Final Project

SUBMITTED TO SNES INSTITUTE OF MANAGEMENT STUDIES AND
RESEARCH, CHETHUKADAVU, KUNNAMANGALAM. IN PARTIAL

FULFILMENT FOR THE AWARD OF MBA INTERNAL MARKS.

UNIVERSITY OF CALICUT

PREPARED BY

JUBIN.P

REPORT ON ORGANISATION STUDY AT VENGERI
SERVICE CO-OPERATIVE BANK LIMITED NO.2714
Vengeri Service Co-operative Bank Ltd.2714
University of Calicut 2

DECLARATION

I Jubin.P hereby declare that the report on ORGANISATION STUDY AT
VENGERI SERVICE CO-OPERATIVE BANK LIMITED NO.2714 and
submitted for the award of second semester , Master of Business Administration
and this report of work done by under the supervision of Ms.Saajida.P.V faculty
of IMSAR.

I also declare that I have not submitted this report before for the award of
any degree, diploma or any other title.

Place:

Date: JUBIN.P


ACKNOWLEDGEMENT

Firstly I take this opportunity to express my sincere thanks and gratitude to
Mr.Balakrishnan PhD, MBA our Director, for his support. I would like to thank
Mr. V.Sahadevan, President, Vengeri Service Co-operative Bank Ltd for giving
me the approval to do this placement training in the bank. I am grateful to Mr.
V.P.Prakasan, Secretary, Vengeri Service Co-operative Bank Ltd for the
immense guidance provided for doing the report. I thank
Mr.C.K.Somasundaran, Asst. Secretary, for moral support, encouragement and
generous assistant.
I also thank all other staffs of Vengeri service co-operative bank who have
helped me to complete my training successfully.

I take this opportunity to sincerely thank to my esteemed and respected
faculty Ms.Saajida for all help and words of advice.

Last but not least I also express my thanks to all my friends and other
associates who have guided me right through my report.

Place: Calicut

Date: JUBIN.P


CONTENTS

SL.NO. CONTENTS PAGE
NO.
CHAPTER 1 INTRODUCTION

7
INDIAN BANKING SYSTEM 8
CHAPTER 2 CO-OPERATION

13
CO-OPERATIVE SOCIETY ACT IN INDIA 15
KERALA CO-OPERATIVE SOCIETY ACT 22
CHAPTER 3 CO-OPERATIVE BANKS

32
TYPES OF CO-OPERATIVE BANKING
INSTITUTION
32
CHAPTER 4 VENGERI SERVICE CO-OPERATIVE BANK

36
ORGANISATION STRUCTURE 37
OBJECTIVES OF THE BANK 41
MEMBERSHIP 43
CHAPTER 5 LOANS 50
TYPES OF LOANS 51
CHAPTER 6 DEPOSITS

62
TYPES OF DEPOSITS 62
CHAPTER 7 ESTABLISHMENT 67
CHAPTER 8 DATA ANALYSIS & INTERPRETATION

69
CHAPTER 9 FINDINGS AND SUGGESTION

74
CONCLUSION 79
BIBLIOGRAPHY 80

LIST OF TABLES

TABLE NO. CONTENTS PAGE NO.
1 PRESENT STAFF PATTERN OF THE BANK

40
2 CAPITAL STRUCTURE OF BANK

43
3 MEMBERSHIP

46
4 LOANS

59
5 FINANCIAL DETAILS OF BANK

69


LIST OF CHARTS

SL.NO. CONTENTS PAGE NO.
1 PROFIT 70
2 DEPOSIT OUTSTANDING

71
3 WORKING CAPITAL

71
4 RESERVES 72
5 LOAN OUTSTANDING

73
6 LOAN OVERDUE

73

CHAPTER 1

INTRODUCTION

Indian banking system
Nationalization of banks
Liberalization of banks


INTRODUCTION

INDIAN BANKING SYSTEM
The Indian banks can be broadly categorized into nationalized (government
owned), private banks, specialized banking institutions and co-operative banks
as shown in figure below.

Over the years the nationalized banks have acquired a place of prominence and
have seen tremendous progress. The need to become highly customer focused
has forced these slow-moving banks to adopt a fast track approach. On the other
hand private banks have been fast on the uptake and are reorienting their
strategies using the internet as a medium. Complementing the roles of the
nationalized and private banks are the specialized financial institutions or Non
Banking Financial Institutions (NBFCs). With their focused portfolio of
products and services, these Non Banking Financial Institutions act as an
important catalyst in contributing to the overall growth of the financial services
sector. NBFCs offer loans for working capital requirements, facilitate mergers
and acquisitions, IPO finance, etc. apart from financial consultancy services.
Trends are now changing as banks (both public and private) have now started
focusing on NBFC domains.

BANKS
NATION
ALIZED
BANKS
PRIVATE
BANKS
SPECIALIZ
ED
BANKING
INSTITUTI
ONS
CO-
OPERATIVE
BANKS

Co-operative banks are nimble footed in approach and armed with efficient
branch networks which focus primarily on the retail segments. These banks
which focus on areas of agriculture, rural development etc. has lower overheads.
This enables them to give a marginally higher percentage on savings deposits.
Among the above stated banks the Indian nationalized banks (banks owned by
the government) continue to be the major lenders in the economy due to their
sheer size and penetrative networks which assures them high deposit
mobilization.
Moreover, to control the actions of these banks, the Reserve Bank of India acts a
centralized body monitoring any discrepancies and shortcoming in the system.
Over the years, the Indian banking has gone through two main phases or
changes which need to be noticed and are therefore explained in the following
paragraphs.

1. NATIONALIZATION OF BANKS

By the 1960s, the Indian banking industry had become an important tool to
facilitate the development of the Indian economy. At the same time, it had
emerged as a large employer, and a debate was ensued about the possibility to
nationalize the banking industry. So for this, Indira Gandhi, the-then Prime
Minister of India expressed this intention of the GOI (Government Of India) in
the annual conference of the All India Congress Meeting in a paper. The paper
was received with positive enthusiasm. Thereafter, her move was swift and
sudden, and the GOI issued an ordinance and nationalized the 14 largest
commercial banks with effect from the midnight of July 19, 1969.This
nationalism was described as a "masterstroke of political sagacity by one of the
national leaders of India.
A second dose of nationalization of 6 more commercial banks followed in 1980.
The stated reason for the nationalization was to give the government more

control of credit delivery. With the second dose of nationalization, the GOI
controlled around 91% of the banking business of India.
The nationalized banks were credited by some; including Home minister P.
Chidambaram, to have helped the Indian economy resist the global financial
crisis of 2007-2009.

List of Public Sector Banks in India is as follows:

Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Bank of
Maharashtra, Canara Bank, Central Bank of India, Corporation Bank, Dena
Bank, Indian Bank, Indian Overseas Bank, Oriental Bank of Commerce, Punjab
and Sind Bank, Punjab National Bank, State Bank of Bikaner & Jaipur, State
Bank of Hyderabad, State Bank of India (SBI), State Bank of Indore, State Bank
of Mysore, State Bank of Patiala, State Bank of Saurashtra, State Bank of
Travancore, Syndicate Bank, UCO Bank, Union Bank of India.

2. LIBERALIZATION OF BANKS

In the early 1990s, the then Narsimha Rao government embarked on a policy of
liberalization,licensing a small number of private banks. The examples of
private banks include Global Trust Bank (the first of such new generation banks
to be set up), which later amalgamated with Oriental Bank of Commerce, Axis
Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank.
Effects of Liberalization: The liberalization brought huge changes in the
banking industry. Some of these changes are stated below.

The reserve which needed to be kept with the RBI was reduced to a great
degree. The reduction of the CRR and SLR resulted in increased flexibility for
banks in determining both the volume and terms of lending.

There was deregulation of interest rates which aimed at promoting financial
savings and growth of the organized financial system.

Because of the lowering of entry barriers, competition has significantly
increased since the beginning of the1990s. Seven new private banks entered the
market between 1994 and 2000. In addition, over 20 foreign banks started
operations in India since 1994.

After the episodes of nationalization and liberalization, the next stage for the
Indian banking had been setup with the proposed relaxation in the norms for
Foreign Direct Investment, where all Foreign Investors in banks may be given
voting rights.


CHAPTER 2

CO-OPERATION

Co-operation

Definition

Co-operative societies Act In India

History of Co-operation in India

Co-operation in Kerala

Kerala Co-operative societies Act

Kerala Co-operative societies Act 1969

Insured Co-operative banks


CO-OPERATION

During the industrial revolution, co-operative movement in England had
show light to the whole world as a brain wave of an exploited class of person.
Robert Owen was one of the reformists who tried to improve the employee-
employer relationship. Later the concept of co-operation becomes successful in
both capitalism and socialism.

In all developing countries a considerable progress is made by the co-
operative movement. It ensures both social freedom and economic growth. Co-
operation is folden mean between capitalism and socialism. In a general sense
Co-operation means living together and working together.

DEFINITION

According to U.L.Metha co-operation may be defined as only one aspect
of vast movement which promotes voluntary association of individuals having
common needs who combine towards the achievement of common economic
needs.

HISTORY OF CO-OPERATION IN INDIA

Co-operative credit societies Act of 1904 is the basic legislation in India.
This Act was introduced in India by the Britisher's as a state policy. This socio-
economic condition of that time had necessitated the introduction of this Act.

During the earlier periods of British rule the economic position of the
Indian villagers was completely shattered. Britain exploited India by exporting
the rich raw materials of our country and importing manufactured goods from
England. Britishers made India a market of their finished products. As a result
Indian industries had set back and they gradually collapsed. The people who
were engaged in such industries had no other alternative but to fall back up on
agriculture for their livelihood. This situation added the pressure on land. The
British didnt pay attention to the problems of the agriculturists. Consequently
it was a period of money lenders. They lend money at a high rate of interest to
the needy agriculturists.

This situation increased their indebtedness. The money lenders exploit
agriculturist, which resulted in unrest among agriculturist.

To check this serious unrest govt. took certain immediate steps. The govt.
passed the Deccan Agricultural Relief of 1879, Land Improvement Loan Act of
1885 and Agricultural Loans Act of 1884. The last two put together are known
as Taccavi Laws. These legislations were intended mainly to provide
agricultural loans to the farmers directly from the govt. But these failed to serve
for the right purpose.

In 1892Madras Govt. sent Sir Frederick Nicholson in Europe for the study
of co-operative movement. He submitted his report in 1895 in which he strongly
recommended the Raiffeisen type of co-operative societies. Subsequently the
Famine Commission Report came out in 1901, which also recommended the
starting of co-operative Credit Societies to tackle the problem of rural farmers.
As a result in 1903 the bill was presented in Parliament and the first Co-
operative Credit Societies Act was passed in 1904.the Act is a positive measure

so as to liberate the Indian farmers from the clutches of unscrupulous money
lenders.

. CO-OPERATIVE SOCIETIES ACT IN INDIA

The Act of 1904 was the result of the pioneer like Mr.Mclegan and
recommendations of various committees like Law Committee and the India
Famine Commission 1901.the 1904 Act was based on the English Friendly
Societies Act of 1886 and was made operative throughout British India. The
1904 Co-operative societies Act was the first Co-operative Societies Act in
India. The Act came into force on 25
th
March 1904. The object of this act was
stated in the preamble as to encourage thrift, self help and co-operation amongst
agriculturists, artisans persons of limited means. From this preamble one can
understand the objects of this Act.
(a) To encourage thrift, self help and co-operation among agriculturists,
artisans, and persons of limited means and

(b) For the constitution and control of co-operative credit societies, this
Act was enacted. This Act contained only 29 sections.

According to section I this Act was extended to the whole of British India.
Section 2 included definitions of some important terms. Section 3 dealt with the
constitution of societies i.e. Society shall consist of ten or more persons above
the age of 18 years. Who are residing in the same village or town or group of
villages. The following are the main features of 190r Act are as follows.

a. Society could be formed by any ten persons living in the same village
or town.

b. Societies were classified as rural and urban. The rural societies are
having unlimited liability. In the case of urban societies the question
of liability was left to their option.
c. The Act provided only for the formation of credit societies.
d. The co-operative credit societies in each province were to be under
the control and administration of the Registrar of Co-operative
Societies
e. Accounts of the societies must be audited by the Registrar.
f. 25% of the surplus should be allotted to reserve fund.
g. The societies should be exempted from stamp duty and registration
fees.
h. The societies could be advance loans to members only on personal or
real security.
i. Societies were given a legal personality and were authorized to raise
funds and carry on their business in a corporate capacity.
j. The chief aim of the society should be to raise funds by deposits from
members as well as loans from non members, govt., and other co-
operative societies and to distribute these funds as loans to members,
or with the permission of Registrar, to other co-operative credit
societies.

The Act of 1904 was found to be insufficient to cope with the expanding
movement. For example it didnt allow central and societies to be organized.
The importance of 1912 Act realizes while studying its improvements over the
earlier Act. Under this Act any society credit or otherwise may be registered
which has its objects the promotion of the economic interests of its members in
accordance with the co-operative principles. A federal society become like the
central bank could be registered. The liability of rural credit society shall be
unlimited. No member can have more than 1/5of total share capital or hold

shared exceeding Rs1000 in such a society. A society has a charge upon shares,
deposits etc. of a member with the society in respect of any debt due from such
a member. One fourth of the net profit of a society must be carried to its reserve
fund. Subject to the prior claim of a govt., a society has prior claim to enforce
any debt against a member.

The primary object of passing this Act to remove the limitations of the 1904
Act. Different types of societies were originated. Persons were appointed in
order to assist the Registrar and the powers of the registrars were vested with
such persons. They were also authorized to register the societies, audit of
societies and to hold enquiry into the constitution and working of society.

a. Any society which aimed at the promotion of the economic interests of
. is members could be now established and registered.
b. Societies are classified on the basis of liability as limited and unlimited.
c. Local governments were permitted to use their discretion in making
rules and Bye-laws of the societies.
d. Co-operative societies were permitted to receive the deposits and loans
even from non-members.
e. Restrictions were imposed on the investments of societys funds.
f. A society could be inspected by the Registrar on the requisition by a
creditor.
g. The Registrar was given wide powers of conducting an enquiry into the
constitution, working and financial condition of a society.
h. Shares of interest in co-operative were exempted from attachment.
i. In matters of liquidation and final winding up of a society the Registrar
was given wide powers.
j. The provided for the first time for the registration of central societies.

k. While the 1904 Act prescribed that no member could hold shares worth
more than Rs1000 but the new Act recommended that a member could
hold shares worth more than Rs1000.

Under this Act any society of otherwise may be registered which has its
objects the promotion of the economic interests o its members in accordance
with the co-operative Principles. It is the objective of the Act to register a
federal society like the central bank. The liabilities of the central societies shall
be limited and the liability of rural credit societies shall be limited and the
liability of rural credit societies shall be unlimited. No member can have more
than 1/5 of the total share capital or hold shares exceeding Rs1000 in such a
society. One fourth of the net profits of a society must carry to its Reserve
Fund.

The main difference between 1904 Act and 1912 Act is as follows:

a. The 1904 Act classified societies into rural and urban where as the 1912
Act provided for the classification of societies on the basis of their
liabilities into limited and unlimited.
b. The 1904 Act confined co-operative societies into primary credit
societies only. The 1912 Act provided for the first time for the register
of central societies, which creates a federal structure?
c. The Act of 1904 was salient about the utilization of profit. The 1912
Act suggested that 25% of the net profit must be carried over the reserve
fund of the society
d. There was no provision for the organization of societies for other than
credit 1903 Act. But 1912 Act provided for the register of non-credit
societies also.

e. 1904 Act prescribed that no member could hold share more than
Rs1000, the 1912 Act recommended that a member could hold shared
worth more than Rs1000.
f. As per the 1904 Act individual members are organizing a society where
as 1912 Act tells that a society can become a member of another
society.

After passing the co-operative societies Acts of 1904 and 1912 the Central Govt.
passed a Multi Unit in 1942. It was enacted to over the co-operative societies
whose area operation is extended to more than one state and serving the interest
of members of more than one state. Different multi unit co-operative societies
are governed by different co-operative laws in the country. A number of
national level co-operative societies and federations promoted by co-operative
in the country have become the assistance of the central and state governments.
The method of operations of these units varies with the regard to its state
character.

The present multipurpose Co-operative Societies Act 1984 was framed as
per the recommendation of the expert committee on Multi State Co-operative
Societies legislation and in consultation with the state governments. The aims
for the effective functioning of multi state co-operative societies.

Now there are a number of national level co-operative institutions coming
under the provisions of this Act. NCCF,NAFED,IFFCO, CAMPCO are
organized under the above Act for regulating the functions of these societies
Registrar of co-operative Societies is posted.


HISTORY OF CO-OPERATION IN KERALA
.

Before independence Indian states were ruled by Royal kings. In
those stated unified laws were not operative. The present Kerala state consists
of old Travancore State, Cochin states which were joined and formed
Travancore Cochin state in 1949, and old Malabar district of madras state.

Sri Rajagopalacari, who was the Registrar of co-operative societies at
madras province, was appointed divan of Cochin and subsequently as divan of
travancore state. He had the experience in the working of co-operative
societies. So he took the initiative and here by the first Act by the name Cochin
Co-operative Act of 1913 was passed.

According to the provisions of this Act the first society organized in
Cochin is still working by the name Edavanakkad Service Co-operative bank.
The same Rajagopalachari was appointed as the divan of travancore also. He
took the initiative and there by Travancore Co-operative Societies Regulation
was passed in the year 1914. The late Govindapillai was appointed as the first
registrar of co-operative societies in Travancore state on November 1914. The
first society was registered 17
th
November 1914 by the name Trivandrum
Central Co-operative Bank Ltd which is the present Kerala state co-operative
bank. In 1949 the Taravancore and Cochin state were integrated and there by
Travancore Cochin State was formed. At that time the Travancore co-operative
societies Act was applicable to the Travancore state and Cochin co-operative
societies Act was applicable to the Cochin state. There was feeling of necessity
to have a common law for the entire Travancore Cochin state and om1952
Travancore Cochin co-operative


Societies Act was passed. This was applicable to the entire Travancore, Cochin
State and old Acts were repealed.

In the year 1956 the Kerala state was formed. At this time 2 different laws
were in existence. It was essential at that time to unify the laws related to the
co-operative societies for the orderly development of the societies of Kerala in
accordance with the relevant directive principles of state policy enunciated in
Indian constitution So the Kerala co-operative societies Act of 1969 was
enacted which came into force in July 1969.

Up to the constitution of Kerala state the present Malabar area was a part if
erst while madras state. The co-operative credit societys Act of 1904 which
was later replaced by co-operative societys Act of 1912 was applicable to this
area until 1932 when the madras co-operative societys Act came in to force.
This Act continued to be in operation in the area until the present Kerala co-
operative societies Act of 1969 cams into effect on 15
th
may 1969

The object of the madras co-operative societys Act 1932 was to facilitate
better living, better business condition and better production. It also aimed at
promoting thrift, self help and co-operation among member agriculture and
persons with common economic interest.

Provisions

The following are the main provisions of madras co-operative societys
Act 1932:


At least ten members are required to register a society.
Societies were registered with limited liability as well as
unlimited liability
Members were liable to the society jointly and severally at
the time of liquidation.
Maximum number of shares for which a member was
entitled was 1/5 of the total paid up capital or Rs.1000
whichever is less.
Societies were not allowed to invest the amount unlimited
liability societies.
There is provision for amalgamation and absorption of
societies

KERALA CO-OPERATIVE SOCIETIES ACTS

Like other parts of British India. Cochin was ruled by the provincial
Royal Kings. Consequently co-operative movement in the Cochin province has
the same character and that of the pre-independence British Indian co-operative
movement. In Cochin State the movement started around 1911. The Cochin co-
operative societies Act was passed under the leadership of the divan
sri.A.RBanarje the salient features of Chin co-operative societies Act was as
follows:

Separate societies were started for extending agricultural and non
agricultural credit.
Supervising unions must be started for supervising the societies.

There is Cochin central co-operative institute, an open body to co-
ordinate the unions.
Unions are members in the central bank under the Act.
The Act gives members in the central bank under the Act
The Act gives priority for cottage industries.

The first primary co-operative society under Cochin co-operative Act is
Edavanakkad service co-operative society in vaipinkara.

Subsequently a central bank centralizing trichur was also registered. Many
primary societies are members in this central bank. In Cochin State there was a
unitary land mortgage bank, with the whole state as its jurisdiction. For Cochin
State, a commission was set up and on the basis of its report many amendments
were made to the co-operative societies Act.

The Travancore co-operative societies Act regulation was passed in the
year 1914 was the first co-operative enactment in the former Travancore state.
During this time sir P. Rajagopalachari was the registrar of co-operative
societies. He was a dedicated co-operator who was closely connected with co-
operative activities directly.

The first co-operative society registered under the act was Travancore
central co-operative bank. It became the present Kerala state co-operative bank.
This is against the original pattern of the co-operative movement in other
provinces. In other provinces government is financing the primary co-operative
societies.


But in Travancore the central bank has been organized and registered to act as
the financing agency for the primary societies. Hence primary societies
organized in Travancore were not forced to approach the government for
finance. This is because they are adequately financed by central bank.

Since the societies organized during this period were with unlimited
liability their financial base was very weak. Hence in 1918 the act permitted to
register co-operative societies with limited liabilities. At the same time the
central bank also failed to attract more deposits from the members as well as
non members. Hence it was decided to organize Taluk banks between primary
societies and central banks with the objects of attracting more deposits. The
first taluak bank membership is opened to both individuals and societies. For
supervising the societies according to their growth and to correct irregularities,
the supervising unions were also was set up.

As per the recommendation of Travancore co-operative union for helping
the long term financial requirements ore farmers separate institutions in the form
of Land Mortgage Bank have started. Soon in 1938 Travancore Credit Bank
was organized. Immediately after its functioning both these institutions were
amalgamated.

Till 1932 the progress of co-operative movement was spontaneously. But
during this period the great depression struck co-operative movement. To lift
the co-operative union government appointed a committee under the
chairmanship of Mr.Dhevdhari, a well known co-operator and the committee
submitted report in 1935 for reconstruction the existing law. The government
liberally accepted all the recommendations and the Travancore co-operative
societys regulation of 1089 (M.E) was replaced by Travancore co-operative

societies act of 1112 (M.E). This Act remained in force was applicable to the
co-operative societies Act 1952.

The Kerala co-operative societys Act 1969 is the law relating to the co-
operative societies in the state. The Act has come into force on 15
th
may 1969.
This new legislation specifically repeals to the madras co-operative societies
Act of 1932 as in force in the Malabar area of the madras state and the
Travancore Cochin co-operative societies Act. The Act has consolidated,
amended and unified the law relating to the co-operative societies in the state.
As a result of this legislation all the co-operative institutions in the state are
governed by KCSA 1968.

According to the preface of the Kerala co-operative societies act 1969 the
objects and intentions of this Act were to provide for the orderly development of
the co-operative societies in the state of Kerala by organizing them as self
governing democratic institutions, in accordance with the directive principles of
the state policy as envisaged in constitution of India. The act aims at
consolidated, amending and unifying the law relating to the co-operative
societies in the state.

In India each and every state has its own co-operative societies Act. These
distinct Acts have unities and diversities in respect of its co-operative laws. All
these states have framed the Act on the basis of the first two central Acts. The
Kerala co-operative societies act 1969 have its own distinct features. These
unique features make the Act distinguished from all other Indian co-operative
Acts.

The main features of KCSA are explained as follows:


1. CO-OPERATIVE UNION

Considering the non official of the co-operative movement importance is
given to the acts as rules pertaining to co-operative unions and sections 89 deals
with the state co-operative union. Moreover these unions have wide powers and
independent source of income.

2. Co-OPERATIVE TRIBUNAL

Sec 81 of the Act deals with a special provision for the establishment of
co-operative tribunal. This is meant for hearing appeals against the orders
awards of decisions of the registrar of arbitrator.

3. APPOINTMENT AND SERVICE CONDITIONS

The qualification, salary, service conditions etc. of the employees are
mentioned i9n sec 80. This is a unique feature of KCSA. This is aimed at
improving the morale and efficiency of the staff.

4. PENAL PROVISION

For dealing with incidence of corruption, malpractices, misuse of powers
etc. in a co-operative institution a new penal provision known as Surcharge
under sec 68 is included in the Act

5. CHECK ON BOGUS SOCIETIES


Under section 62 (b) the minimum number of persons required for
registering a co-operative society is fixed at 25. The section also provides that
such person should belong to different families. This provision is a check
against bogus societies.

6. LIMITED LIABILITY

Provisions of the 1969 insist that societies shall be registered in the state
only with limited liability. Whatever be the merits and attraction of unlimited
liability such not be started.

THE KERALA CO-OPERATIVE SOCIETIES ACT OF 1969

The Kerala co-operative societys Act 1969 is the law relating to the
co-operative societies in the state. This Act has come into existence on 15
th
may
1969. The act has been modified and major amendments were made in 1971,
1974, and 2000.

This act contains 119 sections and various subsections and clauses. Now
in Kerala, the co-operative movement is functioning under the three tier steps.
The primary co-operative societies are working in the grass root level dealing
directly with individual members. These primary co-operative are federated
into and are members of district co-operative bank. The state co-operative bank
Acts as pivot around which the state co-operative movement functions and
grows contrary to situations in to the states. The primary credit societies are
very strong are very strong are doing well here co-operative Bank on 1980.


The Kerala co-operative societys Act 1969 is unique and is having sufficient
depth. Its features and provisions are distinct in nature. It is superior and has
far reaching implication as that of the previous co-operative Acts. Other earlier
acts are Cochin co-operative societies act and Travancore societys act and
madras co-operative societys Act. The main differences of co-operative
societys Act of 1969 from earlier acts are the following.

1. Provision for the setting up of representative general body for big co-
operating.
2. Societies with limited liability only can be registered.
3. Minimum number of persons required for registration is 25.
4. Certain restrictions are imposed for the members of the committee of
another society of the same type are disqualified to become a member.
5. New act provides for the compulsory amendments to byelaws,
compulsory amalgamation and bifurcation of societies.
6. Registrar or a person authorized by him is given right to attend the
meeting of spcoetu.
7. Registrar is empowered to supersede committee of a society under certain
abnormal circumstances.
8. There is a provision for creating a charge on properties of members of an
agricultural credit society who availed loan from the society.
9. Separate provision for appointment and service conditions of employees.
10. 15% of the profit should be set apart for the reserve fund.
11. Requirement of a co-operative tribunal is provisioned.
12. The rate of maximum dividend is fixed at 20%.
13. Establishment of circle co-operative union is provisioned.
14. Provision for deposit insurance.


INSURED CO-OPERATIVE BANKS

According to section74 A, an insured co-operative bank means a society
which has been affiliated with Deposit Insurance and Credit guarantee
Corporation.

The provision of banking regulation Act 1949 was made application to
state co-operative bank, district co-operative bank, and co-operative urban bank.
The co-operative banks are eligible to get their deposit insured under the
provisions of deposit insurance co-operative act of 1961. Thus RBI advised the
state governments to amend their co-operative law to confer on RVBI the
provisions on the matters relating to regulations and advances, maintenance of
cash reserve, winding up, supervision of management etc. accordingly Kerala
government inserted section 74A by amending the act 1974 so as to avail the
facilities of insurance cover to the deposits of co-operative bank 74A provides
the following:

a) An order to winding up or at sanctioning of amalgamation, transfer
of assets or division shall be made with previous written sanction
of the RBI.
b) An order for the winding up of the bank shall be made by the
registrar if so required by the RBI on the circumstances referred it
in section 13 D of the Deposits Insurance Corporation Act 1961.
c) The registrar may supersede the committee if so required by RBI.
d) An order to the winding up, amalgamation, transfer of assets,
division and supervision cannot be questioned in any manner other
than by appeal review or revision.

e) The liquidator or insured co-operative bank or the transferee bank
as the case may be, shall be under the obligation to repay the DIC
to the extend and in the manner re-offered to in it.

For the purpose of this section a co-operative bank means a bank has been
defined in the
Deposit insurance corporation act t 1961. Insured Co-operative Bank means a
society which is an insured under the provision of Deposit Insurance
Corporation Act 1961.


CHAPTER 3

CO-OPERATIVE BANKS

Co-operative Banks
Definition
Type of Co-operative banking institution


CO-OPERATIVE BANKS

Co-operative bank have to play a primary role in providing credit for
agriculture and allied activities. More than 90%of the villages have come under
the co-operative bank. The co-operative banks have made significant progress
in making advances to agriculturists and also to weaker sections.

DEFINITION OF CO-OPERATIVE BANKS:

According to Devine co-operative banks means a mutual society formed,
composed and governed by working people themselves for encouraging regular
savings and granting small loans on easy terms of interest and repayment

TYPES OF CO-OPERATIVE BANKING INSTITUTION

1. State co-operative e banks:
A state co-operative bank is the apex institutions in three tier co-operative
structures operating at the state level. Every state has state co-operative bank.
They provide a link through which the Reserve Bank of India provides credit to
the co-operative and they participated in rural finance. State co-operative banks
obtain their working capital from own funds, deposits, borrowings and other
sources. Owned funds include share capital and various types of resources.
Major portion of the share capital is raised from member, co-operative society
and central co-operative bank and the sect is contributed by state government.
The major source is also from the co-operative society and central co-operative
banks. The remaining deposits come from individual local bodies and others.


2. Central or district Co-operative Banks :
Central co-operative banks are the district level banks and are in the middle
of the 3 tier co-operative credit structure. The main function of central co-
operative bank is to provide loans to primary co-operative societies. However
some loans are given to individual and other institutions. A central co-operative
bank raises they working capital from own funds, deposits borrowing and other
sources.

3. Primary Agriculture Credit Societies:
A primary agricultural credit society forms a\the basis in the tree tier
co-operative credit structure. It is a village level institution which directly deals
with rural people. It encourages savings among agriculturist, accepts deposits
gives loans to the needy persons. Its serves as the last link between their
ultimate borrowers i.e. the rural people on the one and to RBI on the other hand.

4. Service Co-operative
The National development council meeting 1958 decided to stop further
organizations of large sized credit societies and wanted to introduced service co-
operative e societies. The main problem then was the shortage of food. Efforts
have been made to solve it in different ways. Improved methods of cultivation
have been evolved and new strains of seeds have been introduced
A service co-operative society is an organization of the villages for mutual
help and co-operation to meet their common economic requirement and to
increase agricultural production. The service co-operative society was assigned
a important role in aiding agricultural production. It was recognized that for the

development of agricultural production, provisions of cheap credit was not
enough. The farmers also required a number of services to increase agricultural
production. The society provided package of services to the members in
addition to the credit for the development of agriculture. Thus from the position
of mere credit institution roses to and agency for agricultural productions.

Functions of service Co-operative Society

1. Issue of loans for agricultural production
2. To distribute improved seeds, chemical fertilizers etc., to members
3. Crop loan system is adopted
4. Maintain and supply on higher costly agricultural implements such as
tractors, power tillers etc...
5. The agricultural produced are collected and marketed through the nearest
marketing society in which the service society is a member.
6. It mobilizes deposits from members and non members.


CHAPTER 4

VENGERI SERVICE CO-OPERATIVE BANK
LIMITED NO: 2714

General introduction to the bank

Organizational structure

Objects of the Bank

Membership


VENGERI SERVICE CO-OPERATIVE BANK LIMITED NO: 2714

GENERAL INTRODUCTION TO THE BANK

For every institution or organization, there have a well defined
background setup. Like that Vengeri Service Co-operative Bank has also. The
bank has more than 75 years of experience in this field. It has started the
operation in 1918 as a mutual fund organization.
In the earlier stages the bank had 21 members under the leadership of Kuniyil
Narayanan Nair. This group of society named as VENGERI AIKYA
NANAYA SANKHAM. The society was registered on 11
th
April 1918 with
Rs.10000 as authorized capital (1000 shares if Rs. 10/- per share). At the time of
registration, the liability of the society was unlimited. In 1918 society become a
member in district co-operative bank and started its savings bank account and
other small deposit schemes. The area of Vengeri and Varadoor.
Later it was renamed as VENGERI VIVIDHODHESHYA AIYKYA
NANAYA SANKHAM. The society has extended its area of operation to
Nedugottur. In November 1962 its name was again changed in to; Vengeri
Service Co-operative society with limited liability.
In June 17
th
1968, the society constructed their own building and the office
of the society began to work on that new building. In 1
st
June 1967, the society
changed their name to: Vengeri Service Co-operative Bank Limited No:
2714.In the year 1993 the bank celebrated its platinum jubilee.
Vengeri Service Bank has a Neethi Store and a fertilizer depot working in the
Bank H.O in 2003, the bank constructed a coconut processing Unit at
Kannadikkal station and managing committee passed a resolution to open
another branch of coconut processing unit.

The area of operation of this bank is confined to Vengeri Village. It
includes Vengeri Varathur and Desoms.The head of this bank is located at
Thadambattuthazham. And the bank has widened its operation to Civil Station,
Kannadikkal and Karikkamkulam.

The liability of the bank is unlimited. For the A class members the liability
is limited to 2 times of their share value. For B class members it is up to the
amount of shares held.
The main source of funds for the Vengeri service co-operative bank is share
capital, deposits and borrowings, donations, undistributed profits, reserves funds
and other reserves, deposits mobilization etc.

ORGANIZATIONAL STRUCTURE:

Organization structure is the framework of relationship of person, operating
at various levels, to accomplish common objectives. The Organizational
Structure of Vengeri Service Co-operative Bank as follows:-

Board Of directors:
Board of Directors consists of nine members for 5 years selected by A
class members. Among nine selected members of the committee one seat
reserved for a member belonging to scheduled caste or scheduled tribe. The
election of members to the board shall be as per rule 35 under Kerala Co-
operative Societies Act 1969.


The ultimate authority is vested with the board of directors. The quorum for the
meeting is 25 members. Special general body meeting is conducted by them
only when;

a) The request of majority members.
b) The written application of 1/5
th
members.
c) The recommendation of registrar, District Co-
operative Bank and other senior employee of the Co-
operative Department.

The present Board of Directors of the bank as on 29/01/2007 is;

1) Sri. V. Sahadevan -Present
2) Sri. C.V Prabhakaran -Vice President
3) Sri. T.K Ajith Kumar -Director
4) Sri. P. Sethu madavan - Director
5) Sri. M. Sridharan - Director
6) Sri. C. Nazar - Director
7) Sri. P. Krishnan - Director
8) Sri. V. Gangadharan - Director
9) Srimathi. K.K. Bhamini - Director

Secretary:

Mr. Prakashan, secretary of the bank is the chief executive and controls the
internal managements of the society. He should be the person directly
responsible to the board of directors of the bank for due and efficient discharge
of all duties assigned to him and under the Act.


Assistant Secretary:

Mr. C.K. Somasundharam, Assistant Secretary of the bank assists
the secretary in his duties to all duties of the secretary in his absence. He attends
the general correspondence of the bank.

Chief Accountant:

Mrs. Prabhavathi, the chief accountant of the bank controls and supervises all
the duties of the accountant.

ORGANISATION CHART OF BANK

Board of Directors
Accountants
Internal Auditors
President
Branch Manager
Chief Accountant
Secretary

Asst. Secretary
Senior Clerk

TABLE 1
PRESENT STAFF PATTERN OF THE BANK

Secretary 01
Assistant Secretary 01
Chief accountant 01
Branch Manager 01
Head Clerk/Accountants 04
Internal Auditor 04
Senior Clerk/Cashier 14
Typist 02
At tender/peon 06
Watchman 01
Salesman 04
Total number of employees 36
Junior Clerk
Attender
Sales Man
Watch Man

There are total 36 employees in the bank. From this thirty six only
29 are presently working for the bank and the remaining six vacancies are
reserved. If there is any vacancy, it will be reported to Kerala State examination
board and they will conduct the exams for that position. They prepare rank list
and send to bank; the bank will conduct an interview and provide appropriate
marks to the candidate. The maximum mark provided by the board is 20.Then
rank list is send to state board and the state will appoint the candidate.

If there is any offence committed by employees. Punishment should be given.
Authority to take punishment is vested with the Board of Directors. The board
will study the cases and take necessary actions.

OBJECTS OF THE BANK:

The main objectives of the bank as per the bye laws are as follows:
a) To encourage thrift, savings and mutual help among the members.
b) To provide short term, medium term loans to members and any
other loans as they directed by the registrar.
c) To arrange for the supply of farm requirements such that seed,
fertilizers, and agricultural implements.
d) To arrange facilities for marketing of agricultural products of the
members through marketing societies.


e) To conduct agricultural development programmes for the members.
f) To acquire or hire go downs in order to provide storage facilities to
members.
g) To provide the facility of modern agricultural equipments on hire
basis.
h) To provide ware housing and processing and processing facilities
to the agricultural produce.
i) To undertake any other activities as directed by the government or
any other co-operative institutions.
j) To make arrangements for housing loans to members with the help
of HUDCO or any other agencies.
k) To provide the members loans for the purchase of house hold
articles.
l) To undertake collection of funds from individuals and institutions
for the implementation of the above objectives.

The important books maintained by the bank are as follows;

Minutes Book
Cash Book
Day Book
.Loan Ledger
General Ledger
Liability Register

Admission Register
Deposit Ledger
Receipts & Disbursements Register
Fluid Resource Register
Investment Register
Borrowing Register
Land Register
Dividend Register

Membership

For admitting persons in the co-operative societies there are provisions
in byelaw. The transaction made between the societies and such members
have legal validity for limited purposes. For instance, for advancing loans on
the securities of gold ornaments, for standing securities in certain transaction
etc. Usually there are four types.
Table No.2
Capital Structure of Vengeri Service Co-operative Bank

Class No. of Shares Face Value Amount
A 2,90,000 50 1,45,00,000
B 10,000 100 10,00,000
C 8,000 30 2,40,000
D 6,500 40 2,60,000


1) A Class Members

A class members are the real owners of the bank. They have the right to
participate in the general body meeting and cast their votes to choose the board
of director. The share value is Rs50/

Qualification of A class members
He should be a major.
He is a resident in the Vengeri .
He should not be an insolvent.
He should not be an convict
He should not be a paid employee of the bank.
He should not be a lunatic.

Procedure for getting A class membership

A person who has all the above qualification must apply in
writing in the prescribed form along with the two passport size photo. The
received application to be passed in the meeting of Board of Directors after all
these he will become a member.

Right of A class members

Power to elect a Board of director
Power to attend the general body meeting and vote.
Power to remove Board of Directors.
Right to get loans.
Right to get a dividend.

2) B class members

Only government and other co-operative institutions such as State Co-
operative bank, District Co-operative banks, N.C.D.C, I.C.D.P, are eligible for
B class membership. The share value is Rs100/- usually Govt. and other
agencies and authorities join d in the bank as B class members. The B class
members of Vengeri Co-operative bank are Govt. and Kerafed.

3) C class members

Any person can become C class members of the bank. The share value is
Rs30/-. This type of member eligible to joint in the group schemes and take gold
loans only. They have no other rights.

4) D class members

Only Govt., Quasi Govt. employees and business persons with in the
Vengeri village are eligible for getting D class membership. The share value is
Rs40/-. The members have only to strand at surety for taken A class members
and to joint group deposit schemes.


Membership details of Vengeri Service Co-operative bank for the last 5 years as
follows.

Table No.3
MEMBERSHIP

Year A B C D Total
2003-04 17815 02 - - 17817
2004-05 17913 02 - 55 17970
2005-06 18025 02 - 121 18148
2006-07 18382 02 - 208 18592
2007-08 18787 02 01 269 19059
2008-09 18929 1 1 400 19331

Maximum individual borrowing power is Rs10, 00,000/-. If the deposit amount
is Rs1Crore the maximum individual borrowing power is 1Lakh. If the deposit
is between 1-3Crores the IMBP is Rs2Lakhs. If the deposit is between 3-5 the
IMBP is 3Lakhs. If the deposit is between 5-10Crores the IMBP is 5Lakhs and
of the deposit amount is above 10Crores the IMBP is 10Lakhs.


BRANCHES OF BANK:

The Vengeri Service Co-operative bank has 2 branches. These are situated in
Kannadikkal and Civil Station. Also it has one coconut processing unit, Neeti
store and consumer store.

PROFILE OF BRANCHES:

I Name of Bank : Vengeri Service Co-operative Bank Ltd.
District : Kozhikode
Taluk : Kozhikode
Place : Civil Station
Year of Starting : 1984

II Name of the Bank : vengeri service Co-operative Bank Ltd

District : Kozhikode
Taluk : Kozhikode
Place : Kannadikal
Year of Starting : 2000

B CONSUMER STORE:

The vVengeri Service Co-operative Bank is running consumer stores for the
distribution of good quality product at reasonable rate. Ti is situated in
Karikkamkulam.


C NEETHI STORE

In 1997 the bank started, it is situatied in Thadambattu Thazham. The
management is vested in the hands of board of directors of the bank. The main
products from Neethi store are consumer articles, seeds, fertilizers and manures
liquid petroleum gas etc.

D COCUNUT PRCESSING UNIT

A Semi-mechanised copra dring unit setting up a 25000 coconut 1 dayis also
functioning under the management and supervision of the Vengeri ServiceCo-
operative Bank Ltd. The management of the unit is vested with an elected
Board of Directors of society. The main product of this proposed unit is good
quality copra. The bye-products are coconut shell and coconut water.


CHAPTER 5

LOANS

Loans
Types of Loans
Loans Recovery


LOANS

Lending constituted an important function of the bank. The customers
borrow money from the bank on the security of gold, landed properties etc.
lending money includes Short term and Medium term Loans. The loans are
provided to A class members, and to employees of government and semi
government. The bank lends money to its members at lower rate for various
purposes. It is the prime function of the bank. The wrong received as the as the
deposits are used for granting loans. Loans are given to its customers against
personal as well as collateral securities. The secretary has the all responsibility
to provide loans to its customers. Granting of loan is passed only after the
approval of the loan sub-committee. According to the bye-law 52 (D) 1,2,4 the
secretary has the right to grant loans up to Rs.5000/- on the bases of secretarys
recommendation.

1) Purchasing seeds, fertilizers and agricultural implements.
2) The promotion of Cottage and Village industries.
3) Subsidiary occupations.
4) Any other purpose as approved by the Registrar.


TYPES OF LOANS

There are various types of loans that the bank is provided to its customers.
They are explained as below:-

1) Short term loans

Short term is mainly provided for:-

a) Purchasing seeds, agricultural equipments etc.
b) Purchasing of cattles and its expenses.
c) For promoting the small scale industries
d) For providing Kissan card, Kissan Credit card, Green Card
e) For Home agricultural activities.
f) House repairs and settling the small credits
g) For funeral expenses.

2) Medium term Loans

Medium term loans are provided mainly for:-
a) The purchase and permanent improvement on land
b) The construction of bunds
c) Purchase of cattle, machinery etc.
d) Preparation of land for irrigation purposes.
e) Small debt clearances
f) Meeting educational purposes.
g) Self- employment and seeking job abroad.

h) The construction of farm house.
i) Running industries
j) Hire purchase
k) Motor vehicles.
l) Any other purposes as approved by the Registrar form time to
time.

3) Long term Loans

Long term loans are provided to the Bank employees only. Long term
loans facility is introduced during the present accounting period. It is provided
only for the purpose housing loan. Maximum duration of this loan up to 10
years. The interest rate for the housing loans is up to 50000-8%, 50001 to
100000-8.5%, 100001 to 200000-12%, 200001 to500000-13%.

This loan is provided only for govt. employees or those who have fixed
income with the securities provided for medium term loan plan and estimates of
the building should be submitted with the application. The govt. employees
should produce salary certificate and other should produce income certificate. If
the loan is for the purpose of additional building, the loan is provided up to
200000 or 80% of estimated cost whichever is less, loan is given three
instalments.
In the 1
st
instalment 20% of the total amount for foundation.
In the 2
nd
instalment 50% of loan for proof.
In the 3
rd
instalment 30% after finish work.


The Long term loans are provided mainly for:-
a) For the construction of house, repair of house, acquiring land and
building with not less than 2 years old.
b) For the projects that have the approval of government, NABARD, etc.
c) Any other purposes as approved by the Registrar from time to time.

4) Short term Agricultural Loans

This loan is provided only to A class members who are agriculturists. It is
available on the basis 9of credit limit statement prepared by the DCB. The
major part of the loans is provided in kinds. The repayment of loan should be
done within one year or the harvesting period whichever is earlier.

The rate interest is 8.5% .there is a special scheme named Kissan Credit
Card. This is a scheme for providing short term agricultural loan on surety
basis. In this system, cash credit system is followed; it means the farmer must
pay interest only on the amount withdrawn by him from the amount sanctioned
to him. The validity of this loan 3 years and a maximum amount of 25000/- is
provided under this scheme. This schemes of immense utility o the pure farmers
of Vengeri Village as they get this loan at a lower rate of interest.

a) Kissan credit card: - According to this maximum of Rs.25000/- is
granted to farmers for the period of 3 years.
b) Green card:- this is granted only to those who has repay the loan within
the specified period ( 5 years) under the approval of Joint registrar.


5) Medium Term Agricultural Loan

Medium term agricultural loans are provided to A class and B class
members. The period of the loan is 5 years. Final decision about the loan is
taken by DCB and the Managing Committee. Repayment period, interest and
share proportion are fixed by the Registrars.

6) Surety Loans

Under subsection 1 and 2, then the loan is provided to members and non-
members on the foll0owing basis;
a) 90% of the fixed deposit.
b) 90% of the market value of the govt. security, promissory note and
Debentures of Central Land Mortgage Bank as security.
c) 50% of the face value of fixed assets without encumbrance
certificate.
d) Only 70% of the market value of the Gold is advanced as loans.

7) Ordinary Loans

It is provided to non-agricultural purpose. Maximum individual period is 60
months. Joint Registrar prescribes terms and conditions.

8) Short-term Non-Agricultural Loan

Short term agricultural loan are issued for the period of 12 months for
concession purposes of the members. The security of this loan is personal
security of two members or registered document of the owned property of

members. The bank also issued on the pledge of gold ornaments. It provides
loans up to Rs.100000/-

9) Medium Term Non- Agricultural Loan

The this loan is provided on the security of original document and basic
documents, attested tax receipt, encorporance certificate and possession
certificate up to Rs. 1000000/- the lending procedure of this type of loan is
given below;-
a) Produce application along with the above document
b) Forward application to advocate for legal option.
c) If there is any objection board will pass the loan and will be
given.

To avail the long term loan, the loaner as to register his property to the bank as
securities, Earlier there was a 2% charge made by the govt. on this registration.
Now this has been avoided.

10) Cash Credit Loan

This loan is provided for working capital to business, industry and for self-
employment. Maximum period is one year. If necessary the Managing
committee extends the period.

11) Employee Loan
12)
Employee loans are provided to employees as per the order of the Registrar
as an O/D arrangement to purchase house hold articles and motor vehicles and
motor vehicles or for the construction and purchase of house and land.

13) Consumer Loans

These loans are mainly provided for;-

a) Up to 25000/- for children education for the period of 2 years.
b) Up to 500000/- for the professional study of children for the period of 5
years.
c) For marriage purposes provide up to 200000/- for the period of 5 years.

d) For funeral expenses, medical treatments up to 100000/- for the period
5 years.
e) For house repairs up to 200000/- for the period of 5 years.
f) For buying house holds up to 100000/- for the period of 5 years.
g) House construction loans up to 500000/-for the period of 10 years.

14) Self Employment Loans

The bank provides loan for self employment up to 200000/- . Bank has the
all authority on the products produced or acquired by using the bank loan. The
maximum period is 5 years. The interest and the price is has to paid on
monthly instalment basis.

15) Industrial Loans

Bank provides these loans for small scale industries up to 1000000/- for
the period of 5 years. These loans have to be paid with interest on monthly

instalment basis. The loan amount should not be exceeding the 80% of the cost
of the project. 80% of the loan amount should be retained as reserve capital and
the remaining 20% is used as working capital.

16) Land Loan

This type of loan is provided up to Rs. 50000/- for 5 years. This loan amount
should not be exceeding 50% of the real value of the land.

17) House hold loan

This loan is provided on the basis of buying households and the maximum
loan amount is Rs.100000/-for the period of 5 years

18) Motor Vehicles Loan

The maximum amount provided in this type of loan is not more than
1000000/- .The loan amount should not exceed the 80% of the vehicles
amount.

18) Contractors Loan

The amount of loan is limited up to 500000/- . This is given as O/D for one
year. This loan is granted only on the basis of the character of the work they
have.


19) Kudumbasree/ Ayalkoottam

The bank provide loan to the authorized group of Ayalkoottam,
Kudumbasree etc. on the basis of their project. This loan is granted only on the
basis of the recommendation of the Present, Secretary and 2 committee
members of the respective group.

Default; - in case of default loaners the following procedure is followed;-

an ordinary notice is send .

If there is no response, a registered notice is send to loaners and
securities.

Arbitration case is filed in the Registrars court to get the bank money.

After the court order execution of order is done: the court order to repay
the money is known as aware

Loaners is called for hearing in the court.

File execution petition in the registrars court.

Posting of sale officer.

The sale officer will sell the movable property.


Details of Loans and Advances
Table 4
S. No. Type of Loans Maximum Amount Interest
Rate
1 Agricultural Loan 100000 5.50%
2 Marriage 25000
25001-50000
50001-100000
100001-200000

8%
9%
10%
12%
3 House Repair 50000
50001-100000
100001-200000
200001-300000
300001-500000
8.75%
9.50%
10%
13%
14%
4 House Construction 50000
50001-100000
100001-200000
200001-500000
8%
8.5%
12%
13%
5 Buying House Holds 100000 13%
6 Vehicle Loan 100000
100001-200000
2000001-1000000
12%
13%
14%
7 Cash Credit 100000
100001-200000
200001-400000
400001-500000
12%
13%
14%
15%
8 Purchasing Land Up to 100000 12%

100001-200000
200001-300000
300001-500000
13%
14%
15%
9 Business Loan Up to 50000 12%
10 Industrial Loan Up to 200000
Above 200000
12%
13%
11 Self Employment Up to 100000
100001-200000
9%
11.5%
12 Kudumbasree/ SHG 9%
13 Education 9%
14 Gold Loan Up to 200000 11%
15 Gold Loan ( Agriculture) Up to 25000 10%

Loan Recovery

Loans are repayable in equal instalments. One year is given to almost all the
loans. A demand notice is sending to the borrower 15 days prior to the due date
direct him to pay the loan. If the borrower fails to repay the loan, a registered
notice is send. Even after that if he fails to repay the amount are registered
notice is send to him and his securer. Then the bank will waits up to two
months. The bank officer or employees of the bank also encourage the
borrower to repay the amount.
After all these procedure are over and if there is no response from the
side of defaulter arbitration case is filed. For this matter the bank has its own
procedure. After hearing the opinion of this society waits for two months to
repay the amount. After these the borrower cannot repay the loan amount.
Security gives one more chance to the defaulter. Then the court takes similar
procedure and above all bank registered the property in its own nam


CHAPTER 6

DEPOSITS

Deposits
Types of Deposits


DEPOSITS

Deposits are money invested by people in the bank. The investors get
interest on deposits. Deposits are mainly important sources of working capital
to the bank.

TYPES OF DEPOSITS

There are mainly 9 types of deposits in Vengeri Service Co-operative
bank. They are;-

1) Fixed Deposits

These deposits are also called term deposit. These deposits
are withdrawn able only after the expiry of a fixed period. The money deposited
in the fixed deposit account say for one year can be withdrawn only after the
expire of the one year. This deposit carries high rate of interest depending upon
the period for which it is made.

2) Recurring Deposit

These are accounts in which a fixed amount is deposited at
regular intervals so that the amounts deposited grow with accrued interest,
which can be withdrawn at the end of certain period. This type of deposits helps
to set aside small amounts periodically for a future purpose. Recurring deposits
are introduced to create the habit of saving among lower income group. The
important features of such deposits are given below;

a) Recurring deposits account is generally meant for people who have
regular monthly income
b) Depositor can deposit a fixed amount for month for agreed period. The
amount paid into the account should be 50 or the multiple of Rs.50/-
c) No withdrawals are allowed before the expiry of the agreed period.
Hence, the rate of interest allowed on these deposits is relatively high.

3) Savings Bank Account

Saving bank account are mainly meant for non trading
customers. It is generally preferred by middle and low income group who can
deposits only small sum. Salaried class of and middle income group, impose
certain restrictions on the savings bank account and also offer a reasonable rate
of interest.
The savings bank account can be opened with the very small deposits of
Rs.100/-. But the minimum balance of Rs.1000/- is required to open an account
with cheque facility. Certain restrictions are imposed withdrawals of deposits.
These are restrictions as to the number and amount of withdrawals during a
specified period. The number of withdrawals over a period of one year is
limited to 150/- . The minimum amount of cheque Rs.5/- .The rate of interest
payable by the bank on savings bank on saving bank deposits is prescribed by
the RBI.

In this type of deposits the customer can withdraw money as and when he
required provided that he doesnt exceed the number of times of the maximum
amount of withdrawals per week or month. The interest paid on these deposits
is less than that earned by fixed deposits. The savings account is especially
suitable for workers and employees who get small but regular incomes. They are
encouraged to save by means of savings account

4 ) Current Deposits

These deposits can be withdrawn by means of cheques at any time up to
the full of amount of the deposit. Therefore the bank allows no interest on this
types deposit. Traders and businessman prefer these types of deposits.

This account is a running account with may be opened upon any number
of times during a working time. This account is also called Demand Deposits.
Since the banker undertakes the obligation to pay the cheques against such
deposits on demand.
Under current accounts no restrictions are imposed on the amount and the
number of withdrawals can be made each day. That means frequent deposits and
withdrawals without any restrictions are possible. As the banker as to keep large
amount of liquid cash to meet the demand of current account holders. Therefore
no interest is allowed by most of the banks. But the Vengeri Service Co-
operative Bank provides 1% interest on these deposits.

5) Dhanavardhini Deposits

In this type deposit a minimum amount of rs.5/- and the multiple of Rs.1/-
can be deposited daily. This type of deposit is daily deposit. The collection
agent appointed by the bank will collect the amount directly from the depositors
and will issue receipts for the same.

6) Soubhagya Deposit

In this type of deposit a minimum amount of Rs.500/- or multiples of
Rs.500/- cab be deposited for a period of 35, 60,100 days. The amount is
deposited for a period of94 months the amount will be doubled after 94 months.

7) Members Mutual Fund

This type of deposit is only of the bank members. The multiple of Rs. 100/-
can be deposited monthly (not less than Rs 500/- and not more than Rs.2000/-)
for a period of 30 and not exceeding 100 months. These deposits are repayable
after the expiry.

8) Re Investment Deposit

In this type of deposit either Rs. 500/- or the multiple of Rs.500/- can be
deposited for a period exceeding 1 year. The rate of interest is a fixed for the
rate of interest on fixed Deposits. The interest is compounded half yearly. The
amount will repayable on maturity.

9) Member Mutual Fund/ Loan Account Linked daily deposit

This deposit scheme is started mainly for the customers of the bank. The
customer who can easily repay the loan amount by using this deposit scheme.
Here the instalment is taken from the customer account as approved by the
Registrar. The three branches of the bank are linked through internet. So this
facilitates ease to customers to pay money at any branch.


CHAPTER 7

ESTABLISHMENT


ESTABLISHMENT

Junior clerk is selected by the examination conducted by the Kerala Co-
operative Service Examination Board. The topers in the rank list are forwarded
to the concerned bank for interviewing and selection based on the efficiency of
the candidate on the interview a selection list is forwarded to Kerala Co-
operative Service Examination Board for selection. The selecti0n memo is
issued by the Kerala Co-operative Service Examination Board to the selected
candidates for joining duties on joining duty a list is prepared for further
promotion based on date of joining.

The vacancies watchmen, peon, sales man, attender are selected by the bank on
the written test and interview . All the appointments will be notified through
two news papers and applications are invited.

All the employees binding on employers welfare fund and each employee
should contribute Rs50 on each month and employer i.e. bank has to contribute
Rs.50 on each employee.


CHATPTER 8

DATA ANALYSIS AND ITERPRETATION


Table No.5

Years
Particulars 4-05 05-06 06-07 07-08 08-09
Members 17970.00 18148.00 18592.00 19059.00 19331.00
Share
capital
4965.74 5103.84 5471.91 6260.62 7261.62
Deposits 267694.19 310469.73 822688.44 445766.15 542609.5
Loan 156562.98 174177.52 245592.03 289591.74 361085.12
Loan
overdue
30104.10 26220.78 29307.42 25200.84 32858.75
Profit ------------ 1226.06 1535.13 1097.25 2502.98
W. Capital 269962.46 312961.48 365674.18 446585.00 544872.36
Reserves 36998.00 15112.00 27615.00 33743.00 38213.00


PROFIT

Chart No.1

The above graph gives us an idea about the profit made by
the bank in the last 5 years. During the year 2004-05 the bank had incurred loss.
But it is duly compensated by making appropriate profit in the following years.

2004-05 2005-06 2006-07 2007-08 2008-09
Profit 1226062 1535131 1097252 2502981
0
500000
1000000
1500000
2000000
2500000
3000000
A
x
i
s

T
i
t
l
e

Profit

DEPOSIT OUTSTANDING

Chart No.2
WORKING CAPITAL

Chart No.3
Working capital is essential for the bank to meet the day to
day expenses of the bank. The above graph shows that the banks working
capital has been increased during the last five years.

2004-05 2005-06 2006-07 2007-08 2008-09
Deposit outstanding 267694.19 310469.73 367151.19 445766.15 542609.5
0
100000
200000
300000
400000
500000
600000
A
x
i
s

T
i
t
l
e

Deposit outstanding
2004-05 2005-06 2006-07 2007-08 2008-09
Working capital 269962 312961 365674 446585 544872
0
100000
200000
300000
400000
500000
600000
A
x
i
s

T
i
t
l
e

Working capital

RESERVES

Chart No.4

Reserves are the fund kept aside by the bank for meeting the contingencies.
These are actually a part of the profit made by the bank. Vengeri service Co-
operative bank had kept a sufficient amount of reserve for meeting any such
contingencies. As the working capital of the bank is increasing year by year
these reserves help to tackle any problem.

2004-05 2005-06 2006-07 2007-08 2008-09
Reserve 369.98 282.73 276.15 337.43 382.13
0
50
100
150
200
250
300
350
400
450
A
x
i
s

T
i
t
l
e

Reserve

LOAN OUTSTANDING

Chart No.5
LOAN OVERDUE

Chart No.6

Usually bank provide loan to public following the norms. Loans
stand as a source of income for the bank. Still each year bank loan overdue is
comparatively large. From this we can point out that the increase in loan by the
bank is favorable to the bank but an increase in loan overdue is unfavorable to
the bank

2004-05 2005-06 2006-07 2007-08 2008-09
Loan outstanding 156562.98 174177.52 218597.38 289591.74 361085.1
0
50000
100000
150000
200000
250000
300000
350000
400000
A
x
i
s

T
i
t
l
e

Loan outstanding
2004-05 2005-06 2006-07 2007-08 2008-09
Loan overdue 30104.1 26220.78 29307.42 25200.84 32858.75
0
5000
10000
15000
20000
25000
30000
35000
A
x
i
s

T
i
t
l
e

Loan overdue

CHATPTER 9

FINDINGS AND SUGGESTIONS

Summery

Findings

Suggestion

Conclusion


SUMMERY

Vengeri Service Co-operative Bank is a bank under co-operative sector and its
aim should be to cover-up the common mans life on the evil dealings of the
private bankers /money lenders. On my organisation study I understood that
Vengeri Service Co-operative Bank has a good flow of money to this bank from
the localities and even much higher than the co-operative bank in these areas.
With my simple management capacity, I summarize along with bank dealings
some money should have diverted to business participation so that the profit is
much higher than bank dealings. Entry in the agriculture sector will help to
develop the nation.

Vengeri Service Co-operative Bank as an efficient administrative capacity
and good accounting system which only needed for the business promotion and
agricultural development.


FINDINGS

1. There are total 36 employees in the bank. From this thirty six only 29 are
presently working for the bank and the remaining 7 vacancies are
reserved.
2. Considering number & value of accounts and deposit form year wise the
bank is on growth.
3. The facilities to customers are to be increased.
4. When we analyse the performance of Vengeri Service Co-operative bank,
we can make the conclusion that bank mark an increasing trend in the
membership position. It increased 19331.
5. The banks profit shows an increasing tendency, it shows the banks
efficiency.


SUGGESTIONS

Introduce ATM facility in Vengeri Service Co-operative Bank.
Vengeri Service Co-operative Bank has unique feature that an ample
space of Agricultural Market [under Agriculture Department] is near by
it. This facility should used for the benefit of farmers
As group farmers in Kerala is almost a failure due to non-accounting of
receipts properly, I think service of co-operative Bank have a remarkable
role in place of group farming. Service Co-operative Bank has only the
role is boosting agricultural veterinary products etc., for minimize the
barren agricultural land found in the area.
I think co-operative Society Bank has good accounting system &
management capacity and that are need for our development.
Vengeri Service Co-operative Bank could have involve the product
process and marketing of agriculture veterinary etc., by using the space of
agricultural Market [ under Agricultural Department ] near by it and
intervene of Agriculture Department , Veterinary Department Spices
Board, KAIC Ltd., RAIDCO Ltd., MILMA etc..


For agricultural and veterinary development
A) Land owner- Bank expert combination is necessary
a) Land owner means;- owner of Agriculture land /space for
Veterinary maintenance
b) Bank means: - Vengeri Service Co-operative Bank provides loans,
stream lining departmental schemes, keeping accounts by
providing part time service of a regular bank staff.
c) Expert means:- Retired above said departmental staff and local
experts identified by the bank for the purpose with elected ward
members
As Neethi store, the Vengeri Service Co-operative Bank has a remarkable
opportunity to extend the business to some others like sale of iron
materials needed building construction and industrial purpose, automobile
oils, medicals store etc. Which should be much profitable than Neethi
store. However the conductors efficiency should be increased by co-
related with the turnover.


CONCLUSION

To conclude we can say that the performance of Vengeri Service Co-
operative Bank is satisfactory. The bank has promoted the saving habit of
members through deposit mobilization and has granted loans to meet the
financial requirements of members, particularly agriculturists. The management
and the administration of the bank are also satisfactory. The bank has been
successfully in serving the poor farmers and artisans in and around vengeri.


BIBLIOGRAPHY

1. B.S. Raman- Banking Theory and Practice
2. T.S. Balan- Co-operation Principles and practice
3. Bye law of the bank
4. Annual statistical reports provided by the bank
5. Interview and discussions with the concerned authorities.

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