“A STUDY OF NON PERFORMING ASSETS”

AT KRISHNA DISTRICT COOPERATIVE BANK

A Project Report Submitted to the JNTU KAKINADA
in partial fulfillment of the requirements for the award of the Degree of
MASTER OF BUSINESS ADMINISTRATION

Submitted by

K SANTOSH KUMAR

Redg No.17KT1E00D9

Under the guidence of

DR. .V. V. VIJAY DURGA PRASAD MBA Ph.d
Professor

DEPARTMENT OF MANAGEMENT STUIDES

POTTI SRIRAMULU CHALAVADI MALLIKHARJUNA RAO
COLLEGE OF ENGINEERING AND TECHNOLOGY
[Affiliated to Jawaharlal Nehru Technological University, Kakinada] (Sponsored
bySKPVV Hindu High Schools Committee, Vijayawada, Estd.1906) Kothapeta,
Vijayawada, Andhra Pradesh
2017-2019
 POTTI SRIRAMULU CHALAVADI MALLIKHARJUNA RAO
COLLEGE OF ENGINEERING AND TECHNOLOGY
(Affiliated to Jawaharlal Nehru Technological University, Kakinada)
(Sponsored by SKPVV Hindu High Schools Committee, Vijayawada,
Estd. 1906) Kothapeta, Vijayawada, Andhra Pradesh

CERTIFICATE

This is to certify that this project report entitled “A STUDY OF NON PERFORMING
ASSETS’’ is submitted by K SANTOSH KUMAR of Roll.no.17KT1E00D9 in partial
fulfillment of the requirement for award of degree of MASTER OF BUSINESS
ADMINISTRATION under Jawaharlal Nehru Technological University, Kakinada during the
academic year 2017-2019

DR. .V. V. VIJAY DURGA PRASAD MBA Ph.d DR. .V. V. VIJAY DURGA PRASAD MBA Ph.d
Professor & Project Guide Professor, Head Of the Dept

EXTERNAL EXAMINER
 DECLARATION

I K SANTOSH KUMAR bearing register number 17KT1E00D9 hereby declare that the
project report entitled “A STUDY OF NON PERFORMING ASSETS”, is an original and
bonafide work done by me. This is submitted in partial fulfillment of the requirement for
the award of degree of MASTER OF BUSINESS ADMINISTRATION under Jawaharlal
Nehru Technological University, Kakinada. The matter embodied in this report has not been
submitted for the award of any other degree or diploma.

Place: Vijayawada K SANTOSH KUMAR

Date: (17KT1E00D9)
 ACKNOWLEDGE MENT

I also gratitude to Dr. V. VIJAY DURGA PRASAD, Professor and Head of Department of
Management Studies for his inspiring guidance and for providing the background knowledge
in every phase of my project in a systematic manner and in completion of the project.

I express my sincere gratitude to Dr. V. VIJAY DURGA PRASAD professor, Department of

Management Studies for encouraging me at every stage and whose constructive criticism and
constant encouragement, has been very helpful to complete this Project

I would like to express my sincere and heartful thanks to all the faculty members of the
Department for their continuous co-operation, which has given me the clarity and motivation
to push forward to buildup adamant aspiration over the completion of my project.

Finally I thank one and all directly and indirectly that helped me to complete my project
successful.

K SANTOSH KUMAR

(17KT1E00D9)
 CONTENTS
CHAPTERS – I 1-8
 Introduction
 Need for the study
 Objectives
 Scope of the study
 Research Methodology
 Period of the Study
 Limitations

Chapter- II 9-24
 Industry Profile

Chapter – III 25-89

 Company Profile

Chapter – IV 90-101
 Data Analysis and Interpretation

Chapter – V 102-103
 Findings and Suggestions

Bibliography
 INTRODUCTION

Non-performing assets, also called non-performing loans. Loans

are made by a bank or finance company, on which repayments or interest
payments are not being made on time.

A loan is an asset for a bank as the interest payments and the

repayment of the principal create a stream of cash flows. It is from the
interest payments than a bank makes its profits.

Banks usually treat assets as non-performing if they are not

serviced for some time. If payments are late for a short time a loan is
classified as past due. Once a payment becomes really late (usually 90
days) the loan classified as non-performing.

A high level of non-performing assets compared to similar lenders

may be a sign of problems, as may a sudden increase. However this needs
to be looked at in the context of the type of lending being done. Some
banks lend to higher risk customers than others and therefore tend to have
a higher proportion of non-performing debt, but will make up for this by
charging borrowers higher interest rates, increasing spreads. A mortgage
lender will almost certainly have lower non-performing assets than a
credit card specialist, but the latter will have higher spreads and may well
make a bigger profit on the same assets, even if it eventually has to write
off the non-performing loans.

1
Definition :I
A loan or lease that is not meeting its stated principal and interest
payments. Banks usually classify as nonperforming assets any
commercial loans which are more than 90 days overdue and any
consumer loans which are more than 180 days overdue. More generally,
an asset which is not producing income.

Definition : II
Lease or loan where the
(1) Lessee or borrower is not making timely payments,
(2) Payments are no longer anticipated or,
(3) Maturity date has passed without fulfillment of the agreement.

In such cases, the lessor or lender may allow some time (typically
not exceeding 90 days) before asking for additional collateral, demanding
the full payment of the balance, or taking repossession or foreclosure
action.

Non-performing asset is an asset that do not produce the income

effectively. Any amount to be received from such an asset remains due
for more than 90 days. Overdue loan is a fine example of a non-
performing asset can be considered as sign of problem for a lender if
there is high level of non performing assets as compared to similar
lenders. But it should be looked at from the context of the type of lending
which one does. It can be that a bank lends to higher risk customers than
other banks & thus has a higher proportion of non performing debts. Such
banks make up for this by charging higher interest rates & increasing
spreads.
2
 A mortgage lender is more likely to have lower Non-Performing
Asset’s compared to credit card provider but the latter may be making
bigger profits on same assets by having higher spreads even if he has to
write off the Non-Performing Asset’s later on.

Non performing assets are also called as non performing

loans. These are loans on which interest payments or repayments are not
being made as per the schedule.

Banks treat there assets as non- performing when they are not
serviced for some period of time. When the payments are late for a short
duration of time the loan is called as past due. But after payments are late
for longer term (normally 90 days), the loan then is classified as being
non performing'.

3
NEED FOR THE STUDY

 The need for non performing assets. Improved industrial

climate and new options available to banks for dealing with
bad loans help in recovering a substantial amount of non
performing asset
 Many sectors such as auto parts tax tiles and genes and
jewellery were significantly hard hot and some units despite
the debt restructuring remain under stress.
 A senior executive with a small public bank said the rising
gross non performing assets means more pressure on bottom
lines. State owned banks have to have provision out of profits
for bad assets.
 It the wake of the deterioration in the overall economic
climate most public sector banks missed the target gross non
– performing assets during the last financial year.
 Most of the Non-performing Asset’s would come from the
corporate sector, which also includes the small and medium
enterprises sector.
 The reasons for the rise in non performing assets include the
slowdown in demand lack of funding lengthy working capital
cycles and the significant movement in foreign exchange rate.
 However the banking sector’s strong capitalization will allow
it to comforbly absorb the effect of the increased
nonperforming assets.

4
OBJECTIVES OF STUDY

 To analyze the financial soundness and performance of

KDCC Bank Ltd.

 To examine cash management policies & practices.

 To study the liquidity position and cash inflows, out flows of

the KDCC bank.

 To analyze the non performing assts as position of the KDCC

Bank.

 To describe the receivable management for better utilization

of current assets.

 To study the non performing assets, management in KDCC

bank Ltd.,

 To know the non performing assets position in the KDCC

Bank Ltd.,

 To evaluate cash in the management in the KDCC bank Ltd.,

 The examine the feasibility of present system of managing

debtors and inventory in KDCC Bank Ltd,.

 To study the co-operative (bank) industry in India in

generated and bank industry in A.P. in particular.

 To study the profile of KDCC Bank Ltd.

5
SCOPE OF THE STUDY

 The present study corers a period of five years from 2014 to

2018 on “A Study of Non – performing Assets” in Krishna Co

operative central bank Ltd, Machilipatnam.

 The present study is helpful – to the banking sector to know the

deficiencies in Non – Performing Assts practices of KDCC Bank

Ltd. So the necessary steps will be taken to decrease the Non –

performing Assts in banks.

 The study gives details about the solvency/liquidity position of

the banks and the optimum cash balance to meet the day to day

requirements of the bank which is really helpful to the finance

department in KDCC Bank ltd.

 By knowing the average collection period of the Bank can take

measures to restrict the credit policy. But the will run into bad

debts. So those banks will minimize the bad debts.

 The information obtained from the primary and secondary

sources limited to KDCC bank ltd.

 The non – performing assets was taken from last five years

6
METHODOLOGY

It is a systematic procedure of collecting information in

order to analyses and verify and phenomenon. The collection of
information in done through two principle sources namely.

 Primary date collection

 Secondary data collection

Primary Date:
The study commence with a brief review of the profile of the
company based on discussions with the C& O, Financial controller and
other functional heads. This is the primary sources of data collection.

 Conducting personal interviews with the officers of the company.

 Individual observations and inference

Secondary data:
The secondary data is collected from published annual reports of
the company. The financial data that have been collected from the above
mentioned sources is edited, classified and tabulated as per the
requirement of the study.

7
LIMITATION OF STUDY

 Limitations of time: The time which was available for

research was only 60 days which is not sufficient for the
study to collect more details about (company) bank in the
financial area.
 The period of the study is only for five years i.e. 2014- 2018.
 Since the size of the organization is not customized
completely i.e. one of the problem.
 Lack of qualitative analysis of the problem: Non performing
assets give only a good basis for quantitative analysis of
financial problem.
 The study is purely base in the form of bank report of KDCC
bank ltd Machilipatnam.
 The reliability of the study depends upon the information
furnished by the officials.
 Due to time constraints, it is difficult to go into details of the
whole organizations.
 The researcher mostly upon the data which was available in
the company and its officials and hence may be subjected to
their bias.

8
 INDUSTRY PROFILE

RECENT DEVELOPMENTS
Over the years, primary (urban) cooperative batiks have registered
a significant growth in number, size and volume of business handled. As
on 31st March, 2003 there were 2,104 UCBs of which 56 were scheduled
banks. About 79 percent of these are located in five states, - Andhra
Pradesh, Gujarat, Karnataka, Maharashtra and Tamil Nadu. Recently the
problems faced by a few large UCBs have highlighted some of the
difficulties these banks face and policy endeavours are geared to
consolidating and strengthening this sector and improving governance.

CO-OPERATIVE BANKS IN INDIA

The Co operative banks in India started functioning almost 100
years ago. The Cooperative bank is an important constituent of the Indian
Financial System, judging by the role assigned to co operative, the
expectations the co operative is supposed to fulfill, their number, and the
number of offices the cooperative bank operate. Though the co operative
movement originated in the West, but the importance of such banks have
assumed in India is rarely paralleled anywhere else in the world. The
cooperative banks in India play an important role even today in rural
financing. The businesses of cooperative bank in the urban areas also has
increased phenomenally in recent years due to the sharp increase in the
number of primary co-operative banks.

9
 Co operative Banks in India are registered under the Co-operative
Societies Act. The cooperative bank is also regulated by the RBI. They
are governed by the Banking Regulations Act 1949 and Banking Laws
(Co-operative Societies) Act, 1965. Cooperative banks in India finance
rural areas under:

 Farming
 Cattle
 Milk
 Hatchery
 Personal finance

Cooperative banks in India finance urban areas under:

 Self-employment
 Industries
 Small scale units
 Home finance
 Consumer finance
 Personal finance

10
 CO-OPERATIVE BANKS IN INDIA: STRENGTHENING
THROUGH CORPORATE GOVERNANCE VEPA KAMESAM

 Deem it a privilege to have been invited to address this gathering

on a topic of tremendous relevance, focus and significance in

today's context. Needless to say, for the co-operative banks in India

these are transitional times. Never before has the need for restoring

customer confidence in the cooperative sector been felt so much.

Never before has the issue of good governance in the co-operative

banks assumed such criticality. The literature on corporate

governance in its wider connotation covers a range of issues such

as protection of shareholders' rights, enhancing shareholders' value,

Board issues including its composition and role, disclosure

requirements, integrity of accounting practices, the control systems,

in particular internal control systems. Corporate governance

especially in the co-operative sector has come into sharp focus

because more and more co-operative banks in India, both in urban

and rural areas, have experienced grave problems in recent times

which has in a way threatened the profile and identity of the entire

co-operative system. These problems include mismanagement,

financial impropriety, poor investment decisions and the growing

distance between members and their co-operative society.

11
 The purpose and objectives of cooperatives provide the framework

for cooperative corporate governance. Co-operatives are organized

groups of people and jointly managed and democratically

controlled enterprises. They exist to serve their members and

depositors and produce benefits for them. Co-operative corporate

governance is therefore about ensuring cooperative relevance and

performance by connecting members, management and the

employees to the policy, strategy and decision-making processes.

 In fact, the very definition of corporate governance stems from its

organic link with the entire gamut of activities having direct or

indirect influence on the financial health of corporate entities. For

the Nobel Prize-winning economist Milton Friedman, who was one

of the first to attempt a definition, corporate governance, is to

conduct business in accordance with owner or shareholders' desires

which generally will be to make as much money as possible while

conforming to the basic rules of the society embodied in law and

local customs. In subsequent definitions, the scope of corporate

governance has got expanded. While some experts say corporate

governance means doing everything better, to improve relations

between companies and their shareholders, to encourage people to

think long-term, to ensure that information needs of all

12
 shareholders are met and to ensure that executive management is

monitored properly in the interest of shareholders, the Former

President of World Bank, Mr. James Wolfensohn had said that

corporate governance is about promoting corporate fairness,

transparency and accountability. A more comprehensive definition

has come from the Organization of Economic Co-operation and

Development (OECD) which identifies corporate governance as

the system by which business corporations are directed and

controlled. Here the corporate governance structure specifies the

distribution of rights and responsibilities among different

participants in the corporation, such as the Board, managers,

shareholders and other stakeholders and spells out the rules and

procedures for making decisions on corporate affairs. By doing

this, not only does it provide the structure through which the

company objectives are set, it also provides the means of attaining

these objectives and monitoring performance.

 It will certainly not be out of place here to recount how issues

relating to corporate governance and corporate control have come

to the fore the world over in the recent past. The seeds of modern

corporate governance were probably sown by the Watergate

scandal in the USA. Subsequent investigations by US regulatory

13
 and legislative bodies highlighted control failures that had allowed

several major corporations to make illegal political contributions

and bribe government officials.

While these developments in the US stimulated debate in the UK, a

spate of scandals and collapses in that country in the late 1980s and early
1990s led shareholders and banks to worry about their investments.
Several companies in UK which saw explosive growth in earnings in the
'80s ended the decade in a memorably disastrous manner. Importantly,
such spectacular corporate failures arose primarily out of poorly managed
business practices.

 This debate was driven partly by the subsequent enquiries into

corporate governance (most notably the Cadbury Report) and
partly by extensive changes in corporate structure. In May 1991,
the London Stock Exchange set up a Committee under the
Chairmanship of Sir Arian Cadbury to help raise the standards of
corporate governance and the level of confidence in financial
reporting and auditing by setting out clearly what it sees as the
respective responsibilities of those involved and what it believes is
expected of them. The Committee investigated accountability of
the Board of Directors to shareholders and to the society. It
submitted its report and associated 'code of best practices' in
December 1992 wherein it spelt out the methods of governance
needed to achieve a balance between the essential powers of the
Board of Directors and their proper accountability. Being a
pioneering report on corporate governance, it would perhaps be in
order to make a brief reference to its recommendations which are
14
 in the nature of guidelines relating to, among other things, the
Board of Directors and Reporting and Control.

 The Cadbury Report stipulated that the Board of Directors should

meet regularly, retain full and effective control over the company
and monitor the executive management. There should be a clearly
accepted division of responsibilities at the head of the company
which will ensure balance of power and authority so that no
individual has unfettered powers of decision. The Board should
have a formal schedule of matters specifically reserved to it for
decisions to ensure that the direction and control of the company is
firmly in its hands. There should also be an agreed procedure for
Directors in the furtherance of their duties to take independent
professional advice.

 On Reporting and Control, the Cadbury Report recommended that

the Board should ensure that an objective and professional
relationship is maintained with the auditors. It is the Board's duty
to present a balanced and understandable assessment of the
company's position, the report said. The Board should establish an
Audit Committee with written terms of reference which deal
clearly with its authority and duties. The Directors should explain
their responsibility for preparing the accounts next to a statement
by the auditors about their reporting responsibilities. The Directors
should also report on the effectiveness of the company's system of
internal control. The report also stipulated that the Directors should
report that the business is a going concern with supporting
assumptions or qualifications as necessary.

15
 The Cadbury Report generated a lot of interest in India. The issue
of corporate governance was studied in depth and dealt with by the
Confederation of Indian Industry (CII), Associated Chamber of
Commerce and Industry (ASSOCHAM) and Securities and
Exchange Board of India (SEBI). These studies reinforced the
Cadbury Report's focus on the crucial role of the Board and the
need for it to observe a Code of Best Practices. Co-operative banks
as corporate entities possess certain unique characteristics.
Paradoxical as it may sound, evolution of co-operatives in India as
peoples' organizations rather than business enterprises adopting
professional managerial systems has hindered growth of
professionalism in cooperatives and proved to be a neglected area
in their evolution.

 Professionalism reflects the co-existence of high level of skills and

standards in performing duties entrusted to an individual. The
absence of a proper system of placement and skill up gradation
inputs constrain professional management in co-operative banks.
Though there is a system of training in place in many co-operative
banks, attempts are seldom made to match them with the current
and future staff requirements. It is desirable that the training
programmes encompass skill up gradation and aptitude
development in full measure. It is also necessary to keep the staff
sufficiently motivated through periodic job rotation, job
enrichment and recognition of performance. The co-operative
banks should indeed work like professional organisations on sound
managerial systems in tune with the needs of the time taking care
of future projections of requirements to retain and improve their
market share and identity in the long run. It is in this context that
16
 professionalism and accountability of the banks' boards assume
such critical significance.

 Regulators are external pressure points for good corporate

governance. Mere compliance with regulatory requirements is not
however an ideal situation in itself. In fact, mere compliance with
regulatory pressures is a minimum requirement of good corporate
governance and what are required are internal pressures, peer
pressures and market pressures to reach higher than minimum
standards prescribed by regulatory agencies. RBI's approach to
regulation in recent times has some features that would enhance the
need for and usefulness of good corporate governance in the co-
operative sector. The transparency aspect has been emphasised by
expanding the coverage of information and timeliness of such
information and analytical content. Importantly, deregulation and
operational freedom must go hand in hand with operational
transparency. In fact, the Reserve Bank Governor's April 2002
Monetary and Credit Policy announcements have made it clear that
with the abolition of minimum lending rates for cooperative banks,
it will be incumbent on these banks to make the interest rates
charged by them transparent and known to all customers. Banks
have therefore been asked to publish the minimum and maximum
interest rates charged by them and display this information in every
branch. Disclosure and transparency are thus key pillars of a
corporate governance framework because they provide all the
stakeholders with the information necessary to judge whether their
interests are being taken care of. We in the Reserve Bank see
transparency and disclosure as an important adjunct to the
supervisory process as they facilitate market discipline of banks.

17
 Another area which requires focused attention is greater
transparency in the balance sheets of co-operative banks. The
commercial banks in India are now required to disclose accounting
ratios relating to operating profit, return on assets, business per
employee, NPAs, etc. as also maturity profile of loans, advances,
investments, borrowings and deposits. The issue before us now is
how to adapt similar disclosures suitably to be captured in the audit
reports of co- operative banks. The Reserve Bank had advised
Registrars of Co-operative Societies of the State Governments in
1996 that the balance sheet and profit & loss account should be
prepared based on prudential norms introduced as a sequel to
Financial Sector Reforms and that the statutory/departmental
auditors of cooperative banks should look into the compliance with
these norms. Auditors are therefore expected to be well-versed with
all aspects of the new guidelines issued by the Reserve Bank and
ensure that the profit & loss account and balance sheet of
cooperative banks are prepared in a transparent manner and reflect
the true state of affairs. Auditors should also ensure that other
necessary statutory provisions and appropriations out of profits are
made as required in terms of Cooperative Societies Act/Rules of
the state concerned and the bye-laws of the respective institutions.

 Appropriate internal control systems become even more critical in

the context of the growing emphasis on diversification of business
products as the prime need at all levels in co-operative credit
institutions. It is indeed necessary for co-operative banks to devote
adequate attention to maximising their returns on every unit of
resources through an effective funds management strategy and
mechanism. One prime component of the investment portfolio of
18
 the co-operative banks which has attracted a lot of attention -
unfortunately for all the wrong reasons - is their transaction in
government securities. So much so that it has even triggered the
holding of today's Convention.

 The financial sector reforms in India have sought to achieve,

among other things, improvement in the financial health and
competitive capabilities by means of prescription of prudential
norms. The cooperative banks have also thus been put under the
prudential norms regime to bring about the desirable level of
transparency in their balance sheets. While urban cooperative
banks (UCBs) have been subjected to income recognition, asset
classification, provisioning and other related norms in a phased
manner beginning April 1992, these prudential norms including
asset classification and provisioning (excluding the capital
adequacy ratio) were made applicable to the State Co-operative
Banks (SCBs) and District Central Co-operative Banks (DCCBs)
from the year 1996-97 and extended to Agriculture and Rural
Development Banks (ARDBs) from 1997-98.

 The Reserve Bank had also issued comprehensive guidelines

transactions in securities to all co-operative banks - urban and rural
- as early as in September 1992. Detailed guidelines have been
given therein on transactions through brokers, Subsidiary General
Ledger (SGL) facility, issue of Bankers Receipts, internal control
systems, audit and review systems, etc. As per the guidelines in
force, each bank is required to formulate an investment policy, with
the approval of its Board. Banks have been advised that all

19
 transactions in Government Securities for which SGL facility is
available should be put through SGL accounts only. Certain
discipline has also been introduced for transactions through SGL
accounts for minimising settlement risks through a framework for
penal action against bouncing of SGL transfer forms for want of
sufficient balance in the SGL account or current account.15. Banks
were advised that only brokers registered with National Stock
Exchange (NSE) or Bombay Stock Exchange (BSE) or Over the
Counter Exchange of India (OTCEI) should be utilised for acting
as intermediary. If the deal is put through a broker, the role of the
broker should be restricted to that of bringing the two parties to the
transaction together. The settlement of the transaction, namely,
both funds settlement and security settlement should be made
directly between the counter parties. With a view to ensuring that a
disproportionate volume of transactions is not routed through one
or a few broker, a prudential ceiling of 5 per cent of the total
transactions (both purchases and sales) has been prescribed for
routing transactions through an individual broker. In case any bank
is required to exceed the prudential ceiling of 5 per cent for any
broker, the bank is required to inform the Board indicating the
reasons therefore post-facto. Banks have also been advised to have
proper internal control measures for monitoring the transactions in
government securities.

 Regulatory policy can however only set the broad contours of an

appropriate investment strategy. It is no guarantee for articulation
and implementation of commercially sound investment decisions
by lending institution(s). Even the most comprehensive regulatory
framework and effective supervisory system need not be a
20
 foolproof mechanism against pliant management acting in
collusion with unscrupulous clients. Supervision is only periodic
and therefore it cannot be a substitute for effective and continuous
internal control backed by an independent and efficacious audit
system. Towards this, it is imperative to have in place Audit
Committees of the Board independent of the management in
cooperative banks. It may well be recalled that with the extension
of the Banking Regulations (BR) Act to the UCBs in 1966 and
deposit insurance in 1971, people's confidence in the co-operative
sector had taken a big leap forward. So much so that today the non-
member deposits in urban banks far exceed member deposits.
Nothing would be more tragic if we fritter away these advantages
and allow indiscipline and lack of commitment in these banks
make people's trust in the cooperative sector a casualty.

 One important issue that has engaged much attention in the recent
past is the duality of control over co-operative banks. In terms of
the Co-operative Societies Acts of respective States, the Registrar
of Co-operative Societies was the sole regulator and supervisor of
all the societies registered in his State including societies carrying
on banking business. With the application of BR Act, 1949
(AACS) to cooperative banks, this position has since changed.
While the Reserve Bank now regulates and supervises banking
activities carried on by urban co-operative societies, supervision of
State Co-operative Banks and District Central Co-operative Banks
is carried out by National Bank for Agriculture and Rural
Development (NABARD). The core principles of supervision in
relation to co-operative banks have thus to be formulated and
implemented by the Reserve Bank in respect of UCBs and by
21
 NABARD in respect of SCBs and DCCBs and there is an emergent
need to constantly beef up the supervisory system through proper
on-site monitoring and adequate off-site surveillance. We also need
to analyse and pick up early warning signals, if any, in respect of
any such irregularities in the investment portfolio of these banks
from the periodic review reports on such transactions which are
received from them. There is also an urgent need for clarity in
defining the roles of various control institutions by streamlining
processes, procedures, etc. for removing overlapping of controls
over cooperative banks presently vested with State Governments,
the Reserve Bank and NABARD, as the may be. It is in this
context that the Governor's Monetary and Credit Policy
announcement in April 2001 had stressed the need for a separate
regulatory agency for the co-operative banks. This issue is being
debated in various quarters.

 Credit institutions are linked to each other through a complex chain

of inter-bank relationships which - as recent instances have showed
- in any event of difficulty become mechanisms for spread of the
contagion effect. Signs of financial mismanagement in an
institution or a group of institutions regardless of the reasons is
liable to set off similar problems in other institutions and open
serious risks in the financial system. It is in this context that good
corporate governance assumes critical importance. Power and
decision-making in co-operative banks are all too often
concentrated at the top in too few hands. Cooperative performance
has therefore been for a long time characterised by lack of
participation and sense of involvement.

22
 Success of economic decisions depends after all on the human
resources at the disposal of any organisation. A change is needed
today in the co-operative banks which is built on confidence in
human capital - the most important of all resources - in
commitment, creativity and innovation brought about by proactive
management, membership and employees. Strong corporate
governance that takes its obligations seriously can truly be a source
of strength to the management. The ability to capture knowledge
and wisdom gives co-operative banks their competitive advantage.
A prerequisite is that participants from all parts of a co-operative
organisation know and understand its purpose, core values and
visions.

 In the years to come, the Indian financial system will grow not only
in size but also in complexity as the forces of competition gain
further momentum and financial markets acquire greater depth. I
can assure you that the policy environment will remain supportive
of healthy growth and development with accent on more
operational flexibility as well as greater prudential regulation and
supervision. The real success of our financial sector reforms will
however depend primarily on the organisational effectiveness of
the banks, including co-operative banks, for which initiatives will
have to come from the banks themselves. It is for the co-operative
banks themselves to build on the synergy inherent in the co-
operative structure and stand up for their unique qualities.

23
BRIEF HISTORY OF URBAN COOPERATIVE BANKS IN INDIA
The term Urban Co-operative Banks (UCBs), though not
formally defined, refers to primary cooperative banks located in urban
and semi-urban areas. These banks, till 1996, were allowed to lend money
only for non-agricultural purposes. This distinction does not hold today.
These banks were traditionally centred around communities, localities
work place groups. They essentially lent to small borrowers and
businesses. Today, their scope of operations has widened considerably.
The origins of the urban cooperative banking movement in India
can be traced to the close of nineteenth century when, inspired by the
success of the experiments related to the cooperative movement in Britain
and the cooperative credit movement in Germany such societies were set
up in India. Cooperative societies are based on the principles of
cooperation, - mutual help, democratic decision making and open
membership. Cooperatives represented a new and alternative approach to
organisaton as against proprietary firms, partnership firms and joint stock
companies which represent the dominant form of commercial
organization.
The Cooperative Credit Societies Act, 1904 was amended in 1912,
with a view to broad basing it to enable organisation of non-credit
societies. The Maclagan Committee of 1915 was appointed to review
their performance and suggest measures for strengthening them. The
committee observed that such institutions were eminently suited to cater
to the needs of the lower and middle income strata of society and would
inculcate the principles of banking amongst the middle classes. The
committee also felt that the urban cooperative credit movement was more
viable than agricultural credit societies. The recommendations of the
Committee went a long way in establishing the urban cooperative credit
movement in its own right.
24
THE KRISHNA DISTRICT CO-OPERATIVE CENTRAL

BANK LTD MACHILIPATNAM (A.P)

INTRODUCTION:-

Krishna co-operative central (KCC) bank was formed in the year

1915 by sir Dr Bhogaraju Pahttabhi Seetharamaiah at Machilipatnam and

Vijayawada Co-operative central (VCC) Bank was formed by sir

Ayyadevara Kateswara Rao in the 1918 at Vijayawada.

The Krishna District Co-Operative Central Bank Ltd at

Machilipatnam, an affiliate co-operative central Bank A.P State Co-

operative Bank ltd, Hyderabad in the A.P. sis one of the pioneering

institutions in the state “Agricultural credit in Krishna Distract which is

considered in his state of Andhra Pradesh.

Consequent to introduction of single window credit delivery

system by the Govt. of Andhra Pradesh in the year 1977, the east while

KCC Bank, VCC Bank & 14 east while PADBS were merged and on the

principal of one bank for on revenue district. The Krishna district co-

operative central bank ltd. (KDCCB) started functioning with

machilipatnam as head quarters.

25
NAME AND AREA OF OPERATIONS:

The Krishna District Co-operative central bank ltd. Machlipatnam,

No.H.1422 is deemed to have been registered as a co-operative society

under the Andhra Pradesh Co-operative societies act 7 of 1964. Its

address shall for the present be Krishna district. Any change in address

shall be intimated to the registrar within (30 days) from the date of

change of address and also given vide publicity, its area of operation shall

extend the entire revenue district of Krishna District.

DEFINITIONS:

 In these bye – law, unless there is anything repugnant in the

subject or context.

 “Act” means; the Andhra Pradesh Co-Operative societies act 7 of

1964.

 “Rules” means; the Andhra Pradesh Co-operative societies Rules

of 1964.

 “Bank” means the, Krishna District co-operative central bank ltd,

Machalipatnam.

 “Registrar” means the registrar of co-operative societies for the

state of Andhra Pradesh.

 “Board” means the board of management of the bank.

26
  “Apex Bank” means the Andhra Pradesh state co-operative bank

Ltd, Hyderabad.

 “NABARD” Means National Bank for Agriculture and Rural

Development.

 “Government” Means the Government of Andhra Pradesh.

 “PACS” means Primary Agricultural Co-operative credit

Societies.

 “General Manger” means the chief executive of the bank.

 “Co-Operative year” means the period commencing on the 1st

day of April of any year and ending with 31st day of March of the

succeeding year.

 “General Body” mean all the members of the Bank.

 “General Meeting” A meeting of the general Body of the bank.

 “Bye Law” means the registered bye laws of the bank for the

time being in force.

MISSION OF THE KDCC BANK

“Our mission is to be strong, sound, vibrant and leading

organization of the co-operative credit structure. To function as friend,

philosopher and guide to the affiliated societies for promoting sustainable

rural prosperity through effective banking and other related services for

around development of people in the district.

27
OBJECTIVES:

Its objectives shall be:-

 Primarily to finance the primary agricultural co-operative

societies (PACS) registered under the A.P co-operative

society’s act 7 of 1964.

 And secondarily to finance all other co-operative societies in

the district.

 To service members of east while PADBs including

disbursement of second and subsequent installments of loans

directly to such members and recovery of such loans of

members till they are cleared and arrange for issue of fresh

long term loans through PACS.

 To finance individuals firms, companies, corporations,

groups, Etc,. By admitting them as nominal members for

proposes approved by higher financing agencies and for and

government from time to time either individually or jointly

with other financing institutions.

 To raise funds by way of deposits, loans cash, credits

overdrafts and advances from apex, government and other

financing agencies.

28
 To open regional officers, branches or sub – offices with the

period permission of registrar both for banking purpose and

issue and recovery of ST, MT and Loans.

 To guarantee the loans and advances to be made to the

member societies by any other agency.

 To advise, develop, assist, coordinate, supervise and inspect

the functioning of the PACS and also to assist and supervise

the functioning of other affiliated indebted societies.

 To buy, sell or deal with securities, debentures or bonds or

scripts the or other forms of securities on its behalf or on

behalf of members of other co-operative institutions.

 To maintain a library of co-operative and banking literature.

 To act as an agent of government or apex bank or any

institution in financing loans for agricultural and rural

development and allied activities and to accept and

administer any funds for such purpose.

 All such other things and acts as are necessary, conducive

and incidental to the attainment of the foregoing objectives

and generally to promote the cause of co-operation in the

district.

29
  To facilitate and strengthen the functioning of co-operative

societies based on co-operative principles as enunciated

under rule 2 – A of APCS Rules.

The present study focuses on “Non-performing assets” with special

references to KDCC Bank. This study covers financial propitiation of

the KDCC Bank.

 The bank did not issue sufficient quantum of loans to S.C. and

S.T members on the total lending’s during the year 2005-2006.

The percentage of loans issued stood at 5.78% to S.Cs and

0.37% to S.Ts as against the prescribed percentage of 15% and

6% respectively.

 Loans may be issue on the security of goad and silver and such

terms and conditions prescribed by bank in conformity with the

directions/ guidelines issued by Reserve Bank of

India/NABARD. Most of the branches, following the

guidelines/directions issued by RBI and NABARD. The total

gold loans outstanding as on 31-03-2006 are Rs. 2154.80 lakh.

Out of the total overdue gold loans amount of Rs. 24.21

lakhs in 442 loans come under NPA. The general manager,

Krishna DCCB is advised to take necessary action for recovery

of the overdue amounts.

30
 PRUDENTIAL NORMS ON INCOME RECOGNITION, ASSET

CLASSIFICATION AND PROVISIONING ON ADVANCES

Prudential norms on income recognition, asset classification and

provisioning (IRAC norms) pertaining to advances portfolios of banks

were introduced for the first time by Reserve Bank of India during

financial year 1992-93 i.e. year ended 31st March 1993 in line with the

international practices.

For bank branch audits the auditors have to keep themselves

abreast of the applicable IRAC norms incorporated in the RBI’s Master

Circular dated 1st July 2005. On the basis of the guidelines provided in

this circular which, are relevant for audit of F.Y.2005-06, auditor will be

required to take the audit steps like Asset Classification, Income

Recognition, Provisioning Norms, Restructuring of loans/CDR/Project

.under implementation, Agricultural advances, Classification of NPA

borrower-wise and not facility-wise, Up gradation of Account From NPA

to Standard and Regularization of account at near about balance sheet

date. This article discusses salient features and some of the practical

aspects of prudential norms pertaining to advances of banks.

31
 The prudential norms are formulated on the basis of objective

criteria rather than on any subjective consideration. This has brought in

uniform and consistent application of the norms and greater transparency

in published accounts of banks.

Krishna DCCB

The Krishna District Co-operative Central Bank Ltd., with its Head

Office at Machilipatnam, an affiliate Co-operative Central Bank of the

Andhra Pradesh State Co-operative Bank Ltd., Hyderabad in the State of

Andhra Pradesh, is one of the pioneering institutions in the State catering

to the Agricultural Credit in Krishna District which is considered to be

the Rice Bowl in the State of Andhra Pradesh.

Consequent to introduction of Single Window Credit

Delivery System, Erstwhile KCC Bank [Estd. In 1915], the Erstwhile

VCC Bank [Estd. In 1918] & 14 Erstwhile PADBs were merged in 1987

and organized as The Krishna District Co-operative Central Bank Ltd.,

Machilipatnam with a view to have one Bank for one Revenue District.

32
MISSION OF THE BANK:

“Our Mission is to be a strong, sound, vibrant and leading

organization of the Cooperative Credit Structure. To function as a friend,

philosopher and guide to the affiliated societies for promoting sustainable

rural prosperity through effective banking and other related services for

alround development of people in the district.”

Krishna DCCB has won “NABARD Best Performance Bank

Award” for the 5 years during the last decade

Krishna DCCB is the biggest DCCB in the State of A.P. in terms of

no. of Branches (49 Branches), No. of PACS (425 PACS after

restructuring), Deposits (Rs.418.00 crores) and also business turnover

(about Rs.917.13 crores per annum).

Krishna DCCB is the only DCCB in the state whose branch

functions (Back office) are computerized in all the Branches and Day

Book, General Ledger and Receipts & Payments etc., are generated by

the system.

33
 SPECIAL FEATURES OF KRISHNA DCC BANK

 Krishna DCCB has won “NABARD Best Performance Bank

Award” for the 5 years during the last decade.

 Krishna DCCB has also won awards for its performance under

SHG Bank linkage programme during the years 1999-2K, 2000-01

& 2002-03.

 Krishna DCCB is the only DCCB in the state whose branch

functions (Back office) are computerized in all the Branches and

Day Book, General Ledger and Receipts & Payments etc., are

generated by the system.

 Krishna DCCB is earning profit continuously and is placed under

“A” category in Audit Classification.

 Under SHG Bank linkage program, KDCCB is the top performer

among DCCBs and about 40% of the state’s share (DCCBs) in

credit linkage is contributed by KDCCB.

 KDCCB is also playing a lead role among the DCCBs in providing

credit support to the Rythu Mithra Groups. KDCCB has more than

50% of state’s share in RMG Finance.

 KDCCB has a sound financial base with a networth of Rs.116.67

crores and Capital Adequacy Ratio of 26%.

34
  The recovery performance of the DCCB is also good and always

ranked either first or second among the DCCBs. It has recorded

NPA of 8.75%.

Krishna Cooperative Central (KCC) Bank was formedin the

year 1915 by Sri Dr. Bhogaraju Pattabhi Seetharamaiah at Machilipatnam

and Vijayawada Cooperative Central (VCC) Bank was formed by Sri

Ayyadevara Kaleswara Rao in the year 1918 at Vijayawada.

Consequent to introduction of Single Window Credit Delivery System

by the Govt. of A.P in the year 1987, the erstwhile KCC Bank, VCC

Bank & 14 erstwhile PADBs were merged and on the principle of one

Bank for one revenue district, The Krishna District Co-operative Central

Bank Ltd., (KDCCB) started functioning with Machilipatnam as Head

Quarters.

35
 BRIEF PROFILE OF SRI VASANTHA NAGESWARA RAO,

President , Krishna DCCB:

 Rich & varied experience in politics in various levels from 1970’s.

 Hon’ble Ex-Home Minister, Govt. of Andhra Pradesh.

 Hon’ble Ex-Agriculture Minister, Govt. of Andhra Pradesh.

 Hon’ble Ex-Minister for Legislative Affairs, Govt. of Andhra

Pradesh.

 Hon’ble Ex-RTC Zonal Chairman.

 Very close to Cooperatives as Ex-Agriculture Minister as

Cooperatives & Farming Communities are interlinked

BRIEF PROFILE OF DR.N.MURALIDHAR,CHIEF EXECUTIVE

OFFICER , KRISHNA DCCB:

 Educated from A.P. Residential School, Survail and A.P.

Residential Junior College, Nagarjuna Sagar which are the

premier & highly reputed Educational Institutions of A.P.

 Gold Medalist from A.P. Agricultural University and has an

excellent academic record.

 One of the youngest Senior Officers of APCOB.

 Direct recruitee officer joined in APCOB as Manager

[Tech.] in the year 1987 and served in APCOB and DCCBs

in different capacities.
36
  Has vast field experience and worked as General Manager of

Guntur DCCB, Eluru DCCB and also CPO, ICDP Nalgonda.

 Won awards in almost all the places of work.

OBJECTIVES OF K.D.C.C:

o Primarily to finance the primary agricultural credit societies

registered are demand to have been registered under the

Andhra Pradesh Co-operative societies act of 1964.

o Secondarily of erstwhile PADB's including distribution of

second and subsequent instalments of loans directly to such

members and recovery of such loans of members till they are

claimed and arrange for fresh term loans through PAC's.

o To service members of erstwhile PADB's including distribution

of second and subsequent installments of loans directly to such

members and recovery of such loans of members till they are

claimed and arrange for fresh term loans through PAC's.

o To finance individuals, firms, companies Co-operations etc., by

adjusting as "B" class members for purpose approved by higher

financing agencies from time to time either individually or

jointly with other financing institutions.

37
o To rise funds by way of deposits, loans, cash credits, over

drafts and advances from appraisal bank, Govt, and other

financing agencies.

o To open regional affairs branches are sub-officers with the

prior permission of the registrar both for banking purposes and

issue and recovery of S.T, M.T, and L.T loans.

o To guarantee the loans advances to be made to the member!

societies by other agency.

o To advice, develop, assist and co-ordinate and supervise and

inspect the functioning of the PAC's to assist and supervise the

functioning of other affiliated indebted societies.

38
As regards the staffing pattern of the banks it is headed by:

One Chairman

One Chief Executive Officer

Three Dy. General Managers

Three Asst. General Managers General Managers

43 Managers

29 Asst. Managers

129 Staff Assistants

Drivers

74 Messengers

39
The hierarchy of General Staff members at head office is as follows:

Under the present systems the head office controls all the branches

the banks.

Board of Directors – 2

Chief Executive Officer -1

Dy. General Manager – 3

Asst. General Manager – 3

Manager – 6

Asst. Managers -1

Staff Assistants -11

Messengers – 6

40
 The Head Office chairman is assisted by C.E.O who controls all

the departments situated in the office. The department’s such as planning

and development, accounts, credits, staff, information technology etc.

look after, the relevant activities and controls of all the branches

collectively. They provides necessary guidelines to the branches to

discharge there periodically at the head office. The necessary staff will be

passed depending up on the size of the branch.

At the branch level manager is the head of the institution that ads

assisted by a sub-manager, under whom a cashier and one or two clerks

function. The progress of the bank totally rests on the progress of

branches, they have to provided necessary loans to the needy and

depending upon the seasonally of the people. They have to implement

new schemes in mobilizing the deposits. The primary function of banking

i.e. collecting the deposits for the purpose of lending is actually being

under taken at this level. Customers get desired services directly from this

level.

The branch has to perform a dual role in discharging their duties.

On the hand they have to extend maximum services to the customers and

on the other they have to abide by the rules and regulations of their head

office. Hence the more will be the prosperity of the banks. Introduction

41
 Krishna District Co-operative Central Bank was established in

Machilipatnam in the year 1915. It was established by "Bhogaraju

Pattabhi Seetha Ramaiah".

It was established in Vijayawada in the year 1918 by Ayadevara

Kaleswara Rao.

Financial institution affiliated the bank:

1. Primary agricultural Co-operative Societies

2. Handloom Societies

3. Sugar Factories

4. Employees

Branches:

This bank is spread out with 49 branches with 1 extension counter

at Nandigama.

Management Committee:

The management committee was first incepted in august 1995.

The president of this committee meeting is held every month, each

and every issue in the agenda is critically discussed. Declarations are

passed keeping in view of the bank's development, for successful running

of the bank all the needed is done through concerned executive by

passing instructions.
42
Function of various departments in KDCC Bank Ltd.

KDCC Bank is working with the help of various sections in it.

They are as follows:

Banking Section:

Banking section deals with the function such as

1. Preparation of credit limits for loans such as SAO, DTP,

OP{, sugar finance, employees. Etc.

2. Reimbursement of financial loans from APCOB by

gathering loan from branches.

3. Fixation of rate of interest.

4. Investment of funds with PCOB and other co-operative

institutions.

5. Preparation of monthly, quarterly, half-yearly and annual

statements APCOB.

6. Preparation of audit information of auditors.

The very first function involved in the banking system is to prepare

the credit limit for loans. Actually the credit limit statement is a

statement, which shares the banks financial position, and gets the loans to

ensure the credit societies. The use of this statement is to give actual
43
picture of bank to the APCOB to get the loans this is the application to

get the funds for the purpose where actually reserved.

To prepare the credit limit statement following documents are to

be required by the bank.

1. Trial balance of previous two year and current year.

2. Balance sheet of previous two-year and current year.

3. Annual report of current year.

4. A required amount requested by the bank from its allotted

amount.

5. Board of director's resolution.

6. Progress of the bank, audit reports of previous year and

current year.

After getting all these reports ready the second stage involves in the

function of balancing section into forwarding the application requesting

the APCOB required amount for bank. The subsidiary documents, which

are to be prepared secondarily by the bank at the time application to the

APCOB, are

44
 1. Working capital statement

2. Financial statement of bank

3. Review of balance sheet

The important document to be prepared by the bank which submitting

is forwarding the application for funds or credit limit for loans to

APCOB. None over dues cover is the statement, which is proposed by the

co-operative societies and submitted to dues recoveries of cooperative

societies to bank.

The financial assistance of loans, which are sanctioned by the

bank to co-operative societies from this, own funds are reimbursed by the

APCOB. For this reimbursement it has to cover the statement which is to

be submitted by the co-operative societies and then these statements are

forwarded by the APCOB for the approval and reimbursement. As the

bank is rendering its services to the entire revenue area of Krishna

District, it is also issuing various types of loans for the convenience of

different area of people.

The bank is mainly concentrating all these types of financial

assistance to be various fields, those are:

SAO: Seasonal Agricultural Operations

DTP: Development of Tribal Program

LTC: Long Term Loans

OPP: Oil Production Program

45
 These are the loans mainly on which the bank is concentrating

apart from these are other type of loans are housing loans, gold loans, mid

term loans, employees loans etc.,

Fixation of interest rates for Seasonal Agricultural Operations (SAO),

Long Term Loans (LTC) done by NABARD and Government, for

employee loans, housing finances all other loans interest in fixed by the

board of directors.

The blocked amount of loans is invested in the other co-operative

institutions and APCOB as deposits so as to can some amount of interest

are from initialized loan able funds which are blocked amounts.

To know the present financial situation of the bank it will

prepare financial statement for three months. These statements show the

functioning of bank. These statements proposed quarterly, half yearly and

annually. The annually prepared statements are submitted to the

NABARD, APCOB and RBI for their approval.

By this statement the co-operative societies and APCOB will come to

know the successful functioning or positives of the bank. And by this

statement APCOB will issue the finance for the bank.

46
 Every year the bank will submit all its records to auditors for auditing

JX is, primary function or duty of the bank to give correct information to

auditors to know the present financial position of the bank. These are the

primarily function of the banking section.

Establishment Section:

The main functions of the establishment section are as follows: j

1. -Maintains -of service registers and records related to staff

members.

2. Staff posting and transfer orders.

3. Preparation of pay bills and T.A. bills

The main function of establishment section is to motion

service registers and records relating to staff members primarily. It is the

first function of establishment section which is to maintain service

register as they consists of the valuable information recording the

employees such as date of joining, year of service, remarks, if any

necessary information.

Secondly it also deals with the staff posting wherever

necessary in the branches as well as in central office. The posting of any

candidate depends on the score attained by them in the written test and

oral interview conducted. The sections duty is to issue the orders to the

candidate selected by above procedure. The establishment section also

deals with the issues like transfer orders wherever necessary.

47
 The way next function of establishment, preparation of pay bills

includes the calculations of basic House Rent Allowance (HRA),

Dearness Allowance (D.A), City Compensatory Allowance (CCA) and

other allowances. Preparation of Traveling Allowance bills includes the

distance traveled number of days purpose of journey. All those bills

relating to salaries, increments, festival advances, and bonus are prepared

by establishment section and are forwarded to the general manager for

approval.

Development Section:

The main functions of development section are as follows.

1. Deliver and disbursement of subsidy from DRDA and S.C. , B.C.

co-operation.

2. Change of interest on deposits.

The main function done by the development section is sanctioning of

midterm loans and short term loans. They consist of so may schemes

which are given below.

48
Government Sponsored Schemes:

1. S.C. action plan

2. B.C. action plan

Govt. sponsored schemes with contribution to the public:

1. Rajeev Yuva Shakthi

2. DWACRA group

3. Self help groups

4. Aadarana Schemes

5. District Rural Development Agencies (DRDA)

6. Rajeev Abyuday

7. Rajeev Krishna

In this Govt. sponsored schemes public is getting more benefited by

acquiring subsidies by bank. Different groups of schemes are getting

different percentages of subsides such as:

1. Government, sponsored schemes - 30% subsides

2. S.C. Action Plan - 50% subsides

3. DRDA - for O.C - 30% subsides maximum 10,000/-

4. DRDA (S.C.)-for O.C - 30% subsides

49
 For Physically Handicapped - 50% subsides maximum 3,000/-The

main objective of SGRY is to enable Swaraj Gari Yojana to grass the

policy line with a period of three years and to earn a net income of Rs.2,

000/- per month and to ever atleast 30% of the poor families recognized

by the government, in every block with in a period of 5 years.

The composition of the issue to the Swaraj Gari Yojana is as follows:

For S.C. - 50%

For ST. - 50%

For P.H. - 03%

For B.C - 20%

By this composition Government, will enable the operative societies,

banks to uplift the poor and economically B.C families equally.

There are different amounts of subsides which gives to the groups, and

undertake the projects.

For B.C - 30% if project cost

For S.C./S.T. - 50% of project cost

For groups - 50% of project cost

50
 The KDCC bank is also using back - end subsides system, which is

more benefited to public this scheme which is the public is more

benefited as they get total amount of loan issued at least installment of

loan recovery.

Actually these subsidies are issued to the public after getting

utilization certificate from the GramaSabha. Every branch manager is

advised to attend the GramaSabhas as requested by the MPDO and check

out the utilization of their financial assistance to different groups and

after that they have to collect the utilization certificate from

GramaSabha's to sanction the subsides.

51
Financial Position of the KDCC Bank:

The comparative position for a period of lost 7 years from

31-03-2012 to 31-3-2018 is as follows:

SI. Actual for last 7 Years

No.

Years 31-3-12 31-3-13 31-3-14 31-3-15 31-3-16 31-3-17 31-3-18

1 Own Funds

Share 5241.23 5291.02 5283.16 5122.01 5154.92 5474.48 5635.72

capital

Reserves 1214.09 1529.68 1733.22 1756.12 1880.91 2092.77 2146.64

(Statutory)

Total 6455.32 6820.70 7016.38 6878.13 7035.83 7567.25 7782.36

2 Deposits 40219.80 40645.45 39264.27 37334.08 37453.74 40456.04 45351.42

3 Borrowings 34299.75 31473.71 32348.18 32843.29 32749.07 35689.19 36716.86

4 Loans 66775.45 64335.01 59313.56 63772.88 69340.88 69629.29 76510.56

outstanding

5 Loans 45399.01 46765.46 38148.77 49548.52 59342.59 54899.19 52156.62

issued

6 Investments 20706.53 21074.71 20188.34 21452.86 18628.94 21750.77 23713.92

7 Profits 1262.38 813.31 91.63 499.17 847.72 215.48 233.99

52
 The financial position of the bank’s very good when compared 31-

3-2002 as against 31-3-2008. It has very much successfu7lly in all the

areas i.e. it has very much growth rate in the following areas.

1. In it's own funds.

(a) Share Capital, (b) Reserves

2. Deposits

3. Borrowing o/s

4. Loans o/s

5. Loan issues

6. Investments

7. Profits

8. Working capital

9. Audit classification

53
As follows:

SI.No. Particulars As on As on

31-3-02 31-3-08

1 Own Funds

A. Share Capital 52.41 56.36

B. Reserves 12.14 21.47

Total 64.55 77.83

2 Deposits 40.23 45.35

3 Borrowings o/s 34.30 36.72

4 Loans o/s 66.78 76.51

5 Loans Issue 45.40 52.16

6 Investments 23.71

7 Profits 16.62 23.04

8 Working Capital 32.94 93.26

9 Audit A A

Classification

54
District Profile:

Total Geographical Area 8727 Sq.km

No. of Mandals 50

No. of Revenue Villages 1005

No. of Villages Electrified 967

No. of Villages connected by all 947

weather roads

No. of Villages having supply of 428

potable water

Rainfall 1029 mm

Normal

2004-05 Actual 795.6mm

2005-06 Actual 1202.1mm

Population 2001 41.87 lakhs

census

Population density per sq.km 479

Total No. of Bank Branches 436

No. of Krishna DCCB Branches 49

55
Membership:

1315 Societies in the district are affiliated to the KDCC Bank and the

details are as under.

Type of the Society No. Affiliated

1. Primary Agrl. Co-op. 425

Societies

2. Urban Banks 4

3. Weavers Societies 47

4. Employees Societies 255

5. Fishermen Societies 107

6. Milk Supply Societies 115

7. Labour Contract 41

Societies

8. Others 321

Total 1315

56
Share of DCCB in the District Credit Plan:

As on 31.03.2007, the total deposits of Krishna District

are Rs.7103.57 crores and loans issued are to a tune of Rs.7285.26 crores.

The Krishna DCCB with a network of 49 Branches & 425 PACS has a

share of 5.83% of the deposits and 7.92% of the advances of the district.

The deposits and advances of the DCCB as on 31.03.2007 are Rs.413.96

crores and Rs.576.85 crores respectively.

Disbursement of Crop Loans & LT Loans:

The Bank mainly caters to the credit needs of the Farmers in the

district through the 425 affiliated besides extending direct finance

through the 49 Branches of the DCCB.

The DCCB is playing a very important role in sanction of

production & investment credit in the district. Performance of the Bank

during the last 5 years is as under

57
 [Rs.in

Crores]

SI. No Type
Disbursement during
of
2002-03 2003- 2004- 2005- 2006- 2007-08
Loan
04 05 06 07 [As on

29.02.08]

I Crop Khariff 160.22 123.52 122.74 196.01 125.01 204.97

Loans Rabi 51.77 75.17 142.54 178.56 222.80 40.85

II Long 16.85 6.88 29.47 30.17 16.65 16.16

Term

Total 228.84 205.57 294.75 404.74 364.46 261.98

Loans to Self Help Groups :

a) Women SHGs ;

The Bank has given much thrust for providing Credit Linkage to

Self Help Groups in the District through Branches as well as through

PACS. The Bank stood first in the state of A.P. among all DCCBs in

financing S.H.Gs and a target of Rs.30.00 crores is proposed for the

Current Year. The progress made for the last 3 years is furnished

hereunder.

58
b) Farmers SHGs (RMGs):

The Bank took a lead role in extending finance to Rythu Mithra

Groups in the district and proposed to advance Rs. 10.00 crores during

the current year (2007-08) of which an amount of Rs. 10.45 crores is

already disbursed as on 29.02.2008.

[Rs. in

lakhs]

Year Women SHGs RMGs

No. Amount No. Amount

2012-13 1363 305.72 -- —

2013-14 1199 290.83 -- ~

2014-15 1263 363.71 ~

2015-16 1750 634.42 294 205.30

2016-17 2872 1433.90 439 399.39

2017-18 5722 2392.58 1448 1158.21

(Upto

29.02.18)

59
Other Loans sanctioned by the Bank :

Though ST/SAO loans and long term / investment credit form the

main business of the Bank, the DCCB is sanctioning various types of

other loans also as part of diversification of Business of the Bank. The

details of various types of loan products of the Bank are indicated

hereunder.

Direct Loans Loans through PACS

 Sold Loans  Gold Loans

 Agrl. Gold Loans  Agrl. Gold Loans

 Comml. Gold  Comml. Gold Loans

Loans
 Express Gold
Loans
 Non Farm Sector  Commercial Agrl. Loans
Loans
 Commercial Agrl.  Palavelluva Loans
Loans
 Non Credit  Produce Pledge Loans
Business Loans
 Produce Pledge  Fish Feed Loans
Loans
 Housing Loans  Self Help Group Loans

(Women Groups)

 Construction Loans

 Mortgage Loans

60
  Repairs Loans

 °° Secured Over  Self Help Group Loans

Draft Loans
(RMGs)

 Clean Over Draft

Loans
 Cash Credit to  Compound Wall Const.
Traders
Loans (Int. Free)

 ^ Personal Loans  Swayam Krushi Loans

 Godown Repair
Loans
 Self Help Group
Loans (Women
Groups)
 Self Help Group
Loans (RMGs)
 Rajiv Yuva Sakthi
Loans
 Sugar Cane Tie-up
loans
 Oil Farm Tie-up
loans
SRTO Loans

Swayam Krushi Loans

Consumer Durable Loans

Higher Education Loans

Industrial Finance Loans

61
Deployment of Funds ;

Deployment of funds in various activities by the Bank as on

29.02.2018 is indicated hereunder.

(Rs. in

lakhs)

SI. Particulars Limit Borrowin Loans Own fund

No. sanctione g from outstandi involveme

d APCOB ng nt

1. SAO 20950.00 20780.00 39961.03 19181.03

2. OPP 100.00 50.74 50.74

3. DTP 100.00 79.55 79.55

4. Weavers CC 289.38 450.82 161.44

5. M.T Agrl. - 239.25 239.25

IRDP

6. MTC 18.71 18.71

7. MTN ECC5 1798.08 1798.08

8. SHGs 2174.14 2244.44 70.30

9. RMGs 300.00 1013.51 713.51

10. Fish Feed - 2029.05 2029.05

PACS

62
11. Gold Loans 1255.41 4753.61 3498.20

12. CMEY 30.50 30.50

13. Rajiv Yuva 157.67 157.67

Sakthi

14. Delta Sugars 1043.50 1043.50

15. Rural Housing 565.39 627.80 62.41

(Non Farm)

16. Non-Farm 115.76 115.76

Sector others

17. Personal Loans 65.46 65.46

18. Spl. Crop 533.76 533.76

Loans - Direct

19. Sugar Cane 704.08 704.08

Tie-up Loans

20. L.T 9499.31 16511.96 7012.65

(PACS+Erstwh

ile PADB)

21. CC Societies 188.72 188.72

22. Palavelluva 49.35 49.35

23. Loans to 1950.00 1464.67 -485.33

Depositors

63
24. Staff Loans 276.38 276.38

25. Others (ICDP, 588.62 534.00 -54.62

RSP,

Compound

Walls)

26. O.D. 83.06 0 -83.06

27. Milk Union 83.01 83.01

Tota 21150.00 37485.31 75025.41 37540.10

64
Recovery Position as on 30th June:

The Recovery performance of the Bank for the last 5 years is

furnished here under

[Rs.in

lakhs]

SI. No. Year As on 30th June

Demand Collection Balance %

1. 2012-11 39162.45 19403.39 19759.06 49.55

2. 2013-12 45898.92 25976.93 19921.99 56.60

3. 2014-13 44260.42 33314.82 10945.60 75.27

4. 2015-14 45629.95 37301.96 8327.99 81.58

5. 2016-15 50998.95 41767.36 9231.59 81.90

6. 2017-16 52538.29 15392.80 37145.49 29.30

65
100% Member Level Recovery in PACS:

The Bank has a good tradition of recovering 1007o demand by a

good number of societies every year. The progress of the last 5 years is

furnished here under.

SI. No. Year No. of PACS

1. 2013-12 39

2. 2014-13 26

3. 2015-14 74

4. 2016-15 98

5. 2017-16 100

Fertilizer Business by PACS:

The Bank has been extending Cash Credit Limits to the PACS for

taking up Fertilizer Business and encouraging the PACS for undertaking

Fertilizer Business in a big way. 138 PACS have taken up the Fertilizer

Business during Khariff 2016 and 101 PACS during Rabi 2015-14. The

particulars of Fertilizers sales during the last 5 seasons is furnished

hereunder.

66
Season Fertilizer Sales
Quantity (Tonnes) Amount (lakhs)
Khariff 2015 10156 613.77
Rabi 2015-14 7038 384.77
Khariff 2016 17804 964.37
Rabi 2016-15 10175 562.70
Khariff 2017 25068 1335.71
Rabi 2017-16 16209 1374.18

Computerization of Branches:

Back Office: The Bank started Computerization of Back Office in

all Branches in the District in a phased manner wherein 15 branches

started computerization of Back Office on 5.3.2017 and 20 branches on

1.10.2017. The remaining Branches started Computerization from

01.08.2018 onwards. We are successfully getting vouchers, daybook,

general ledger, cashbook extracts, Balancing of Deposits <& Loans and

receipts & payments through computer only.For implementation of this

project, the services of M/s Cooptions Technologies Ltd.,. are being

availed.

67
CKCC Cards:

The Crop Loans are being disbursed through Cooperative Kisan

Credit Card System wherein the borrowers are permitted to draw from the

sanctioned limit as and when he requires and permitted to remit as and

when he receives amounts. The Interest will be charged on the actual

utilization amounts only under the scheme. The Bank covered the

members to an extent of 99.32%.

Eligible Members - 2,84,241

Cards Issued - 2,82,306
Balance - 1,935
% of coverage - 99.32%

Janatha Insurance Scheme :

The Janatha Insurance Scheme is being implemented for the past

few years for the benefit of the loan farmers under tie-up with the

insurance company. Whenever the loan farmer is affected accidental

death there will be insurance coverage of Rs.1,00,000/-.

68
Business Targets of the Bank for 2017-16 :

The Business targets proposed for the year 2017-16 are furnished

hereunder :

1. Deposits Rs.500.00 crores

2. Short Term Rs.375.00 crores

3. Long Term Rs.30.00 crores

4. Rythu Mithra Groups Rs.10.00 crores

5. Self Help Groups Rs.30.00 crores

6. Gold Loan Business Rs.75.00 crores

7. NFS / Retail Banking Rs.25.00 crores

8. Recoveries 85%

9. Non-Performing Assets Less than 5%

10. 100% Recovery-Member Level 125 PACS

69
Staff position:

The Staff details and the deficit in the sanctioned strength of

the Bank is as under.

SI. No. Category Approved Proposed Existing Vacancies

Strength strength by strength as to be filled
by CC & Ernst & on 29.02.08 in
RCS Young (w.r.tCol.4)
1 2 3 4 5 6

1. General 1 1 1 —
Manager
2. Dy. Gen. 3 3 1 2
Manager
3. Asst. Gen. 5 3 2 1
Manager
4. Manager 69 53 46 7

5. Asst. 76 34 31 3
Manager
6. SA/ Typist 369 245 138 107

7. Catg. VI 7 6 4 2
Driver
8. Messenger 130 80 94 *14

Total 660 425 317 122

* Excess

70
Recapitalization Assistance under Revival Package :

As per guidelines of NABARD, the DLST has assessed the

eligibility under Revival Package (Vaidhyanadhan Committee) and the

DLIC has recommended the same to SLIC as shown below.

(Rs. in crores)

Amount of Assistance
No. of
Category Govt. of State Total
PACS PACS
India Govt.

I 265 17.48 3.96 8.48 29.92

II 110 25.19 3.26 4.93 33.38

TOTAL 375 42.67 7.22 13.41 63.30

The Government of India & Government of Andhra Pradesh has

released their share of Rs.21.44 crores towards Category I PACS, Rs.3.26

crores was released by GOAP towards Category II PACS and the same

was credited to PACS as per the guidelines of the NABARD / APCOB.

71
1. Problems faced by Krishna DCCB :

 Krishna DCCB is working with acute shortage of staff. As against

the sanctioned strength of 425, the staff strength as on 29.02.2017

is 317.

 As there is no recruitment of staff at regular intervals there is no

young blood and the average age of the employees of the DCCB is

50 years.

Because of large no. of branches and PACS, it is increasingly

becoming difficult to effectively discharge functions at various levels

there by the efficiency is being affected.

Krishna DCCB is the biggest DCCB in the State of A.P. not only in

terms of no. of Branches(49 Branches),no. of PACS (425 PACS after

restructuring),but also in terms of deposits (Rs.453.51 crores) and

business turnover (about Rs.1220.00 crores per annum)

72
 WORKING CAPITAL : 932.59 CRORES
Bank's Progress from Single Window onwards i.e., from
1987

Year Share Deposit Reserv Workin Net Audit

Capita s e Fund g Profit Classificatio
l Capital n

1994 751.96 2715 69.61 9002.5 -165.1 C

-95
1995 883.16 3081.9 69.61 11290 -104 B
-96
1996 1069.6 3183.4 69.61 13578 27.06 A
-97
1997 1228.5 3198.6 69.61 16528 -409.4 B
-98
1998 1837.8 4276.4 69.61 23360 195.4 A
-99 2
1999 1913.2 4015.8 118.47 24591 62.96 B
-00
2000 2092.9 4814.4 158.64 27747 235.4 A
-01 7
2001 2357.6 6753.1 237.09 29628 124.2 A
-02 4
2002 2579.7 8186.4 268.2 32186 126.6 A
-03 9
2003 3025.7 11036 299.87 38457 181.7 A
-04 9
2004 3239.4 16776 345.32 45326 287.7 A
-05 9
2005 3645.3 21799 417.27 54392 508.2 A
-06

73
2006 4537.6 30312 544.32 68786 629.5 A
-07 2
2007 4898.5 37218 701.69 78821 921.8 A
-08 5
2008 5167.1 48215 935.93 90264 1097. A
-09 8
2011 5241.2 40220 1214.1 82938 1262. A
-10 4
2012 5291 40645 1529.7 81316 813.3 A
-11 1
2013 5283.2 39264 1733.2 65911 91.63 C
-12
2014 5122 37334 1756.1 65122 499.1 A
-13 7
2015 5154.9 37454 1880.9 68838 847.4 A
-14 2
2016 5474.5 40456 2092.8 72079 215.4 A
-15 8
2017 5635.7 45351 2149 93259 233.9 A
-16 8

74
 (Rs.in Lakhs)

Year Share Deposit Reserv Workin Net Audit

Capita s e Fund g Profit Classificatio
l Capital n

1994 751.96 2715 69.61 9002.5 -165.1 C

-95
1995 883.16 3081.9 69.61 11290 -104 B
-96
1996 1069.6 3183.4 69.61 13578 27.06 A
-97
1997 1228.5 3198.6 69.61 16528 -409.4 B
-98
1998 1837.8 4276.4 69.61 23360 195.4 A
-99 2
1999 1913.2 4015.8 118.47 24591 62.96 B
-00
2000 2092.9 4814.4 158.64 27747 235.4 A
-01 7
2001 2357.6 6753.1 237.09 29628 124.2 A
-02 4
2002 2579.7 8186.4 268.2 32186 126.6 A
-03 9
2003 3025.7 11036 299.87 38457 181.7 A
-04 9
2004 3239.4 16776 345.32 45326 287.7 A
-05 9
2005 3645.3 21799 417.27 54392 508.2 A
-06
2006 4537.6 30312 544.32 68786 629.5 A
-07 2
2007 4898.5 37218 701.69 78821 921.8 A
-08 5

75
 2008 5167.1 48215 935.93 90264 1097. A
-09 8
2011 5241.2 40220 1214.1 82938 1262. A
-10 4
2012 5291 40645 1529.7 81316 813.3 A
-11 1
2013 5283.2 39264 1733.2 65911 91.63 C
-12
2014 5122 37334 1756.1 65122 499.1 A
-13 7
2015 5154.9 37454 1880.9 68838 847.4 A
-14 2
2016 5474.5 40456 2092.8 72079 215.4 A
-15 8
2017 5635.7 45351 2149 93259 233.9 A
-16 8

Share of DCCB in the District Credit Plan:

As on 31.03.2017, the total deposits of Krishna District are Rs.7103.57

crores and loans issued are to a tune of Rs.7285.26 crores. The Krishna

DCCB with a network of 49 Branches & 425 PACS has a share of 5.83%

of the deposits and 7.92% of the advances of the district. The deposits

and advances of the DCCB as on 31.03.2017 are Rs.413.96 crores and

Rs.576.85 crores respectively.

76
 BYE-LAWS

1. Name and Area of Operations:

The Krishna District Cooperative Central Bank Ltd.,

Machilipatnam, No.H.1422 is deemed to have been registered as a

Cooperative society under the Andhra Pradesh Cooperative Societies Act

7 of 1964. Its address shall for the present be Krishna District. Any

change in address shall be intimated to the Registrar within (30 days)

from the date of change of address and also given vide publicity. Its drea

of operation shall extend to the entire Revenue District of Krishna

District.

2. Definitions:

In these bye-laws, unless there is anything repugnant in the subject

or context.

(a) 'Act' means; the Andhra Pradesh Cooperative Societies Act 7 of 1964.

(b) 'Rules' means the Andhra Pradesh Cooperative Societies Rules of

1964.

(c) 'Bank' means the Krishna District Cooperative Central Bank Ltd.,

Machilipatnam.

(d) 'Registrar' means, the Registrar of Cooperative Societies for the State

of Andhra Pradesh.

(e) 'Member' means a member of the/Bank.

77
(f) 'Board' means the Board of Management of the Bank.

(g) 'Apex Bank' means the Andhra Pradesh State Cooperative Bank Ltd.,

Hyderabad.

(h) NABARD' means National Bank for Agriculture and Rural

Development.

(i) Government' means the Government of Andhra Pradesh.

(j) TAGS' means Primary Agricultural Cooperative Credit Societies.

(k) 'General Manager' means the Chief Executive of the Bank.

(I) Cooperative Year' = The period commencing on the 1 * day of April

of any year and ending with 31st day of March of the succeeding year.

(m) General Body' means all the members of the Bank.

(n) General Meeting': A meeting of the General Body of the Bank.

(o) Bye-laws' means the registered bye-laws of the Bank for the time

being in force.

78
3. OBJECTIVES:

Its objects shall be:-

i) Primarily to finance the Primary Agricultural Co.operative

Societies (PACS) registered under the A.P. Co.operative

Societies Act 7 of 1964.

ii) And secondarily to finance all other Co.operative Societies in the

District.

iii) To service members of erstwhile PADBs including disbursement

of second and subsequent installments’ of loans directly to such

members, and recovery of such loans of members till they are

cleared and arrange for issue of fresh long term loans through

PACS.

iv) To finance individuals, firms, companies, corporations, groups,

etc., by admitting them as nominal members for purposes

approved by higher financing agencies and (or)/and

Government from time to time either individually or jointly

with other financing institutions.

v) To raise funds by way of deposits, loans, cash credits, overdrafts

and advances from Apex Bank, Government and other

financing agencies.

79
vi) To open regional offices, branches or sub-offices with the prior

permission of the Registrar both for banking purposes and issue

and recovery of ST, MT and LT loans.

vii) To guarantee the loans and advances to be made to the member

societies by any other Agency.

viii) To advise, develop, assist, coordinate, supervise and inspect the

functioning of the PACS and also to assist and supervise the

functioning of other affiliated indebted societies.

ix) To buy, sell or deal with securities, debentures or bonds or scripts

or other forms of securities on its behalf or on behalf of

members of other Co.operative Institutions.

x) To maintain a library of Co.operative and Banking literature.

xi) To act as an agent of Government or Apex Bank or any institution

in financing loans for Agricultural and Rural Development and

allied activities and to accept and administer any funds for such

purposes.

xii) To carry on the general business of Banking not repugnant to

the provisions of the A. P. Co.operative Societies Act 7 of 1964

and the rules framed there under or the Banking Regulations

Act, 1949 as applicable to Co.operative Societies and the rules

made there under.

80
 xiii) All such other things and acts as are necessary, conducive and

incidental to the attainment of the foregoing objects and

generally to promote the cause of Cooperation in the District.

xiv) To facilitate and strengthen the functioning of Cooperative

Societies based on Co.operative Principles as enunciated under

Rule 2-A of APCS Rules

4. Share Capital:

i) The share capital of the Bank be Rs. 70.00 crores made up of 67

lakhs 'A' class shares of Rs. 100/- each and Rs.3.00 crores made

up of XB' Class Shares of Rs.10/- each.

ii) The value of each share be paid in one lump sum on admission. Tl

'A' Class shares are allotted to Cooperative Societies and if

Government. The lB' Class shares are allotted only to nominal

members.

iii) Every member except the Government shall pay an entrance fee

Rs.2.00 per share subject to a maximum of Rs. 500/- for all

shares allotted

iv) "Transitory Provision for existing associate member or normal

member Every Society having associate member or nominal

member shall and such person as member provided they

81
 otherwise satisfy the condition of membership and are eligible

to become members as per the A and Rules.

v) Provided that any associate member or nominal member admitted

as such by a Society is availing any benefit from the Society is

discharging any liability by virtue of his associate or nominal

membership and who has not been made a member as provide d

(1) above shall continue to be liable to discharge his/her

obligation 1 the Society till the loans borrowed or guaranteed by

him or her any fully repaid or discharged and such person shall

continue to t governed by the provisions of the APCS Act and

Rules.

vi) The individual members of Erstwhile PADBs on their merger with

If CCB shall be deemed to be the 'B' Class (nominal) members

of th CCB. The CCB shall on application of the members shall

transfer on share to the PACS having jurisdiction where the

immovable propertk of the Erstwhile members of PADB are

situated, by adjustment in cas such member is not already a

member of the PACS.

82
6. Membership Eligibility:

a) Primarily all the Primary Agricultural Credit Societies within the

area

coperation of' We Bank shall be eligible for membership of the CCB

an other societies shall also be eligible for admission.

b) It shall also be open to the State Government to take shares in the

Bank directly or indirectly subject to such conditions and terms as

ma be laid down by Government from time to time and such terms

an conditions shall be binding on the bank.

c) The Managing Committee shall examine the admission of member

into the Bank as per the provisions contained in Section-! 9 of the

APCS Act relating to qualifications to become a member.

d) Nominal Membership (B Class) may be given to individuals i.e. for

the objects envisaged under byelaw 3 (iv).

7. Disqualification of Membership:

No person/a delegate of a Cooperative Society/Institution shall be

qualified for being a member if he/the Co. operative Institution acquired

any of the disqualifications as per Section-21 of the APCS Act.

83
8.Share certificate:

a) A share certificate duly signed by the President and the General

Manager of the Bank and with the seal of the Bank shall be issued the

every4A' Class member for the share taken after the full value of such

shares have been subscribed.

b) If a share certificate is either lost or destroyed a duplicate certificate

may be issued after obtaining an indemnity bond, in this behalf. If an1

certificate is worn out or damaged, the General Manager may chance it

and issue a duplicate certificate in lieu thereof on surrendering the

certificate so worn out or damaged. For every duplicate certificate issued

under this bye-law, a fee of Rs. 20.00 shall be collected.

9. Funds:

The bank will ordinarily obtain funds from the following sources:

1. Share Capital.

2. Deposits from individuals, institutions, members, other societies.

Government Agencies and others with the approval of the Registrar.

3. Other borrowings from various sources.

4. Entrance fee and miscellaneous receipts.

5. Grants from Government and other agencies.

84
10. Deposits:

The Bank may accept deposits from members or others as per the

interest rate directives of the Reserve Bank of India/NABARD from time

to time. The Reserve Fund, the Bad Debt Reserve, Thrift Deposits,

Special Bad Debt Reserve and other Reserves of such nature of

Cooperative Societies shall be received as term deposits at such rates of

interest as may be fixed by the Board from time to time.

11. Management:

1) The Management of the Bank shall vest in a Board consisting of si

number of members and with such composition of members prescribed in

the ARCS Act and Rules.

2) The Registrar on behalf of the State Government may nomine persons

as Directors on the Board of Management soon after i declaration of

results to the Board is over, as per the provision of AF Act and Rules.

12. Term of Board:

The term of the office of the Committee shall be 5 years from the

date election of the members of the committee. All the members of the

Bo< and President other than those nominated by the Registrar shall be

eled at one and the same time, as provided in the APCS Act and Rules for

¦ specified period of 5 years. Any interim vacancy can only be filled up

the unexpired portion of the original period by co-option from delegates

85
of the respective groups. The proceedings of the Board is not are

invalidated on account of any vacancy or vacancies on the Board which

remain unfilled.

The resignation letter submitted by any member or members of the

Board by Regd. Post to the General Manager/President and it shall be

process and decided as per the provision of Rule 23-AAA of the APCS

Runny nominated member of the Board may at any time resign from his

office by sending a letter of resignation to the Registrar under copy to the

General Manager of the Bank, but such resignation shall take effect from

the date it is accepted by the Registrar.

13. ELECTION OF OFFICE BEARERS:

The election of the Board of Directors shall be in accordance with

provisions of APCS Act and Rules framed thereon.

14. MEETING OF THE BOARD:

Meeting of the Board shall be convened by the General Manager in

consultation with the President once in a month or often if necessary, for

the conduct of business of the Bank. The President shall call for a

meeting of the Board within a month after receipt of requisition in writing

signed by atleast 12 (twelve) members of the Board or by Registrar or by

Apex Bank for such a meeting. The quorum for the Board meeting shall
86
be as indicated in Sub-Rule 2 of Rule 23 of APCS Act. All questions

before the Board shall be decided by a majority of votes.

The President or in his absence Vice-President shall preside at all

meetings of the General Body of the Bank or the Board and in the

absence of the President and the Vice-President a Chairman shall be

elected from among those present. The Chairman shall exercise casting

vote, whenever there is equality of votes. No Director, including the

President or Vice-President shall be present at a meeting when a matter in

which he is directly or indirectly interested is discussed.

15. Disqualifications:

The disqualifications for membership of committee shall be as

prescribed in the APCS Act as amended from time to time.

16. Powers of the Board:

The committee of a society shall subject to the provisions of the

Act, Rule Bye-laws and resolutions of the General Body, exercise the

following powers and functions namely:-

a. Recommend the admission of% A' Class members to General

Board

b. Recommend on allotment of shares to members and transfer

shares to General Body.

87
c. Recommend removal of the members disqualified under Section

21.

d. Removal of any of the Committee members disqualified u/s 21 -

22-AA, 21-B and reinstatement of a committee member of ceased

to be such member of the committee u/s 21-B and plan the reports

before the General Body.

e. Raise funds in the form of loans or deposits and invest them.

f. Provide services or facilities including sanction of loans are

advances to the members on a specific recommendation of that

Chief Executive Officer on the basis of the date of admission

such members;

g. Sanction expenditure which is necessary for the business of that

society subject to the provisions of the annual budget;

h. Conduct elections in the manner specified in the bye-laws to the

office of the members of the committee before the expiry of the

term.

i. Conduct general meetings as prescribed in the Act;

j. Cause the audit of the accounts of the society within the time

prescribed and place the audit report before the General Body.

k. Decide matters connected with the day to day management of the

society;

88
l. Fix the staffing pattern, qualifications, pay scales and other

allowances to the employees of the bank, subject to the

availability of the administrative and contingent fund and

approval of the General Body and Registrar.

m. Place the reports of inquiry u/s 51 or inspection u/s 52 or u/s 53

or special audit report u/s 50 before the General Body within the

time prescribed.

n. Prepare and place before the General Body information or report;

or statements relating to:

 Disposal of properties;
 Deficits in cash and stocks;
 Proposals for appropriation of net profits including creation
o reserves and other funds;
 Write off bad debts;
 Removal of membership;
 Contribution to Co-op Education Fund and administrative
and Contingent fund.
 Expulsion of member who has acted adversely to the interest
of the bank.
 Affiliation of the bank to the financing bank or other
societies;
 Elections of delegates to the financing bank or other
societies

89
 DATA ANALYSIS & INTERPRETATION

Business Targets of the Bank for 2017-18 :

The Business targets proposed for the year 2017-18 are as

under:

1. Deposits Rs.600.00 crores

2. Short Term Loans Rs.375.00 crores

3. Long Term Loans Rs.30.00 crores

4. Loans to RMG Rs.10.00 crores

5. Loans to SHG Rs.70.00 crores

6. Gold Loan Business Rs.125.00 crores

7. NFS / Retail Banking Rs.25.00 crores

8. Recoveries 85%

9. Non-Performing Assets Less than 5%

100% Recovery-Member
10. 125 PACS
Level

90
Here are some graphs which depict the financial status of the bank as
on 31-03-2018:

YEARS OWN FUNDS

2013-14 98.93

2014-15 104.17

2015-16 114.85

2016-17 118.72

2017-18 125.31

91
 YEARS DEPOSITS
2013-14 373.3

2014-15 381.3

2015-16 414

2016-17 453.5

2017-18 484.2

92
 YEARS Loans & Advances Outstanding
2013-14 638

2014-15 693.4

2015-16 696.3

2016-17 765.1

2017-18 792.2

93
YEARS 100% Member-Level Recovery in
PACS
2013-14 638
2014-15 693.4
2015-16 696.3
2016-17 765.1
2017-18 792.2

94
1. A study of total deposits of Krishna district co-operative central bank
ltd.
Krishna DCCB is the biggest DCCB in the state of AP not only in
terms of no. of Branches (49 Braches PACS after restructuring) but also
interims of deposits (incrores) and business turnover (a bow crores
perineum).

Year Deposits

2013-14 374.34

2014-15 387.27

2015-16 413.96

2016-17 453.51

2017-18 478.15

95
Interpretation:

The above graph shows the study of total deposits of KDCC bank

ltd for the 5 years. The deposits are increased from year to year, i.e.

increase the 15 is “6.93”, 07 is 39.76, 08 is 39.54.

96
2) A study of advances of KDCC bank for the year, 2004, 2005,
2006, 2007-2008.

Year Advances

2013-14 405.02

2014-15 538.12

2015-16 546.97

2016-17 583.00

2017-18 602.18

97
Interpretation:
The above graph shows a study of advances of KDCC bank Ltd.
The advances are increased from 133.1in 2016 to 8.85 in 2017 to 36.03 in
2017 because.
1. There is a change in the lending system they have to provide
more long term loans in Krishna DCC Bank Ltd.
2. The Government policy liberalized in respect of loans and
advances.
3. There must be change in the people certitude.

98
3). A study of Net Non-Performing Asset’s showing of KDCC bank
ltd for the years.

Year Net NPA’s

2013-14 1858.24

2014-15 1334.52

2015-16 1447.69

2016-17 1553.76

2017-18 2004.04

99
Interpretation:

The above graph shows the study of net non performing assets of

Krishna DCC Bank Ltd.

The net NPA’s are increased up to 2018. But in 2017 it is

decreased i.e. from 2004.04 in 2018 1553.76 in 2017 Because the RBI

gives guidelinces to take the actions of recovery and to follow the

security act, single settlement scheme the NPA’s will decline.

100
4). Study of gross NPA’s of KDCC bank for the year 2003 to 2008.

Year Gross NPA’s

2013-14 11551.18

2014-15 7385.02

2015-16 6847.28

2016-17 6095.04

2017-18 9532.96

101
Interpretation:
The above graph shows the study of gross NPA’s is increasing to

11551.18 in 2014 and in 2018 it is gradually decreasing to 6095.04

because the RBI gives guide lines for the recovery of NPA is compromise

settlement scheme, constitution of settlement advisory committee. One

term settlement scheme security act.

102
 Findings

 The Krishna DCC bank is not profit oriented it works to develop

the Agriculture sector.
 Bank has successfully participated in the real time gross settlement
(RTGS) during its year. The facility now available from 49
branches across the country.
 An amount of Rs.1545.54 lakhs is out standing against the
employees societies in the bank. Out of which an amount of Rs.
365.81 lakhs overdue and treated as NPA & 100%provision is
made as the employees loans traded as unsecured loans classified
by the NABARD classification.
 The bank has a budgetary control system is vogue. Expenses were
generally within the provided limits.
 The bank earned a net profit of Rs. 847,41,651.00 for the year
2016.-2017 of which,
o 25% amounting to Rs, 2, 11, 85,413.00 shall be carried to
Reserve Fund.
o 15% amount of Rs.1271248.00 shall be carried to
stabilisation fund.
 The balance of Net Profit is available for distribution in accordance
with the provisions of the bye loans of the bank and the other
statutory provisions.
 Net NPA ratio has declined from 1.95% in march 2017 to 1.5% in
march 2008.
 During the year 2018 the bank as sold 17 non – performing assets
having book value of 7537/- crores to April.

103
 Suggestions

1. Better NPA management is the need of the hour as it promotes and

protects the interest of deposits and promotes stability and

efficiency of financial system.

2. Proper strategies have to adopt to recover the loss in NPA

recovery.

3. The extent of working capital should be increased so to achieve

grater profits.

4. Fixing the chartered accountants accountable for concealing losses/

embezzlements in balance sheet.

5. Comparing with other banks the NPA position of the bank is not

satisfactory so it was suggested to improve NPA performance.

6. Strict and proper measures are necessary in recovery of loans.

7. It promotes and protects the interest of deposits and promotes

stability and efficiency of financial system.

104