A

COMPREHENSIVE PROJECT REPORT

ON

“ THE JUNAGADH COMMERCIAL CO-OPERATIVE BANK ”

Submitted to PARUL INSTITUTE OF MANAGEMENT & RESEARCH

IN PARTIAL FULFILLMENT OF THE

REQUIREMENT OF THE AWARD FOR THE DEGREE OF MASTER OF BUSINESS ASMINISTRATION

In

Gujarat Technological University

UNDER THE GUIDANCE OF

Faculty Guide Company Guide MR. DIVYANG JOSHI MR. MAHENDRABHAI HIMSHU

Submitted by (SUMIT J. VACHHANI)

Batch: 2012-14, Enrollment No.:127110592331 MBA SEMESTER III

PARUL INSTITUTE OF MANAGEMENT & RESEARCH

MBA PROGRAMME Affiliated to Gujarat Technological University

Ahmadabad 2013

Parul Institute of Management & Research(Formerly Dr.J K Patel Institute of Management)

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CERTIFICATE

“Certified that this Comprehensive Project Report Titled CREDIT MANAGEMENT” is the bonafide work of Mr.SUMIT J. VACHHANI (Enrollment No127110592331), who carried out the research under my supervision. I also certify further, that to the best of my knowledge the work reported herein does not form part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate

Prof. Divyang Joshi Dr.P.G.K.Murthy

(Faculty Guide) Director

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ACKNOWLEDGEMENT

Industrial development has its own important in every country; industrial

development is called the “Barometer” to measure development of the country.

I am heartily thankful to the Director Dr.P.G.K.MURTI, Assistant Prof.

DIVYANG JOSHI and all staff member of PARUL INSTITUTE OF MGT &

RESEARCH of being source of inspiration and for allowing me to visit at THE

JUNAGADH COMMERCIAL CO-OPERATIVE BANK at JUNAGADH.

I owe a deep sense of gratitude to all the members of company giving permission

to take visit of the industry.

I am also thankful to MR.MANDALIYA SIR &MR. MAHENDRABHAI

HIMSHU for their encouragement, guidance & best cooperation in preparing this

report.& for the enhancement of my knowledge by sharing their so many valuable time.

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DECLERATION

I, SUMIT J. VACHHANI hereby declare that the report for

Comprehensive Project entitled “CREDIT MANAGEMENT” is a

result of our own work and our indebtedness to other work

publications, references, if any, have been duly acknowledged.

Date: - Yours Faithfully

Place: -JUNAGADH (Vachhani Sumit j.)

INDEX

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NO. PARTICULAR PAGE NO.

1 INTRODUCTION OF BANK

HISTROY OF BANK CURRENT SCANIRO OF INDIAN BANK TYPES OF BANK STATUS WISE BIFURCATION OF BANK FUNCTION OF BANK

2 COMPANY INFORMATION

INTRODUCTION OF CO- OPERATIVE BANK

TYPES OF CO-OPERATIVE BANK

HISTORY OF JCCB

BASIC INFORMATION OF JCCB

BRANCHES OF JCCB

ORGANIZATION STRUCTURE

SERVICE PROVIDE BY JCCB

VISION, MISSION AND GOAL

PROGRESS AT GLANCE

3 ABOUT THE CONCEPT

MAIN FUND FLOW

MAIN OUTFLOW

MEANING OF CREDIT

CREDIT MANAGEMENT

FROM OF CREDIT

TIMES WISE BIFURCATION OF ADVANCE

SECURITY WISE BIFURCATION OF ADVANCE

PROCESS OF CREDIT FOLLWED BY JCCB

CREDIT POLICY OF JCCB

SCRUTINY OF CREDIT

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TYPES OF CREDIT

CREDIT APPRAISAL

CREDIT MONITORING, FOLLOW UP, AND

REVIEW

4 NPA CONCEPT

INTRODUCTION OF NPA CLASSIFICATION OF NPA OF JCCB PROVISION OF NPA IN JCCB REASON FOR NPA NPA REDUCTION TECHNIQUES METHOD OF RECOVERY

5 RESEARCH METHDOLOGY

LITERATURE REVIEW

OBJECTIVE OF THE STUDY

TITLE OF THE STUDY

SOURCE OF DATA

HYPHOTHESIS TESTING

LIMITATION OF STUDY

6

7

8

9

10

FINDING

SUGGESTION

CONCLUSION

BIBILOGRAPHY

BALANCE SHEET OF THE JCCB

HISTORY OF BANKING INDUSTRY

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The word ‘Bank’ it derived from the word ‘bancus’ or ‘banque’ that is a French.

There were others of the opinion that the word ‘Bank’ is originally derived from the

German word ‘back’ meaning joint for which was Italianized into ‘banco’.

As early as 2000 B.C., the Babylonians has developed a banking system. There is

evidence to show the temples of Babylon were used as banks. After a period of time,

there was a spread of irreligion, which soon destroyed the public sense of security in

depositing money and valuable in temples. The priests were longer acting as financial 45

agents. The Romans did minute regulations, as to conduct private banking and to create

confidence in it. Loan banks were also common in Rome. From these the poor citizens

received loans without paying interest, against security of land for 3 or 4 years.

During the early periods, although private individuals mostly did the banking

business, many countries established public banks either for the purpose of facilitating

commerce or to serve the government.

However, upon the revival of civilization, growing necessity forced the issued in

the middle of the 12th century and banks were established at Venice and Genoa. The Bank

of Venice established in 1157 is supposed to be the most ancient bank. Originally, it was

not a bank in the modern sense, during simply an office for the transfer of the public debt.

Again the origin of modern banking may be traced to the money dealers in

Florence, who received money on deposit, and were lenders of money in the 14 th century

and also in 1349, the business of banking was carried on by drapers of Barcelona.

In India, as early as the Vedic Period, banking, in most crude from existed. The

books of Manu contain references regarding deposits, pledges, policy of loans, and rate of

interest. True, the banking in those days largely mint money lending and they did not

know the complicated mechanism of modern banking.

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This is true not only in the case of India but also of other countries. Although, the

business of banking is as old as authentic history, banking institutions have since than

changed in character and content very much. They have developed from a few simple

operations involving the satisfaction of a few individual wants to the complicated

mechanism of modern banking, involving the satisfaction of capital slowly seeking

employment and thus providing the very life blood of commerce.

CURRENT SCENARIO OF INDIAN BANKING

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As far as the present scenario is concerned the Banking Industry is in a transition

phase. The Public Sector Banks (PSBs), which are the foundation of the Indian Banking

system account for more than 78 per cent of total banking industry assets. Unfortunately

they are burdened with excessive Non Performing assets (NPAs), massive manpower and

lack of modern technology.

Banks in India can be categorized into non-scheduled banks and scheduled banks.

Scheduled banks constitute of commercial banks and co-operative banks. There are about

67,000 branches of Scheduled banks spread across India. During the first phase of

financial reforms, there was a nationalization of 14 major banks in 1969. This crucial step

led to a shift from Class banking to Mass banking. Since then the growth of the banking

Industry in India has been a continuous process.

On the other hand the Private Sector Banks in India are witnessing immense

progress. They are leaders in Internet banking, mobile banking, phone banking, ATMs.

On the other hand the Public Sector Banks are still facing the problem of unhappy

employees. There has been a decrease of 20 percent in the employee strength of the

private sector in the wake of the Voluntary Retirement Schemes (VRS). As far as foreign

banks are concerned they are likely to succeed in India.

Indusland Bank was the first private bank to be set up in India. IDBI, ING Vyasa

Bank, SBI Commercial and International Bank Ltd, Dhanalakshmi Bank Ltd,

KarurVysya Bank Ltd, Bank of Rajasthan Ltd etc are some Private Sector Banks. Banks

from the Public Sector include Punjab National bank, Vijaya Bank, UCO Bank, Oriental

Bank, Allahabad Bank, Andhra Bank etc.ANZGrindlays Bank, ABN-AMRO Bank,

American Express Bank Ltd, Citibank etc are some foreign banks operating in India.

Rural banks have undergone many changes due to alterations in the financial

system of the country. As a result there were changes in the functioning of the rural

banks. The article below highlights some of the hindrances, which the rural banks

encounter while operating.

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Scheduled Banks in India constitute those banks, which have been included in the

Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI in turn includes only

those banks in this schedule that satisfy the criteria laid down vide section 42 (6) (a) of

the Act. As on 30th June 1999, there were 300 scheduled banks in India having a total

network of 64,918 branches.

“Scheduled banks in India” means the State Bank of India constituted under the

State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State

Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank

constituted under section 3 of the Banking Companies (Acquisition and Transfer of

Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies

(Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank

being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2

of 1934), but does not include a co-operative bank”.

“Non-scheduled bank in India” means a banking company as defined in clause of

section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a scheduled

bank”.

STATUS WISE BIFURCATION OF BANKS

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Scheduled Banks

In first schedule, Government of India notifies the Primary Banks, which are licensed

and whose demand and time liability are not less than 50 corers in 1987.

Government of India notifies the Primary banks, which are licensed and whose

demand and time liability are not less than 100 corers can only qualify to be included in

the second schedule since 1993.

A Bank becomes scheduled when it fulfills the followings :

‘A’ grade rating from RBI

Demand and Time Liability over 100 Corers

Satisfy the RBI guidelines related to CRR and SLR

As per the norms Priority Sector wise lending

Benefits of Being a Scheduled co-operative are described below:

RBI would provide Rediscounting facility at nominal rate

RBI gives remittance facility at par

The demerit of being a scheduled co-operative bank is that the bank will not get 0.5%

subsidy from RBI.

The conferment of scheduled status on the banks has certain advantages like refinance

facility, directly industrial finance from Reserve Bank of India.

Non-Scheduled Bank

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Scheduled Banks Non-Scheduled Banks

The banks, which are not applicable as per the criteria of Scheduled Banks, are called

as a Non-scheduled Banks. These are very small banks.

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TYPES OF BANKS

Reserve Bank of India

Nationalize Bank

State Bank Group

Old private bank

New private bank

Foreign Bank

Regional rural bank(RRB)

RESERVE BANK OF INDIA

The Hilton-young commission, appointed in 1926 has recommended the necessity of

centrally empowered institution to have effective control over currency and financial

transaction in the country. Accordingly, the Government had then passed Reserve Bank

of India Act, 1934 and established the Reserve Bank of India with effect from 1 st April

1935. The principal aim behind this was to organize proper control over the currency

management in the interest of country benefits and to maintain financial stability. With

this, the RBI mainly looks after the following important functions:

-To keep effective control over creation of credits and currency supply

-To control the Banking transactions of Central and State Governments

-To act as Central administered Authority of all other Banks in the Country.

-To organize control over Foreign Currency Transaction

-To assist for improvement in financial aspects of the country

NATIONALIZE BANKS

The Banking Company Act establishes it in July 1969 by nationalization of 14 major

banks of India. The sent percent ownership of the bank is of government of India.

STATE BANKS

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The State Bank of India was established under the State Bank of India Act, 1955, the

subsidiary banks under the State Bank of India (subsidiary Banks) Act, 1959. The

Reserve Bank of India owns the State Bank of India, to a large extent, and rest of the part

is some private ownership in the share capital of State Bank of India. The State Bank of

India owns the subsidiary Banks.

OLD PRIVATE BANKS

These banks are registered under Company Act, 1956. Basic difference between co-

operative banks and private banks is its aim. Co-operative banks work for its member and

private banks work for earn profit.

NEW PRIVATE BANKS

These banks lead the market of Indian banking business in very short period, because

of its variety of services and approach to handle customer, also because of long working

hours and speed of services. This is also registered under the Company Act, 1956.

FORIEN BANKS

Foreign Bank means multi-countries bank. In case of India Foreign Banks are such

Banks, which open its branch office in India and their head office is outside of India.

REGIONAL RURAL BANKS (RRB)

Regional Rural Banks are added in Indian Banking since October 1975. The

Government of India in terms of the provision of the Regional Rural Bank Act 1976 has

established these banks. The distinctive feature of Regional Rural Bank is that through it

is a separate body corporate with the Commercial Bank, which has sponsored the

proposal to establish it. The Central Government, while establishing a Regional Rural

Bank at the request of a Commercial Bank, shall specify the local limits within which it

shall operate. The Regional Rural Bank may establish its branches or agencies at any

place within the notified area.

State Bank of Saurashtra sponsors Regional Rural Banks in Saurashtra.

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CO-OPERATIVE BANKS

State Co-operative Banks

Central / District Co-operative Banks

Primary / Urban Co-operative Banks

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FUNCTION OF BANKS

According to section (1) of the Banking Regulation of Act 1949, Banking means

accepting, for the purpose of lending or investment, of deposits of money from the

public, repayable on demand or otherwise and withdrawal by cheque, draft, order or

otherwise. Besides these functions, Section of the Act sets out other forms of business a

bank can carry on.

Other functions of bank are:

I. Collecting cheques, bills etc. for customers.

II. Dealing in foreign exchange.

III. Issuing guarantees, indemnities, letters of credit, traveler’s cheques etc.

IV. Extending remittance services such as demand drafts mail transfer, telegraphic

transfers etc.

V. Acting as agents for central and state governments or any other person in respect of

collection of taxes, pension payments, income tax, consultancy etc.

VI. Providing facilities like safe custody, locker etc.

VII. Acting as executor, administrative, trustee etc.

The banking industry today, however, is one of complexity. There are an array of

financial service provider’s different products and services, not to mention the enormous

amount of different.

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INTRODUCTION OF CO-OPERATIVE BANKS

Co-operative banks are formed on the principle of co-operative to extend credit

facilities to farmers and small scale industrial concerns and promotes in general the

habit of thrift and self-help among the low and middle-income group of the society.

The distinguish feature of the co-operative bank is the absence of profit motive co-

operative banks are very helpful to meet the requirements of small farmers, artesian,

etc in India in mobilizing rural deposits. Today, however, the co-operative have been

putting more weight on their lending activities than on deposit mobilizing.

Co-operative banking came into vogue in India in 1904 when the first co-

operative credit society was passed. The main function of a co-operative credit

society was to provide cheap credit to the members who are small people with small

mean and small need and finance. Another object was to inoculate the saving habit

an\among the agriculture and makes them take advantage of co-operation from fellow

members of the society. The co-operative movement in banking has since then makes

good progress from credit co-operative societies. The district level co-operative bank

cover the need of the various types of members. We could bring green revolution in

agriculture sector only due to co-operative activities.

“Co –operative is an effective self – reliance done by organism.”

SIR HORAS ORGANISM

“Co – operative is one type of organism in which people join to encourage their

financial interest”

HEWERT KELVERT

“Co – operative is the step taken for equal profit or loss under mutual management by

mutually using their own resources and factors willingly.”

HERICK M. T.

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PRINCIPLES :-

The co – operative principles are guidelines by which co –operative put their

values into practice.

1) VOLUNTARY AND OPEN MEMBERSHIP :-

Co – operatives are voluntary organization open to all persons able to use their

services and willing to accept the responsibilities of membership, without gender, social,

racial, political or religious discrimination.

2) DEMOCRATIC MEMBER CONTROL :-

Co – operative do their members, who actively participate in setting their policies and

making decision, men and women serving control democratic organizations, as elected

representatives are accountable to the membership. In primary co – operative members

have equal voting right (one member, one vote) and co – operatives at other levels are

also organized in a democratic manner.

3) MEMBER ECONOMIC PARTICIPATION :-

Members contribute equitably to and democratically control the capital of their co –

operative. At least part of the capital is usually receiving limited compensation if any on

capital subscribed as condition of membership. Members allocate surpluses for any of the

following purposes: developing their co – operative, possible by setting up reserves, part

of which at least would be indivisible, benefiting members in proportions to their

transactions with the co –operative and supporting other activities approved by the

membership.

4) AUTONOMY AND INDEPENDENCE:-

Co – operatives are autonomous, self – help organizations controlled by their

members. If they enter into agreements with other organizations, including governments

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to raise capital from external sources, they do so in terms that ensure democratic control

by their members and maintain their co – operative autonomy.

5) EDUCATION, TRAINING AND INFORMATION:-

Co – operative provide education and training for their members, elected

representatives, managers and employee so that they can contribute effectively to the

development of their co – operatives. They inform the general public – particular young

people and opinion leaders about the nature and benefit of corporation.

6) CO – OPERATION AMONG CO – OPERATIVE:-

Co – operative serve their members most effectively and strengthen the co – operative

movement by working to gather through local, national, regional and international

structures.

7) CONCERN FOR COMMUNITY:-

Co-operative work is the sustainable development of their communities through

policies approved by their members.

STRUCTURE OF CO – OPERATIVE BANK IN INDIA:-

The co – operative banking structure in India may divided into three component

parts, viz., (1) primary credit societies at the base, (2) central co – operative banks at

the district level in the middle, and (3) provincial or state co – operative banks (also

called apex banks) at the top.

Co – operative banking has three – tire structure as under:

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CO-OPERATIVE BANKS

State Co-operative Banks

State Co-operative Bank means the principal Co-operative society in the state. The

primary objective of which is the financing other co-operative societies in the state.

Central / District Co-operative Banks

Central / District co-operative Bank means the principal co-operative society in a

district, the primary objective of which is the financing of other co-operative in that

particular district.

Primary / Urban Co-operative Banks

The primary objective of principal business of which the transaction is of banking

business and paid up share capital and reserve of which are not less than rupees 100,000

and bye-laws of which do not permit admission of any other co-operative society as a

member.

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STATE CO – OPERATIVE

CENTERAL CO- OPERATIVE BANK

PRIMARY CO- OPERATIVE BANK

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HISTORY OF THE JUNAGADH COMMERCIAL CO-OPERATIVE BANK

The Junagadh Commercial Co-operative Bank Ltd was registered under the Co-

operative Society Act on Reserve Bank License no. GJ 521P, was established on 18 th Feb.

1971. At that time the farmers, small shopkeepers and the workers of small villages used

to borrow money from “SHAHUKARS” at high rate of interest. Their life became

miserable diem per diem. Their life was ruined due to various kinds of exploitation.

The entrepreneur of the bank, “ShriChandrakantMalvia”, was aware about these

problems. He wished to free these peoples from the exploitation. After a lot of thinking,

he felt that if a co-operative bank is established in a economically backward area like

Junagadh, the farmers, small workers, businessmen and other people will get a relief from

these and thus the Junagadh Commercial Co-operative Bank came into existence.

The working of bank was started on 30th Sep, 1971 in Junagadh city under

supervision of highly knowledgeable manager Mr. Ambalal Shah. In the beginning, the

bank provides finance to farmer and small businessmen at feasible and low rate of

interest. The bank progressed at a slow and steady pace. Observing the progress and

working of bank, the surrounding for the expansion and opening of branches.

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BASIC INFORMATION

NAME: - THE JUNAGADH COMMERCIAL CO-OPERATIVE BANK LTD.

ADDRESS: - HEAD OFFICE / REG. OFFICE:

The Junagadh Commercial Co-operative Bank Ltd.ChandrakantMalaviaSmrutiBhavan,Choksi Bazaar,Junagadh. – 362001Phone no. : (0285) 2620496Fax no. : (0285)2628340E-mail : jccbank_ad1@sancarnet.in

DATE OF ESTABLISHMENT : 18-02-1971

REG. NO. : se-8821 18-02-1971

RESERVE BANK LICENSE NO : GJ 521 PCOMMENCEMENT OF WORK : 30-09-1971AUDITORS : _________________________

BRANCH OFFICE : The Junagadh Com. Co-operativeBankLtd.Choksi bazar Branch,Junagadh – 362001Phone no. : (0285) 2620496

BANKERS : Reserve Bank of India State Bank of India State Bank of Saurashtra

AUDITOR : ______________________Certified auditor, Junagadh-362001

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VISION MISSION AND GOAL

VISION

The aim of junagadh commercial co-operative bank is to provide a ivy league

Banking facility to the common hoipolloi of the society at an economical rate.

MISSION

To be a preferred of the banking services in the area where bank operates and to

achieve hefty profit which would be partly used for the benefit of society, rat chat up the

hoipolloi and general growth and co- operative movement.

GOAL

Junagadh commercial co-operative bank’s business philosophy based on core values

o Operational excellence

o Customer focus

o Up liftmen through co-operation.

BOARD OF DIRECTORS:-

MR. DOLARRAI V. KOTECHA (CHAIRMAN)

MR. ASHISHBHAI J. MANKAD (VICE CHAIRMAN)

MR.VASANTRAI K. BHATT (MANAGING DIRECTOR)

SHRI GOVINDBHAI R. DEWANI

SHRI MANIKANT G. SHAH

SHRI P.D.GADHAVI

SMT. PRITIBEN D. KOTECHA

SHRI PRAKASHBHAI A. TALATI

SHRI ASHISHBHAI PAREKH

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SHRI IQBALBHAI MARFATIYA

SHRI PRAVINBHAI J. GONDHIYA

SHRI BHAVESHBHAI V. VORA

SHRI AMARSHIBHAI SOLANKI

SHRI BHARATBAHI J. UPADHYAY

SHRI SUNILBHAI H. NAVANI

LOAN COMMITTEE:-

SHRI DOLARRAI V. KOTECHA (CHAIRMAN)

SHRI ASHISHBHAI J. MANKAD (VICE CHAIRMAN)

SHRI VASANTRAI K. BHATT (MANAGING DIRECTOR)

SHRI ASHISHBHAI PAREKH

SHRI SUNILBHAI H. NAVANI

SHRI BHAVESHBHAI V. VORA

SHRI IQBALBHAI MARFATIYA

RECOVERY & LEGAL COMMITTEE:-

SHRI. POPATLAL D. GADHAVI

SHRI. IQABALBHAI M. MARFATIA

SHRI. ASHISH J. PAREKH

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BRANCHES OF JUNAGADH COMMERCIAL CO-OPERATIVE BANK

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Head Office ChandrakantMalaviya

SmurtiBhavanChoksiBazzar

Limbadi Branch

Gandhinagar Branch

Manavadar Branch

Vanthli BranchKesoad Branch

Kodinar Branch

Dolatpara Branch

Joshipara Branch

ORGANISATION STRUCTURE

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Borad Of Director

Chairman Vice Chairman

Managing Director

General Manager

Branch Manager

Accountant

Officers

Clerks

Peons

SERVICES PROVIDED BY JCCB

The basic type of services offered by bank depends upon the type of bank and the

country. Services typically provided include:

Taking deposits from their customers and issuing current or checking accounts

and saving accounts to individuals and businesses.

Extending loans to individuals and businesses.

Cashing cheques.

Facilitating money transactions such as wire transfers and cashier’s checks.

Issuing credit cards, ATM cards and debit cards.

Storing valuable, particularly in the safe deposit box.

Cashing and distributing bank rolls.

Consumer and commercial financial advisory services.

Pension and retirement planning.

Financial transactions can be performed through many different channels as following:

A branch, banking centre or financial centre is a retail location where a bank or

financial institution offers a wide array of face to face service to its customers.

ATM is a device for computerized telecommunication that provides financial

institution’s customers a method of financial transactions in a public space

without the need for a human clerk or a bank teller.

Mail is a part of the postal system which itself is a system where in written

documents typically enclosed in envelopes, and also small packages containing

other matter are delivered to destinations around the world.

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PROGRESS AT A GLANCE

The JCCO Bank has been continuously in the upward north. Thus bank continuously has

been progressing and providing best of the best service to their customer and fully

adopted the K.Y.C. approach and online system.

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Particulars 20010-11(in lacs)

2011-12(in lacs)

2012-13(in lacs)

Share capital 183.47 214.41 219Reserve fund 863.31 1057.24 1171Deposit 6464.59 7006.22 8114Advances 3934.97 4821.38 5344Working capital

7774.63 8530.57 9804

Profit 48.25 23.24 12.54

No of branch 8 9 9

Dividend 15% 15% 15%

MAIN FUND INFLOW

Capital

The owned funds consisting of paid capital of the bank, reserve fund, and other reserves.

Deposits

It is sum of current deposits, fixed deposits, saving deposits, special saving deposits, NRI

deposits, inoperative deposits, etc. It is the main Cash Inflow for any institution.

Borrowings

The borrowed funds consisting of borrowings from other banks (as per some writer

deposits of various types is also part of borrowed funds), debentures offered to public,

etc.

Others

Increase in current liabilities, reduction in debtors, fund from operations like net income,

depreciation, and reserves, less payment to creditors, reduction in advances, reduction in

inventories, reduction in cash, sold marketable securities, etc.

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MAIN FUND OUTFLOW

CRR (Cash Reserve Ratio) with Reserve Bank Of India

The capacity of credits creation of bank is depending upon their cash flow

received. To restrict this credit creation, the reserve bank of India has directed their

terms. In case of scheduled banks and sec.18 of banking regulation act are required to

maintain the cash reserve ratio @4.75 and non-scheduled bank @ 3% of their demand

and time liability amounts separately. The co-operative banks cash reserve ratio is @3%

fixed by RBI in AUG 2010The scheduled banks are required to deposit the cash reserve

ratio amount with Reserve Bank of India while the non-scheduled banks are required to

maintain separate account for this. The Reserve Bank of India is also empowered to raise

the cash reserve ratio up to 15% only in respect of scheduled banks.

Time liability is related with time like, fixed deposits

Demand liability is related with the demand like, Current deposits, inoperative deposit,

and matured fixed deposits

SLR (Statutory Liquidity Ratio)

The cash flow for regular banking transactions mainly depends upon deposit

received in the bank. The reserve bank of India there fore puts some restrictions on

utilization of these

amounts. The scheduled and non-scheduled banks are required to deposit 24% amount of

their demand and time liability amount in the security approved by reserve bank of India.

These securities are converted into cash and therefore they are termed as ‘liquid assets’

and 25% amount termed as ‘liquid ratio’. The reserve bank of India is empowered to raise

this liquidity ratio from 25% to 40%. It is maintained average fortnight and reported to

RBI.

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Loanable Fund

Credit deposit ratio is not more than 70%.Loanable funds means amount of

money, which is applicable for lending. Three main factors own fund, deposits, and

borrowings decide it. Advances can never be more than loanable fund.

Loanable fund is a total of:

75% of own funds

70% of deposits

100% of borrowings

Others

Purchase of fixed assets, purchase of marketable securities, addition to advances,

addition to inventories, payment to creditors, payment of dividend, etc..

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MEANING of CREDIT

The word ‘credit’ is actually derived from the Latin word ‘Credere’. ‘Credere’

means to have trust or faith. Thus ‘credit’ is directly related with trust. That is why State

Ford stated that ‘Credit is nothing more than that of trust’. By this we can say that credit

is a tool that is resulted by the complete mutual trust/faith.

‘Credit creation implies a situation when a bank may receive interest simply by

permitting customer to overdraw their accounts or by purchasing securities and paying

for them its own cheque or bank may pay amount to borrower or directly to seller of

goods whom against borrower get amount’.

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CREDIT MANAGEMENT

“Credit allows the customer to buy now pay later”.

CREDIT MANAGEMENT can be defined as management of loans and advances in

Banks. In other words credit management means successfully managing the credit by

paying the debt obligations on time for the amount required.

A credit is a legal contract where one party receives resource or wealth from another

party and promises to repay him on a future date along with interest. In simple terms, a

credit is an agreement of postponed payments of goods bought or loan. With the issuance

of a credit, a debt is formed.

FORMS OF CREDIT

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Loan/term loan

In case of a loan a specified amount is sanctioned by the banker to the customer,

who may either draw the amount in case immediately or may like the amount to be

credited to his current account. But legally it is presumed that he has withdrawn the

amount from the bank and deposited it in his current account. He is required to pay

interest on the full amount from the date of sanction. A loan may be repayable in

installments or in lump sum.

Cash credit

Cash credit is the main method of lending in India and accounts for above 70% of

total bank credit. Under the system, the banker specifies the limit, called the cash credit

limit for each customer, up to which the customer is permitted to borrower against the

security of tangible assets or guarantees. The customer withdraws from his cash credit

account as and when requires the funds and deposits any amount of money, which he

finds surplus with him on any day. The cash credit amount is thus an active and running

account to which deposits and withdrawals may be affected frequently. The customer is

required to provide tangible assets as security to cover the amount borrowed from the

banker. The borrower is charged interest on the actual amount utilized by borrower and

for the period actually utilized only.

Overdrafts

When a current amount holder is permitted by the banker to draw more than what

stands to his credit, such an advance is called an overdraft. The banker may take some

collateral security or may grant such advance on the personal security of the borrower.

The customer is permitted to withdraw the amount as and when he needs it and to repay it

by means of deposit in his account as and when it is feasible for him. Interest is charged

on the exact amount overdrawn by the customer and for the period of its actual utilization

Bills Purchase

Page | 35

The Banker credits customer’s account with the amount of the bill after deduction

his charges. As the demand bills are repayable on demand and there is no maturity, the

banker is entitled to demand their payment immediately on presentation before of

drawee. Their practice adopted in the case of demand bills, is known as purchase of the

bills.

Bills Discount

In case of bills discounting, a bank credits the amount of the bill to the drawer’s

account before the realization of the bill and thus lends its funds to him after deduction

his charges. The bills purchased and bills discounted by a bank are, therefore, shown in

its balance sheet as part of loans and advances. In case of a bill maturing after a period of

time maximum for 180 days in JCCB, the banker retains the bill for that period and

realizes the amount of bill from the drawer on its due date. This practice is called

discounting of the bill.

Bank Guarantee

It is a contract to perform the promise or discharge the liability of a third person in

case of his default. In case of guarantee, Bank is taking responsibility to pay the amount

to seller if buyer will not pay amount in time.

TIME WISE BIFURCATION OF ADVANCES

Short-term Finance: up to 12months

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Refer to any investment and financial plan or anything else lasting for one year or

less. Short term investments and financial plan usually involve less uncertainty than long

term investments. Because generally speaking market trends are more easily predictable

for one year than for any longer period. Likewise short term financial plans are more

easily amendable as a result of the short term frame.

-Medium-term Finance: 12 to 36 months

Referring to any investment or financial plan with a term longer than short term

but shorter than long term called as medium term finance. It could be in weeks or a few

years.

- Long-term Finance: Above 36 months

Describe a plan, strategy, security, or anything else with a term of longer than one

year. Theexact number of years varies according to the usage. For example, along term

financial plan outlines investment and other financial goals for any time more than one

fiscal year. While a long term bond has a maturity of 10 or more years.

SECURITY WISE BIFURCATION OF ADVANCES

1. Secured Finance / Advances:

Secured Advances are those advances, which provide absolute safety to the

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Banker by means of a charge, created on the tangible assets of the borrower in favor of

the Banker. In such cases, the Banker gets certain rights in the tangible assets over which

a charge is created. A Secured Loan or Advance means a loan or advance made on the

security of assets, the market value of which is not at any time less than the amount of

such loan or advance.

2. Unsecured Finance / Advances:

Unsecured Loan or Advance means a loan or advance, which are not secured, this

types of advances is not preferable for any banking institutions.

PROCESS OF CREDIT FOLLOWED BYJCCB

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APPLICATION

CREDIT APPRAISAL

SUBMISSION TO HIGHER AUTHORITY FOR APPROVAL

UNIT INSPECTION

STEP 1: APPLICATION

A customer seeking an advance is required to submit an appropriate application form. There are different types of application forms for different types of advances available. The information furnished in the application covers, inter alias, the following: name and address of the borrower and his establishment, the details of borrower’s business, the nature and amount of security offered. The application form has to be supported by various ancillary statements like the financial statements and financial projections of the firm. A separate inquiry department is set under the loan department. Here, different types of application forms are available and collect process charge from borrower; application is accepted and entered into computer.

STEP 2: CREDIT APPRAISAL

Credit Appraisal is the process by which a lender appraises the technical feasibility, economic viability and bankability including creditworthiness of the prospective borrower. Credit appraisal process of a customer lies in assessing if that customer is liable to repay the loan amount in the stipulated time, or not. Here bank has their own methodology to determine if a borrower is creditworthy or not.

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SUBMISSION TO HIGHER AUTHORITY FOR APPROVAL

STEP 3: UNIT INSPECTION

It is a one specific procedure of physical inspection of particular unit by the legal inspector appointed by bank or the senior officer. Where overall unit inspected by them and then actual position known and after it higher authority will decide such decisions about credit given or not.

STEP 4: SUBMISSION TO HIGHER AUTHORITY FOR APPROVAL

After inspection the loan application is send to the higher authority for approval. After checking overall documents and inspection report higher authority give approval for credit.

STEP 5: SENCTION LETTER

After approval by higher authority sanction letter is given to the loan department for give a credit.

STEP 6: TITLE CLEAR CERIFICATE

Starting from agriculture land transferring to non agriculture land various stages of land owner and last owner of non-agriculture land on government record .this type of procedure certified by any lawyer and submitted to bank in a form of title clear certificate.

STEP 7: REGISTRATION OF PROPERTY

After the procedure of title clear certificate mortgage registration of property on the name of bank is one of important procedure done by the registrar.

STEP 8: DOCUMENTATION

Banks and borrowers do an written legal agreement for credit given by bank and on which conditions and borrower’s eligibility for payment and promise to repay the loan.

STEP 9: PAYMENT GIVEN TO CUSTOMER

After all this procedure credit payment is given to the borrower in a form of cash

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CREDIT POLICY OF JCCB

According to the preamble of RBI Act of 1934, the main functions of RBI are to

regulate the issue of bank notes and keeping of reserves with a view to secure monetary

stability and generally to operate the currency and credit systems of the country to its

Page | 41

advantage . Credit policy can be looked upon as a short term policy instrument to make

connections in the economy as it progresses. It is customary for the Reserve bank to

announce the credit policy for the first half of the fiscal year. The credit policy indicates

the current economic scenario while at the same time indicates the areas where

creditpolicy initiatives are required. It also specifies the various policy measures to be

indicated by the reserve bank over the next six months.

The credit policy measures may include some or all of the following measures

depending upon the prevailing situations:

Reserve Bank’s expectation of deposit growth and achieve the targeted growth

rate. Measures to control liquidity in the banking system which may include CRR, SLR

and curtailment of refinance facilities.

Changes in bank deposit and lend interest rate and their effect on savings and

deposit mobilization, priority sector lending, investment and bank profitability.

Measure to promote agricultural growth and rural development.

Change in re-financing and bills re-discounting facilities. So, also individual banks must

also prepare their own credit policy in conformation with the guidelines issued by RBI. A

bank’s credit policy is of,

a. Tight or Restrictive

b. Liberal or Non restrictive

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SCRUTINY OF CREDIT

While scrutinizing an application from the bank takes into consideration-safety,

liquidity, purpose profitability, security, and spread of advances.

Safety

Bank has to see that the prospective borrower is a reliable user of the finance and bank’s

money is safe in his hands.

Liquidity

Bank has to find out that the borrower is quite capable in repaying the finance within

the period.

Purpose

The purpose for the finance should not be illegal. It should be creative, service

oriented, development oriented, and like. Banks should check end use of funds.

Profitability

If the project or purpose of the finance is not profitable in the hands of the borrower

than he will not be in a position of repay the amount to bank. It should be profitable

enough to generate the income to satisfy his needs and bank’s dues.

Security

The bank has to take into consideration the character, capacity, and capital of the

prospective borrower. Bigger advances and cash credit are to be secured with collateral

security over and above prime security.

Spread of advances

For having balanced economy the bank should choose to spread the finance amongst

various sectors of the society, so that the risk of incoming bad advances is minimized.

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Concentration on one type of advances may turn into bad advances if the scheme

becomes ineffective due to some natural calamities or government rules or change in

taste or demands of the society.

TYPES OF CREDIT

HYPOTHECATION LOAN

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HYPOTHICATION CASH CREDIT

VEHICLE LOAN

PERSONAL LOAN

GOLD LOAN

GOLD OVERDRAFT LOAN

POSATL CERTIFICATE LOAN

EMPLOYMENT LOAN

REAL ESTATE LOAN

Types of Loan Rate of InterestAs On 31-3-2013

Hypothecation Loan 13.00%14.00%15.00%

Hypothecation cash credit 14.00%15.00%

Vehicle loanCommercial

Personal14.00%15.00%

Personal loan 14.50%15.00%

Gold loan 13.00%Gold over draft 14.00%Postal certificate 11.00%

CREDIT APPRAISAL

The assessment of the various risks that can impact on the repayment of loan is

credit appraisal. In short, you are determining "Will I get my money back?" Depending

on the purpose of loan and the quantum, the appraisal process may be simple or

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elaborate. For small personal loans, credit scoring based on income, life style and existing

liabilities may suffice. But for project financing, the process comprises technical,

commercial, marketing, financial, managerial appraisals as also implementation schedule

and ability

It is a process of appraising credit worthiness of a loan applicant. Factors like age,

income, number of dependents, nature of employment, continuality of employment,

repayment capacity , previous loans, credit cards etc. are taken into account while

appraising the credit worthiness of a person. Every bank or institution has its own panel

of officials for this purpose.

Customers are now able to manage NPA's better and mitigate risk by automating

the entire credit appraisal process. They are now able to record & verify information

related to their customers, capture information related to projects and also send

application to third party appraisal agent/company. Our Business Process Management

practice further enhances these workflows by implementing industry standard third party

BPM tools.

The Junagadh commercial co-operative banks have the specific credit appraisal

system which is added into annexure.

CREDIT MONITORING, FOLLOW UP AND REVIEW

When we lend, it is essential for us that to keep watch on it till we recover it. This

is called credit monitoring in terms of banking.

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CREDIT MONITORING SYSTEM in JCCB

In the JCCB, there is system for credit monitoring specially account, which is

above 10, 00,000 rupees is described below:

Find out the list of potential NPA accounts above 10, 00,000 rupees

Statements of potential NPA accounts are submitted to head office from branches

Head office monitoring this every three months and prepare report on it.

Report is submitted to board of directors.

Follow up action for credit monitoring in JCCB:

Consolidation of data, which comes from the branches and every month, update

the data and generate this and use it for follow up

Head office directly sends the notice to account holders of such accounts

To stop the slippage of the potential NPA accounts, banks organize the committee under

authorization of Mr. MARADIA and Mr. BHATT with the help every branch recovery

officers, they try to recover. General Manager arranges the meeting for that and gives

guidelines to the committee member.

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OBSERVATION FINDINGS AND SUGGESTIONS

System of loan portfolio review and monitoring

There is system of weekly review and monitoring of loan portfolio in the JCCB

every week a statement is prepare to be acquainted with the present credit deposit ratio, if

this ratio is less than 70% for example 65%, it represent that bank can finance up to 5 %

at present.

Items of priority sectors

Advances to individuals for activities allied to agriculture Loans and advances to

cottage/small scale industries and equipment /system for development of new and

renewable sources of energy.

Advances to road and water transport operators for purchase of one vehicle

Private retail traders dealing in essential commodities (fair practice shop)

Small business enterprise

Professionals and self employed persons

Educational loans

Consumption loan

Timely renew and review by credit limit

Every year JCCB review cash credit accounts and every three years renew that

accounts. At the time of review bank only keep in view the turnover of business, account

inspection, field inspection, renew insurance, renew shop act license, proof of rent,

income tax return or assessment of income tax, turnover with bank. But process of renew

of accounts is totally inspection of party. Bank considers last three year’s business

progress of the party and deal with bank also.

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INTRODUCTION OF NPA

NPA The three letters Strike terror in banking sector and business circle today. NPA is

short form of “Non Performing Asset”. The dreaded NPA rule says simply this: when

interest or other due to a bank remains unpaid for more than 90 days, the entire bank loan

automatically turns a non performing asset. The recovery of loan has always been

problem for banks and financial institution. To come out of these first we need to think is

it possible to avoid NPA, no cannot be then left is to look after the factor responsible for

it and managing those factors.

Definitions:Definitions: An asset, including a leased asset, becomes non-performing when it ceases

to generate income for the bank.

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CLASSIFICATION OF NPAS

The primary (urban) co-operative banks should classify their assets into the following

broad groups, viz.

Performing assets

- Standard assets

Non-performing assets

- Sub-standard assets

- Doubtful assets

- Loss assets

After identification of borrowed accounts as NPA the next stage is asset classification

Standard assets

Standard Assets is one, which does not disclose any problems and which does not

carry more than normal risk attached to the business. Such as asset should not be an NPA.

Sub-standard assets

In case of sub-standard assets, the current net worth of the borrower/guarantors or

current market value of the security charged is not enough to ensure recovery of the dues

to the banks in full. In other words, such assets will have well defined credit weakness

that jeopardize the liquidation of the debt and are characterized by the distinct possibility

that the banks will sustain some loss, if deficiencies are not corrected.

An asset where the terms of the loan agreement regarding interest and principal

have been re-negotiated or rescheduled after commencement of production, should be

classified a sub standard and should remain in such category for at least 18 months of

satisfactory performance under the re-negotiated or rescheduled terms. If interest and

installment paid regularly as per term re-scheduled.

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In other words, the classification of an asset should not be upgraded merely as a

result of rescheduling, unless there is satisfactory compliance of this condition.

Doubtful assets

An asset is required to be classified as doubtful, if it has remained in the sub-

standard category for 12 months. As in the case of sub-standard assets, rescheduling does

not entitle the bank to upgrade the quality of an advance automatically.

A loan classified as doubtful thus all the weakness inherent as that classified as

sub-standard, with the added characteristic that the weaknesses make collection or

liquidation in full, on the basis of currently known facts, conditions and values, highly

questionable and importable.

Loss assets

A loss asset is one where loss has been identified by the bank or internal or

external auditors or by the co-operation department or by the Reserve Bank Of India

inspection but the amount has not been written off, wholly or partly, in other words, such

an asset is considered un-collectible and of such little value that its continuance as a

bankable asset is not warranted although there may be some salvage or recovery value.

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PROVISIONS FOR NPAS IN JCCB

Assets classification % Of provision to be made

Standard assets

- Agriculture

- real estate

Sub standard assets

- secured

- unsecured

Doubtful assets

A. Doubtful up to 1 year

B. Doubtful for above 1 year but not

3 year

C. Doubtful above 3 years

Loss

25%

1%

1%

100%

20%

30%

50%

100%

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REASONS FOR NPA

“Assets which are not generate actual income or which are classified in to overdue

account and if account becomes an overdue above 90days .those assets can be classifies

into non-preforming assets.”

OTHER REASONS AS IS UNDER:

Improper selection of borrowers activities

Weak appraisal system for credit proposal industries problem/prospects not locked

into

Lack of proper monitoring and follow up measures.

Managerial competence of borrower given less consideration

Change in economic policies / environment.

Lack of proper follow up by banks.

Irregularities in deficiencies in documentation-

Undated

Not renewed

Non transparent accounting policy and poor auditing practices.

Lack of coordination between Bank / FIs.

Failure on part of the promoters to bring in their portion of equity from their own

sources or public issue due to market turning unfavorable.

Assessment of borrower and guarantors net worth on market opinion

Inadequate staff to contact borrowers frequently

Failure to take punitive (strict and effective) actions against defaulters

Bank’s failure to appreciate the acts of prompt repayers

Non action/co-operation of government agencies in recovery

Effect of agricultural debt relief scheme

Inadequate monitoring of court cases and delays in execution

Lack of income generation due to natural calamities and other uncertainties.

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NPA REDUCTION TECHNIQUES

Recovery management consist of the functions and activities the bank carries out

acquire back what the bank has advanced with principal amount as well as interest on the

same. So it is recovery of what the bank has advanced to loanee for carrying out their

purpose/ objective of taking a loan.

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Recovery is the act against the borrowers the pay out the debt taken by them.It is

an procedure to recover the debt from borrowers as soon as possible and as most as

recoverable.

Recovery management is very much important part of the credit management

because no any company or an organization survives if they are not capable as enough to

recover company’s debt as soon as possible.

Recovery department or we can say recovery manager plays very much important

role in the credit management of the organization.

National institute of co-operative management, Gandhinagar decided some strict

action against the loanee/borrower for the debt recovery.

METHODS OF RECOVERY

Following are the recovery methods followed by The Junagadh Commercial co-

operative bank which is guided by the RBI and national institute of co-operative

management.

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METHODS OF RECOVERY

RESEACH METHEDOLOGY

Research is actually a voyage of discovery. It is the pursuit of truth with the help

of study, observation, comparison & experiment. In today’s modern world it is difficult to

survive without making research in latest trend and activities.

Research can be defined as the search for knowledge or any systematic

investigation to establish facts. The primary purpose for applied research (as opposed to

basic research) is discovering, interpreting, and the development of methods and systems

Page | 56

Recovery through Salary/Wage

Settlement of Dispute

Issue recoveryCertificate

Right to appeal

for the advancement of human knowledge on a wide variety of scientific matters of our

world and the universe.

Research methodology, being the most important part of the study, should get

extra attention. Besides this, all efforts have been put to apply appropriate methodology

suitable for each type of study. Marketing research is the systematic gathering, recording,

and analyzing of data about problem relating to the marketing of goods and services.

Research is a process of knowing new fat and verifying old ones by the

application of scientific method. Research as per common man refers to search for

knowledge. Some people consider research as a movement, a movement from unknown

to known. It is systematic search or information on a systematic topic.For my analysis

purpose I go to secondary data so I used Non-parametrictest. Where I use chi square test

as follows:

LITERATURE REVIEW

Research Paper – “A comparative study of Non Performance Assets in India” by

Prashanth K Reddy, IIM- Ahmadabad-

This article discusses about the financial sector reform in India which has progressed

rapidly on aspects like interest rate deregulation, reduction in reserve requirements,

barriers to entry, prudential norms and risk based supervision but the progress on th

Page | 57

e structural-institutional aspects has been much slower and is a cause for concern. It

tells about what changes are required to tackle the NPA problem. This paper also

deals with the experiences of other Asian countries in handling of NPAs. It also

suggests mechanisms to handle the problem by drawing on experiences from other

countries.

Research Paper on “Rooting Out Non-Performing Assets” by Nachiket Mor, ICICI

research centre-

The paper attempts to highlight some major micro-level issues that are at the root of

why unsustainable performance levels are being observed within Banks. The authors

argue that unless the micro level issues are dealt with, even after the systemic issues

are resolved, the problem of NPAs or other failures of the intermediation process may

resurface with greater intensity. The manner in which banks manage the three phases

in the life cycle of an asset (creation, monitoring and recovery) determines the quality

of the intermediation process within a bank. In this paper, the need for internally

consistent business models to guide the behavior of a bank in each of these three

phases is discussed.

Non-Performing Assets of Indian Public, Private and Foreign Sector Banks: An

Empirical Assessment by: Gaurav Vallabh, Anoop Bhatia, Saurabh Mishra-

This paper explores an empirical approach to the analysis of Non-Performing Assets

(NPAs) of public, private and foreign sector banks in India. The NPAs are considered

as an important parameter to judge the performance and financial health of banks.

The level of NPAs is one of the drivers of financial stability and growth of the

banking sector. This paper aims to find the fundamental factors which impact NPAs

of banks. A model consisting of two types of factors, viz., macroeconomic factors and

bank-specific parameters, is developed and the behavior of NPAs of the three

categories of banks is observed. This model tries to extend the methodology of

widely-known Altman model. The empirical analysis assesses how macroeconomic

factors and bank-specific parameters affect NPAs of a particular category of banks.

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The macroeconomic factors of the model included are GDP growth rate and excise

duty, and the bank-specific parameters are Credit Deposit Ratio (CDR), loan

exposure to priority sector, Capital Adequacy Ratio (CAR), and liquidity risk. The

results show that movement in NPAs over the years can be explained well by the

factors considered in the model for the public and private sector banks. The co-

linearity between independent variables was measured by Durbin-Watson test and

VIF characteristic and it was found to be a little for public and private banks. The

factors included in the model explain 97.1% (adjusted R-square value of regression

results) of variations in NPAs of public banks and 76.9% of the same of private

banks. The other important results derived from the analysis include the finding that

banks ‘exposure to priority sector lending reduces NPAs.

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OBJECTIVE OF STUDY

PRIMARY OBJECTIVE :

1. To study and understand the Credit management of JCCB.

SECONDARY OBJECTIVE

2. To study and understand the process of sanctioning the loan.

3. To study and understand the criteria for sanctioning the loan

4. To study the bank’s policy towards NPA.

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TITLE OF STUDY

The title of the study is “CREDIT MANAGEMENT” which means those credit

given by the bank to the where borrowers are default of delay of interest of principal

payment or repayment of credit. Banks are now required to recognize.

Today there is huge competition in the banking sector. Banks are now just not

depositing, receiving or paying money but it has become One Step Banking. Only a step

in banking the banks should satisfy all the monetary requirements of the people along

with the repayment which the borrowers have take and have to pay in time so the

liquidity will remain sustain the competition prevailing in the sector makes all the

requirements of the people possible.

All the research help me a lot to know about reason behind non paying and

this non performing asset become more in number than it would difficult to maintain the

cash out flow in the bank.

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SOURCES OF DATA

Primary data collection

Primary data is basically the live data which collected on field while doing calls

with the customers and I shows them list of question for which I had required their

responses. In some cases I got no response from their side and then on the basis of my

previous experience I filled those fields.

Secondary data collection

For preparing the theoretical background of the study, I have used secondary data

from articles, books and annual reports of JUNAGADH COMERCIAL CO-

OPERATIVE BANK LTD.

Secondary data are collected by someone else. So, it becomes secondary information

for the research

GROSS NPA

Year Gross NPA in RS2008-09 268820002009-10 489160002010-11 207450002011-12 228960002012-13 20680000

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Analysis

Here we can see that there is reduction in the year 2010-11 approximant 58% and

2011-12 raise and than 2012-13 it is fall. So that it is indicate that bank has strengthen his

position from the out of order advance.

NET N.P.A

Year Net NPA in RS2008-09 9670002009-10 193390002010-11 02011-12 02012-13 0

Analysis

Here in the year 2008-09 it is 967000 and then it is increased in the year 2009-10 and

then after rest of the year it becomes zero. It is indicate that bank advance monitoring

policy quite efficient.

HYPOTHESIS TESTING

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CHI - SQUARE TESTFOR GROSS NPA

STEP: 1 SETTING OF HYPOTHESIS

H0: There is no significance difference between gross NPA Observed frequency and

gross NPA expected frequency.

Ha: There is significance difference between gross NPA Observed frequency and gross

NPA expected frequency.

STEP: 2 CALCULATIONS FOR TEST STATISTICS

    1           

year O E (O-E) (O-E)2 (O-E)2/E

         2009 26.88 28.03 -1.15 1.32 0.0472010 48.92 28.03 20.89 436.39 15.572011 20.75 28.03 -7.28 53 1.892012 22.9 28.03 -5.13 26.31 0.942013 20.7 28.03 -7.33 53.73 1.92

140.15 20.367TOTAL

OBSERVED

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WHERE,

O = Observed frequency.

E= Expected frequency.

E= TOTAL OBSERVED FREQUENCY

NO OF FREQUENCY.

Degree of freedom = n-1

= 5-1

=4

STEP 3: LEVEL OF SIGNIFICANCE

Х2 = (0.05, 4) = 9.49

STEP 4: DECISION

Х2c = 20.367 >Х2( 0.05, 4) = 9.49

H0: Rejected

Ha: Accepted

Interpretation:

So, there is significance difference between past data and present data. It show that the

bank has strengthen his position from the out of order advance.

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CHI-SQUARE TEST FOR NET N.P.A

STEP 1: SETTING OF HYPOTHESIS

H0: There is no significance difference between Net NPA Observed frequency and Net

NPA expected frequency.

.

Ha : There is significance difference between Net NPA Observed frequency and Net

NPA expected frequency.

STEP 2: CALCULATIONS FOR TEST STATISTICS.

WHERE,

O = Observed frequency.

E= Expected frequency.

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  2  

NET N.P.A (Rs IN 10Lacs)         

Year O E (O-E) (O-E)2 (O-E)2/E         

2009 9.67 5.80 3.87 14.98 1.552010 19.34 5.80 13.54 183.33 9.482011 0 5.80 -5.80 33.64 02012 0 5.80 -5.80 33.64 02013 0 5.80 -5.80 33.64 0

29.01       11.03 TOTAL

OBSERVED        

C= No of parameters being estimated from the sample data.

WHERE ,

E= TOTAL OBSERVED FREQUENCY

NO OF FREQUENCY.

Degree of freedom = n-1-C

= 5-1-2

=2

STEP 3: LEVEL OF SIGNIFICANCE

Х2 = (0.05, 2) = 5.99

STEP 4: DECISIONS

Х2c = 11.03 > Х2 ( 0.05, 2) = 5.99

H0: Rejected

Ha: Accepted

Interpretation:

So, there is significance difference between past data and present

data. It shows that the bank credit management is better and company credit

monitoring policy is quite efficient.

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LIMITATION OF STUDY

Nothing in the world is complete and my presented work is not an exception to this

saying. Since banking is a very vast topic to cover, it includes a lot of things and NPA is

also a very big affair. The limitations that I felt in my study are:

I take past 5 year data for my research but it not describe actual study. So there is

limitation of the study.

There are many tools for the calculation of the NPA. It also gives the accurate

decision on NPA.

We can also use other tools for NPA calculation. The other tools are return on

investment, NPA ratio analysis etc.

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FINDINGS

All procedure take maximum fifteen days to passed loan in which to deposit the

document and all necessary paper would create a road blocks.

Those borrowers who did not pay the dues it would create a negative in the profitability.

In finance side, most of the people are prefer to get.

Also from the reason I can come to know that people do not agree that co-operative bank

has advantage and flexibility than private banks in terms of law , interest rate, large

network and fast processing.

There existing rating system in the Junagadh commercial Co-operative bank did not

consider the rating of interest coverage ratio, and debt service ratio.

The bank did not manage the credit risk by getting the credit risk information from the

other bank in order to lend.

The current ratio is not a very good indicator of the credit worth in case of the borrower.

Where as the debt equity ratio and the interest coverage ratio is a very good indicator of

the credit worthiness of the borrower

Page | 69

CONCLUSION

The project work on CREDIT MANAGEMENT has proved to be a fruitful and

learning experience for me. Practical training apart from theory lectures has interested to

me. This project work has given me an opportunity to learn various aspects of banks and

as well as research in NPA

This project work has helped us to relate the theoretical process with the practical

aspects of the market research. During our research I acquired a detailed knowledge

about the role of the bank and its function. That is got an overall idea about how a NPA

research is to be conducted, through this project work. Thus this practical approach filled

in the gaps of our long-standing theoretical knowledge.

From the research analysis I conclude that

Overall performance of co-operative bank is average as compare to others

in most of the segment and it should tries to grow in the rest of the segment in which it

has lagging behind.

Page | 70

REFERENCE

NO

NAME

1 Prashanth K Reddy, IIM- Ahmadabad

2 Nachiket Mor, ICICI research centre

3 Gaurav Vallabh, Anoop Bhatia, Saurabh Mishra

BIBLIOGRAPHY

NO NAME OF BOOK

1 Shekhar K.C. Banking Theory and Practices

2 C.R. Kothari- Research Methodology: WishwaPrakashan- New Delhi.2003

3 Khan and Jain-Finance Management: TATA McGrewhill New Delhi. 2006

4 Bedi H.L.; Hardikar V.K. Practical Banking Advances. New Delhi: Institute

of banking studies, 1975.

5 www.google.com6 www.jcombank.com7 www.rbi.org.com8 www.bankindia.com

Page | 71

BALANCE SHEET OF JCCB

Schedule-1Capital 31.03.2013 31.03.2012

Authorized capital

[400000 share of 100 each] 40000000.00 20000000.00

[200000 share of 50 each ] 10000000.00 10000000.00

Subscribe & paid up capital

[207446 share of 100 each] 20365 21227600.00 20744600.00

[196196 share of 100 each] 21294

Share capital (LIMBADI BRANCH) 530240.00 696590.00

SHARE CAPITAL – (GROUP B) 120100.00

TOTAL 21877940.00 21441190.00

Schedule-2Reserve & surplus 31.03.2013 31.03.2012

Free reserves

Statutory reserve 36170915.92 34781843.92

Contingent reserve 651031.67 651031.67

Building fund 13630374.39 3481843.92

Dividend equalization fund 354806.00 1696779.80

Development fund 1194769.39 1194769.39

Risk coverage Reserve

Bad debts reserve fund 30100000.00 30000000.00

Special B.D.D.R 6232905.58 5882825.58

B.D.D.R (NPAs A/c) 0.00 0.00

Lambadi Branch Daily collection 0.00 0.00

Provision Madhavpura Marc. Co-op Bank 0.00 0.00

Page | 72

Overdue interest Receivable reserve A/c 3784656.63 3784656.63

Contingency provision against Standard assests 2200000.00 2000000.00

Capital Reserve

Merger Adjustment A/c (Vanthli) 983202.47 312477.47

Merger Adjustment A/c (Limbdi) 1258666.70 929253.70

Merger Bank (Rushika) Collection A/c 1784844.00 1691144.00

Other Reserve

Charitable Fund 417669.26 417669.26

Walfare Fund 561458.39 622458.39

Co – Operative Propaganda Fund 94917.85 106917.85

Member Reserve

Shareholder Members Gifts 0.00 0.00

Staff Reserve

Staff Benefits Fund 128781.00 128781.00

Depreciation Reserve

Investment Depreciation reserve 5030675.00 549600.00

Sub Total 104579674.25 98380583.05

Profit & Loss Account

Profit 2011-2012

Balance in Profit & loss Account 12542969.26 2333867.80

Total 117122643.51 100714450.85

Schedule-3Deposits 31.03.2013 31.03.2012Demand DepositCurrent Deposit 95768139.12 99318677.85Cash Credit 1534948.97 4952896.52

Page | 73

Sub Total 97303088.09 104271574.37Saving DepositSaving deposit 177454806.77 179598299.66Sanstha saving deposit 69269.00 66842.00Small saving deposit 2089583.00 1444781.00Special saving deposit 268402.68 244095.17

Sub Total 179882061.45 181354017.83Term DepositFix deposit 166066725.00 122487907.00Double benefit deposit 5026632.00 6097459.00Re investment deposit 349017570.17 274051460.98Recurring deposit 13495483.00 9941453.00Members compulsory deposit 0.00 1600648.72Silver collection deposits 657093.00 794506.00Gold collection deposits 19765.00 22887.00

Sub Total 534283268.17 414996321.70Total 811468417.71 700621913.90

Sub schedule for credit balance in cash credit account

Cash Credit 31.03.2013 31.03.2012Hypo. Cash credit \CR balance 1457357.18 4485131.61Surety cash credit\ CR balance 10492.20 7839.82F.D.O.D CR\balance 28720.19 121654.21Secured overdraft CR\balance 15708.50 301577.41Staff overdraft loan CR\balance 22670.90 36693.47

Total 1534948.97 4952896.52

Schedule-4

Borrowings 31.03.2013 31.03.2012Borrowings from Reserve Bank Of India 0.00 0.00Borrowings from other Bank & institute

Total 0.00 0.00

Schedule-5

Other Liability & Provision 31.03.2013 31.03.2012Overdue Interest ReserveOverdue Interest Reserve (GD A/c) 611368.00 280105.00Overdue Interest Reserve (GW A/c) 1308116.00 872279.00Overdue Interest Reserve (GP A/c) 681337.00 411593.00Overdue Interest Reserve(GOLD A/c) 8721.00 1022182.00

Sub Total 2609542.00 2586159.00Interest payable On depositInterest payable (compulsory saving) 0.00 0.00Interest payable matured deposit 2627607.00 3029130.00Interest payable (Fixed deposit) 4180348.53 3487993.53

Page | 74

Interest payable (Recurring) 2500314.00 1509310.00Sub Total 9308269.53 8026433.53

Sundry LiabilityCredit equalization fund 96258.00 96258.00Education fund 5100.00 125737.60Draft payable 90456.00 22600.00Pay sleep account 2007550.00 2285893.30Bills payable 0.00 0.00Pay order vvns share holder 0.00 618500.00Share vyaktigat payable 0.00 62550.00Payorder (share swap Limbdi) 0.00 312580.00Payorder (share swap Rushika) 0.00 3933.00Dividend payable -38 2009-10 0.00 0.00Dividend payable -41 2010-11 0.00 978132.00Dividend payable -42 2011-12 791299.60Insurance deposit 0.00 0.00Election deposit 0.00 0.00Share application 0.00 0.00Share application (Group B) 0.00Nominal membership 0.00 0.00Misc. payable 569300.00 1251216.00TDS staff/ other 0.00 0.00Clearing house 0.00 0.00Sundry creditor 355504.58 6443913.14Prov. Closing allow payable 1050000.00 925000.00Prov. bonus payable 1200000.00 1025000.00Prov. Leave payable 395000.00 400000.00Prov. Gratuity payable LIC 0.00 0.00Prov. Insurance premium payable 0.00 0.00Income tax payable 4500000.00 3500000.00Prov. Special allowance payable 0.00 251000.00Income tax paid under appeal – prov. 3672336.00 3672336.00Income tax refund receivable – prov. 1212070.00 1212070.00Other liability(credit balance in loan a\c) 12766.00 60006.00Inter branch adjustment (net) 1155333.50 1224475.50

Sub Total 18102973.68 19666678.54Total 30020785.21 30279271.07

Sub schedule for credit balance in Loan account 31.03.2013 31.03.2012Gold Loan\CR balance 0.00 57714.00Housing Loan\CR balance 9211.00 1951.00Hire purchase Loan\CR balance 0.00 0.00Cash credit \CR balance 0.00 0.00Staff vehicle Loan\CR balance 0.00 0.00Employment Loan\CR balance 0.00 0.00Postal certificate Loan\CR balance 3555.00 0.00Gold (Diamond)Loan\CR balance 0.00 0.00Gold (White) Loan\CR balance 0.00 0.00Hypothecation\CR balance 0.00 341.00Pledge Loan\CR balance 0.00 0.00Gold loan (platinum) Loan\CR balance 0.00 0.00Vajpai Employee Loan\CR balance 0.00 0.00

Page | 75

Staff salary Loan\CR balance 0.00 0.00Total 12766.00 60006.00

Sub schedule for inter branch adjustment 31.03.2013 31.03.2012Joshipara Branch Account 66766388.19 55577891.98Dolatpara Branch Account 25200851.88 36718209.20Kodinar Branch Account -285467.33 -1807952.55Keshod Branch Account 62369553.52 38960650.81Vanthli Branch Account 36799614.46 37412642.32Manavadar Branch Account -11043545.64 -6284247.25Gandhinagar Branch Account 6673691.58 1378803.15Limbadi Branch Account 2113899.81 -2327986.69Head office Branch Account -187439652.97 -158403535.47

Total 1155333.50 1224475.50

Schedule – 6

Cash & balance with RBI 31.03.2013 31.03.2012Cash on hand 39067361.80 16038087.07Cash at ATM

Total 39067361.80 16038087.07

Schedule –7

Balance with banks & call deposit 31.03.2013 31.03.20121. balance in current account with other banka.Balance with SCB & CCB of the districtGujarat state co- op Bank Ltd. 1961245.45 236598.45Junagadh Dist. co- op Bank Ltd. 142200.73 77851.73Ahmadabad Dist. co- op Bank Ltd. 2672566.23 3709436.41Surendranagar Dist. co- op Bank Ltd. 15452.73 15297.73

Sub Total 4791465.14 4039184.32

b. balance with SBI & other notified bankState bank of India 10586112.21 14812872.48Bank of Baroda 13501.00 13725.00Dena bank 10785.00 11000.53Union bank of India 245886.68 58518.38

Sub Total 10856285.62 14896116.39

c. Balance with private sector bankIDBI bank Ltd. 42736.00 43490.00HDFC bank Ltd. 4735922.00 5250476.03AXIS bank Ltd. 2260013.73 11211213.01ICICI bank Ltd. 126979.11 29800.11

Sub Total 7165650.84 16534979.15TOTAL(1A+1B+1C) 22813401.60 35470279.86

2 Balance in deposit account with other banka. term deposit with SCB & CCB of other bankGujarat state co- op Bank Ltd. 37500000.00 7500000.00Junagadh Dist. co- op Bank Ltd. 0.00 0.00

Page | 76

Ahmadabad Dist. co- op Bank Ltd. 20500000.00 20500000.00Surendranagar Dist. co- op Bank Ltd. 0.00 0.00

Sub Total 58000000.00 28000000.00

b. term deposit with SBI & other bankState bank of India 11237268.00 30604553.00Punjab bank of India 22500000.00 0.00

Sub Total 33737268.00 30604553.00

c. Term deposit with private bank IDBI bank Ltd. 9900000.00 11700000.00HDFC bank Ltd. 0.00 0.00AXIS bank Ltd. 20000000.00 0.00

Sub Total 29900000.00 11700000.00Total (2a+2b+2c) 121637268.00 70304553.00

3. madhavpura mercantile co – op bank 0.00 0.004. Money call & short term 0.00 20000000.00

Total[1+2+3+4] 144450669.60 125774832.86

Sub schedule balance with CCB/SCB 31.03.2013 31.03.2012Gujarat state co- op. bank limbdi branch 0.00 -189405.28Gujarat state co- op. bank -19612545.45 -47193.17

Sub total -1961245.45 -236598.45

Schedule –8

Investment 31.03.2013 31.03.2012

1.investment in government security

Central Government security 229958027.00 19625969.00

State government security 0.00 0.00

Sub total 229958027 19625569.00

2. investment in shares of other co operative institute

Gujarat co- op bank share 1500000.00 1030000.00

JDCC bank share 65000.00 65000.00

Surendernagar dist. co- op share 273100.00 273100.00

Ahmadabad dist. Co – op bank share 100.00 100.00

Saurashtra co- op spinning mills 500.00 500.00

Sub total 1839200.00 1369200.00

total 231797227.00 197628769.00

Schedule -9

Page | 77

Loan & Advance 31.03.2013 31.03.2012Short termSecured loan & AdvanceJcom trader plus 992452.95 1459496.95Hypothecation cash credit 145607434.11 149089548.83Secured over draft 19157369.99 12812221.59Pledge loan 0.00 0.00Mortgage loan 4490904.81 4494833.81Fixed deposit overdraft 0.00 0.00Goldy loan 11661.00 21996480.00Gold loan 42897174.60 27608056.00Gold loan (diamond) 80053099.70 55031783.00Gold loan (white) 54442702.44 37678328.00Gold loan (platinum) 2482596.16 1573234.99Staff over draft 12215713.28 12602878.37

Subtotal 362351109.04 324346861.48Unsecured loan & advanceSurety cash credit 313759.199 349197.61T.O.D on current A/c 30418.00 30418.00

Subtotal 344177.19 379615.61Medium term loan & long termHypothecation loan 77521131.00 76735551.25Housing loan 63514839.50 516104732.50Immovable loan 536699.70 780622.70Hire purchase loan 3009839.65 3287200.90Postal certi. Loan 1321590.00 2158995.00Education loan 0.00 0.00Staff loan 393550.00 308304.00Staff salary loan 114547.00 91317.00Staff housing loan 7402201.00 5177246.00Consumer staff loan 350709.00 321854.00Staff vehicle loan 766596.00 875121.00

Sub Total 154931702.85 141346944.35Unsecured Loan & advanceEmployment loan 9745126.34 10951135.34Vajpai employment loan 1318104.00 1270426.00Cash credit 545605.05 691587.55Cash credit (installment c2) 5254915.56 3151354.56

Sub total 16863750.95 16064503.45Total 534490740.06 482137924.89

Schedule 10

Fixed assets 31.03.2013 31.03.2012Land & building 4369609.00 4855122.00Furniture 2783581.00 3094125.00S.D.V & Locker system 896238.00 995821.00Air condition & electricity 2232613.00 257646.00Computer system & networking 226703.00 287084.00Networking & software 2114.00 5286.00Vehicles 329436.00 754262.00

Total 10840294.00 12568546.00

Page | 78

Schedule 11

Other assets 31.03.2013 31.03.20121 interest receivableOn other banks deposit 3519967.00 5094795.00On csgl account 2990807.00 1955367.00On staff loan 1433350.00 1209241.00Sub total 7944124.00 8680466.752 staff receivableFestival advance 770335.00 567654.00LTC advance 27000.00 21000.003 office, stock, stamps & otherOffice expense 191500.00 64888.00Adhesive stamps advance 37080.00 61700.00Stamp agency stock 953610.00 1025460.00Stationary stocks 387435.00 215160.00Library stock account 6360.00 6360.00Insurance premium advance 0.00 0.00Locker rent receivable 0.00 61600.004 Taxes & refund receivableIncome tax paid (u.apl) 3672336.00 3819075Income tax receivable (TDS) 23192.00 0.00Income tax refund receivable 1212070.00 1212070.00Advance tax 2010-11 0.00 3500000.00Advance tax 2011-12 4500000.005 Advance Deposit for businessTelephone deposit 41831.00 41831.00Geb deposit 48248.00 48248.00Postage stamp advance 25493.00 1337.00Office deposit 2880.00 2880.00

Total 19843494.00 18908666.00

Schedule 12

Contingent liability 31.03.2013 31.03.2012Guarantee issue 458800.00 300078.00

Total 458800.00 300078.00

Schedule 13

Note: off balance sheet item 31.03.2013 31.03.2012Employee GGCA investment 15034936.00 13548068.00Employee PF investment A/c 8845937.00 8199451.00Share holder gift stock silver coin 451989.12 4519893.12Leave encash investment (licgles) 2460208.00 1961095.00OBC(outward bills receivable) 850417.00 888031.06IBC (inward bills receivable) 10420.00 75190.00Outstanding interest receivable 9782435.75 8680466.75

total 37436342.87 33804290.93

Page | 79

Schedule 14

Interest & discount earned 31.03.2013 31.03.2012Interest earned on advance 69953663.31 66118670.86Interest earned on depositInterest call money deposit 1915632.25 1206108.58Interest income term deposit 10952081.99 8723272.20Interest earned on investmentInterest investment GOI/ BOND 16021770.00 13065540.33Dividend income 154711.00 125329.00

Total 98997858.55 89238920.97

Schedule 15

Other income 31.03.2013 31.03.2012Commission income 1331497.71 1345115.99Form fee 9600.00 10300.00Stationary income 248551.50 275900.50Service charge income 4931600.48 6045951.81Document charge income 310775.00 213590.00Late fee income 15419.00 10687.00Locker rent income 462630.00 400263.00Stamps sale commission a/c 163673.00 140000.00Share transfer fee 355608.00 284043.00Notice fee 222647.86 0.00Other income 66535.00 60802.00Membership fee 0.00 0.00MMCB provision written back 0.00 0.00Daily Depo written back 0.00 2000000.00Contingent reserve written 0.00 5039814.00Profit on sale of other asset 0.00 0.00Share holder benevolent w’back 0.00 1056279.00

Total 8118537.00 16882746.00

Schedule 16

Interest expended 31.03.2013 31.03.2012Interest expended on deposit 53943983.79 44733606.00

Total 53943983.79 44733606.00

Schedule 17

Other expense 31.03.2013 31.03.2012Salary & other allowances 21443349.00 20328933.00Municipal taxes exp. 0.00 0.00Office rent 58420.00 55520.00Municipal taxes 1232494.00 1531294.00Insurance premium 519728.62 577803.09Light bills 814635.00 776732.00Service tax 33382.00 207292.00Legal exp. 0.00 3199.00Legal exp suit field a/c 300044.00 286989.00Audit fee 209626.00 213494.00

Page | 80

Telephone expense 260523.47 137889.24Post & telegraph exp 593524.00 616718.84Stationary exp. 593524.00 616718.84Advertisement (non fbt) 302384.00 256049.00Advertisement (non fbt) 17410.00 55932.26Repairing & maintained 502858.86 440835.24Computer expense 0.00 665.00Depreciation 1772791.00 2066839.23Computer peripheral 41226.00 0.00Bank charge 71871.45 55002.45Vehicle expense 0.00 130590.66Merger expense 282006.00 174009.48General meeting expense 0.00 205000.00Customer meeting exp. 230416.00 321720.00EGM exp. 0.00 0.00Newspaper expense 8083.00 4350.00Travelling exp. 78259.00 94809.00Training exp. 0.00 4820.00Office exp. 164597.00 238689.03Lavajam exp.. 67394.19 39744.00Remittance exp. 866086.00 204384.00Conveyance tours & travels 25000.00 23760.00Tea refreshment staff 62985.00 247973.50Hospitality 201680.00 228445.00Branch inauguration limdi 0.00 239872.00Misc. expense 0.00 3200.00Premium on G sec written off 349552.00 349552.00Income tax paid 247038.00 574702.00Other expense 0.00 0.00Cibie report chg 31881.00 0.00Training fee 4800.00 300.00

Total 31348368.05 31245039.42

Provision & contingencies 31.03.2013 31.03.2012Provision for taxation 4500000.00 3500000.00

Total 4500000.00 3500000.00

Schedule 18

Provision & contingencies 31.03.2013 31.03.2012Provision for taxation 4500000.00 3500000.00

Total 4500000.00 3500000.00

Schedule 19

Page | 81

Provision & contingencies 31.03.2013 31.03.2012

Acquisition cost Rushikamahilashakari Bank 0.00 1427395.00

Acquisition cost Limbdivibhagiyanagrik bank 0.00 9296508.84

Prov. For standard assets 200000.00 400000.00

Prov. Investment depreciation reserve 4481075.00 484200.00

Provision for Bad & doubtful 100000.00 776830.21

Daily depo written off 0.00 5039814.00

MadhavpurMerc. FDR written off 0.00 200000.00

Prov. MMCB fix Depo. Investment 0.00 0.00

Income tax paid U’ aapeal prov. 3672336.00

Income tax refund receivable – Prov 1212070.00

Total 4781075.00 24309154.05

Profit & Loss Account

Particular sch 31.03.2013 31.03.20121.Income Interest & discount 14 98997858.55 89238920.97Other income 15 8118537.55 16882746.30

Total 107116396.10 106121667.272. expenditure Interest Expended 16 53943983.79 44733606.00Other expense 17 31348368.05 31245039.42

Total 85292351.84 75978645.423. profit before tax & provision (1-2) 21824044.26 30143021.85Less: provision for taxation 18 4500000.00 3500000.00Less: provision for contingencies 19 4781075.00 24309154.05Total provision contingencies 9281075.00 27809154.054. Net profit transfer to bal. sheet 12542969.26 2333867.80

Balance sheet

Particular sch 31.03.2013 31.03.2012Capital & liability Capital 1 21877940.00 21441190.00Reserve & surplus 2 117122643.51 100714450.85Deposit 3 811468417.71 700621913.90Borrowing 4 0.00 0.00Other liability & provision 5 30020785.21 30279271.07

Total 980489786.43 853056825.82Assets & propertiesCash & balance with RBI 6 39067361.80 16038087.07Balance with banks & call money dep. 7 144450669.50 125774832.86Investment 8 231797227.00 197628769.00Loan & advance 9 534490740.03 482137924.89Fixed assets 10 10840294.00 12568546.00

Page | 82

Other assets 11 19843494.00 18908666.00Total 980489786.43 18908666.00Contingent liability 12 458800.00 300078.00Off balance sheet item 13 37436342.87 33804290.93Total 37895142.87 34104368.93

Page | 83