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INTRODUCTION

Finance plays a vital role in the survival of any industry. It is the life

blood of business. As far as the banking sector is concerned finance

management has an important role. To have a clear understanding of the

profitability and financial position of a business, the financial statements will

have to be analyzed and interpreted.

Financial analysis is the process of identifying the strength and

weakness of a company with help of accounting information provided by the

profit and loss account and balance sheet.

Financial analysis is usually carried out study the financial position of

the company from the point of view of share holders, debenture holders, and

financial institutions, statutory agencies and others.

The basic objective of financial statement is to assist the Management

is decision making. It requires critical analysis and careful interpretation of

published financial statements. The common tools used to facilities analysis

are Ratio analysis. Comprehensive statements, Common size statements and

trend analysis. Here the present study is undertaken to analyze the financial

performance of KANNUR DISTRICT CO-OPERATIVE BANK LTD by

using various tools of analysis.

Kannur District Co-operative Bank

OBJECTIVES OF THE STUD Y

PRIMARY OBJECTIVE:

The primary objective of the study conducted at the KDC Bank Ltd. is given

below.

The detailed analysis of financial performance of Kannur District Co-

operative Bank Ltd.

.

SECONDARY OBJECTIVES:

To evaluate the Financial position of the bank.

To measure the short-term and long-term solvency of the bank.

To analyse the over all working of the bank.

To analyse the various sources of funds of banks and its application in

various banking and non-banking activities.

Provide suggestion and recommendation for future improvement.

Sharaf arts and Science college Kannur University2


SCOPE OF STUDY

Since finance is the life blood of any business, it should be managed

giving special attention. The first aspect to be attended is the estimation of

how much funds a business organization requires and its purpose. Unless the

financial forecast can be prepared on sound basis, the business is likely to

run in to difficulties arising from insufficiency or excess of capital funds. In

second place, it needs to be seen how the amount estimated for meeting the

business requirements.

In the competitive world of business the function of fund management

plays an important role in ensuring fair return on investment. generating and

building up reserves and surpluses for growth and expansion etc. This study |

covers the financial performance analysis of the Kannur District Co-

operative Bank Ltd.

The main source of information required for the analysis is the annual

report of the Bank, The annual report comprises the Income and Expenditure

Statement, the Balance Sheet. Report to the Directors and Auditors report.

The period of analysis is for a period of five years (2007-08). The different

tools used for analysis of financial statements are Ratio Analysis, Trend

Analysis. Comparative Analysis and Common size statements.



RESEARCH METHODOLOGY

Research is the process of systematic in-depth study or a research of

any particular topic, subject and area of investigation, backed by the

collections, compilations., presentation and interpretation of relevant details

of data.

Methodology implies the science of the method of study. Methodology is the

concept of method used in carrying out the study. This research is a financial

research. It is assessed the over all financial position of the company by

taking to account the financial data for a period of five years (2005-09). Each

study differs in accordance with the objectives set.

NATURE OF RESEARCH

This research is a diagnostic study geared to solve the specific

problems relating to financial performance by the discovery of the relevant

variables that are associated with financial statement.

RESEARCH DESIGN

The research is by and large a desktop analysis and it involves

scanning and absorbing tools and ideas from the standard texts, journals,

websites and other related materials to get a hold on the theories of financial

control.



SOURCE OF DATA

The study is based on the data published in the annual reports and

other documents provided by the bank.

PRIMARY DATA

Primary data originally collected by researches through personal

interview with the financial officials in Kannur District Co-operation.

SECONDARY DATA

Secondary data collected from the financial statement of Kannur

District Co-operation for 5 years. (Balance sheet of profit and loss)

ANALYTICAL TOOLS

1) Ratio Analysis

2) Trend Analysis

3) Comparative Financial Statement

4) Common size statement



REVIEW OF LITERATURE

Financial statements

Financial statements may be defined as the statements containing

summaries of detailed information about financial position and performance

of the enterprise. They refer to a package of statements such as balance

sheet, income statement, statement of retained earnings, fund flow statement

and cash flow statement. The basic purpose of preparing financial statements

is to convey the owners, creditors, and the investors about the financial

position of the enterprise.

The main objectives are

- To judge the financial position

- To estimate the earning capacity

- To determine the dept capacity

- To decide about the future prospects of business.

To have a very clear understanding of the profitability and financial

position of a business, the financial statements will have to be analyzed and

interpreted. Financial analysis is a process of identifying the strength and

weakness of the company with helps of accounting information providing by

the P/c a/c of B/s. It is the process of evaluation of relationship between

component parts of financial statements to obtain a better understanding of

firm’s position and performance. Financial analysis will give the

management considerable right in to the levels and area of strength or

weakness. The form interpretation means explaining the meaning and



significance of the data so arranged. It is the study of relationship between

various components if the financial statements.

Users of Financial Analysis

Financial analysis is the process of identifying the financial strengths

and weakness of the firm by properly establishing relationship between the

items of the balance sheet and the profit and loss account. Financial analysis

can be undertaken by the management of the firm, or by parties outside the

firm, via, owners, creditors, investors and others. The nature of analysis will

differ depending of the purpose of the analyst.

1. Trade creditor

They are interested in firm's ability to meet their claims over a very short

period of time. Their analysis will, therefore, confine to the evaluation of the

firm's liquidity position.

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2. Suppliers of long-term debt

They are on the other hand, are concerned with the firm's long solvency and

survival. They analyses the firm's profitability over time, its ability to

generate cash to be able to pay interest and repay principal and the

relationship between various sources of funds. Long term creditors do

analyses the historical financial statements, built they place more emphasis

on the firm's projected or pro forma, financial statements, to make analysis

about its future solvency and profitability.

3. Investors

They are who have invested their money in the firm's shares, arc most

concerned about tufts firm's earnings. They restore more confidence in those

firm that show steady growth in earnings. As such, they concentrate on the

analysis of the firm's present and future profitability. They are also interested



in the firm's financial structure to the extent it influences the firm's earnings

ability and risk.

4. Management

The management of the firm would be interested in every aspect of the

financial analysis. It is their over all responsibility to see that the resources of

the firm are used most effectively and efficiently. And that the firm's

financial condition is sound.

Standards of comparison

The ratio analysis involves comparison for useful interpretation of the

financial statements. A single ratio in itself does not indicate favorable or

unfavorable condition. It should be compare with the same standard.

Standards of comparison may consist of:

TYPES OF FINANCIAL ANALYSIS

The classification of financial analysis can he made either on the basis

of material used or according to the modus operand! of the analysis. On the

basis of material used financial analysis can be of two types:

1. External analysis

This type of analysis is done by those who are outsiders to the business. The

outsiders are investors, creditors, govt. etc. These persons mainly depend

upon the published financial statements.

2. Internal analysis

This analysis is done by those who have access to the books of accounts and

other information relating to the business concern. This type of analysis is

meant for managerial purposes. This is conducted by executives or

employees of the firm as well as government agencies which have statutory

control over such firms. On the basis of modus operand financial analysis

can be of two types.



a. Horizontal Analysis

Analysis of changes in different components of the financial statements for

certain number of years is known as Horizontal Analysis, e.g., study of

profitability trends for a period of five or ten years. It is also known as

dynamic analysis because it shows the changes that have taken place.

h. Vertical Analysis

This refers to the analysis of the quantitative relationships of the various

items in the statements at a particular date, e.g., comparison of current assets

to current liabilities for one point of time or one accounting period. Vertical

analysis is also known as static analysis.

TOOLS OK FINANCIALANALYSIS

A number of techniques or devices are used to undertake financial analysis.

The fundamental objective of any analytical method is to simplify the data to

more understandable terms. The following are the important tools of

financial analysis.

1. Comparative Financial Statement

2. Trend Analysis

3. Common size statements

4. Ratio Analysis

5. Fund Flow Analysis

6. Cash Flow Analysis-Comparative Financial Statements

The Financial in the financial data over a period can be understood if

the statements of two or more years are placed side by side to

facilitate comparison. Such statements are called comparative Financial

statements. There are two types of financial statements namely, Comparative

balance sheet and Comparative income statement.



a. Comparative Balance Sheet

A comparative Balance sheet shows the assets, liabilities and owner's equity

of business enterprises at the beginning and at the end of the accounting

period with increases and decreases in the absolute data in terms of rupees

and percentages. The single Balance sheet focuses on the financial status of

the firm as on a particular date, while the comparative Balance sheet focuses

on the changes that have taken place in one accounting period. The changes

in the Balance sheet items are the result of acquisition or sale of assets,

change in current assets and current liabilities, issue of shares, profit or loss

etc. A comparative Balance sheet has two columns for the data of original

balance sheets. A third column is used to show increase or decrease in

figures. A fourth column may be added for giving percentages of increase or

decrease. Comparative balance sheet indicates whether the business is

moving in a favorable or unfavorable direction. Thus the comparative

balance sheet is a type of connecting link between the income statement and

balance sheet. n. Comparative Income Statement and balance sheet.

a. Comparative Income Statement

The comparative income statement will show the operating results for

two or three periods and the amount as well as percentage increase or

decrease in them. It explains clearly the relationship between sales and cost

of goods sold and its effects on gross profit. It gives an idea of the progress

of a business over a period of time.

b.Trend Analysis

Comparing the past data over a period of time with a base year is

called trend analysis. Under this technique, information for a number of

years is (taken up and one year (usually the first year) is taken as the base

year. Each itme of the base year is taken as 100 and on that basis the



percentage for other years are calculated^.,. The object of calculating the

trend percentage is to show the direction of the change upward or downward.

The trend percentages are generally computed for major items in the

statement.

c. Common Size Statement

The comparative financial statements and the trend analysis have a

common limitation in that they are not helpful in understanding the changes

that have taken place from year to year in relation to total assets,

total liabilities, total capital or total net sales. Under the above said tools of

analysis, there is no common base for comparison. This limitation is

eliminated by common-size analysis. Common-size financial statements are

those statements in which items are converted in to percentages taking some

common base. These statements are also called ""100 percent statements" or

'"Component

Percentage" because each statement is reduced to the total 100 each

individual item is expressed as a percentage of this total.

a. Common Size Balance Sheet

A statement in which each asset is shown as a percentage of total asset

and each liability and capital as a percentage of total liability and capital is

called a common-size Balance sheet. In other words, it shows the relation of

each component to the whole. A common-size balance sheet shows

relationship between each asset to total asset and each liability and capital to

total liability and capital. These are helpful to get a better understanding of

balance sheet and income statement.



b. Common-Size Income Statement

A statement in which each expense items is shown as a percentage of

net sales is called a Common income Statement. The sales figure is assumed

to be 100% and all figures are shown as a percentage of net sales. As

Common-Size statements facilitates comparison between two companies

belonging to the same industry.

RATIO ANALYSIS

The ratio analysis is one of the most power full tools of financial

analysis. An analysis of financial statement on the basis of ratios is known as

ratio analysis. It is the systematic use o! Accounting ratios in order to weigh

and evaluate the operating performance of a firm. It involves the process of

computing, determining and presenting the relationship of items in the

Imuncial statement. It also embraces the comparison and interpretation of

these ratios and use of them for further projections. Ratio analysis is being

used as devise to diagnose the financial health of a business concern.

MEANING AND NATURE OF RATIO ANALYSIS

Ratio is simply one number expressed in terms of another number. It

refers to numerical relationship between two figures. It is obtained by

dividing one figure by the other. Accounting ratios are relationships

expressed in, mathematical terms between two related figures in the financial

statements, e.g. ratio between current assets and current liabilities. A single

figure by itself has no meaning but when expressed in terms of a related

figure, it yields valuable information.

Ratio can be expressed in three ways. It may be expressed as the

quotient of one number divided by another. Then it is said to be expressed in

'times'. If the quotient is multiplied by hundred, it is expressed as

'percentage". It may also be expressed in terms of 'proportion' between two



figures. Thus limes, percentage and proportion arc the three ways of

expressing ratio.

Advantages or use of Ratio Analysis

A study of the trend of strategic ratios may help the management in

the task of planning and forecasting.

The ratios measure the efficiency of operation of enterprise. Hence

they can be used as a tool of management control.

Ratios facilitate inter firm comparison.

It is possible to test the liquidity, solvency and profitability of the

enterprise through the technique of ratio analysis.

Sometimes investment decisions are guided by certain ratios.

Ratio analysis simplifies the comprehension of financial statements.

Ratio analysis communicates the financial strength or weakness of a

firm in a more and understandable manner.

Thus, ratio analysis gives valuable information not only to

management but also to creditors, investors and shareholders.

Limitations of Ratio Analysis

Ratios should be used with great care because they suffer from serious

limitations. It is better that one should keep in mind these limitations before

drawing conclusions. The important limitations are as follows:

• A particular ratio cannot be regarded as -an indicator of good or bad

performance of management. It only provides a clue to be further probed.

• It will not reveal all relevant limitation about the business operation.

They only provide n part of information needed in the process of decision-

making.a Ratio is not conclusion themselves. They arc only means to draw

conclusions.



• Ratio relates to last data. A financial analyst is more concerned with

probable happenings in the future rather than the past.

• Ratio became helpful to the management only when they are compared to

ratio of previous periods or that of similar firms.

• Ratio do not reveal the non-monetary aspects of the organizational

environment; e.g., morale and loyalty of employees, quality of supervision,

human relations etc.

« Financial statement can easily be window dressed to present a better

picture of the firm's financial position and profitability, hence one has to be

very careful in making a decision on the basis of ratios calculated from such

financial statements.

« Price level changes make the ratio analysis difficult,

If too many ratios are calculated, it will be difficult to draw precise and

meaningful conclusions.

Ratio analysis only out the symptoms and cannot indicates the forces which

are responsible for these symptoms.



INDUSTRY PROFILE

The financial sector is in a process of rapid transformation. Reforms

are continuing as part of the overall structural reforms aimed at improving

the productivity and efficiency of the economy. The role of an integrated

financial infrastructure is to stimulate and sustain economic growth.

The USS 20 billion Indian financial sector has grown at around 15

percent and has displayed stability for the last several years, even when other

markets in the Asian region were lacing a crisis. This stability was ensured

through the resilience that has been built into the system over time. The

financial sector has kept pace with the growing needs of corporate and other

borrowers. Banks, capital market participants and insurers have developed a

wide range of products and services to suit varied customer requirements.

The Reserve Bank of India (RB1) has successfully introduced a regime

where interest rates are more in line with market forces.

Financial institutions have combated the reduction in interest rates and

pressure on their margins by constantly innovating and targeting attractive

consumer segments. Banks and trade financiers have also played an

important role in promoting foreign trade of the country.

Banks

The Indian banking system has a large geographic and functional

coverage. Presently the total asset size of the Indian banking sector is US$

270 billion while the total deposits amount to US$ 220 billion with a branch

network exceeding 66.000 branches across the country. Revenues of the

banking sector have grown at 6 per cent CAGR over the past few years to

reach a size of US$ 15 billion. While banks cater to short and medium term

financing.



Industrial Profile

Co-operative banks have a history of almost 100 years. The Co-

operative banks are an important constituent of the Indian financial system,

judging by the role assigned to them. The expectation they are supposed to

fulfill their member and the number of offices they operate. The co-operative

movement originated in the west, but the importance that such banks have

assumed in India is rarely paralleled anywhere else in the world. Their role

in rural Financing continues to be important even today and their business in

the urban areas also has increased and resulting in increase of number of

primary co-operative bank.

The co-operative institution is playing an important role in the

financial sphere in the district. The history of co-operative movement in

district can be traced in 1909.

Status of Co-operative Bank

The Registrar of co-operative societies who looks after the

administrative matters relating to 11690 co-operative societies heads the

Department of Co-operation. The affairs of the following categories of co-

operation are administrated by the Head of the Departments noted against

each of the power of Registrar of Co-operative Societies have been delegated

by government.

Joint Registrar of Co-operative Societies (Audit) is the District level

officer supervising and reviewing the works of Auditors. He also conduct

test audit of co-operation and verifies duties and programs of Auditors. Audit

certificate in respect of primary co-operatives coming under Banking

Regulation act are approved and issued by Joint Registrar (Audit). Audit



certificate in respect of apex, Central Regional and State level Co-operative

Societies. The Joint Registrar (Audit) is assisted by a Assistant Registrar and

Auditors for office work.

PERFORMANCE OF CO-OPERATIVE SECTOR CREDIT SECTOR

Kerala can claim to have an elaborate and efficient rural credit system

administered through primary Co-operative Bank, Central Co-operative

Banks and Apex Co-operative Bank. The Co-operative credit structure in

Kerala comprises of 2 parts namely,

(1) Short and medium term credit structure

(2) Long term credit structure.

The short and medium credit requirements

History of Co-operative Movement

Co-operative movement originated first in England. Later on it has

been introduced in Germany. It is from these countries that the movement

spread to almost all other parts of the world. Therefore, the history of co-

operative movement is nothing but the history of movement in those

countries.

The co-operative movement was originated in England in 1844. The

infant organization-was formed by a group of flannel weavers. At this time

the weavers in England were badly exploited by the money lenders and

capitalists. They found that co-operation is the only way out of this situation.

As a result, some twenty eight flannel weavers joined together and opened a

retail store in 'Rockdale' which came to be known as "Rockdale Co-operative

Society". The success of this society paved the way for the establishment of

modern co-operative movements. After 'Rockdale' experiment in England



two types of credit societies were organized in Germany. E.W. Raiffeisen

and Frank Schultze Delitzsch are the pioneers of co-operative movement in

Germany. Reiffeisen organized 'Rural Ranks' on co-operative basis to protect

the poor farmers from the merciless money lenders. These banks arc purely

meant for helping the farmers in rural areas. They arc also known as

"Agricultural Credit Societies". At this time Trunk Schultxe Delitzseh

organized 'Urban Ranks' in urban areas. They are meant ibr helping the poor

people in towns to start business. They provide cheap loans repayable on

easy installments to small business units. These banks are also known as

"Non Agricultural Credit Societies.

The idea of co-operation has spread all over the world within a short

period of time. The forerunners of co-operative movement in Italy were

Lougi Luzzatle organize Urban Co-operative Credit Societies known as

"Banca popuair means "People banks' they were organized in line with the

urban banks in Germany. They are formed to provide cheap credit for non-

agricultural purpose. Dr.Wollenburge formed 'Gassu Ruralit' in rural areas to

provide cheap credit to farmers. They arc also known as farmers in due

course, the popularity of co-operative movement spread all over Italy.

Thus the vine cooperation planted by the English Flannel Weavers in

the soil of Rockdale has an unusual growth.

Co-operative Movement in India

The co-operative credit movement was officially launched in India in 1904

after the famous prescription of Nicholson to "Find Ralffeisen". It resents a

three-tier ground floor; the central co-operative banks the top floor as the

apex institutions.

Co-operative banks mobilize the savings of* the members and non-

members by inculcating the habit of thrift and self-held and lend the funds so



raised to those who can profit by them. These 'two broad functions coupled

with a few others make them look like commercial banks. Their line of

action is also roughly the same in that they aim at earning profit, but this

again makes the main point of distinction. To co-operative banks profit

motive is subordinate to service, while the reverse is true of commercial

banks. Strictly speaking, is the central, state and urban co-operative banks

which should be taken as co-operative hanks since their deposits are

withdrawal from by cheque. This explains the extension of the Banking

companies Act 1949 to certain co-operative societies in terms of the Banking

Laws Act, 1965 with effect from March 1, 1966, the date on which this came

in to force, these state co-operative societies in terms of the Banking Laws

Act, 1965 with effect from March 1, 1966, the date on which this Act came

in to 1965, these state cooperative bank, central co-operative banks and

primary non-agricultural credit societies which have a paid up capital and

reserves of not less than Ks. 1 lakh have been brought within the regulatory

frame work of the Reserve Bank. Accordingly, the name of the Banking

Companies Act charged in to Banking Regulation Act.

. The most disturbing aspect of the working of co-operative banks has

been their mounting over dues, Along with the increase in the quantum of

advances, there has been a corresponding rise in over dues showing that the

banking have it has not yet developed among the borrowers, On the average

over dues to outstanding advances are as 44 percent. Then, a large number of

PACS still remain non-viable even after their re-organization. Their

expenses exceed their incomes and overdue loans are mounting. However,

the program of intensive development of PACS for transforming them in to

efficient multipurpose units. Under the monitoring of NABARD is being

implemented. It has also recorded considerable progress.



The result that the reliance on Reserve Bank funds has been

historically substantial in recent years, however, the Reserve Bank has been

stressing the need for co-operative banks to increase their self-reliance and

limit their resource facilities. Simultaneously, steps have been taken to

improve the ability of co-operatives to augment their own resource by

extending to them certain concession such as allowing them to offer slightly

higher rates of interest on deposits and the extension of insurance cover to

their deposits.

Co-operative Movement in Kerala

Various types of co-operative societies exist in almost all parts of the slate.

The Kerala Co-operative Societies Act 1969 governs these societies. It came

in to force on 5lh May 1969.The head of co-operative department in Kerala is

the "Registrar of Co-operative Societies". He is assisted by Joint and Deputy

Registrar at the District level and by Assistant Registrar at the Taluk level.

The co-operative sector is classified as Co-operative Banks. Co-operative

Credit societies, Co-operative Consumer Societies, Co-operative Pressing

societies, Co-operative producer's Societies, Co-operative lousing Societies.

Co-operative Banks in Kerala include three types of banks. The state

cooperative banks stand at the top of the credit structure in Kerala. It is

otherwise called Apex co-operative society or provincial co-operative banks.

State Co- operative Bank means Ihe principal society in Kerala, which is

registered or deemed to be registered under the co-operative societies Act

1912, or any other law. The primary objective of the state co-operative bank

is to finance the other societies in Kerala.

According to Kerala Co-operative Societies Act an Apex Society is a

society having the whole of the state as its area of operation and having its

members only other societies with similar objects and declared us such by

registrar.



The function of the apex bank in Keala is to act as a' balancing centre'

because its assist the central bank and to balance excess and deficiencies in

resources of central bank. In the absence of central bank the state co-

operative acts as a central bank. The Kerala stale co-operative bank with

head, quarters at Trivandrum is the apex bank in the state.

The central co-operative bank is the intermediary between the apex

bank and the primary societies. The central co-operative bank is a financing

bank for the primary co-operative societies in the district. The central co-

operative banks are also a federation of the primary credit societies within its

area of operation. In kerala the pattern adopted is one central co-operative

bank for every revenue district. Therefore it is also called District Co-

operative Bank. In Kerala we can see the pure type of central co-operative

bank because the membership of which is confined to co-operative

organizations only. The central co-operative bank draw their funds from

share capital, deposits, loan from the slate co-operative bank and where the

state bank does not exist, from the slate reserve bank and other commercial

banks. They also act as balancing centers.

The lowest level of the co-operative society is the primary society. It

is often engaged in close association with the farmers in the village. It can be

started with that more persons. The membership is open to-all-residents of

the locality. Hence people of different states are bought together in to the'

common organization. Bach member contributes to the share capital of the

society. The value of each share is nominal so as tp enable even the poorest

farmer to be a member. The liability of each member is unlimited. The

affairs of the society are managed by honorary secretaries and president

assisted by board of directors. All these officials are elected from among the

members on the principle of "one man one vote'". The society derives its

fund from share capital, entrance ice, reserve fund, deposits, or loan from



members and non-members. The society lend for short periods on the

personal security of the borrower or that one or more members. It changes a

low rate of interest.

Features of Co-operative Societies

The following are some important features of co-operative societies which

distinguishes it from other forms of business organizations.

a. Voluntary Organization

Individuals having common interest can join a co-operative organization

without any restriction and they are free to leave the organization at any time

after giving due notice.

b. Separate Legal Entity

On registration co-operative society will be treated as a separate legal

personality just like a joint stock company.

are met by a three tier system consisting of State Co-operative Banks at

middle and 1628 primary Agricultural Credit Societies at the base level. In

addition to this 85 Urban Co-operative Banks and 1013 Employees Credit

Co-operatives are meeting the Non-Agricultural Credit requirements of their

members.

S/No Particulars/Societies Unit All India AverageKerala

1 Membership Numbers 1390 6560

2 Deposit In Lakhs Rs. 4.11 Rs. 119.47

3 Advance In Lakhs Rs. 11.00 Rs. 116.26

4 Working Capital In Lakhs Rs. 23.31 Rs. 205.00



ROLE OF NABARD IN THE DEVELOPMENT OF CO-OPERATIVE

MOVEMENT IN THE STATE

The refinance to State Co-operative Banks and District Co-operative

Banks for short term (short term agricultural operation) purpose at present is

made available by the NABARD subject to minimum involvement policy.

The credit limit for the purpose will be fixed with reference to the credit

limit statement under the loan system.

Financial assistance by which of loan with NABARD’s refinance is

also provided to District Co-operative Bank for various purposes such as

Minor irrigation land development plantation, Horticulture, Diary

Development, Animal husbandry, Farm mechanization etc and non-farm

sector outside IRDP.

Co-operative Credit Structure

The Co-operative credit structure is three tier structures with state co-

operative bank at the top, district co-operative bank at the middle and the

primary credit societies at the base. For the long term loans there is a two tier

system with central and mortgage bank at the top and primary land mortgage

banks at the grass root level.

1) Primary Credit Societies

At the village level there are primary credit societies having only

individuals as their members. Their primary function is creation of funds to

land to the members. These societies from the base of the movement and

provide direct access to the people. So as the stability and strength and

strength of a building mainly depends on its foundation. The soundness of

three tier credit structure depends upon primaries. If they are weak we



cannot expect the sound working at the District Co-operative Banks or State

Co-operative Bank.

2) District Co-operative Bank

District Co-operative Bank is a federal society of all the primary credit

societies in a revenue district. Usually societies are the members of the

District Co-operative Banks and not the individuals. The aim of the District

Co-operative Bank is to give loans and other financial help to the affiliated

societies. It supervises the working of the affiliated societies. It supervises

the working of the affiliated member societies. It also functions as a

balancing centre of societies. The District Co-operative Bank also gives the

proper direction and guidance for all affiliated societies in the district.

3) State Co-operative Bank

District Co-operative Bank further organizes them into an apex bank which

has jurisdiction all over the state. The bank works as a Lawson between the

co-operative movement in the state and NABARD, which finances the co-

operative credit movement. It is the highest body in co-operative credit

structure. The main responsibility of the State Co-operative Bank is to

provide credit to the district co-operative institution in the state and to

supervise their working The State Co-operative Bank also function as a co-

ordination with the state government and the NBARD in the matter of credit

policy. The finance received from the NABARD is routed through the co-

operative bank to the borrowers. The State Co-operative Bank also adopts

uniform procedures for the working of co-operative credit institution in the

state and also acts as a balancing centre of co-operative institution.



STRUCTURE OF CO-OPERATIVE BANK

CENTRAL CO-OPERATIVE BANK / DISTRICT CO-OPERATIVE

BANK

A central co-operative bank was established under a co-operative

societies Act 1912 to provide refinance to primary credit societies. A central

co-operative bank is the financing bank of the primary co-operative societies

in the district. It is the middle layer in the co-operative credit structure of the

country. The central co-operative bank is also a federation of the primary

credit societies and other types of primary societies within its area of

operation (one revenue district). In Kerala there are 14 central co-operative

banks at present. One central co-operative bank for every revenue district is

the pattern adopted in this state. Therefore it is also called district co-

operative bank.

NEED FOR A CENTRAL CO-OPERATIVE BANK

Primary Co-operative Societies especially in the beginning of the

organization cannot function effectively without obtaining financial help

from an outside agency. They also require technical guidance and

administrative advice. As a measure of mutual help it is necessary that all

these primary societies may form a federation for assuring rational use of

their funds and providing a common meeting place for exchange of ideas and

co-operative experiences. It was such a necessity which warranted the

formation of central co-operative banks in the country.



Objectives

To provide loan to the affiliated co-operative societies.

To act as a balancing centre for the primary societies.

To arrange for the supervision the assimilated societies.

To raise deposits from members and non-members.

To open branches of the bank at important places with the

permission of the Registrar of co-operative societies.

Funds

There are two types of shares i.e. A class and B class shares. A class

shares are intended for the member societies and its share value is usually

Rs. 100/-. The ‘B’ class shares are reserved for the state government and its

share value is normally fixed at Rs. 1000/-. The funds of the Central Co-

operative Bank include share capital from member societies, government

deposits from members, non-members, reserve fund and other reserves and

loans from State Co-operative Bank, State Bank of India and State

Government.

Working

The central co-operative bank advances two types of loan i.e. short

term loans and middle term loans to its member societies for agricultural

purpose. The district bank also advances ordinary loans which are to meet

the non-agricultural needs of the members. Ordinary loans are advanced out

of its own resources. The rate of interest of the ordinary loans will be higher

than the agricultural loan.



Agricultural loans are issued to a scale of finance which is usually

fixed in the field workers conference conveyed by the District Co-operative

Bank. Now it is being fixed by the Board of Directors of the bank as per

recommendation of the technical committee. Bank provide short term,

medium and long term loans, overdraft / cash credit, housing loan and govt.

loan (ICDP) to its customers.

Principle Function

5) Receiving Deposits

6) Lending Money

7) Investment of Funds

8) Creation of Money

9) Other Function.



COMPANY PROFILE

KANNUR DISTRICT CO-OPERATIVE BANK LTD

The Kannur District Co-operative Bank Ltd. No. C. 266 is registered

as a Co-operative Society under Madras Co-operative Societies act of 1932

and now functioning under Kerala State Co-operative Societies Act of 1969.

The area of operation is extent to whole of Kannur Revenue District.

Kannur District Co-operative Bank Ltd. the pioneer bank in the Co-

operative sector was registered on 22nd May 1963 and came into existence on

1st July 1963 and plays a vital role in the over all development of the district.

The bank has a network of 50 branches in district including 10

evening branches and one ladies branch. Of the 50 branches some of the

branches are fully computerized and the bank phases to computerize the

remaining branches as early as possible. The functioning of the bank spread

all over the district is extending advance to PACS as well as individuals for

varied purposes giving emphasis on priority sector advances. 50 branches

have 8-10 staffs. These include Branch Manager, Branch Inspector or Field

Supervisors, Cashiers, Accountants and peons. The number of staffs depends

on the size of operation of the branch.

In addition to the banking activities, bank involved in many welfare

activities like aid for medical treatments, complimenting students in their

meritorious achievements, pension to the building and construction workers.

As recognition of its profound performance, District Co-operative

Bank received ‘Best Performance Award’ from NABARD consecutively for



three years. The bank also received trophies from Kerala State Co-operative

Bank for several years for the top most performance in mobilization of

deposits.

FUNCTIONS OF THE BANK

- Provision of short term loan to carry out seasonal agriculture

and for the purpose of sale of agricultural products.

- Provision for medium term loan for irrigation, poultry, farming,

animal husbandry etc.

- Acceptance of deposit.

- Provision of remittance of payment facilities.

- Acceptance of valuables for safe custody.

THE MAIN OPERATIONS OF THE BANK

- Cash recipients / Deposits

- Cash withdrawals

- Sanction and disbursement of loans

- Locker facilities

- Updating and issuing of new pass books and cheque books

- Issuing demand draft

CORPORATE MISSION

- To meet the growing aspiration of the customers of the bank in

particular and others in general.

- To bring about total customer satisfaction by providing equally

service.



- To promote social economic development and employment as

rational and social objectives.

- To post a satisfactory return on equity investment through

sustained profitable growth.

- To meet the economic and career aspiration of employee of the

bank.

MANAGEMENT

The management of the bank is vested in the hands of elected Board

of Directors consisting 17 members. Sri. P. Hareendran is the President of

the Bank. The Board of Directors is the ultimate body of Management.

POWERS OF BOARD OF DIRECTORS

- To rise funds necessary for the purpose of carrying out the

function of the bank in the form of deposits and loan.

- To grand loan and advances to members on certain terms and

conditions.

- To scrutinize and put up the annual budget to the general body.

- To make arrangement for efficient supervision of the bank and

affiliated societies.

- To maintain accounts and registers as specified by the Registrar

from time to time.

- To place Registrar’s notes of audit and inspection in the general

body meeting.



STAFF STRUCTURE

I. General Manager (Chief Executive)

II. Deputy General Manager

III. Banking and Administration

Loans, Recovery and NPA Management

Planning and Development, Housing Finance

IV Senior Officers

a. Executive Officers. (Zonal Manager)

b. Inspectors of Branches

c. Branch Manager

d. Senior Branch Manager

V Senior Accountants

a. Accountants

b. Clerk / Cashier

SECTIONS

The bank has seven sections through which the bank carrying out its

various operations. The various sections are as follows.

A Section – Account

B Section – Personnel and Administration

C Section – Planning and Development

D Section – Loans and advances.

E Section – Recovery

F Section – Registration

G Section – Inspection and Supervision



Share Capital

At present share capital of the bank is Rs. 20 crores.

1) 12,00,000 ‘A’ class shares of Rs. 100/- each

2) 80,000 ‘B’ class shares of Rs. 1000/- each

Objectives

To raise funds from the members and non-members.

To open the branches at suitable places in the district with the

permission of the Registrar.

To develop, assist and co-ordinate the work of affiliated societies

To arrange for the holding of periodical co-operative conferences

and taking necessary action pertaining to its own function on the

resolution passed at such conferences.

To maintain a library of co-operative literature.

To guarantee loans and advance or credit granted to any member

societies of bank by government, State Bank of India or any other

agency, with such terms and conditions as may be fixed.

To provide housing loan, vehicle loan etc. to the employees subject

to the subsidiary rules formed by the Board of Directors and

approved by Registrar.

WOMEN DEVELOPMENT CELL (WDC)

A Scheme for supporting the setting up of Women Development Cells

(WDCs) in RRBs and Co-operative Banks was introduced in October 1995

by NABARD to create a gender friendly banking environment, to plan and



ensure increased credit flow is also to strive towards capacity building of

rural women. Until 31 March 2006 NABARD has supported 130 (86 RRBs,

36 DCCBs, 5 SCBs and 3SCARDBs) cells, with a grant support to the tune

of Rs. 272 lakhs. Based on the evaluation studies on the efficiency of WDCs

and it in the context of the renewed emphasis on strengthening credit

delivery to women and to provide credit plus services to them, it has decided

to revised the scheme to extent increased quantum of productivity linked

incentive to RRBs and Co-operative Bank. The scheme came into force on

1st April 2007.

Objective

The main objective of WDC is to facilitate the banks to plan and

ensure increased credit flow to women, on a sustainable basis.

Eligible Institutions

All RRBs and Co-operative banks including SCBs, DCBs and

SCARDBs.

Eligibility for applying under the scheme

Banks which propose to set up a WDC and / or continue to maintain

the WDC (if set up earlier with NABARD assistance) and have a separate

identified key person to manage the cell, are eligible to apply for assistance

under the scheme. The banks need to fulfill the following for being

considered for assistance.



I. The bank has prepared a specific policy for providing financial services

to women. A copy of such policy approved by the Board may be

submitted along with the application to the concerned RD of NABARD.

II. The bank has put in place appropriate Management Information System

(MIS) for collecting, collating and maintaining gender disaggregated

data on its business.

III. The bank is required to submit an Action Plan giving the targets of

deposits from and credit to women both in terms of fresh disbursement

and learn outstanding along with total deposit / credit for the bank as a

whole and details of the strategies to be adopted for increasing the credit

flow to women to a level of 30% in 3 years.

Quantum of Assistance

a) Refinance.

100% refinance to cover the loans for investment credit given to women,

both for Farm and Non-farm sectors.

b) Grant

One time grant assistance not exceeding Rs. 30,000/- p.a., if the bank has

introduced a computerized MIS for collection and maintenance of gender

disaggregated data, provided the bank has not earlier availed of the same

from NABARD.

Mobility allowance @ Rs. 20,000/- per district, covered by the bank with

a ceiling of Rs. 1,00,000/- p.a. for the bank as a whole. The allowance will

be provided for undertaking visit by the identified officer (s) of the WDC for

facilitating activities like awareness creation, credit ramps, counseling,

training etc. which will help in increasing the credit flow to women.



Cost towards awareness and publicity campaign for women relating to

banking, credit camps exclusively for women etc., up to a maximum of Rs.

10,000 per district with a ceiling of Rs. 50,000/- per annum. This also

includes the cost of publicity / literature which the bank may prepare

specifically to reach the women clientele.

Expenses up to a maximum of Rs. 10,000/- for celebrating International

Women’s Day (8th March) by organizing functions, honoring women

entrepreneurs / business women / women staff members etc.

In addition to the above, grant assistance will be provided, with prior /

sanction of concerned NABARD, RO for the following purposes under the

ongoing promotional schemes of NABARD

Capacity building of the women entrepreneurs through REDPs /

SDIs.

Capacity building needs like training and exposure of the bank’s

staff and key person.

Monitoring and Feedback to NABARD

The performance of the WDC will be assessed with respect to its

average of women both quantitatively and qualitatively and achievements

against the action plan submitted by it. The grant assistance will be released

based on the assessment of performance on the basis of the return submitted

by bank.



Activity check - for Women Development Cells in RRBs and Co-

operative Banks

1) Facilitate gender responsive policies for enhancing the coverage of

women.

2) Identity / potential / areas for development of women either on

individual as group basis and assist the bank is the preparation of an

Action Plan for covering women. The ‘Action Plans’ should be in

consonance with bank’s over all plan.

3) Initiate innovative schemes / products, specific to women and help

increases the flow of credit to women.

4) Create awareness among rural women in various aspects of banking,

availment of loans etc.

5) Sort out issues relating to credit and other support services to women

and initiate the process of better gender awareness among bank’s staff

and clients.

6) Facilitate skill up gradation / capacity building of rural women

entrepreneur, offer counseling and credit for setting up of units.

7) Identifies agencies (NGOs, VAs etc.) and network with for

dispensation of credit to women through bankable schemes.

8) Promote women SHGs / JIGs / farmers clubs and their credit linkage.

9) Conduct REDPs / SDIs (Skill Development Initiatives) for women

clients.

10) Act as a nodal point between the bank and the women clients as

agencies dealing with women.

11) Bring out relevant literature for the benefit of women clients

and also for discriminating success stories on women clients etc. for

benefits of staff of the bank so as to sensitize the staff and facilitate

increased coverage of women.



As a part of initiating innovative schemes or products to specific women,

Women Development Cell of Kannur District Co-operative Bank has

developed certain new scheme for women such as

1) Vanithanidhi

2) Mangalya Suthra

3) Mangalya Nidhi

4) Vidyajyothi

5) Kanaka Nidhi

6) Sangadeepthi

7) Mahilamithra



Ratio Analysis

1) Current Rates – Current Asset__

Current Liabilities

Table:1

Year CA CL Ratio

2004 – 2005 21308.6 9162.49 232

2005 – 2006 26659.19 10890.28 244

2006 – 2007 34101.01 9031.45 377

2007 – 2008 39177.04 10719.4 365

2008 – 2009 49152.3 10434.95 471

Chart 1

21308.6

26659.19

34101.01

39177.04

49152.3

9162.4910890.28

9031.4510719.4 10434.95

232 244 377 365 4710

10000

20000

30000

40000

50000

60000

2003 – 2004 2004 – 2005 2005 – 2006 2006 – 2007 2007 – 2008

CA

CL

Ratio

Current Asset is greater than current liabilities ie it satisfies idle ratio is 2:1

which indicates the current financial position of the company.



Profitability Ratio

2) Profit as % total ratio/profit margin

Net profit x 100 Total income

Table:2

Year Profit Total Income Ratio

2004-2005 338.063 6410.61 5.273

2005.2006 396.53 8039.32 4.93

2006-2007 410.07 9365.77 4.38

2007 – 2008 103.63 10476.8 .99

2008– 2009 162.67 13067.68 1.24

Chart:2

338.063 396.53 410.07103.63 162.67

6410.61

8039.32

9365.77

10476.8

13067.68

5.273 4.93 4.38 0.99 1.240

2000

4000

6000

8000

10000

12000

14000

2003-2004 2008.2005 2005-2006 2006 – 2007 2007 – 2008

Profit

Total Income

Ratio

Total profit to total income ration is declining from 2003 – 04 to 2007 – 08.

But total income was increasing year by year.



3) Profit to interest rate

Profit x 100Interest earned

Table:3

Year Profit Total Interest Ratio

2004-2005 338.063 6249.79 5.41

2005.2006 396.53 5797.9 6.84

2006-2007 410.07 6175.61 6.65

2007– 2008 130.63 7092.55 1.84

2008 – 2009 162.67 9122.38 1.78

Chart:3

338.063 396.53 410.07130.63 162.67

6249.79

5797.9

6175.61

7092.55

9122.38

5.41 6.84 6.65 1.84 1.780

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2003-2004 2008.2005 2005-2006 2006 – 2007 2007 – 2008

Profit

Total Interest

Ratio

Ratio of profit to interest earned is rate decreasing from 2003 – 04 to 2007 –

08



4) Solvency Ratio

Cash as a % of deposit

= Total cash x 100

Deposit

Table:4

Chart:4

16513.7

20340.9

30419.75

33904.99

44912.445143.04

50954.4

61673.15

75295.4

94781.67

36.58 39.92 49.32 45 47.380

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

2003-2004 2008.2005 2005-2006 2006 – 2007 2007 – 2008

Profit

Total Dposit

Ratio

Here it shows there is a increasing tendency of cash to deposit ratio.

Expenditure Ratio.

Sharaf arts and Science college Kannur University

Year Profit Total Ratio

2004-2005 16513.7 45143.04 36.58

2005.2006 20340.9 50954.4 39.92

2006-2007 30419.75 61673.15 49.32

2007– 2008 33904.99 75295.4 45.0

2008 – 2009 44912.4 94781.67 47.38

41


5) Interest paid to gross income ratio

Interest paid x 100 Gross income

Table:5

Chart:5

6249.79

5797.96175.61

7092.55

6410.61

8039.32

9365.76

10476.81

97.44 72.12 65.99 67.810

2000

4000

6000

8000

10000

12000

2003-04 2004-05 2005-06 2006-07

Interest paid

Gross income

Ratio

Interest paid to gross income ratio is at high during the year 2005-06. and the

lowest rate was in the year 2007-08


Year Interest paid Gross income Ratio

2005-06 6249.79 6410.61 97.44

2006-07 5797.9 8039.32 72.12

2007-08 6175.61 9365.76 65.99

2008-09 7092.55 10476.81 67.81

42


6) Management cost to gross income = Management cost x100 GI

Table:6

Chart:6

1995.15

4061.07

5057.665456.38

6339.646410.61

8039.32

9365.77

10476.81

13067.68

31.12 50.5 54 52 48.5130

2000

4000

6000

8000

10000

12000

14000

2003-2004 2008.2005 2005-2006 2006 – 2007 2007 – 2008

Mgt cost

Gross Income

Ratio

Gross income in every year is greater than management cost which indicates a satisfactory financial position.


Year Mgt cost Gross Income Ratio

2004-2005 1995.15 6410.61 31.12

2005.2006 4061.07 8039.32 50.5

2006-2007 5057.66 9365.77 54

2007 – 2008 5456.38 10476.81 52

2008– 2009 6339.64 13067.68 48.513

43


7) Management cost to total expenditure ratio = Management cost x100

Total Expenditure

Table:7

Chart:7

1995.15

4061.07

5057.665456.36

6339.646072.55

7642.79

8955.69

10346.18

12905.01

32.8 53.13 58.47 52.74 49.130

2000

4000

6000

8000

10000

12000

14000

2003-04 2004-05 2005-06 2006-2007 2007-08

Mgt cost

Total expenditure

Ratio

Management cost to total expenditure ratio increased during the years 2005-06 and

2006-07.And in the year 2007-08 to 2008-09 it has decreased.


Year Mgt cost Total expenditure Ratio2004-05 1995.15 6072.55 32.82005-06 4061.07 7642.79 53.132006-07 5057.66 8955.69 58.472007-2008 5456.36 10346.18 52.742008-09 6339.64 12905.01 49.13

44


8) Total Expenditure to Gross Income ratio

Total expended X100 Gross income

Table:8

Chart:8

6072.55

7642.79

8955.69

10346.18

12905.01

6410.61

8039.32

9365.77

10476.81

13067.68

94.72 81.6 95.62 98.75 98.760

2000

4000

6000

8000

10000

12000

14000

2003-04 2004-05 2005-06 2006-07 2007-08

Total expenditure

Gross income

Ratio

Total expenditure to gross income ratio is highest in the year 2008

&2009, with 96.75% and 98.76% Except in the year 2006, it shows an increasing

trend.


Year Total expenditure Gross income Ratio2004-05 6072.55 6410.61 94.722005-06 7642.79 8039.32 81.62006-07 8955.69 9365.77 95.622007-08 10346.18 10476.81 98.752008-09 12905.01 13067.68 98.76

45


9) Income Ratio/ Earning RatioInterest on Investment to gross income ratio

Interest on Investment x 100 Gross income

Table:9Year Interest on investment Gross Income Ratio

2004-2005 6249.78 6410.61 97.49

2005.2006 5797.9 8039.32 72.12

2006-2007 6175.61 9365.77 65.94

2007 – 2008 7092.55 10476.81 67.69

2008 – 2009 9122.38 13067.68 69.81

Chart:9

6249.785797.9

6175.61

7092.55

9122.38

6410.61

8039.32

9365.77

10476.81

13067.68

97.49 72.12 65.94 67.69 69.810

2000

4000

6000

8000

10000

12000

14000

2003-2004 2008.2005 2005-2006 2006 – 2007 2007 – 2008

Interest on investment

Gross Income

Ratio



In the year 2005 interest on investment to year’s income in 97.49%.During

the year2006 and 07interest on investment to gross income ratios are 72.12 % and

65.94 % respectively.

10) Other income to gross income = Other income x100Gross income

Table:10

Year Other income Gross Income Ratio

2004-2005 160.82 6410.61 2.5

2005.2006 2241.42 8039.32 27.8

2006-2007 3190.16 9365.77 34.06

2007 – 2008 3384.6 10476.81 32.3

2008– 2009 3945.29 13067.68 30.19

Chart:10

160.82

2241.42

3190.163384.6

3945.29

6410.61

8039.32

9365.77

10476.81

13067.68

2.5 27.8 34.06 32.3 30.190

2000

4000

6000

8000

10000

12000

14000

2003-2004 2008.2005 2005-2006 2006 – 2007 2007 – 2008

Other income

Gross Income

Ratio



During the years 2005 other income to gross income ratio was 2.5 and in

the next -4 sequent years it increased tremendously.

11) Gross income to owner Fund RatioGross income x100Owner Fund

Table:11

Chart:11


Year Gross income Owner Fund Ratio

2004-05 6410.61 7673.62 83.5

2005-06 8039.32 10441.48 76.99

2006-07 9365.77 12247.97 76.46

2007-08 10476.81 12637.15 82.90

2008-09 13067.68 13592.01 96.14

48


6410.61

8039.32

9365.77

10476.81

13067.68

7673.62

10441.48

12247.9712637.15

13592.01

83.5 76.99 76.46 82.9 96.140

2000

4000

6000

8000

10000

12000

14000

16000

2003-04 2004-05 2005-06 2006-07 2007-08

Gross income

Owner Fund

Ratio

Gross income to owner fund ratio during the year 2005 is 83.5% and the

highest is in the year 2009 by 96.18%

Asset Quality Ratio

12) Net profit to owned Fund ratio = Net Profit x100 Owned fund

Table:12

Chart:12


Year Net profits Owned Fund Ratio

2004-05 338.06 7673.62 4.41

2005-06 396.52 10441.48 3.79

2006-07 410.07 12247.97 3.35

2007-08 130.63 12637.15 1.03

2008-09 162.67 13592.01 1.19

49


338.06 396.52 410.07130.63 162.67

7673.62

10441.48

12247.9712637.15

13592.01

4.41 3.79 3.35 1.03 1.190

2000

4000

6000

8000

10000

12000

14000

16000

2003-04 2004-05 2005-06 2006-07 2007-08

Net profits

Owner Fund

Ratio

Net profit to owned fund ratio decreased from 2005 to 2009. During the year 2005

Net profit to owned fund ration was 4.41% and during the year 2009it has reached

to 1.19%.

13) Net profit to working fund ratio

= Net Profit____x 100 Working Fund

Table:13

Chart: 13


Year Net profits Working Fund Ratio

2004-05 338.06 65615.11 .51

2005-06 396.52 74921.18 .53

2006-07 410.07 79153.56 .52

2007-08 130.63 94848.65 .14

2008-09 162.67 118825.69 .14

50


338.06 396.52 410.07 130.63 162.67

65615.11

74921.1879153.56

94848.65

118825.69

0.51 0.53 0.52 0.14 0.140

20000

40000

60000

80000

100000

120000

140000

2003-04 2004-05 2005-06 2006-07 2007-08

Net profits

Working Fund

Ratio

In the year 2004 – 05 Net Profit to working Fund ratio was 51% and in 2006 ratio

increased to 53%. After it shows a dealing trend. In the year 2007 ratio was 52%

and in 2008and 09 it reaches its lowest ratio of 14%

14) Net Profit to NPA ratio = Net profit x 100 NPA

Table: 14

Chart:14


Year Net profits NPA Ratio

2004-05 338.06 7769.45 4.35

2005-06 396.52 8133.30 4.88

2006-07 410.07 6750.86 6.07

2007-08 130.63 8466.13 1.54

2008-09 162.67 8550.82 1.90

51


338.06 396.52 410.07130.63 162.67

7769.45

8133.3

6750.86

8466.13 8550.82

4.35 4.88 6.07 1.54 1.90

1000

2000

3000

4000

5000

6000

7000

8000

9000

2003-04 2004-05 2005-06 2006-07 2007-08

Net profits

NPA

Ratio

Net profit to NPA shows a declining tread. Highest ratio was in the year 2007with

and 6.07% the lowest ratio was in the year 2008and 09with 1.54% and 1.90%.

15) NPA to owned fund ratio

= NPA x 100 Owned fund

Table:15

Chart:15


Year NPA Owned Fund Ratio

2004 – 2005 7769.45 7673.2 101.2

2005– 2006 8133.30 10441.48 77.89

2006 – 2007 6750.86 12247.97 55.12

2007– 2008 8466.13 12637.15 66.99

2008 – 2009 8550.82 13592.01 62.91

52


7769.458133.3

6750.86

8466.13 8550.82

7673.2

10441.48

12247.9712637.15

13592.01

101.2 77.89 55.12 66.99 62.910

2000

4000

6000

8000

10000

12000

14000

16000

2003 – 2004 2004 – 2005 2005 – 2006 2006 – 2007 2007 – 2008

NPA

Owned Fund

Ratio

NPA to owned fund ratio. Show a declining trend it declare from 101.2 to

77.89 in the year 2005 – 06 and in 2006 – 07it decreases to 55.12 and in the year

2007.08 the ratio was 66.99% and 62.91% respectively.

16) NPA to total equity

= NPA Share capital + Reserves


Year NPA Share capital + Re Ratio

2004 – 2005 7769.45 8149.7 95

2005 – 2006 8133.30 10626.6 76

2006– 2007 6750.86 11837.9 57

2007– 2008 8466.13 12637.15 66

2008– 2009 8550.82 13592.01 62

53


7769.458133.3

6750.86

8466.13 8550.828149.7

10626.6

11837.9

12637.15

13592.01

95 76 57 66 620

2000

4000

6000

8000

10000

12000

14000

16000

2003 – 2004 2004 – 2005 2005 – 2006 2006 – 2007 2007 – 2008

NPA

Share capital + Re

Ratio

NPA to total equity shows a declining tread. During the year 2004 – 05 it

was 95% and in the year 2008 – 09it reaches to 62%.

17) Credit Deposit Ratio (CDR)= Total loans &advances x 100

Total DepositTable:17


Year Total loans &

advances

Total Deposit Ratio

2004 – 2005 44683.54 45143.04 98

2005 – 2006 50130.40 50954.43 98

2006– 2007 56975.02 61673.15 .92

2007– 2008 69922.23 75295.42 .92

2008– 2009 84187.37 94781.66 .88

54


Chart:17

44683.54

50130.4

56975.02

69922.23

84187.37

45143.04

50954.43

61673.15

75295.42

94781.66

98 98 0.92 0.92 0.880

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

2003 – 2004 2004 – 2005 2005 – 2006 2006 – 2007 2007 – 2008

Total loans & advances

Total Deposit

Ratio

In the year 2004 – 05& 2005 – 06 CDR is 98%. During the year 2006 – 07

& 2007 – 08CDR is declined to 92% and in the year 2008 – 09it reaches to 88%.

Increase in the total deposit has result in decrease in the current Deposit ratio.

COMMON SIZE BALANCE SHEET as on 31 st March 2004 – 2005

Particulars 2005 % 2006 %

Capital and Liabilities

Share capital 1125.07 1.66 1189.78 1.52Reserve Fund & other resources 5360.95 7.89 6258.94 7.99

Deposit 45143.04 66.48 50954.4 65.10Borrowings 7116.22 10.48 8971.56 11.46

Other liabilities 9162.49 13.49 10890.28 13.91

67907.77 100 78264.96 99.98Assets

Cash & balance with banks 16513.7 24.3 20340.9 25.99Investment 1825.3 2.68 1362.72 1.74

Advance 44683.5 65.80 50130.39 64.05



Fixed asset 90.264 .132 112.69 .14Other asset 4794.98 7.06 6318.29 8.07

TOTAL 67907.744 99.972 78264.99 99.99

Interpretation

Reserve fund Borrowings has increased in the year 2006. During the year

2005 cash and balance with bank was 16513.7 and during the year 2006 it has

increased.



Share capital 1189.78 1.52 1173.57 1.27

Reserve Fund & other resources

6258.94 7.99 6682.84 7.21

Deposit 50954.4 65.10 61673.15 66.61

Borrowings 8971.56 11.46 14026.68 15.15


78264.96 99.98 92587.69 99.99

Assets

Cash & balance with banks 20340.9 25.99 30419.75 32.85

Investment 1362.72 1.74 1373.19 1.48



Advance 50130.39 64.05 56975.02 61.53

Fixed asset 112.69 .14 138.48 .14

Other asset 6318.29 8.07 3681.26 3.98

TOTAL 78264.99 99.99 92587.7 99.98

Deposit contribution to Banks capital and liabilities is 65.10% in the year

2006 and during the year 2007 it has increased to 66.61%. Cash balance

contribution has increased from 25.99% to 32.85%



Share capital 1173.57 1.27 1176.09 1.063


6682.84 7.21 7515.54 6.79

Deposit 61673.15 66.61 75295.4 68.06

Borrowings 14026.68 15.15 15913.65 14.38


92587.69 99.99 110620.08 99.983

Assets




Investment 1373.19 1.48 1366 1.234

Advance 56975.02 61.53 69922.22 63.21

Fixed asset 138.48 .14 154.85 .14

Other asset 3681.26 3.198 5272.05 4.77

92587.7 99.198 110620.11 100.004

Advances of bank have increased from 61.53% to 63.21% during the year

2007-2008. But borrowing and Reserve fund has decreased from 2007 to 2008.



Share capital 1176.09 1.063 1171.17 .86


7515.54 6.79 7969.45 5.92

Deposit 75295.4 68.06 94781.67 70.36

Borrowings 15913.65 14.38 20347.5 15.11


110620.08 99.983 134704.74 100

Assets


Investment 1366.00 1.234 1204.44 .893



Advance 69922.22 63.21 84187.32 62.38

Fixed asset 154.85 .14 160.70 .12

Other asset 5272.05 4.77 4239.86 3.14

110620.11 100.004 134704.72 99.843

Deposit has increased from the year 2008 to 2009. Contribution of reserve

fund, borrowings and other liabilities to total capital & liabilities has decreased

during the year 2009.

COMMON SIZE INCOME STATEMENT For the Years 2005 – 06


Financial return 6249.78 100 5797.90 100

Less Financial Cost 4077.39 65.24 3581.72 61.78

Financial Margin 2172.39 34.75 2216.18 38.22

Less Transactional cost 968.79 15.50 1009.05 17.40

Operating Margin 1203.60 19.26 1207.13 20.82

Add miscellaneous income 160.82 2.57 2241.42 38.66

1364.42 21.83 3448.55 59.48

Less other expense 1026.35 16.42 3052.02 52.64



Netprofit 338.06 5.41 396.53 6.64

Interpretation

In the year 2006 financial cost have been decreased from 4077.39 to

3581.72 but Transactional cost increases from 968.79 to 1009.05. net profit of

2005 is 338.06 and of 2006 is 396.53 which is increased from 2006 profit.










3448.55 59.48 3850.23 62.35


Netprofit 396.53 6.84 410.05 6.64

Net profit earned during the year 2007 has increased. There is an increase

in the financial cost during the year 2007. Miscellaneous income had tremendous

increase in the year 2007 it has increased from 38.66% to 51.66% in the year 2007.








3850.23 62.35 4080.02 57.52




Net profit 410.05 6.64 130.63 1.84

During the year 2008 Netprofit has decreased from 6.64 to 1.84.

Miscellaneous income has decreased during this period. It has decreased from

51.66% to 47.71%.





Less Transactional cost 1506 21.25 1668.72 18.29



4080.02 57.52 4833.58 52.99


Netprofit 130.63 1.84 162.66 1.79



During the year 2009_ financial cost has in creased. FC has increased from

68.94 to 71.97. But transaction cost has decreased from 21.25% to 18.29%. And

there is 1.79% of increase in net profit.

COMPARATIVE BALANCE SHEET AS ON 2005-2006

Particulars 2005 2006 Amount of increase or decrease in 2005

% of increase of decrease or decrease in 2005


Share capital 1125.07 1189.78 -64.71 -5.75




5360.95 6258.94 897.99 16.75

Deposit 45143.04 50954.4 5811.36 12.87Borrowings 7116.22 8971.56 1855.34 26.07

Other liabilities 9162.49 10890.28 1727.79 18.8667907.8 78265.01 10227.78 74.55

Assets

Cash & balance with banks 16513.7 20340.9 3827.2 19.90Investment 1825.3 1362.72 -462.58 -25.34

Advance 44688.5 50130.39 5446.89 12.19Fixed asset 90.264 112.69 22.43 24.85

Other asset 4794.98 6318.29 1523.31 3.77

67907.8 78265.01 10227.25 68.81

There is an increase in deposit as compared to 2005. Investment of bank

showed a negative change in 2005. Except share capital all other item of capital &

liabilities has increased in the year 2006.


% charges in

Capital and LiabilitiesShare capital 1189.78 1173.57 -16.21 -1.36Reserve Fund & other resources

6258.94 6682.84 423.9 6.77

Deposit 50954.4 61673.15 10718.7 21.04Borrowings 8971.56 14026.68 5055.12 56.35Other liabilities 10890.28 9031.45 -1858.83 -17069

78265.96 92587.69 14322.32 65.731



AssetsCash & balance with banks 20340.9 30419.75 10078.9 49.55Investment 1362.72 1373.19 10.47 .76Advance 50130.39 56975.02 6844.63 13.65Fixed asset 112.69 138.48 25.79 22.89Other asset 6318.29 3681.26 -2637.03 -41.74

78265.01 92587.69 14322.32 45.11

Deposit in the year 2006, has increased by 21.04%. Other liability shows a

negative charge of -17.069%. Borrowing and Reserves has increased by 56.35%

and 6.77%


% charges in


Share capital 1173.57 1176.09 -2.52 -.215Reserve Fund & other resources

6682.84 7515.54 832.7 12.46

Deposit 61673.15 -15295.4 13622.25 2.21

Borrowings 14026.68 15913.65 1886.97 13.45Other liabilities 9031.45 10719.4 1687.95 18.69

92587.69 110620.08 18029.87 46.595



Assets

Cash & balance with banks 30419.75 33904.9 3485.15 1146

Investment 1373.19 1366.00 -7 -.51Advance 56975.02 69922.22 12947.2 22.72

Fixed asset 138.48 154.85 16.37 11.82Other asset 3681.26 5272.05 1590..79 43.21

92587.7 110620.06 18030.5 80.70

As compared to 2006, deposit increased by 2.21% and reserves, borrowings

and other liabilities are increased by 12.46%, 13.45%,n 18.69% respectively.

Contribution of cash during the year 2006 was 30419.75 and during the year 2007

it has increased by 11.46%. Fixing asset and other asset also increased by 11.82%

& 43.21% respectively.


% charges in


Share capital 1176.09 1171.17 4.92 .42


7515.54 7969.45 453.91 6.04

Deposit 75295.4 94781.67 19486.27 25.88

Borrowings 15913.65 20347.5 4433.85 27.86

Other liabilities 10719.4 10434.95 -284.45 -2.65

110620.08 134704.74 24094.5 57.55

Assets




Investment 1366.00 1204.44 -161.56 -11.83

Advance 69922.22 84187.32 14265.1 20.40

Fixed asset 154.85 160.70 5.85 3.78

Other asset 5272.05 4239.86 -1032.19 -19.58

110620.11 134704.72 24094.6 25.24

Cash and balance with bank has increased to 32.47% and there is a

decrease of -11.83% and -19.58% in investment and other asset reserve fund,

Deposit and Borrowing have an increase of 6.04%, 25.88% and 27.86%

respectively.

COMPARATIVE INCOME STATEMENT FOR THE YEAR 2005 – 2006

Particulars 2005 2006 Amt of increase or decrease in 2006

% change

Financial return 6249.78 5797.90 -451.88 -7.23Less Financial Cost 4077.39 3581.72 -495.67 -12.16Financial Margin 2172.39 2216.18 43.79 2.016Less Transactional cost 968.79 1009.05 40.26 4.16Operating Margin 1203.60 1207.13 3.53 .29Add miscellaneous income

160.82 2241.42 2080.6 1293



1364.42 2241.42 2084.13 152.79Less other expense 1026.35 3052.02 2025.67 197.37Netprofit 338.06 396.53 -58.47 17.29

Financial return has decreased from the year 2005 to 2006. Financial cost

also has decreased during the yea. Miscellaneous income had a tremendous

increase in the year 2006.


% change

Financial return 5797.90 6175.6 377.7 6.5




Operating Margin 1203.60 660.08 -543.52 -45.16

Add miscellaneous income

2241.42 3190.15 948.73 42.33

3448.55 3850.23 401.68 11.65




Netprofit 396.53 410.05 13.52 106.57

Financial return has increased by 6.5% during the year 2007. Financial cost

and transaction cost has increased by 8.83% and 66.96%. There is an increase in

the Net profit.


% change

Financial return 6175.6 7092.55 916.95 14.85Less Financial Cost 3898.03 4889.79 991.76 25.44Financial Margin 2277.57 2202.76 -74.81 3.28Less Transactional cost 1617.48 1506.99 -110.49 6.83Operating Margin 660.08 695.76 35.68 5.405Add miscellaneous income

3190.15 3384.2 194.05 6.083

3850.23 4080.02 229.79 5.97Less other expense 3440.18 3949.39 509.21 14.80Netprofit 410.05 130.63 -279.42 68.14



In the year 2006 there is 14.85% increase in financial return. And miscellaneous

income increased at 6.08%. During the year 2006 Financial cost and other

expenses has increased b 25.44% and 14.80% so that Net Profit has decreased by

68.14%.

Particulars 2008 2009

Amt of increase or decrease in

2008

% change

Financial return 7092.55 9122.38 2029.83 28.62





Add miscellaneous income

3384.2 3945.29 561.09 16.58



4080.02 4833.58 753.56 18.47


Netprofit 130.63 162.66 32.03 24.52

As compared to 2008 financial return in 2009 has increased by 28.62%.

Financial cost as well as transaction cost has increased by 34.27 and 10.73 as

compared to 2008.

Findings

1. Bank has a social financial position.

2. Bank enjoyed high profitability during the period 2006– 2007.

3. It was fund that the bank have high rate of NPA.

4. Co-operative Bank provides high interest rate compared to other

banks.

5. Deposit rate of the bank was increasing year by year. It shows

credibility of its customers towards the bank.



6. Assets such as cash and balance with other bank also show an

increasing trend.

7. Bank has a good liquidity position.

8. Increase in the deposit and loans and advances teach to a high rate of

increase in the market share.

Suggestion

Bank has to take necessary steps to improve the effective utilization of

available resources.

Bank should take appropriate action to reduce its NPA to the minimum

possible limit.

Bank has to improve the earning asset or value of asset.

Bank has to invest its fund in more productive way.



In order to overcome the declining trend of financial margin bank should

take necessary action.

Bank can introduce ATM facility to its customer.

LIMITATIONS

The study is limited only on the head office of the bank. No branches of the

bank are taken in the consideration.

The duration given for the project was not sufficient to do an elaborate

study.

The researcher’s inadequacy of experience also might have influenced the

study to an extent.

The data used for analysis and interpretation is secondary data of last five

years.



As the data, ratio, averages all are based on year ending figure it shall not

reflect the real position due to abnormal increase in deposits, loans and

advances, cash and bank balance etc.

CONCLUSION

Analysis of financial statement is an attempt to measure the enterprise’s

liquidity, profitability, solvency and other indicators to assess its efficiency and

performance. It is of immense importance to financial controllers and managers. In this

study an attempt was made to know the working of District co-operative Bank Ltd.,

Kannur. In this project work the researcher has made an attempt to analyze the published

annual accounts of The Bank Ltd. with the help of Common size and comparative

Balance sheet and Profit & Loss A/c, Ratio analysis, and Trend analysis.



It has been concluded that the performance of the bank is satisfactory.

From the analysis of financial statement it is found that the Bank is successful in making

a significant increase in Net Profit. From the study it is concluded that the interpretations,

suggestions and findings would support the company to do things in better and efficient

way.

BIBLIOGRAPHY

Books

Research Methodology by C.R. Kithara

Bank Management by Timothy W. Koch and S. Scott Macdonald

Financial Management by I. M. Pandey

Management Accounting by Maheswari S.N

Management Accounting by A. Vinod



Web Sites

http://osufacts.okstate.edu

http://www.rbi.com

http://www.netmba.com/finance/financial/ratios/

http://en.wikipedia.org/wiki/Financial_statements


http://en.wikipedia.org/wiki/Financial_statements

http://www.netmba.com/finance/financial/ratios/

http://www.rbi.com/

http://osufacts.okstate.edu/


Findings

1Current asset to current liability shows a satisfactory level which states that the

company has a satisfactory financial level.



2) Profit to total income shows a decreasing trend even though total income is

increasing expenditure also increases.

3) Interest paid to gross income ratios show a decreasing trend. It is found that

interest paid as were gross income increased.

4) Management cost have come down from 2006 – 07. It has a low raio in the

year 2004 – 05 and next 2 year management cost was high and then it started

declining.

5) Mgt cost to total expenditure ratio not changes in every year. In the fest year it

was low ratio and the next 2 year it increases and then it starts declining.

6) Interest on investment constitute a major income to the bank be During the year

2003 – 04 interest ratio was 97.49% and in the year 2007 – 08 it is 69.8%

7) Other income has increased in every year which helps in improving the income

earned.

8) Gross income to owned fund ratio is 96.14% is the year 2008 – 09. It shows an

increasing trend from 2004 – 05 to 2008 – 09.

9) Net profit to owned fund was decreasing. During the year 2004 – 05it was

4.41% and low it reaches to 1.03.

10) Net Profit to working fund ratio was declining compared to 2005. It had a

small increase in the year 2006.

11) In the common size balance sheet during the year 2005 – 06 borrowings has

increased from 10.48% to 11.46%. Cash and balance with banks has in

increased from 24.3% to 25.99%.

12) During the year 2007cash and balance with bank increased to 32.85%

13) In the year 2008 Deposit has increased to 68.06% from 66.61. Which shows

the financial sounders of the bank?

14) Financial return of the bank is increasing year by year. It shows that the bank

receive a high rate of interest from loans and advances.

15) Transaction cost increased during the year 2005 – 06 and has decrease during

the 2007– 08.

16) Interest on deposit and borrowings increased year by year.



17) Reserves and surplus, Deposit and borrowings were increasing every year.

Cash advances, fixed assets also increases tremendously.

LIMITATIONS

The study is limited only on the head office of the bank. No branches of the

bank are taken in the consideration.


study.



The researcher’s inadequacy of experience also might have influenced the

study to an extent.

The data used for analysis and interpretation is secondary data of last five

years.

As the data, ratio, averages all are based on year ending figure it shall not

reflect the real position due to abnormal increase in deposits, loans and

advances, cash and bank balance etc.

AnnexureBalance sheet For the year 2003 – 2004 in lakhs

Capital and liabilities 2005 2006 2007 2008 2009Share capital 1125.07 1189.78 1173.57 1176.09 1171.17Reserve Fund & other resources 5360.95 6258.94 6682.84 7515.54 7969.45

Deposit 45143.04 50954.4 61673.15 75295.4 94781.67Borrowings 7116.22 8971.56 14026.68 15913.65 20347.5



Other Liabilities 9162.49 10890.28 9031.45 10719.4 10434.9567907.8 78265.96 92587.69 110620.08 134704.7

AssetCash 5598.9 6028.21 5272.25 4108.69 5492.58Balance with bank 10914.8 14312.71 25147.5 29796.3 39419.8Investment 1825.3 1362.72 1373.19 1366.00 1204.44Advance 44683.5 50130.39 56975.02 69922.22 84187.32Premises 20.434 19.67 18.72 17.77 16.82Furniture & Fittings 69.83 93.01 119.75 137.08 143.88Other assets 4794.9 6318.29 3681.26 5272.05 4239.86

67907.8 78265.96 92587.69 110620.08 134704.7

Suggestion



Bank should take appropriate action to reduce its NPA to the minimum

possible limit.





Inorder to overcome the declining trend of financial margin bank should

take necessary action.


Findings

1. Bank has a social financial position.

2. Bank enjoyed high profitability during the period 2006– 2007.


4. Co-operative Bank provides high interest rate compared to other

banks.





6. Assets such as cash and balance with other bank also show an

increasing trend.

7. Bank has a good liquidity position.

8. Increase in the deposit and loans and advances teach to a high rate of

increase in the market share.

Ratio Analysis

1) Current Rates – Current Asset x 100 Current Liabilities

Year CA CL Ratio2003 – 2004 21308.6 9162.49 2322004 – 2005 26659.19 10890.28 2442005 – 2006 34101.01 9031.45 3772006 – 2007 39177.04 10719.4 3652007 – 2008 49152.3 10434.95 471

Current Asset is greater than current liabilities ie it satisfies idle ratio is 2:1 which indicates the current financial position of the company.

Profitability Ratio3) Profit as % total ratio/profit margin

Net profit x 100 Total income


2004-2005 338.063 6410.61 5.273

2005.2006 396.53 8039.32 4.93

2006-2007 410.07 9365.77 4.38

2007 – 2008 103.63 10476.8 .99

2008 – 2009 162.67 13067.68 1.24



Total profit to total income ration is declining from 2004 – 05 to 2008– 09. But total income was increasing year by year.

3) Profit to interest rate Profit x 100Interest earned


2004-2005 338.063 6249.79 5.41

2005.2006 396.53 5797.9 6.84

2006-2007 410.07 6175.61 6.65

2007 – 2008 130.63 7092.55 1.84

2007 – 2008 162.67 9122.38 1.78

Ratio of profit to interest earned is rate decreasing from 2003 – 04 to 2007 – 08

4) Solvency RatioCash as a % of deposit

= Total cash x 100Deposit


2003-2004 16513.7 45143.04 36.58

2008.2005 20340.9 50954.4 39.92

2005-2006 30419.75 61673.15 49.32

2006 – 2007

33904.99 75295.4 45.0

2007 – 2008

44912.4 94781.67 47.38

Here it shows there is a increasing tendency of cash to deposit ratio.Expenditure Ratio.10) Interest paid to gross income ratio

Interest paid x 100 Gross income


Year Interest paid Gross income Ratio2003-04 6249.79 6410.61 97.442004-05 5797.9 8039.32 72.122005-06 6175.61 9365.76 65.992006-07 7092.55 10476.81 67.81

84


Interest paid to gross income ratio is at high during the year 2003-04. and the lowest rate was in the year 2005-06

11)Management cost to gross income = Mgt cost

GI

Gross income in every year is greater than management cost which indicates a satisfactory financial position.12)Management cost to total expenditure ratio

Management cost to total expenditure ratio increased during the years 2004-05 and 2005-06.And in the year 2006-07 to 2007-08 it has decreased.13)Total Expenditure to Gross Income ratio14)

Total expended X100 Gross income


Year Interest paid Gross income Ratio2003-04 6249.79 6410.61 97.442004-05 5797.9 8039.32 72.122005-06 6175.61 9365.76 65.992006-07 7092.55 10476.81 67.81

Year Mgt cost

Gross Income

Ratio

2003-2004 1995.15 6410.61 31.12

2008.2005 4061.07 8039.32 50.5

2005-2006 5057.66 9365.77 54

2006 – 2007

5456.38 10476.81 52

2007 – 2008

6339.64 13067.68 48.513

85


Total expenditure to gross income ratio is highest in the year 007 &2008, with 96.75% and 98.76% except in the year 2005, it shows an

increasing trend.15) Income Ratio/ Earning Ratio

Interest on Investment to gross income ratioInterest on Investment x 100 Gross income

Year Interest on investment Gross Income Ratio

2003-2004 6249.78 6410.61 97.49

2008.2005 5797.9 8039.32 72.12

2005-2006 6175.61 9365.77 65.94

2006 – 2007 7092.55 10476.81 67.69

2007 – 2008 9122.38 13067.68 69.81


Year Total expenditure Gross income Ratio2003-04 6072.55 6410.61 94.722004-05 7642.79 8039.32 81.62005-06 8955.69 9365.77 95.622006-07 10346.18 10476.81 98752007-08 12905.01 13067.68 98.76

Year Mgt cost Total expenditure Ratio2003-04 1995.15 6072.55 32.82004-05 4061.07 7642.79 53.132005-06 5057.66 8955.69 58.472006-2007 5456.36 10346.18 52.742007-08 6339.64 12905.01 49.13

86


In the year 2004 interest on investment to year’s income in 97.49%.During the year2005 and 06 interest on investment to gross income ratios are 72.12 % and 65.94 % respectively.

10) Other income to gross income = Other income x100Gross income

Year Other income Gross Income Ratio

2003-2004 160.82 6410.61 2.5

2008.2005 2241.42 8039.32 27.8

2005-2006 3190.16 9365.77 34.06

2006 – 2007 3384.6 10476.81 32.3

2007 – 2008 3945.29 13067.68 30.19

During the years 2004 other income to gross income ratio was 2.5 and in the next -4 sequent years it increased tremendously.11) Gross income to owner Fund Ratio

Gross income x100Owner Fund

Year Gross income Owner Fund Ratio

2004 6410.61 7673.62 83.5

2005 8039.32 10441.48 76.99



2006 9365.77 12247.97 76.46

2007 10476.81 12637.15 82.90

2008 13067.68 13592.01 96.14

Gross income to owner fund ratio during the year 2008 is 83.5% and the highest is in the year 2008 by 96.18%

Asset Quality Ratio12) Net profit to owned Fund ratio = Net Profit x100

Owned fundYear Net profits Owner Fund Ratio

2004 338.06 7673.62 4.41

2005 396.52 10441.48 3.79

2006 410.07 12247.97 3.35

2007 130.63 12637.15 1.03

2008 162.67 13592.01 1.19

Net profit to owned fund ratio decreased from 2004 to 2008. During the year 2004 Net profit to owned fund ration was 4.41% and during the year 2008 it has reached to 1.19%.13) Net profit to working fund ratio

= Net Profit____x 100



Working FundYear Net profits Owner Fund Ratio

2004 338.06 65615.11 .51

2005 396.52 74921.18 .53

2006 410.07 79153.56 .52

2007 130.63 94848.65 .14

2008 162.67 118825.69 .14

In the year 2003 – 04 Net Profit to working Fund ratio was 51% and in 2005 ratio increased to 53%. After it shows a dealing trend. In the year 2006 ratio was 52% and in 2007 and 08 it reaches its lowest ratio of 14%14) Net Profit to NPA ratio = Net profit x 100

NPA Year Net profits Owner Fund Ratio

2004 338.06 7769.45 4.35

2005 396.52 8133.30 4.88

2006 410.07 6750.86 6.07

2007 130.63 8466.13 1.54

2008 162.67 8550.82 1.90

Net profit to NPA shows a declining tread. Highest ratio was in the year 2006 with and 6.07% the lowest ratio was in the year 2007 and 08 with 1.54% and 1.90%.15) NPA to owned fund ratio

= NPA x 100 Owned fund


Year Net profits Owner Fund Ratio

2003 – 2004 7769.45 7673.2 101.2

2004 – 2005 8133.30 10441.48 77.89

2005 – 2006 6750.86 12247.97 55.12

2006 – 2007 8466.13 12637.15 66.99

2007 – 2008 8550.82 13592.01 62.91

89


NPA to owned fund ratio. Show a declining trend it declare from 101.2 to 77.89 in the year 2005 – 06 and in 2005 – 06 it decreases to 55.12 and in the year 2006.07 the ratio was 66.99% and 62.91% respectively.

16) NPA to total equity

= NPA Share capital + Re

NPA to total equity shows a declining tread. During the year 2003 – 04 it was 95% and in the year 2007 – 08 it reaches to 62%.17) Credit Deposit Ratio (CDR)

= Total loan of advanced x 100Total Deposit



2003 – 2004 7769.45 8149.7 95

2004 – 2005 8133.30 10626.6 76

2005 – 2006 6750.86 11837.9 57

2006 – 2007 8466.13 12637.15 66

2007 – 2008 8550.82 13592.01 62

90


In the year 2003 – 04 & 2004 – 05 CDR is 98%. During the year

2005 – 06 & 2006 – 07 CDR is declined to 92% and in the year 2007 – 08 it

reaches to 88%. Increase in the total deposit has result in decrease in the

current Deposit ratio.

Findings

18) Current asset to current liability shows a satisfactory level which

states that the company has a satisfactory financial level.

19) Profit to total income shows a decreasing trend even though total

income is increasing expenditure also increases.

20) Interest paid to gross income ratios show a decreasing trend. It is

found that interest paid as were gross income increased.

21) Management cost has come down from 2005 – 06. It has a low raio in

the year 2003 – 04 and next 2 year management cost was high and then it

started declining.

22) Mgt cost to total expenditure ratio not changes in every year. In the

fest year it was low ratio and the next 2 year it increases and then it starts

declining.



2003 – 2004 44683.54 45143.04 98

2004 – 2005 50130.40 50954.43 98

2005 – 2006 56975.02 61673.15 .92

2006 – 2007 69922.23 75295.42 .92

2007 – 2008 84187.37 94781.66 .88

91


23) Interest on investment constitute a major income to the bank be

During the year 2003 – 04 interest ratio was 97.49% and in the year 2007

– 08 it is 69.8%

24) Other income has increased in every year which helps in improving

the income earned.

25) Gross income to owned fund ratio is 96.14% is the year 2007 – 08. It

shows an increasing trend from 2003 – 04 to 2007 – 08.

26) Net profit to owned fund was decreasing. During the year 2003 – 04 it

was 4.41% and low it reaches to 1.03.

27) Net Profit to working fund ratio was declining compared to 2004. It

had a small increase in the year 2005. But in the next thjj

28) In the common size balance sheet during the year 2004 – 05

borrowings has increased from 10.48% to 11.46%. Cash and balance

with banks has in increased from 24.3% to 25.99%.

29) During the year 2006 cash and balance with bank increased to

32.85%

30) In the year 2007 Deposit has increased to 68.06% from 66.61. Which

shows the financial sounders of the bank?

31) Financial return of the bank is increasing year by year. It shows that

the bank receive a high rate of interest from loans and advances.

32) Transaction cost increased during the year 2004 – 05 and has

decrease during the 2006 – 07.

33) Interest on deposit and borrowings increased year by year.

34) Reserves and surplus, Deposit and borrowings were increasing every

year. Cash advances, fixed assets also increases tremendously.



LIMITATIONS

The study is limited only on the head office of the bank. No branches

of the bank is taken in the consideration.


study.

The researcher’s inadequacy of experience also might have influenced

the study to an extent.

The data used for analysis and interpretation is secondary data of last

five years.

As the data, ratio, averages all are based on year ending figure it shall

not reflect the real position due to abnormal increase in deposits, loans

and advances, cash and bank balance etc.



Annexure

Balance sheet For the year 2003 – 2004 in lakhs

Capital and liabilities 2004 2005 2006 2007 2008

Share capital 1125.07 1189.78 1173.57 1176.09 1171.17

Reserve Fund & other

resources

5360.95 6258.94 6682.84 7515.54 7969.45

Deposit 45143.04 50954.4 61673.15 75295.4 94781.67

Borrowings 7116.22 8971.56 14026.68 15913.65 20347.5

Other Liabilities 9162.49 10890.28 9031.45 10719.4 10434.95

67907.8 78265.96 92587.69 110620.08 134704.7

Asset

Cash 5598.9 6028.21 5272.25 4108.69 5492.58

Balance with bank 10914.8 14312.71 25147.5 29796.3 39419.8

Investment 1825.3 1362.72 1373.19 1366.00 1204.44

Advance 44683.5 50130.39 56975.02 69922.22 84187.32

Premises 20.434 19.67 18.72 17.77 16.82

Furniture & Fittings 69.83 93.01 119.75 137.08 143.88



Other assets 4794.9 6318.29 3681.26 5272.05 4239.86

67907.8 78265.96 92587.69 110620.08 134704.7

Suggestion





Bank should take appropriate action to reduce its NPA to the

minimum possible limit.



Inorder to overcome the declining trend of financial margin bank

should take necessary action.


Findings

1. Bank have a social financial position.

2. Bank enjoyed high profitability during the period 2005 – 2006.




4. co-operative Bank provides high interest rate compared to other

banks.



6. Assets such as cash and balance with other bank also shows an

increasing trend.

7. Bank have a good liquidity position.

8. increase in the deposit and loans and advances teach to a high

rate of increase in the market share.


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