki
ngi
nIndi
a.Acooper
ati
vebank
i
saf
inanci
alent
it
ywhi
chbel
ongst
oit
smember
,whoar
eatt
hesamet
imet
heowner
s
andt
hecust
omer
soft
hei
rbank.cooper
ati
vebanksar
eof
tencr
eat
edbyper
sons
bel
ongi
ngt
othesamel
ocalorpr
ofessi
onalcommuni
tyorshar
ingacommoni
nter
est
.
t
hese banksgener
all
ypr
ovi
de t
hei
rmember
swi
th a wi
de r
ange ofbanki
ng and
f
inanci
alser
vice(
loans,deposi
t,banki
ng account
s)cooper
ati
vebanksdi
ff
erf
rom
st
ockhol
derbankbyt
hei
ror
gani
zat
ion,
thei
rgoal
s,t
hei
rval
uesandt
hei
rgov
ernance.

TYPESOFCOOPERATI
VEBANK

Cooper
ati
vebankwi
th3t
ierf
eder
alst
ruct
urepr
ovi
deshor
t-t
erm,medi
um t
erml
oans
andconcent
rat
emai
nlyi
nagr
icul
tur
esect
or.Theyar
esi
tuat
edi
nst
ate,di
str
ict
,and
v
ill
agel
evelr
espect
ivel
y.t
hel
ong–t
erm cr
edi
tst
ruct
ureconsi
stsofst
ateagr
icul
tur
al
r
uraldev
elopmentbanksandpr
imar
yagr
icul
tur
alr
uraldev
elopmentBanksf
unct
ioni
ng
att
heApex,Tal
uk/
blockl
evel
sinI
ndi
a.t
heur
banandsemi
-ur
banar
easf
orpr
ovi
ding
non-agr
icul
tur
ecr
edi
t.

4
THEPRI
MARYAGRI
CULTURALCREDI
TSOCI
ETI
ES(
PACS)

PACSar
econsi
der
edasmi
niat
urebanksorv
ill
agebanksast
heyar
eissui
ngl
oanst
o
i
ndi
vidual
sandaccept
ingdeposi
tsi
nther
uralar
eas.Thought
hePACSar
ecal
ledas
banksi
nsomeoft
hest
atesl
ikeKer
ala,Tami
lNaduandPondi
cher
ryt
heyar
enot
cont
rol
ledbyRBIandnotbr
oughtunderbanki
ngr
egul
ati
onact
.

DI
STRI
CTCENTRALCOOPERATI
VEBANK(
DCCB’
s)

DCCB’
spr
ovi
def
inanci
alst
rengt
htoPACSandot
hermembersoci
eti
esatt
hedi
str
ict
l
evel
,actasabal
anci
ngcent
erf
ort
her
esour
cesoft
hePACS,at
tractl
ocaldeposi
ts,
r
enderbanki
ng ser
vice and super
vise t
he wor
king and managementofaf
fi
li
ated
soci
eti
es.

STATECOOPERATI
VEBANKS(
SCBS)

SCB’
sar
ewor
kingasapi
votatt
hel
eveloft
hree-t
ierpy
rami
dalst
ruct
ure.Thi
sbank
act
sasbanker
sbankofcooper
ati
ve cr
edi
tst
ruct
ure.i
tpr
ovi
desconnect
ing l
ink
bet
weenmoneymar
ket
,cooper
ati
vesandNABARD,act
sasaf
inanci
alcent
erofal
l
cooper
ati
vebanksandot
hersoci
eti
esi
nthest
ate.Theot
herf
unct
ionofSCBSar
e
sanct
ioni
ng ofshor
tter
m,medi
um t
erm,and l
ong-t
erm cr
edi
t,car
ryoutbanki
ng
busi
ness,
arr
angementofi
nspect
ionandcont
rolofaf
fi
li
atedcooper
ati
vei
nthest
ate.

COOPERATI
VEAGRI
CULTURALRURALDEVELOPMENTBANKS(
CARDB’
s)

CARDBsi
ssuel
ong-t
erml
oanst
otheagr
icul
tur
istf
ort
hepur
chaseofl
and,t
ract
ors,
pumpsset
,

Oi
lengi
ne,
sinki
ngofwel
l,i
nst
all
ati
onofpi
pel
ine,
landr
ecl
amat
ion,
hor
ti
cul
tur
eandf
or
pr
ojectl
endi
ng.st
ateAgr
icul
tur
alRur
alDev
elopmentbankar
rangef
undsbyf
loat
ingof

5
debent
ureswi
tht
hehel
pofNABARD andi
ssuel
oanst
hroughpr
imar
yAgr
icul
tur
al
Rur
alDev
elopmentbanks.I
nmanyst
atest
wo-t
ierf
eder
alst
ruct
urei
scr
eat
edwi
tht
he
apex and pr
imar
ies.Thi
s pat
ter
n exi
stsi
n Assam,Har
yana,Ker
ala,Kar
nat
aka,
Mahar
asht
ra,Punj
ab,Raj
ast
han,Tami
lNadu and westBengal
.uni
tar
y st
ruct
ure
consi
stsofagr
icul
tur
alr
uraldev
elopmentbankswi
thbr
anchesf
unct
ioni
ngi
nst
atel
ike
Guj
arat
,Bi
har
,Ut
tarPr
adeshandJammuandKashmi
r.

URBANCOOPERATI
VEBANKS

Ur
bancooper
ati
vebankspr
ovi
debanki
ngandcr
edi
tfaci
li
ti
est
our
banandsemiur
ban
popul
ati
on.Asofnow120ur
bancooper
ati
vebanksar
efunct
ioni
ngi
nthest
ates.They
mobi
li
zedeposi
tsf
rom t
hepubl
icandext
endcr
edi
tfaci
li
ti
esf
orspeci
fi
edpur
poses.
t
hei
rlendi
ngoper
ati
oni
ncl
udespr
ovi
sionofcr
edi
tfaci
li
ti
est
osmal
ltr
ader
s,ar
ti
sans
andper
sonbel
ongi
ngt
olow-andmi
ddl
e-i
ncomegr
oupf
orpur
posesr
angi
ngf
rom
housi
ng,
busi
ness,
educat
ion,
consumerandot
hernon-Far
m sect
oract
ivi
ti
es.

Among t
he non-agr
icul
tur
alcr
edi
tsoci
eti
es ur
ban cooper
ati
ve bank occupy an
i
mpor
tantpl
ace.UCBi
nIndi
apl
ayedani
mpor
tantr
olei
nmobi
li
zingr
esour
cesf
rom
l
ower
-andmi
ddl
e-i
ncomegr
oupandi
npr
ovi
dingdi
rectf
inancet
osmal
lent
repr
eneur
s
andt
rader
s.Thi
sbanki
nIndi
awi
tht
heobj
ectofcat
eri
ngt
othebanki
ngandcr
edi
t
r
equi
rement
soft
heur
banmi
ddl
ecl
asses.

TheRBIdef
inesUr
bancooper
ati
vebanksas“
smal
lsi
zedcooper
ati
vel
yor
gani
zed
banki
nguni
tswhi
choper
atei
nmet
ropol
it
an,ur
banandsemiur
bancent
er’
smai
nlyt
o
t
heneedsofsmal
lbor
rower
s,v
izowner
sofsmal
l-scal
eindust
ri
aluni
tsandr
etai
l,
pr
ofessi
onaland sal
ari
escl
asses.Ur
ban cooper
ati
ve bankmobi
li
ze sav
ingsf
rom
mi
ddl
e-and l
ower
-incomegr
oup and pur
veycr
edi
tto smal
lbor
rower
s,i
ncl
udi
ng
weakersect
ionoft
hesoci
ety
.thesebanksext
endt
hei
rar
eaofoper
ati
onov
erat
own.
t
hemai
nfunct
ionoft
hesebanksi
stopr
omot
ethr
if
tbyat
tract
ingdeposi
tsf
rom
member
sandnon-member
sandt
oadv
ancel
oanst
othemember
s.Pr
iort
o1966,
ur
bancooper
ati
vebankswer
eex
clusi
vel
yundert
hepur
viewofst
ategov
ernmentf
rom

6
Mar
ch1,1966cer
tai
npr
ovi
sionofbanki
ngr
egul
ati
onacthav
ebeenmadeappl
icabl
e
t
othesebanksconsequent
ly,
theRBIbecomest
her
egul
ator
yandsuper
visor
yaut
hor
it
y
ofsuchbankscont
inuet
oremai
nwi
thst
ategov
tundert
her
espect
ivecooper
ati
ve
soci
eti
esact
.thesebanksgr
antsi
zeabl
eloansandadv
anceunderpr
ior
it
ysect
orf
or
l
endi
ngt
osmal
lbusi
nessent
erpr
ises,r
etai
ltr
ade,r
oadsandwat
ert
ranspor
toper
ator
s
andpr
ofessi
onalandsel
f-empl
oyedper
sons.t
heur
bancooper
ati
vebanksar
emost
ly
l
ocat
edi
ntownsandci
ti
esandcat
ert
hecr
edi
trequi
rementoft
heur
banpeopl
e.

1.
2Indust
rybackgr
ound

1.
2.1Or
igi
noft
hei
ndust
ry

Thet
erm ur
bancooper
ati
vebank(
UCBs)
,thoughnotf
ormal
lydef
ines,
ref
erst
opr
imar
y
cooper
ati
vebanksl
ocat
edi
nur
banandsemi-ur
banar
eas.t
hesebanks,t
il
l1996,
coul
dlendmoneyonl
yfornon-agr
icul
tur
alpur
pose.t
hisdi
sti
nct
iondoesnothol
d
t
oday
.thesebankswer
etr
adi
ti
onal
lycent
erar
oundcommuni
ti
es,l
ocal
it
ieswor
kpl
ace
gr
oups.Theyessent
ial
lyl
entt
osmal
lbor
rower
sandbusi
nesses,t
oday
,thei
rscopeof
oper
ati
onhaswi
denedconsi
der
abl
y.

Theor
igi
noft
heur
bancooper
ati
vebanki
ngmov
ementi
nIndi
acanbet
racedt
othe
cl
osedofni
net
eent
hcent
uryhen,i
nspi
redbyt
hesuccessoft
heexper
iment
scr
edi
t
mov
ementi
nGer
manysuchsoci
eti
eswer
esetupi
nIndi
a.cooper
ati
vesoci
eti
esar
e

7
basedont
hepr
inci
plesofcooper
ati
on,mut
ualhel
p,democr
ati
cdeci
sionmaki
ngand
openmember
shi
p.cooper
ati
ver
epr
esent
edanew andal
ter
nat
iveappr
oacht
othe
or
gani
zat
ionasagai
nstpr
opr
iet
aryf
ir
msandj
ointst
ockcompani
eswhi
chr
epr
esent
t
hedomi
nantf
orm ofcommer
cialor
gani
zat
ion.

Thef
ir
stknownmut
ualsoci
eti
esi
nIndi
awaspr
obabl
ythe‘
Any
ony
aSahakar
iMandal
is
‘
organi
zedi
ntheer
stwhi
lepr
incel
yst
ateofBar
odai
n1889undert
hegui
danceofv
ithal
l
axmanal
soknownasBhausahebkav
thekar
.ur
bancooper
ati
vecr
edi
tsoci
eti
es,i
n
t
hei
rfor
mat
ivephasecamet
obeor
gani
zedont
hecommuni
tybasi
stomeett
he
consumpt
ion-or
ient
ed cr
edi
tneeds oft
hei
rmember
s.Sal
ary ear
ner
s soci
eti
es
i
ncul
cat
inghabi
tsoft
hri
ft
sandsel
f-hel
ppl
ayedasi
gni
fi
cantr
olei
npopul
ari
zingt
he
mov
ement
,especi
all
yamongstt
hemi
ddl
ecl
assaswel
lasor
gani
zedl
abor
.fr
om i
ts
or
igi
nst
hent
otoday
,thet
rustoft
heUCBs,hi
stor
ical
ly,hasbeent
omobi
li
zesav
ing
f
rom mi
ddl
e-andl
ow-i
ncomeur
bangr
oupsandpur
veycr
edi
ttot
hei
rmember
s–
manyoft
hewhi
chbel
ongedt
oweakersect
ions.

Theenact
mentofcooper
ati
vecr
edi
tsoci
eti
esact
1904,
howev
er,
gav
ether
eali
mpet
us
t
omov
ement
.thef
ir
stur
bancooper
ati
vecr
edi
tsoci
etywasr
egi
ster
edi
nCanj
eev
aram
(
kanj
ivar
am) i
nthe er
stwhi
le Madr
as pr
ovi
nce i
n Oct
ober
,1904.amongstt
he
pr
omi
nentcr
edi
tsoci
eti
eswer
epi
oneerur
bani
nBombay(nov
ember
11,
1905)
,theno1
Mi
li
tar
yaccount
smut
ualhel
pcooper
ati
vesoci
etyi
nPoona(j
anuar
y9,
1906)
,cosmos
i
nPoona(
Januar
y18,
1906)
,Gokakur
ban(
Febr
uar
y15,1906)andBel
gaum pi
oneer
(f
eb231906)i
nBel
gaum di
str
ict
,thekanakav
li-mat
hco–oper
ati
vecr
edi
tsoci
ety
andv
arav
adeweav
ersur
bancr
edi
tsoci
ety(mar
ch13,
1906)i
nsout
hRat
nagi
ridi
str
ict
.
t
he mostpr
omi
nentamongstt
he ear
ly cr
edi
tsoci
eti
es was t
he Bombay ur
ban
cooper
ati
ve cr
edi
t soci
ety
,sponsor
ed by Vi
thal
adas Thacker
sey and Lal
lubahi
Samal
dasest
abl
ishedonJanuar
y23,
1906.

1.
2.2Pr
esentSt
atusoft
heI
ndust
ry

Thecooper
ati
vecr
edi
tsoci
eti
esact1904wasamendedi
n1912wi
tht
hev
iewt
obar
d
basi
ngi
ttoenabl
eor
gani
zat
ionofnon–cr
edi
tsoci
eti
es.t
heMacl
agancommi
tt
eeof
19154 was appoi
nted t
orev
iew t
hei
r per
for
mance and suggest measur
efor
st
rengt
heni
ng t
hem.t
he commi
tt
ee obser
ved t
hatsuch i
nst
it
uti
on wasemi
nent
ly
sui
tedt
ocat
ert
otheneedsoft
hel
ower
-andmi
ddl
e-i
ncomest
rat
aofsoci
etyand

8
woul
dincul
cat
ethepr
inci
plesofbanki
ngamongstt
hemi
ddl
ecl
asses.Thecommi
tt
ee
al
sof
eltt
hatt
heur
bancooper
ati
vecr
edi
tmov
ementwasmor
evi
abl
etanagr
icul
tur
al
cr
edi
tsoci
eti
es.t
her
ecommendat
ionsoft
hecommi
tt
eewental
ongi
nest
abl
ishi
ngt
he
ur
bancooper
ati
vecr
edi
tmov
ementIi
tsownr
ight

The cooper
ati
ve banks f
unct
ioni
ng i
nthe Tami
lNadu ar
eful
fi
ll
ing t
he cr
edi
t
r
equi
rement
soft
hef
armer
s,weav
er,r
uralar
ti
sans,consumeroft
heur
banar
eas.
Thesei
nst
it
uti
onsar
eknownasco-oper
ati
vecr
edi
tst
ruct
urear
eoft
hree-t
ir
einnat
ure.
Att
hegr
assr
ootl
evel
,thepr
imar
yAgr
icul
tur
alcoopBanks(
PACBs)i
sfunct
ioni
ngat
t
hev
ill
agel
evel
.Att
hedi
str
ictl
evel
,thecent
ralcoopbanks(
CCBs)i
sfunct
ioni
ngwi
th
t
heheadquar
ter
satdi
str
ictcapi
talandt
hei
rbr
anchesi
nvar
iouspl
acesoft
hedi
str
ict
s
concer
ned.Att
heapexl
evel
,thepur
asawal
kam co-oper
ati
vebankLt
d.,i
sfunct
ioni
ng
atChennaiwhi
chco-or
dinat
est
heent
ir
eshor
t-t
erm coop.cr
edi
tst
ruct
ure.

I
nthepr
esent
-daycont
ext
,iti
sofi
nter
estt
orecal
lthatdur
ingt
hebanki
ngcr
isi
sof
1913-14,whennof
ewert
han57j
ointst
ockbandscol
lapsed,t
her
ewasaf
li
ghtof
deposi
tsf
rom j
ointst
ockbankst
ocooper
ati
veur
banbanks.

ov
ert
hey
ear
s,pr
imar
il
y(ur
ban)cooper
ati
vebankshav
eregi
ster
edasi
gni
fi
cantgr
owt
h
i
nnumber
,si
zeandv
olumeofbusi
nesshandl
ed.
ason31stmar
ch,
2003t
her
ewer
e
2,
104UCB’
sofwhi
ch56wer
eschedul
edbanks.About79per
centoft
hesear
elocat
ed
i
nfi
vest
ates

1.
2.3Gr
owt
handDev
elopmentoft
heI
ndust
ry
I
ndi
ahasbasi
cal
lyanagr
ari
aneconomywi
th72% ofi
tst
otalpopul
ati
onr
esi
dingi
n
r
uralar
eas.Thi
sseedsofcooper
ati
oni
nIndi
awer
esowni
n1904whent
hef
ir
st
cooper
ati
vesoci
eti
eswaspassed.Si
ncet
hen,t
hecooper
ati
vemov
ementhasmade
si
gni
fi
cantpr
ogr
essandext
endedacr
osst
heent
ir
ecount
ry.t
hecooper
ati
vecr
edi
t
sy
stem ofI
ndi
ahasl
argestnet
wor
kint
hewor
ldandcooper
ati
vehasadv
ancedmor
e
cr
edi
tinI
ndi
anagr
icul
tur
alsect
ort
hancommer
cialbanks.

Thev
ill
agecooper
ati
vesoci
eti
espr
ovi
dest
rat
egi
cinput
sfort
heagr
icul
tur
alsect
or.
consumersoci
eti
es meett
hei
rconsumpt
ion r
equi
rementatconcessi
onalr
ates,
mar
ket
ing soci
eti
es hel
pthe f
armert
o getr
emuner
ati
ve pr
ices and cooper
ati
ve
pr
ocessi
nguni
tshel
pinv
alueaddi
ti
onst
other
awpr
oduct
set
c,I
naddi
ti
oncooper
ati
ve

9
soci
eti
esar
ehel
ping i
n bui
ldi
ng up ofst
orageGodownsi
ncl
udi
ng col
d st
orages,
v
ari
ous dev
elopment act
ivi
ti
es i
n agr
icul
tur
e, smal
lindust
ry and pr
ocessi
ng,
di
str
ibut
ionandsuppl
iesar
enowcar
ri
edont
hroughcooper
ati
ves.Theconst
it
uti
onal
r
efor
mswhi
chl
edt
othepassi
ngoft
hegov
ernmentofI
ndi
a

1.
2.4Fut
ureoft
heI
ndust
ry
Al
lthebankbot
hcommer
cialandcooper
ati
veshast
heal
locat
ionofRs36118.
78cr
ore
f
ori
mpl
ement
ati
onofACPf
ort
hey
ear2007-2008andt
heachi
evement
sfort
hey
ear
i
sRs.
40244.
31cr
ore,
regi
ster
ing111.
42%achi
evementoft
heannualcr
edi
tfar
m sect
or
andot
herpr
ior
it
ysect
orswasat46.
20%,
18.
93%and34.
87%r
espect
ivel
y.

Enhanced spendi
ng on i
nfr
ast
ruct
ure,speedy i
mpl
ement
ati
on of pr
oject
s and
cont
inuat
ionofr
efor
msar
eexpect
edt
opr
ovi
def
urt
heri
mpet
ust
ogr
owt
h.Al
lthese
f
act
orssuggestt
hatI
ndi
a’sbanki
ngsect
ori
sal
sopoi
sedf
orr
obustgr
owt
hast
he
r
api
dlygr
owi
ngbusi
nesswoul
dtur
ntobanksf
ort
hei
rcr
edi
tneeds.
Al
so,t
headv
ancement
sint
echnol
ogyhav
ebr
oughtt
hemobi
leandi
nter
netbanki
ng
ser
vicest
othef
ore.Thebanki
ng sect
ori
slay
ing gr
eat
eremphasi
sonpr
ovi
ding
i
mpr
ovedser
vicest
othei
rcl
ient
sandupgr
adi
ngt
hei
rtechnol
ogyi
nfr
ast
ruct
ure,i
n
or
dert
oenhancet
hecust
omer
’sov
eral
lexper
ienceaswel
lasgi
vebanksacompet
it
ive
edge.
Manybanks,i
ncl
udi
ngHDFC,I
CICIandAXI
Sar
eexpl
ori
ngt
heopt
iont
olaunchcont
act
-l
esscr
edi
tanddebi
tcar
dsi
nthemar
ketshor
tl
y.Thecar
ds,whi
chusenearf
iel
d
communi
cat
ion(
NFC)mechani
sm,wi
llal
lowcust
omer
stot
ransactwi
thouthav
ingt
o
i
nser
torswi
pe.
Mr
.Bi
llGat
es,Co-f
ounderofMi
crosof
tCor
p,hasst
atedt
hatI
ndi
awi
llmov
equi
te
r
api
dlyt
o adi
git
alpay
ment
’seconomyi
n asl
it
tl
eassev
en y
ear
s,based on t
he
i
ntr
oduct
ionofdi
git
alpay
mentbankscombi
nedwi
thot
hert
hingsl
ikedi
rectbenef
it
t
ransf
ers,
uni
ver
salpay
ment
sint
erf
aceandAadhaar

Or
gani
zat
ionalPr
ofi
le

10
2.
1Or
igi
noft
heor
gani
zat
ion

Thebankwasst
art
edbyt
heassoci
ati
onof35member
swi
tht
hepai
d-upcapi
talof
RS63/
-.ThebankwasRegi
ster
edon25.
11.
1924andBankwasf
unct
ioni
ngon
26.
12.
1924.Thebankhadcel
ebr
atedi
tsGol
denJubi
leei
nthey
earf
orwhi
cht
he
Hon’
bleMi
nist
erf
orco-oper
ati
onandHon’
bleMi
nist
erf
orheal
thpar
ti
cipat
edi
nthe
f
unct
ion.

Thebankhadt
heownbui
ldi
ng@no.
22,
pur
asai
wal
kam hi
ghr
oad,
Chennai-600007,
on1.
4.1959.atacostofRs33,
000/
-andl
aterasum ofRs17.
50l
acsspent
t
owar
dsRe-Model
li
ngandr
enov
ati
onandopenedanew bui
ldi
ngdur
ingt
hey
ear
1998.Theact
ivi
ti
esoft
hebankwer
emai
nlyconf
inedt
ogr
ant
ingofl
oansand
mor
tgageofi
mmov
abl
epr
oper
tyt
il
lthe1966.

I
ts act
ivi
ti
es wer
e af
ter
war
ds di
ver
sif
ied t
o gr
ant
ing l
oans on t
o smal
lscal
e
I
ndust
ri
es, sel
f-empl
oyed per
son, pet
ty t
rader
s, t
ranspor
t oper
ator
s and
busi
nesspeopl
eandj
ewell
oanst
olower
-andmi
ddl
e-cl
assbor
rower
s.

THEMAI
NOBJECTS:

 Tobor
row f
undsf
rom memberorot
hert
obeut
il
izedf
orl
oanst
o
memberf
orusef
ulpur
pose

 Toactast
heagentf
orj
ointpur
chaseoft
hedomest
icandot
her
r
equi
rement
sofi
tsmember
stounder
takecol
lect
ionofbi
ll
sdr
awn,
accept
ed orendor
sed by member
,const
it
uent
s and t
o di
scount
chequesofappr
ovedmember
s.

 Gener
all
y,t
oencour
aget
hri
ft-sel
f-hel
pandco-oper
ati
onamongt
he
member
.

 Tounder
taket
hef
inanci
ngofsmal
l-scal
eindust
ri
es

 Tounder
taket
hei
ssueofguar
ant
eeonbehal
foft
heconst
it
uent
underpr
opersaf
eguar
d

11
Vi
sionoft
hebank

Acooper
ati
vebanksr
endert
othesoci
etybypr
ovi
dingcr
edi
ttot
ranspor
toper
ator
s,
smal
ltr
ader
s,l
ower
-incomegr
oupofpeopl
e,ar
ti
sanset
c.,
onr
easonabl
eter
ms.

Mi
ssi
onoft
hebank

 Topr
omot
eandat
tractsav
ingofr
uralandsemiur
banar
eas

 Toi
ncr
easet
hest
andar
dofl
ivi
ngoft
hepeopl
ewhoar
eresi
dingi
nrur
al
andsemiur
banar
eas
2.
2STATUSOFTHEORGANI
ZATI
ON

TheAut
hor
izedshar
ecapi
taloft
hebanki
sRs30,
000,
000of3,
00,
000shar
esofRs
100/
-each.

Thebankcol
lect
ingt
hef
oll
owi
ngt
ypesofdeposi
tfr
om member
sandnon-member
s:

 Fi
xeddeposi
t

 Cashcer
ti
fi
cat
e

 Recur
ri
ngdeposi
t

 Sav
ingbank

 Cur
rentdeposi
t

 Homedeposi
t(hundiboxf
orchi
ldr
en)

Thebankhadi
ssuedt
hef
oll
owi
ngt
ypeofl
oansandadv
ance:

 Deposi
tloan

 Jewell
oan(
10.
5%)

 Mor
tgagel
oan(
Forl
oanv
alueupt
o500000Lakhs–5y
ear
s)

12
  Mor
tgagel
oan(
Forl
oanv
aluef
rom 500000t
o600000Lakhs–7y
ear
s)

 Sur
etyl
oans

 Pet
tyt
rader
s’l
oan(
12%)

 SEPL(
sel
f-empl
oyedper
sonall
oan)

 Cashcr
edi
ttoSSI

 SSTTer
mloan

 Loant
osel
f-hel
pgr
oup

 Womenent
repr
eneurl
oan(
ForLoanamountupt
o300000Lakhs-3y
ear
s)

 Wor
kingwomenl
oan(
ForLoanamountupt
o800000Lakhs-3y
ear
s)

 DAPL(
dis-abl
edpeopl
e)

 TABL(
6%)

 TAMCO(
6%)

AUDI
T

Thecooper
ati
veaudi
tdepar
tmenti
slooki
ngaf
tert
heaudi
tandonecooper
ati
veaudi
t
of
fi
cer
sandseni
orcooper
ati
veaudi
torar
eaudi
ti
ngt
heaccount
soft
hebanksand
audi
tcer
ti
fi
cat
ehasbeeni
ssuedbyt
hej
ointdi
rect
orofcooper
ati
veaudi
tonorbef
ore
30thSept
emberev
eryy
ear
.

ADMI
NISTRATI
VEAUTHORI
TY

Thebanki
sunderdualcont
rolonebycooper
ati
vedepar
tmentandot
herbyr
eser
ve
bankofI
ndi
awhi
chhasi
ssuedl
icenset
othebankt
ocar
ryoutt
hebanki
ngbusi
ness,
t
heby
lawi
sbei
ngr
egi
ster
edbycooper
ati
vedepar
tment
.

13
2.
3GROWTHANDDEVEL
OPMENTOFTHEORGANI
ZATI
ON

TheBankwasawar
dedshi
eld6t
imesasamar
kofgoodwor
kingUr
banBankbyt
he
gov
ernmentofTami
lNadu.Recent
lyf
ort
hey
ear2008-2009&2012-2013,t
he
bank was awar
ded Bestur
ban bank i
n co -oper
ati
ve hel
d on 20.
11.
2009 &
20.
11.
2013.

TheBankhasbeencl
assi
fi
edcont
inuousl
yas“
A”Cl
assBanki
nAudi
tSi
nce1982.
TheBankhasopened4br
anchesat

 Padi

 Mogappai
r

 MKBNagar

 Nanganal
lur

Saf
edeposi
tsl
ocker
sfaci
li
ti
esar
eav
ail
abl
einHeadof
fi
ceandBr
anches.
Now,
theBankal
linHeadof
fi
ceandBr
anchof
fi
cear
eful
lycomput
eri
zed.

SOURCEOFFUNDS

ThePUCB r
equi
resadequat
efi
nancet
oper
for
mthei
rfunct
ionsef
fect
ivel
y.The
PUCB canr
aisef
inancebot
hint
ernal
lyandext
ernal
ly.Thei
nter
nalsour
ceconsi
sts
ofshar
ecapi
tal
,ent
rancef
eescol
lect
edf
rom member
sandnon-member
s.The
ext
ernalsour
ceofl
oansf
rom cent
ralco-oper
ati
vebanks,
loansgr
antandsubsi
des
f
rom t
hegov
ernmentandr
ecei
vingdeposi
tsf
rom memberandnon-member
s

Sour
ceoff
undcanbecl
assi
fi
edast
wot
ypes

A.I
nter
nalsour
ceorownedf
unds

B.Ext
ernalsour
ceorbor
rowedf
unds

A.I
NTERNALSOURCEOROWNEDFUNDS
14
 1.Shar
ecapi
tal(
member
s,gov
ernment
)

2.Reser
ve(
stat
utor
yreser
ve,r
eser
vef
orbaddebt
s,r
eser
vef
orov
erdue,
ot
herr
eser
ve)

3.Sur
plus

SHARECAPI
TAL

Shar
ecapi
tali
soneoft
hesour
cesofPUCB.t
heshar
ecapi
tali
scol
lect
edf
rom t
he
memberwhoav
ail
sloansorser
vicef
rom t
hebank.t
heshar
ecapi
talv
alueRs100.

Thef
oll
owi
ngt
abl
erepr
esentt
heshar
ecapi
talposi
ti
onofPUCB f
or2012-2013t
o
2018-2019.

Tabl
e1:Shar
ecapi
talposi
ti
on(
Rsi
nlakhs)

S.
NO YEARS SHARECAPI
TAL %ofgr
owt
h

(
inLakhs)

1 2012-2013 104.
39 ___

2 2013-2014 116.
96 12.
04

3 2014-2015 149.
37 27.
76

4 2015-2016 164.
96 10.
25

5 2016-2017 165.
80 0.
61

Theshar
ecapi
talhasi
ncr
easedev
eryy
ear
.theshar
ecapi
tali
n2013i
s104.
39l
akhs

15
andi
n2018i
s185.
75l
akhs.i
tIncr
easedar
ound28% andt
hendecl
inet
o0.
61% and
t
henagai
nincr
easedt
o12%.t
hePUCB canconcent
rat
emor
etoi
ncr
easet
heshar
e
capi
talbyadmi
tt
ing mor
emember
s.t
heshar
ecapi
tali
sful
lycont
ri
but
ed byt
he
member
sandgov
ernmenthasnotcont
ri
but
edanyshr
ecapi
tal
.theov
eral
lgr
owt
his
0.
10%.

RESERVES

Ther
ear
esev
eralt
ypesofr
eser
vescr
eat
edt
ost
rengt
heni
ngt
hef
inanci
alposi
ti
onof
t
hePUCB .t
heyar
est
atut
oryr
eser
ve,baddebt
sreser
ve,ov
erduer
eser
veandot
her
ki
ndsofr
eser
veal
toget
hercr
eat
eddur
ingt
hecour
seofaudi
t.t
hef
luct
uat
ioni
sduet
o
cr
eat
ionofr
eser
vef
ort
heov
erduel
oansandal
sof
orst
atut
oryr
eser
ves.

Tabl
e2:Tot
alr
eser
ves(
Rsi
ncor
es)

S.
NO YEARS RESERVEFUNDS %OFGROWTH

1 2013-14 4.
69 -

2 2014-15 4.
07 -13.
21

3 2015-16 4.
47 9.
82

4 2016-17 5.
13 14.
76

5 2017-18 2.
08 -0.
97

Thet
otalr
eser
veofPUCB hasi
ncr
easedf
rom 2014t
o2017andi
thassl
ight
ly
decl
inedi
nthey
ear2018.PUCB mustt
ryt
oincr
easei
tsr
eser
vesot
hati
tdoesn’
tface
anyf
inanci
alpr
obl
emsi
nthef
utur
e.t
heov
eral
lgr
owt
his0.
02%.

MEMBERSHI
P

Member
shi
poft
hecooper
ati
vebanki
scl
assi
fi
edi
ntwot
ypesv
iz,Member
sand
associ
atedMember
s.Member
sar
eel
igi
blet
ogetal
lki
ndsofl
oansandal
sohav
eri
ght
t
ovot
eint
he gener
albodymeet
ing.An associ
ated membershal
lnotent
it
let
o
par
ti
cipat
eint
hegener
albodymeet
ingsandhasnov
oti
ngr
ight
.Onl
ygett
heser
vices
f
rom t
hebank.Buti
nPUCB t
hemember
sar
eful
lypubl
icandt
her
ear
enoassoci
ated

16
member
s.

Thef
oll
owi
ngt
abl
erepr
esentt
het
otalMember
shi
pdet
ail
soft
hePUCB f
or2012-
2013t
o2017-2018

Tabl
e3:Tot
almember
shi
pdet
ail
s

YEAR MEMBERS %OFGROWTH

2012-2013 37881 _

2013-2014 38461 1.
53

2014-2015 39336 2.
27

2015-2016 41289 4.
96

2016-2017 41945 1.
58

2017-2018 43923 4.
71

Thet
otalmember
soft
hePUCB i
sincr
easi
ngev
eryy
ear
.thet
otalmember
sin2017-
2018hadi
ncr
easedwhencompar
edt
oot
hery
ear
s.ov
eral
lthePUCB hasshowna
v
erygoodgr
owt
hinmember
shi
pov
ert
hey
ear
s.t
hePUCB cani
ncr
easeadmi
tt
ing
mor
emember
sandgener
atemor
efunds.t
heov
eral
lgr
owt
his0.
02%.

KYC(
KnowYourCust
omer
)schemehasbeeni
ntr
oducedt
omaket
hei
dent
if
icat
ion
of cust
omer
seasy
.

2.
4Fut
urePr
ospect
sandPl
ansoft
heOr
gani
zat
ion

 ATM’
swi
llbei
nst
all
edShor
tl
y
 RuPaycar
dswi
llbei
ssuedshor
tl
y
 BBPS(
Bhar
athBi
llPay
mentSy
stem)any
wher
eany
timebi
llpay
mentwi
llbe
i
ntr
oducedshor
tl
y

17
2.
5Or
gani
zat
ionst
ruct
ureandor
gani
zat
ionchar
t

BOARDOFMANAGEMENT

Pr
esi
dent

Vi
ce Boardof
pr
esi
dent Dir
ector

Prof
essi
onal Char
ter
ed
Dir
ector(
inthe 18 account
ant
bankingfi
eld)
STAFFSTRUCTURE

Managi
ngDirector
(govtst
aff)

Gener
almanager

Manager

Asst
. Asst
.
Manager 19 Manager
Jewelloan
&other
SB FD&RD
SECTI
ON SECTI
ON

Establ
ishment EDP
ODsect
ion
secti
on sect
ion

Lear
ningf
rom I
nter
nshi
p
3.
1SWOTAnal
ysi
soft
heor
gani
zat
ion

STRENGTHS:

 Cust
omercent
ri
cschemes
Thebankshav
edi
ff
erentl
oansschemest
ail
ormadet
osui
ttheneedsof
v
ari
ous cust
omer
s.They al
so hav
evar
ious scheme desi
gned f
orsmal
l
ent
repr
eneurandbusi
nessmen.t
hepr
ocedur
eforsanct
ioni
ngofl
oansunder

20
 t
heschemehasbeensi
mpl
if
iedwi
thav
iewt
oat
tractt
hecust
omer

 Pr
ofessi
onal
lymanagedbusi
nessuni
ts

They hav
e under
stood t
he i
mpor
tance of pr
ofessi
onal
ism i hi
n t s
compet
it
ivewor
ld.

 Fav
orabl
etr
eat
mentbyRBI
WhenRBIi
slenderofl
astr
esor
tforcommer
cialbanksi
tist
hel
enderoff
ir
st
r
esor
tforco-oper
ati
vebanks.t
heypr
ovi
def
inanci
alr
esour
cei
nthef
orm of
i
nit
ialcapi
talwor
kingcapi
tal
,ref
inanceet
c.t
oco-oper
ati
vebanks

l
owerC.
R.RandS.
L.R
Ur
banco-oper
ati
vebankshav
etomai
ntai
nlowerC.
R.RandS.
L.Rbal
ancesas
compar
edt
ocommer
cialbanks.t
hisi
sanot
herbl
essi
ngf
ort
hem.Recent
ly
t
hisconcessi
onhasbeenwi
thdr
awnbyt
heRBI
.

 Exper
iencedst
aff
Exper
iencedst
affi
sanot
heri
mpor
tantst
rengt
hoft
hesebanks,manypeopl
e
wi
thi
mmenseknowl
edgeaboutt
hissect
orj
oinbecauset
hewor
kloadi
snot
much.

WEAKNESSES:

 Todayco-oper
ati
vecr
edi
tsy
stem nei
therhast
hel
eader
shi
pofmen,i
tisi
n
t
hissenset
hatt
heco-oper
ati
vesy
stem r
emai
nsdi
rect
ionl
essandf
all
san
easyv
ict
imt
orapaci
ousel
ementwhi
char
eont
hel
ookoutf
orsuchapr
ey.t
he
t
roubl
eatPUCB br
ingt
othef
ore,t
hef
inanci
ali
rr
egul
ari
ti
esatco-oper
ati
ve
banks

 St
affr
ecr
uit
menti
snotdonepr
oper
lyi
nUCBs.t
her
eisashor
tageofmanpower
.

 A good numberofmi
sfi
ts and unf
it
s ar
efound occupy
ing t
he chai
rs of
admi
nist
rat
ion.t
hei
rinadequat
eknowl
edgel
eadst
oinef
fi
ciency
 Thepr
ocessofcomput
eri
zat
ionofUCBsi
srat
hersl
ow.Thoughcomput
erhav
e

21
 beeni
nst
all
ed,
trai
nedst
affi
snotav
ail
abl
e.
 Lackofpr
ofessi
onalmanagement

 Lackofi
nfr
ast
ruct
ure,
thebanksl
acksi
nimpl
ement
ingofl
atestt
echnol
ogyof
l
atestt
echnol
ogysuchasATMs

OPPORTUNI
TIES:

 PUCB sar
eint
egr
atedi
ntot
hei
rlocalenv
ironmentandt
hei
rrol
egoesbey
ond
t
hatofpr
ovi
deroff
inanci
alser
vices

 Onaccountoft
hei
rpr
oxi
mit
ytot
hei
rmember
sandt
hei
rfi
rms,
PUCB shav
ea
goodscopef
orenl
argi
ngt
hemember
shi
p.

 PUCB sar
epi
oneer
sint
hef
iel
dofmi
crof
inance.

 Col
lect
iveef
for
tsnotonl
yenhancet
hechancesofsuccessbutal
soi
ncr
ease
t
heeconomyofscal
ebyr
educi
ngt
hepercapi
tacostofoper
ati
onandi
ncr
ease
pr
oduct
ivi
ty.

 Per
missi
ongr
ant
edbyRBIt
othef
inanci
all
yst
rongSchedul
edUCBshav
inga
mi
nimum networ
thofRs.
100cr
orest
oent
eri
nsur
ancebusi
nessf
rom 4.
8.2003.

 Thenot
if
icat
ionoft
heGov
ernmentofI
ndi
a(No.
S.O.
E.105(
e)dat
ed28t
h
Januar
y2003)t
hathasmadeappl
icabl
ethepr
ovi
sionsoft
heSecur
it
izat
ionand
Reconst
ruct
ionofFi
nanci
alAsset
sandEnf
orcementofSecur
it
yActt
oUCBs.

 RBI r
egul
ator
y ar
rangement wi
th t
he St
ate Gov
ernment t
hrough a
Memor
andum ofUnder
standi
ngt
ofaci
li
tat
epr
operandcoor
dinat
edr
egul
ati
on
andsuper
visi
onofPUCB s.

THREATS:

 Acut
ecompet
it
ioni
nthemar
ket
 I
ncr
easi
ngi
nci
denceoff
raudsandmi
sappr
opr
iat
ion
 Ti
ght
eni
ngofI
ncomeRecogni
ti
onandAssetCl
assi
fi
cat
ionNor
mshada
di
rectbear
ingont
hebal
ancesheetoft
hePUCBs.

22
  Hi
gher cost of management especi
all
yfor i
nter
est on deposi
ts and
est
abl
ishmentcost
.
 Fai
lur
eoft
heGov
ernmentt
ohonori
tsguar
ant
eeswheni
nvoked.
 I
ncr
easi
ngl
it
igat
ionbet
weenmanagementandempl
oyees.
 Ext
ernalpr
essur
etof
inancei
nel
igi
blebor
rower
s.
 Loanwai
verannouncementofgov
ernmentt
henandt
her
e.
 Depar
tment
ali
nter
fer
encei
nfi
nanci
almat
ter
sinv
ari
ousf
orms.

Funct
ionalanal
ysi
s

Fi
nanceDepar
tment

BUSI
NESSPERFORMANCEOFTHE“
PURASAWALKAM CO-OPERATI
VE
BANK,

ThePUCB mai
nfunct
ionsar
eaccept
ingv
ari
ouski
ndsofdeposi
tsf
rom member
s
andassoci
atemember
s.I
ssuel
oansandadv
ancef
orv
ari
ouspur
posesandi
ssui
ng
l
oanst
osel
f-hel
pgr
oups;
handi
cappedet
c.,

Asapar
tofi
nst
it
uti
onaldev
elopmentpr
ogr
am,
NABARDhasbeenpr
ovi
dedf
inance
andt
echni
calassi
stancet
oACSTI
.Act
ivepar
ti
cipat
ionofNABARDandi
tsmat
ter
s

23
oft
rai
ningi
nthef
orm off
inanci
alassi
stanceandt
echni
calsuppor
thasenabl
ed
ACSTI
’sef
fect
ivef
unct
ioni
ng.

DEPOSI
TS

PUCB hasf
inanci
alasf
oll
owal
soi
trai
sesi
tsr
esour
cesbycol
lect
ingdeposi
tsunder
v
ari
oust
rendsasf
oll
owi
nor
dert
omeeti
tsmemberneedsandr
equi
rement
soft
hei
r
bor
rower
s.I
thasi
ntr
oducedv
ari
ouski
ndsofdeposi
ts.deposi
tfr
om member
sar
ethe
mosti
mpor
tantsour
ceoff
undf
ortbank.PUCB t
akessi
ncer
eef
for
ttomobi
li
zet
he
deposi
tsf
rom publ
ic

Thef
oll
owi
ngar
ethedi
ff
erentofdeposi
tsmobi
li
zedbyt
hepur
asawal
kam cooper
ati
ve
bank

a.Sav
ingdeposi
t

b.Fi
xeddeposi
t

c.Recur
ri
ngdeposi
t

d.Homedeposi
t

e.St
affsecur
it
ydeposi
t

f
. Cur
rentdeposi
t

PROCEDUREFOROPENI
NGANDCLOSI
NGACCOUNTS

ThePUCB hasf
inanci
alposi
ti
onasf
oll
ows,hassomepr
ocedur
etoopent
heaccount
orcl
oset
heaccount
sar
efol
lowi
ng

 Theyshoul
dbecomeasamemberoft
hePUCB .

 Theymustber
esi
dingi
nwi
thar
eaofoper
ati
onoft
hePUCB

24
  Theymustbegi
vensur
etyf
rom t
heexi
sti
ngmember
s

 Forcl
osi
ngt
heaccount
,theymustpr
oduceasel
f-decl
arat
ionl
ett
erandwi
tht
he
r
easont
ocl
oset
heaccount
s.

Thef
oll
owi
ngt
abl
erepr
esentt
het
otaldeposi
tdet
ail
sofPUCB f
ort
hey
ear2014-
2015t
o2017-2018

Tabl
e4:Deposi
tsandot
heraccount
s

PARTI
CULARS 2017-18 2016-17 2015-16 2014-15

Cur
rentdeposi
t 1.
42 3.
18 3.
20 2.
72

Sav
ingdeposi
t 10.
95 10.
78 9.
21 8.
47

Ter
m deposi
t 52.
39 57.
36 61.
27 62.
40

Tot
al 64.
76 71.
32 73.
68 73.
59

Theabov
etabl
eofdeposi
tofPUCB hasdecr
easedov
ert
hey
ear
s.i
nthey
ear2014-
2015 and 2015-2016 t
he deposi
tamounthassl
ight
lyi
ncr
eased and t
hen i
thas
decr
easedi
nthef
urt
hery
ear
.thePUCB mustt
akest
epst
oincr
easemor
edeposi
tand
t
henl
endmoneyandear
npr
ofi
ts

RATEOFI
NTERESTONDEPOSI
TS

Thet
ermi
nter
estr
ater
efer
stot
heamountofmoneypai
douti
nint
erestpai
dbya
f
inanci
ali
nst
it
uti
ononcashdeposi
ts.bankpaydeposi
trat
eonsav
ingandot
her
i
nvest
mentaccount
s.

Thef
oll
owi
ngt
abl
ehasshownt
her
ateofi
nter
estf
orv
ari
oust
ypesofdeposi
toft
he
PUCB :

Tabl
e5:Rat
eofi
nter
estondeposi
ts

S.
NO TYPESOFDEPOSI
TS RATEOFI
NTEREST SENI
ORCI
TIZENS

1 Fi
xeddeposi
ts 9.
25% 9.
50%

25
 2 Sav
ingsa/
c 4% Ni
l

3 RDa/
c 8.
25% 8.
50%

4 CashCer
ti
fi
cat
e 8.
25% 8.
50%

5 St
affsecur
it
ydeposi
t 9% Ni
l

Theabov
etabl
eist
her
ateofi
nter
estoft
hePUCB .t
her
ateofi
nter
esti
sfi
xedf
oral
l
br
anches,
buti
tvar
ieswi
thot
herur
banbanksaccor
dingt
othebanksf
inanci
alposi
ti
on.
t
hebankf
ixest
hei
nter
estdependi
ngupont
hef
inanci
alcondi
ti
ons.

BORROWI
NGS

Bor
rowi
ngsar
ethemai
nsour
cesoff
undofev
eryPUCB butPUCB hasnobor
rowi
ngs
i
tsr
unswi
thi
tsownf
undsonl
y.

LOANSANDADVANCES

Thesecondmaj
orf
unct
ionoft
hePUCB i
srunni
ngl
oansandadv
ance,t
hePUCB i
s
l
endi
ngmoneyt
othememberi
nter
msof

1.Shor
tter
m

2.Medi
um t
erm

3.Longt
erm

RATEOFI
NTERSTONLOANS

Theamountchar
gedandexpr
essedasaper
cent
ageofpr
inci
palbyl
endi
ngt
oa
bor
rowerf
ort
heuseofasset
sint
erestr
atesar
ety
pical
lycal
cul
atedonannualbasi
s,
knownast
heAnnualPer
cent
ageRat
e(APR)
.Theassetbor
rowedcoul
dbecash,
consumergoodsandl
argeasset
ssuchasv
ehi
cleorbui
ldi
ng.t
hef
oll
owi
ngt
abl
ehas
showi
ngr
ateofi
nter
estoft
hePUCB f
orl
oans:

Tabl
e6:Rat
eofi
nter
estf
orl
oans

26
 S.
no Ty
pesofl
oans Rat
eofi
nter
est

1 Jewell
oan 12%

2 Housi
ngmor
tgagel
oan 15%

3 Pet
tyt
rader
s’l
oan 12%

4 Sel
f-empl
oyedpeopl
eloan 15%

5 Sur
etyl
oan 14%

6 Sel
f-hel
pgr
oupl
oan 12%

7 Phy
sical
lyhandi
cappedl
oan 4%

Thet
abl
eshowt
her
ateofi
nter
estf
orv
ari
ousl
oansoft
hePUCB .Ther
ateofi
nter
est
di
ff
ersf
rom v
ari
ousur
banbanks.Thought
hesemanyl
oansar
eof
fer
edonl
yfewl
oans
ar
efast
mov
ingorf
requent
lyav
ail
ed,f
orexampl
ejewell
oanandmor
tgagel
oanpl
aya
v
italr
ole.

LOANSANCTI
ONI
NGPROCEDURE

ThePUCB hassomepr
ocedur
etogetl
oans.t
heyar
efol
lowi
ng

 Themember
sshoul
dgi
veowndecl
arat
iont
othePUCB

 Thent
heyshoul
dpr
oduceal
lther
equi
reddocument
s

 Theyshoul
dbr
ingt
hecer
ti
fi
cat
efr
om t
heVAO

 I
nspect
ionwi
llbedonebyt
hegener
almanager

 I
ftheyf
ini
sh t
hosef
ormal
it
iest
hePUCB wi
lli
ssuet
hel
oan aspert
he
r
equi
rementandwi
tht
erm andcondi
ti
ons.

LOANRECOVERYPROCEDURE:

ThePUCB hassomepr
ocedur
etor
ecov
ert
heLoan,i
fanyl
oani
sbey
ondt
heper
iod
andi
fnotr
epai
dwi
thi
nther
epay
mentdat
ethepr
inci
palori
nter
esti
sconsi
der
edas
nonper
for
mingasset
.thatl
oanshoul
dber
ecov
eredf
rom t
hePUCB .al
so,t
hatl
oans

27
wi
llaf
fectt
hePUCB pr
ofi
tandbusi
nessper
for
mance.so,
thePUCB hast
otakesome
si
ncer
eact
iont
orecov
ert
hel
oanandt
osust
aint
hePUCB andt
hatshoul
dnotaf
fect
t
hepr
ofi
toft
hePUCB .

ThePUCB hassomepr
ocedur
esameasl
oansanct
ioni
ngpr
ocedur
e.t
heyhav
e
f
oll
owi
ngt
hatpr
ocedur
etor
ecov
eryt
hel
oani
nef
fect
ivemanner
.Suchpr
ocedur
eisas
f
oll
ows:

 I
fanyl
oanshav
ebeout
standi
ngt
hePUCB wi
lli
ssuet
hedemandnot
icef
ir
st

 I
fthel
oani
snotr
epai
daf
tert
hedemandnot
icei
ssue,
aft
ert
hatARCnot
icewi
ll
i
ssuet
hel
oan

 Af
tert
hatwi
lli
ssuet
hedecr
ee.

 St
il
lthel
oanamounti
snotr
epai
dmeanst
hef
inalst
epofl
oanr
ecov
eryf
rom
at
tachmentoft
hepr
oper
ty

 Theat
tachmentofpr
oper
tywi
llbeasperTami
lNaduCooper
ati
vessoci
eti
es
andby
elawoft
hePUCB .

WORKI
NGCAPI
TALMANAGEMENT:

Wor
kingcapi
tali
sacommonmeasur
eofal
iqui
dit
y,ef
fi
ciency
,andov
eral
lheal
th.
Becausei
tincl
udescash,
inv
ent
ory
,accountr
ecei
vabl
es,
accountpay
abl
es,
thepor
ti
on
ofdebtduewi
thi
noney
earandot
hershor
tter
m account
sacompanywor
kingcapi
tal
ef
fect
sther
esul
tofal
ostcompanyact
ivi
ti
es,
incl
udi
ngandpay
ment
stosuppl
ier
s

Tabl
e7:Gr
owt
hrat
einwor
kingcapi
talmanagement

Year Amount(
inl
akhs) %ofgr
owt
h

2012-2013 6559.
80 -

2013-2014 7505.
73 14.
42

2014-2015 7520.
90 0.
20

2015-2016 7554.
47 0.
44

28
2016-2017 7299.
21 -3.
37

2017-2018 6677.
43 -8.
51

Theov
eral
lgr
owt
his0.
202%.t
hewor
kingcapi
talhaddecr
easedi
nthey
ear2017-2018
compar
edt
othepr
evi
ousy
ear
.

NETPROFI
TORLOSS

Netpr
ofi
t,al
sor
efer
redt
oast
hebot
tom l
ine,
neti
ncome.ornetear
ningsi
sameasur
e
oft
hepr
ofi
tabi
li
tyofav
ent
ureaf
teraccount
ingf
oral
lcost
sandt
axes.I
tist
heact
ual
pr
ofi
tandi
ncl
udest
heopeni
ngexpensest
hatar
eexcl
udef
rom gr
osspr
ofi
t.

A netl
ossexceedssomet
imesr
efer
redt
oasnetopeni
ngl
oss(
NOL)occur
swhen
expensesexceedt
hei
ncomeort
otalr
evenuepr
oducedf
oragi
venper
iodoft
ime.

ThePUCB hasr
egi
ster
ednetpr
ofi
tfort
het
hreey
ear
scont
inuousl
yfr
om 2012-13t
o
2014-15.Ther
eaf
tert
hePUCB hasr
ecor
dedt
henetl
ossf
rom 2014-2015t
o2017-18.
t
henetl
ossi
n2017-18i
sRs.
165.
60l
akhs

ThePUCB hasr
egi
ster
ednetpr
ofi
tfort
het
hreey
ear
scont
inuousl
yfr
om 2012-13t
o
2014-15.Ther
eaf
tert
hePUCB hasr
ecor
dedt
henetl
ossf
rom 2014-2015t
o2017-18.
t
henetl
ossi
n2017-18i
sRs.
165.
60l
akhs

Tabl
e8:Netpr
ofi
t&l
ossesofPUCB

YEARS AMOUNT(
inl
akhs)

2012-2013 (
+)18.
2

2013-2014 (
+)9.
95

2014-2015 (
+)14.
4

2015-2016 (
-)46.
20

2016-2017 (
-)136.
86

29
 2017-2018 (
-)165.
60

AUDI
TCLASSI
FICATI
ON:

Theaudi
thasbeencompl
etedf
ort
hey
ear2017-2018.Thepr
essi
scl
assi
fi
edunder“
C”
2013-2014TO2017-2018.

Thoseget
ti
ng60%andabov
eaudi
tmar
kwi
llbecl
assi
fi
edas“
A”Cl
ass.

Thoseget
ti
ng50%t
o59%audi
tmar
kwi
llbecl
assi
fi
edas“
B”Cl
ass.

Thoseget
ti
ng35%t
o49%audi
tmar
kwi
llbecl
assi
fi
edas“
C”Cl
ass.

Thoseget
ti
ng35%audi
tmar
kwi
llbecl
assi
fi
edas“
D”Cl
ass.

Tabl
e9:AUDI
TCLASSI
FICATI
ON

YEARS CLASSI
FICATI
ON

2013-2014 B

2014-2015 B

2015-2016 B

2016-2017 B

2017-2018 B

Thi
stabl
eshowst
heaudi
tcl
assi
fi
cat
ionoft
hePUCB .I
tear
nsamedi
um pr
ofi
t,soi
t
showsas“
B”Cl
ass.

30
3.
3Suggest
ionsf
orOr
gani
zat
ionalDev
elopment

I
nthe l
ightoft
he st
udy
,some i
mpor
tantsuggest
ionsf
ort
he i
mpr
ovementi
n
Pur
asawal
kam CoOpbank’
sper
for
mancear
edescr
ibedbel
ow:

 Al
locat
e mor
efunds i
n adv
ert
isi
ng and gi
ve huge numberof
adv
ert
isi
ngi
nal
lsoci
almedi
a

 Toi
ncr
easet
henumberofempl
oyees

 The PUCB can t

ake st
epst
oincr
ease t
hei
rshar
e capi
talby
admi
tt
ingmor
emember
s

 Tor
ecr
uitwel
ltr
ainedempl
oyees

 ThePUCB musti
mpl
ementl
atestbanki
ngt
echnol
ogysuchasnet
banki
ng,
mobi
lebanki
nget
c.,

 ThePUCB mustconcent
rat
etoi
ncr
easet
hei
rdeposi
ts.

 ThePUCB mustr
educet
heov
erdueout
standi
ngandmustt
ake
act
iont
orecov
ert
hedue.

31
 CONCLUSI
ON

Thr
ought
hisi
nter
nshi
ptr
aini
ng,Ihav
esecur
edadeeppr
act
icalandt
heor
eti
cal
knowl
edgeaboutf
unct
ionsofPur
asawal
kam ur
banCooper
ati
veBankandwasabl
e
t
o gai
n knowl
edge aboutt
he manager
ialf
unct
ions.t
he shar
e capi
taland t
he
i
nter
estr
ecei
vedonl
oanshadal
soi
ncr
easedbutt
het
otaldeposi
ts,
inv
est
menthad
decr
eased.t
hel
oansout
standi
ngandov
erduehadi
ncr
eased.t
hebankhadal
so
i
ncur
redanetl
ossf
rom 2014-15t
o2017-18whi
chshowsmustconcent
rat
eto
i
ncr
easet
hei
rper
for
mancei
nthef
utur
efort
hei
rgr
owt
h.

32
Bi
bli
ogr
aphy

1.Co-oper
ati
vepr
inci
plesandpr
act
ices

2.Banki
ngPr
act
ices,
theor
yandl
aw

3.Dat
afr
om t
hef
il
esofPUCB

33
34