CONTENT

Guide

Certificate

2
Declaration

3
Preface

4
Acknowledgements

5 Objective 6
Research

of

the

study Methodology

CHAPTERS CHAPTER-1 CHAPTER-2 CHAPTER-3 CHAPTER-4 CHAPTER-5 CHAPTER-6 CHAPTER-7 CHAPTER-8 CHAPTER-9 CHAPTER10 CHAPTER11 CHAPTER12

PARTICULARS NO. INTRODUCTION MANAGEMENT OF THE BANK PERSONNEL MANAGEMENT LOANS AND ADVANCES DEPOSITS INVESTMENTS FINANCIAL POSITION RECOVERY AND REVIVAL INITIATIVES PERFORMANCE OF THE BANK SWOT ANALYSIS SUGGESTIONS CONCLUSION Annexure Bibliography Abbreviations

PAGE 8 12 19 26 34 41 47 58 69 73 77 80 82 84 85

DEPARTMENT OF MANAGEMENT
RAJIV GANDHI UNIVERSITY Rono Hills, Doimukh Assam

GUIDE CERTIFICATE
This is to certify that Ms. PRANJUMONI SAIKIA (11MBA017), a bona fide MBA 3rd semester student of Department of Management, Rajiv Gandhi University, Doimukh, Assam has submitted Summer Training Project Report on ASSAM STATE COOPERATIVE APEX BANK LTD for the partial fulfillment of the award of the Degree of Master of Business Administration which is an original piece of research work under my guidance and supervision. The result embodied in this report has not been submitted to any other organization/ institution for the award of any Degree or Diploma.
3

Odang Tayeng Assistant Professor Internal Guide Department of Management Rajiv Gandhi University

DECLARATION

I hereby declare that the project report titled AN ANALYSIS OF ASSAM STATE COOPERATIVE APEX BANK LTD. has been submitted by me to Assam State Co-op Apex Bank Ltd., Nagaon and Department of Management, Rajiv Gandhi University, Rono Hills, Doimukh, Assam, as a part of Summer Internship Project. I would like to submit that I have been immensely benefitted by the counseling and guidance from my professors, friends, and the officials of ASSAM State Co-op Apex Bank Ltd. I also declare that this project has neither been submitted to any other university, academy and institution nor published in any magazines or anywhere else.

Pranjumoni Saikia MBA 3rd semester

PREFACE
The Assam Co-operative Apex Bank Ltd. (ACAB) was established in 1948. Since then the Bank has developed and expanded its activities/ operations and has grown in manifolds. The Bank has a wide network of 68 branches; spread throughout the state the State providing effective banking products and other related services to the general public of Assam. The ACAB has mobilized Deposit Resources of more than Rs. 1400 Crores and has advanced over Rs. 300 Crores for various development activities in the State.

The ACAB as a pioneer in Banking in Assam, has taken banking to the doorsteps of the people of the State and has been able to nurture and develop banking habits among the people of the State. This has changed the saving habits of people from the traditional methods to the modern banking facilities to earn remunerative returns for their savings invested with the

Bank and utilize various attractive and innovative banking products offered by ACAB. This project report entitled An Analysis of Assam state CoOp Apex Bank Ltd. is an exploratory study of the performance of the Bank. The report consists of various topics which include management of the bank, personnel management, loans and advances, deposits, investments, recovery and revival initiatives, etc. In order to make the data and findings easily understandable, efforts has been made to present the report in a simplified and organized manner. Wherever possible, tables have been used. Suggestions and recommendations have also been made on the basis of findings herein.

ACKNOWLEDGEMENTS
A study like this cannot be completed without the help and support from other persons. Thus, I owe thanks to a great many people especially to Professor R. Tamuli (HOD), Dept. of Management, Rajiv Gandhi University for his kind arrangement, guidance and suggestion to undergo this Summer Training Project. Special thanks are due to Mr. Trailokya Kumar Goswami, MD, ASCABL for allowing me to carry out training programme in the Assam State Co-Op Apex Bank Ltd., Nagaon.

My profound gratitude goes to my teacher Assistant Professor Odang Tayeng, Dept. of Management, RGU for his insightful teaching and guidance. I express my sincere thanks to all the staff of ASCABL, Nagaon for their support and providing me necessary information and materials to carry out the project; and to my friends and well-wishers who stood by me at all times.

PRANJUMONI SAIKIA

OBJECTIVES OF THE STUDY

As a student of management, I am very much keen in understanding how an organization manages its operations. It is quite interesting to know how an organization utilizes its manpower, how it achieves objectives under steep competition and how it fulfills its obligations towards the society and the country as a whole. It is also interesting to study how they maintain its profit level after meeting all the expenditures and how

they maintain such accounts. Therefore, the main objective of the analysis of ASSAM State Co-Op Apex Bank Ltd is to have depth knowledge about:1. How the bank manages its human resources. 2. Various deposit schemes and interest rates offered on such deposits. 3. Loans and advances offered and outstanding loans with the bank. 4. The kinds of investments made by the bank. 5. Financial position of the bank-whether sound or not? 6. Borrowings made by the bank. 7. Reasons for the downfall of the bank. 8. Recovery and revival initiatives taken by the bank.

Hypothesis
The ASSAM State Co-Op Apex Bank Ltd will have large number of customers, employees and will have huge and large number of financial transactions. Thus, it will be a herculean task for the management to manage such large number of employees and maintain such transactions; and satisfy the needs and wants of its customers. Thus, to analyze such a big institution would be complicated.

RESEARCH METHODOLOGY
Research methodology is a systematic way to show the research problem. It may be understood as a science of studying how research is done scientifically. It is necessary for the researcher to know not
8

only the research method but also how to apply it. This section includes the research design, sources of data, tool of analysis and plane of analysis.

Research Design:
This project is based on an exploratory research method. It was an exploratory research of Assam State Co-Op Apex Bank Ltd to analyze and evaluate the functioning of ASSAM State Co-Op Apex Bank Ltd.

Sources of Data:
To meet the various relevant information of ASCABL, the data has been collected mainly from both primary as well as secondary source and it was collected from internal sources. The primary data was collected from officials and staffs of ASCABL; and secondary data was collected from Annual Reports, Souvenir, Balance Sheet, Official records, preserved information in the organization`s database.

Tool of Analysis:
To make data easily understandable, it has been presented with the help of statistical tool such as bar graphs, pie charts, tables, etc. Percentage method has also been used to represent the data clearly and efficiently.

CHAPTER 1

1
INTRODUCTION
10

The Assam State Cooperative Apex Bank Limited (ASCABL) is sponsored by the Govt. of Assam and registered vide no. Coop. (G) 46/77 dated 03rd May 1977, under AP State Co-operative Act and RBI issued the license vide no. ACD Gau 20-S dated 01st Nov 1977. It started its business w.e.f. 09th Nov 1978. The Bank has its Head Office at Guwahati Assam. It is an apex development financial institution in the state. At present, ASCABL is operating through a network of 32 branches spread over 16 districts of the state. The Apex Bank has been functioning as an integrated state level financial institution for both short-term and long-term credit requirements of cooperatives and people in the state. The Bank has come a long way during the last 3 decades and in its path of progress has witnessed several impediments and hurdles in its operations and many a time the state Govt. had to interfere to rescue it from the situation. The bank is now striving to perform and succeed in all its financial parameters and to grow into a premier bank in the state. The bank has an authorized share capital of Rs.50,000.00 lakhs made up of 5,00,000 shares of Rs.100.00 each out of which paid up share capital is Rs.19235.35 lakhs only at the end of March,2011 as against Rs.19235.02 lakhs in the previous year. The main objective and aim of ASCABL is to have at least one account per family in the area of its operation. For this purpose, ASCABL is providing various deposit schemes for the customer and encourages them to open accounts into the bank by giving certain amount of interest against the amount deposited by them. On the other hand, ASCABL also provides various types of loans and advances to the needy people so that they may able to fulfill their desire and overcome their financial constraints. ASCABL also invests the amount deposited in Govt. and securities to earn some amount.

11

ASCABL functions with the general supervision and direction from a team of board of Management drawn from Govt. of Assam and professionals experts from the field of economics, accounts, etc. The Board of ASCABL is assisted by an executive committee and advisory council. This present project report contains the details of various deposit schemes of Assam State Cooperative Apex Bank Ltd., interest rate paid to the customer on their deposits, various development schemes provided by the bank, the investment made by bank in various securities, income earned by these investments, and the management of loans and advances as well as interest rate charged by bank on such loans and advances. Zone-wise branches of Assam State Cooperative Apex Bank Ltd. (ASCABL) is as under:Zone Name Northern Zone No. of Branches 15 Name of Branches Bihpuria, B Charali, Dhakuakhana, Dhekiajuli, Dhemaji, Gohpur, Jamugurihat, Jonai, Mangoldoi, Lakhimpur, Rangapara, Sootea, Tangla, Eastern Zone 14 Tezpur, Udalguri. Dergaon, Dibrugarh, Domdoma, Duliajan, Golaghat, Jorhat(HQ), Moran, Naharkatia, Naliapul, Saarupather, Sivsagar, Sadia, Guwahati Zone 15 Teok, Tinsukia. Barpeta, Barpeta Road, Bamuni Maidan, Bijoynagar, Dispur, Guwahati(HQ), Nalbari, Noonmati, Pathsahala, Boko,
12

Rangia, Silpukhuri, Sualkuchi, Southern Zone 7 Tihu, Fancy Bazaar. Badarpur, Haflong, Hailakandi, Karimganj, Lala, Rknagar, Central Zone 8 Silchar(HQ) Bokajan, Bhing, Diphu, Hojai, Jagiroad, Western Zone 9 Morigaon, Nagaon(HQ), Silghat Abhayapuri, Bilasipara, Bongaigaon, Dhubri(HQ), Dudhnoi, Goalpara, Gossoigoan, Kockrajhar, Lakhipur.

Table.1.1. District-wise distribution of Apex Banks

13

CHAPTER-2

14

2
MANAGEMENT OF THE BANK
ADVISORY COMMITTEE:
The Board of Management of the bank was superseded on 17th Nov. `05 and appointed an Administrator to take control of the management of the bank by the state Govt. An Advisory Committee was constituted to assist the Administrator with the following members: 1. Mr. - CHAIRMAN DC (Capital) cum Administrator, ASCABL 2. Ms. - VICE- CHAIRMAN Finance, Govt. of Assam 3. Mr. - MEMBER Societies, Govt. of Assam 4. Mr. Kartik Chandra Das, MD MEMBER Hemanta Biswa Sharma Pankaj Barbora,, Gautam Bora

SECRETARY
15

The Advisory Committee headed by the Administrator meets from time to time to review the plan & policy, implementation of the programmes and progress of the bank under different sectors. Further, the Bank has constituted a Monitoring Committee, Funds Investment Committee, Loan Committee, and Audit Committee at Head Office level.

MONITORING COMMITTEE:
1. Chief Secretary, Govt. of Assam

Chairman
2. Commissioner/ Secretary, Finance, Govt. of Assam

Member
3. Commissioner/ Secretary (Co-op), Govt. of Assam

Member
4. Registrar of Co-op. Societies, Govt. of Assam

Member
5. Administrator,

ASCABL

-Member Secretary

STATUTORY AUDITORS:
The accounts of Assam State Co-Op Apex Bank Ltd and its branches was audited by M/s D.Dhandaria & Company, Tinsukia, Assam.

16

APPROVED BANKERS:
1. The Reserve Bank of India 2. The State Bank of India 3. The Industrial Development Bank of India 4. The Central Bank of India 5. The ICICI Bank 6. The Union Bank of India

Organizational structure of Assam State Co-Op Apex Bank Ltd:

An organizational structure consists of activities such as task allocation, coordination and supervision, which are directed towards the achievement of organizational aims. An organization can be structured in many different ways, depending on their objectives. The structure of an organization will determine the modes in which it operates and performs. Organizational structure allows the expressed allocation of responsibilities for different functions and processes to different such as the branch, department, work group and individuals. Organizational structure affects organizational action in two big ways. First, it provides the foundation on which standard operating procedures and routines rest. Second, it
17

determines which individuals get to participate in which decision-making processes, and thus to what extent their views shape the organization`s actions. Thus, the organizational structure of ASCABL consists of following:

Fig.2.1. Organizational structure

Top Management: 1. Managing Director 2. Additional Managing Director 3. General Manager 4. Deputy General Manager 5. Assistant General Manager i) ii) iii) General Administration Planning & Development Credit
18

iv) v)

General Banking Audit & Inspection & Vigilance

Middle Management: 1. Senior Manager 2. Manager 3. Assistant Manager 4. Accountant Lower Management: 1. Senior Cashier 2. Cashier 3. Clerk 4. Guard 5. Peon

Objectives of Assam State Co-Op Apex Bank Ltd:

The main objectives of the bank shall be: i) To serve as a Co-operative Bank of the state. ii) To raise funds by way of augmentation of shares, receiving deposits and borrowings for financing its members in the form of loans and advances, cash credit, overdraft on such terms and conditions as may be prescribed by the Reserve Bank/ National Bank and Board. iii) To carry on and undertake any business transaction or operation which can be carried on by a bank registered under the Act for the time being in force.
19

iv) To purchase and sell Promissory Notes, Govt. Securities and other Trustee Securities. v) To maintain Safe Deposit Vaults and Lockers and to let them out on hire or otherwise. vi) To receive securities and valuables from the members and others for keeping in safe custody. vii) To open branches, offices/ sub-offices, pay offices within the area of operation and to conduct all kinds of banking business under the provisions of the Act and Rules framed there under for the time being in force. viii) To arrange for holding periodical Co-operative conferences/

seminars for taking necessary action on the resolutions passed by such conferences/ seminars. ix) To purchase, acquire or lease or otherwise obtain movable and immovable properties and dispose-off the same for the needs of the bank or in connection with the settlement of loan due to it but not with the object of the business of purchase and sell of the property. x) To inspect the LAMPS and other Units financed by the bank and to guide them in their workings. xi) To promote rural industries, agro processing units and rural savings for the welfare of the members. xii) To finance informal groups like Self Help Groups (SHGs), Joint Liability Groups (JLGs) etc. only after being satisfied about their credit worthiness, solvency, etc. xiii) To carry on business of Insurance services such as Insurance Agent, Referral Agents, Broker, Representative, Consultant and Provider of
20

all kind of intermediary service in the area of insurance of all classes viz. Life Insurance, Health Insurance and General Insurance in accordance with the IRDA norms. xiv) To undertake the management of affiliated societies indebted to the bank, on such terms and conditions as to be laid down by the Registrar to facilitate recoveries from the indebted societies. xv) To guarantee to issue Letters of credit for import of machinery and/or other requisites under License from the Govt. or to guarantee payment of money for purchase of machinery and/or other requisites or to generally give banker`s guarantee on behalf of co-operative societies or on behalf of other constituents and depositors of the bank. xvi) To establish and support or aid in the establishment and support of funds calculated to benefit employees or ex-employees of the bank or the dependants or relatives of such persons. xvii) To do any such other business which the government may specify as business in which it is lawful for the bank to engage under section 6 of the Banking Regulations Act, 1949 (As applicable to Cooperative societies). xviii) To adopt such Information Communication Technology (ICT) for undertaking banking business to provide efficient services and to maintain transparency, accuracy in the financial management of the bank. xix) In general to carry out and discharge such duties, functions and business which are usually carried on by the Bank or Bankers and deal with the funds, assets and properties of the bank in such a manner as may be deem fit including such acts and things as may be conducive, beneficial or incidental to one or the other objects
21

and to undertake such other works to promote co-operative banking.

CHAPTER-3
22

3
PERSONNEL MANAGEMENT
Personnel Management is concerned with people at work and their relationships with each other. It may be defined as a set of programmes, functions and activities designed to maximize both personal and organizational goals. It ensures that the organization attracts and hires qualified, imaginative and competent people. It involves the establishment of various policies to deal with employees and to retain them. To this end, it lays out the rules regarding working conditions, design appropriate compensation plans, and strengthens employer- employee relations. Personnel Management

23

Personnel Aspect Industrial Relation Aspect

Recruitment management relations Selection Disputes settlements Placement Grievance handling Training Discipline Collective bargaining Compensation Productivity Working conditions

Welfare Aspect
UnionAmenities Facilities Benefits Appraisal

Manpower Planning:
Manpower planning (also called human resource planning or personnel planning) is essentially the process of getting the right number of qualified people into the right job at the right time so that an organization can meet its objectives. Assam State Co-Op Apex Bank Ltd. employs a total no. of 315 employees which includes top, middle and lower level employees. These employees are employed at 32 branches of ASCABL spread over 16 districts of the state.

Human Resource Development (HRD)

HRD is based on the belief that an investment in human beings is necessary and will invariably bring in substantial benefits to the organization in the long run. It aims at overall development of human resources in order to contribute to the well being of the employees, organization and the society at large. Training & Development: Training is the act of increasing the knowledge and skills of an employee for performing a particular job. Training enables an employee to
24

do his present job more efficiently and prepare himself for a higher level job. Development, in contrast, is considered to be more general than training and more oriented to individual needs in addition to organizational needs. Training tries to improve a specific skill relating to a job whereas development aims at improving the total personality of an individual. The Assam State Co-Op Apex Bank Ltd. has given utmost importance to manpower development and with a view to professionalize the bank it regularly deputes officers and employees at national and regional level Institutes for professional training. A total of 32 no. of officers and employees was deputed for such training in the year 2011-12. Following are the institutes where such trainings are conducted: 1. Institute of Cooperative Management (ICM), Gauhati. 2. Indian Institute of Banking Management (IIBM), Gauhati. 3. Manpower Development & Management Institute (MDMI), Shillong. 4. Bankers Institute of Rural Development (BIRD), Lucknow. 5. National Institute of Rural Development (NIRD), Pune. 6. National Institute of Banking Management (NIBM), Pune.
7. Assam Cooperative Training Centre (APCTC).

8. Industries, Govt. of A.P. 9. National Training Centre, Bangalore. 10. RTC NABARD, Bholpur. The ASCABL has submitted a proposal to NABARD for assistance of setting up of a Staff Training Centre (STC) by the Bank which has been returned with a suggestion of re-submission with modification as per latest NABARD guidelines.
11. CAB RBI, Pune.

Compensation Management:
Compensation refers to the set of rewards that the organizations provide to individuals in return for their willingness to perform various jobs and tasks within the organization. Compensation is a comprehensive term
25

including pay, incentives, and benefits offered by employers for hiring the services of employees. Thus, compensation management is a system of compensating individuals for the work they perform in such a way that the organization is able to attract, retain, and motivate them to perform well keeping in view organizational and market factors. Assam State Co-Op Apex Bank Ltd designs pay structure for their employees as per their financial capacity and capability. It maintains own pay scale. Bonuses are given as per the financial status i.e., according to profit of the bank. However, it compensates its employees with basic salary as per state and central govt. norms and regulations. The compensation structure of A.P State Co-Op Apex Bank Ltd can be divided into:1. Base pay: It is the basic compensation an employee gets, usually as a

wage or salary.
2. Variable pay: It is the compensation that is linked directly to

performance accomplishments (bonuses, incentives, etc.).

3. Benefits: These are the indirect rewards given to an employee or group

of employees as a part of organizational membership (health insurance, vacation pay, retirement pension etc.).

Allowances, benefits and incentives:

Apart from basic salary or wage, ASCABL provides following allowances, benefits and incentives to its employees: i) Dearness Allowance ii) Travelling Allowance iii) Overtime allowance iv) Gratuity v) Contributory/Employee Provident Fund
26

vi) Bonus vii) viii) House Rent Allowance Group Savings Link Insurance

ix) Annual Increment x) Medical Benefit

xi) Maternity Benefits

xii)

Miscellaneous, etc.

Leave Structure:
Following are the number and type of leaves granted by ASCABL to each employee: Sl. No. 1. 2. 3. 4. 5. 6. Name/Type Casual Leave Restricted Holiday Earned Leave Medical Leave Maternity Leave period) Paternity Leave period)
Table.3.1. Leave structure of ASCABL

No. of days (per year) 12 2 30 10 135(two times during service 15 (two times during service

Performance Appraisal:
Performance Appraisal is the process of identifying, evaluating and developing the work performance of employees in the organization, so that the organizational goals and objectives are more effectively achieved, while at the same time benefiting employees in terms of recognition, receiving feedback, catering for work and offering career guidance.

27

Assam State Co-Op Apex Bank Ltd conducts performance appraisal of its employees annually. Every year each employee`s report is made regarding their performance, known as Annual Performance Appraisal Report. Evaluating employee performance is a part of ASCABL`s performance management system. In such appraisal, a brief history of the official/officer for the reporting year is made on following: i) Major items of work/training/seminar/conference/meetings/workshops attended during the year. ii) Factors affecting performance of official/officer (favorably/adversely) during the year. iii) Any outstanding achievement done during the year iv) Requirement of any change/placement with valid justification. A performance rating (grade) is used for assessing the various Job Performance/key result areas, Performance and Personal Attributes of the official/officer as below: A B C requirements) D improvements) E Very Good (for exceptional performance) Good (for performance above requirements) Average (for performance meeting Unsatisfactory (for performance which needs Poor (for performance below requirements)

Job Performance/Key results areas:

28

Sl. NO . 1 2 3 4 5 6 7 8

Job Areas

Performance Target Target Grad fixed for achieved e the year during the year Deposit mobilization Loan sanctioned Recovery of loan Customer service Documentation Filling of HO returns Filling of other Statutory returns Liaising with Public leaders & Govt. dept.

Comments, any

if

Table.3.2. Job performance/ key results areas

Performance Attributes: Sl. No. 1 2 3 4 5 6 Parameters Knowledge of work Planning & organizational ability Analytical/judgments ability Leadership/management Adherence for schedules/deadlines Decision making power
Table.3.3. Performance attributes

Grade

Comments/observations

Personality Attributes: Sl. No. 1 2 3 4 5 6 7 8 Parameters Personality Interpersonal relation Reliability/dependency Integrity/faithfulness Creativity/initiatives Relations with superiors juniors Communication skill Promptness in disposal Grade Comments/observations

& of
29

9 10 11

assignments Quality in noting & drafting Punctuality in attendance Driving skill

Table.3.4. Personality attributes

CHAPTER-4

30

4
LOANS AND ADVANCES
It is an arrangement in which a lender gives money or property to a borrower and the borrower agrees to return the property or repay the money, usually along with some amount of interest, at some future point(s) in time. Usually, there is a predetermined time for repaying a loan, and generally the lender has to bear the risk that the borrower may not repay the loan and become NPA. In other words, it is the amount of money raised by an individual or a firm or a company or a government from another individual or bank or other financial institution. The raising of loans is essential for growth and expansion of individuals, business, industrial concerns as well as govt. credit have become lifeblood of trade and commerce so is essential for the govt. at various level. Loans may be short-term or long-term. Further, it may be secured or unsecured, secured when it is backed up by definite asset. The loans may be private or public, and redeemable or irredeemable. Loans always carry a certain rate of interest.

Loan Account:
When the broker or any other financial institution like banks sanctions loans; it opens an account in the name of the person to whom the loan is sanctioned, such account is called as loan account. Loans and

31

advances is one of the most important activities of bank from where they can generate income for their own and for the depositors.

Loan/Developmental Schemes:
The Assam State Co-op Apex Bank Ltd. has various loan scheme viz. KCC, Agriculture & Allied Activities, SHGs, Transport, Housing, SSI, Small Business, Cooperative Societies, and Salaried Persons etc. The bank had suspended its lending operation after the crisis during 2005to 2007 and had resumed from the year 2007-08 with utmost care, so that fresh loan is not slipped in to NPA henceforth. However, the bank has prepared a comprehensive loan schemes to increase the lending folio through SHG model. Following are the development schemes provided by A.P. State Co-op Apex Bank Ltd.: 1. Kisan Credit Card (KCC) 2. Micro Finance through SHG 3. Govt./ NABARD Sponsored Schemes 4. Agriculture/ Horticulture Development Scheme 5. Animal Husbandry Schemes 6. Fisheries Development Schemes 7. Farm Mechanization Schemes 8. Loan for Govt. Employees 9. Small Business Loan

32

10. 11. 12. 13.

Transport Vehicle Loan Rural Housing Loan Personal Loans Loans against securities like NSC/ LIC policies

Any individual or organization can apply for the loans and advances but only those individual or organization is are liable to get loans that fulfill the general conditions laid down by the ASCABL. General Conditions: 1. Scheme should be viable. 2. Capacity and Integrity of the applicant should be satisfactory. 3. Loan amount must be utilized for the purpose for which loan is availed. 4. Proper securities/ guarantor should be available, and many more other formalities.

During the year 2010-2011, it has a modest lending of Rs.191.57 lakhs only. The purpose-wise loan disbursement position is given below: (Figures in Lakh) Sl. No. Priority Sector 1. 2. 3. 4 5. 6. 7. ST (SAO)/KCC MTL (Agri) & Allied SGSY/SJSRY Procurement MTL (Plantation/Horti.) MTL SRWTO SHGs
33

Purpose

Amount Disbursed during the year 6.00 13.76 17.80 13.21 3.95

8. 1. 2. 3. 4. 5.

MTL (Rural Housing) Sub-total Non-Priority Sector MTL (Indls) MTL(Socy) MTL (Industry) C/C (Socy ) C/C (others) Sub-total Grand Total

76.60 131.32 25.25 35.00 60.25 191.57

Table.4.1. Sector-wise loan disbursement during 2010-11

The Sector-wise comparative Statement of Outstanding Loans and advances for last two years are given bellow:(Figures in Lac)

34

Sl. No.

Purpose

Amount Outstanding as on 31.3.2010

Amount Outstanding as on 31.3.2011 35.82 213.48 351.42 46.75 528.44 196.12 6.82 776.60 2155.45 1082.33 74.97 12.44 580.52 3588.62 724.55 2585.77 8649.20 10804.65

Priority Sector 1. ST (SAO)/KCC 2. MTL (Agri) & Allied 3. IRDP/SGSY/ 4 Procurement 5 MTL (Plantation/Horti.) 6. MTL SRWTO 7. SHGs 8. MTL (Rural Housing) Sub-total Non Priority Sector 1. MTL (Indls) 2. MTL(Socy) 3. MTL (Industry) 4. C/C (Socy ) 5. C/C (others) 6. OD against FD/ RD/ STL(I) &(O) etc. 7. Protested Bill Accounts Sub-total Grand Total

35.28 72.12 232.26 10.34 630.56 214.30 0.76 809.06 2004.68 747.73 55.11 33.04 839.31 5888.59 1394.08 8957.86 10962.54

Table.4.2. Sector-wise comparative Statement of Outstanding Loans and advances

RECOVERY PROVISION OF LOANS AND ADVANCES

The Bank is making all out efforts for recovery of dues of the bank in a time bound manner. The Bank has recovered Rs.1028.19 lakhs during the year 2010-11. The recovery positions with last four years are given below: (Amt in Lakhs) Year Amount
35

2007-08 2008-09 2009-10 2010-11

1300.31 1447.36 1839.26 1028.19

Table.4.4. Comparative recovery position

Out of total recovery, a sum of Rs. 814.27 lakhs recovered under Bakijai cases. Graphical comparison of amounts recovered in the last four years:

Fig.4.1. Graphical comparison of recovery position

36

CHAPTER-5

5
DEPOSIT
37

Money put in an account either with some company, private or public or with the bank is known as deposit. Raising funds through deposit has become quite popular. In India, the central public undertaking as well as the state public undertaking have been raising huge fund for developmental and other essential purposes. The money that is kept with the bank is known as the bank deposits. It is one of the basic functions of a commercial bank. A deposit account is a current account, saving account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank`s books, and the resulting balance is recorded as a liability for the bank, and represent the amount owed by the bank to the customer. The bank deposits can be categorized into following type of accounts: 1. Current Account 2. Time Deposit Account 3. Savings Account

Current Account:

A deposit account held at a bank or other financial

institution, for the purpose of securely and quickly providing frequent access to funds on demand. It is an account in which any sum can be withdrawn at any time. Businessman usually operates in current account. The bankers pay no rate of interest on the amount credited on the customers` account.

Time Deposit Account:

It is an account in which any sum is deposited

at a banking institution for a certain preset fixed term or time period. The banker`s on the other hand, pays certain fixed rate of interest against the deposit. In such account, customer cannot withdraw the sum before the maturity period. When the term is over it can be withdrawn or it can be
38

rolled over for another term. Time deposit account is of two types- 1) Recurring deposit account, and 2) Fixed deposit account.

Savings Account:

Savings account is one of the most important

accounts that are operated by all the banking institutions. It is an account in which any sum can be deposited and in same manner it can be withdrawn at any working time. The banker pays certain rate of interest on the amount deposited. These account let customer keep liquid assets while still earning a monetary return. Money deposited in the current account and savings account is the demand liability while money deposited in the term deposit account is the time liability for the bank. Like other commercial banks, Assam State Co-op Apex Bank Ltd. also accepts public deposits in form of various deposit schemes.

DEPOSITS MOBILIZATION
The deposit of the bank is increased to Rs.722913190.37 as on 31.3.2011 from Rs.629692436.81 only as on 31.3.2010 which is encouraging and building up the confidence of the people. Further, Bank has been able to reduce the cost of its deposits substantially as a low cost deposit contributes to 75.19 % to the total deposits. The position of deposits since last three years is given below;
(Figures in Lac)

Deposits Demand Deposits Time Deposits Total

March2009 5460.92 1261.94 6722.86

March2010 4802.02 1562.53 6364.55

March2011 5435.89 1973.24 7229.13

Table.5.1. Deposits 39

Encouraged by the positive response from the depositors, the Bank has formulated various attractive schemes to increase low cost deposits. The graphical comparison between demand deposit, time deposit and total deposit received by the bank during three years is given below through a bar graph:

(Rs. in lakhs)

Fig.5.1. Graphical comparison of deposits (demand, time & total)

The details of rate of interest provided by the Assam State Co-op Apex Bank Ltd. on various deposit schemes are as follows:

40

RATE OF INTEREST PER ANNUM

Sl. No. Particulars w.e.f. dated: 01/12/2010 to 30/05/2011 w.e.f. dated: 01/06/2011 w.e.f. dated: 01/06/2011 (senior citizen) 4.00% p. a 4.00% p. a 4.00% p. a 4.00% p. a

A
1. 2.

SAVING ACOUNT Up to 1 yr From 1 to 3 yrs ADDS ACCOUNT Up to 1 yr From 1 to 3 yrs TERM DEPOSIT 30 days to 45 days 46 days to 90 days 91 days to 180 days yr 1 yr to less than 2 yrs 2 yrs to less than 3 yrs 3 yrs to less than 5 yrs 5 yrs and above 3.00% p. a 4.00% p. a 5.25% p. a 6.50% p. a 6.50% p. a 7.50% p. a 8.00% p. a 8.50% p. a 9.00% p. a 8.50% p. a 8.75% p. a 7.00% p. a 7.00% p. a 8.00% p. a 8.50% p. a 9.00% p. a 9.50% p. a 9.00% p. a 9.25% p. a 3.00% p. a 3.50% p. a 4.00% p. a 5.00% p. a 4.00% p. a 5.00% p. a 3.50% p. a 3.50% p. a

B
1. 2.

C
1. 2. 3. 4. 5. 6. 7. 8.

181 days to less than 1 5.75% p. a 6.50% p. a 7.00% p. a 7.00% p. a 7.50% p. a

Table.5.2. Rate of interest offered on various deposit schemes

41

CHAPTER-6

6
42

INVESTMENT
Investment may be defined as an activity that commits funds in any financial/ physical form in the present with an expectation of receiving additional return in the future. The expectation brings with a probability that the quantum of return may vary from a minimum to a maximum. This possibility of variation in the actual return is known as investment. The expectation of favorable return is an essential characteristic of investment. Investments are of two types: 1. Financial Investment: Financial investment is the commitment of fund to have desired future income into the form of interest, dividend, premium, pension, benefits or appreciation in the value of the initial investment. Hence, the purchase of shares, debentures, post office saving certificates and insurance policies are all financial investment. 2. Economic Investment: Economic investment is undertaken with an expectation of increasing the current economy`s capital stock that consists of services desired by the society. Investment in this sense implies the expectation of formation of new and productive capital in the form of new construction, infrastructure, plant and machinery, inventories and so on. Such investment generates physical assets as well as employment.

43

Every investment has following features:

Return Risk Safety Liquidity

1.

Return:
All investment is characterized by the expectation of return. In fact, investment is made with the primary objective of deriving a return. The expectation of return may be from income (yield) as well as through capital appreciation. Capital appreciation is the difference between the sale price and the cost price of the investment. The interest or dividend from the investment is the yield. The dividend or interest from the investment is the yield. Different type of investment promise different rates of return. The expectation of return depends upon the nature of investment, maturity period, market`s demand and so on.

2.

Risk:
Risk is an inherent characteristic of investment. Risk may relate to loss of capital, delay in repayment, non-payment of interest, or variability of return. While some investment such as government securities and bank deposits are almost without risk, but investing in private sector is full of risk. The risk of an investment is determined by

44

the investment`s maturity period, repayment capacity and nature of commitment and so on.

3.

Safety:
Safety is yet another feature that an investor wants from investment. The safety of an investment is identified with the certainty of return of capital without loss of money or time. Every investor expects to get back the initial capital along with interest on maturity. Safety is measured through the reputation established by the borrowers. A highly reputed and successful corporate entity assures the investors of their initial capital along with some interest.

4.

Liquidity:
An investment that is easily salable in market without loss of time, it is said to possess the characteristic of liquidity. Bank deposits, Post office deposits, the National Savings Certificate and so on are not marketable. A well developed secondary market for securities increases the liquidity of the investment traded therein.

Investments made by Assam State Co-Op Apex Bank Ltd

1. Investment in Govt. and Trustee securities:

45

The Bank has invested Rs. 1546.27 lakhs in the Central Govt. Securities and complied Statuary Liquidity Ratio (SLR) requirement under Sec.18 of the B.R. Act. The comparative position of Govt. Securities held by the bank as on every 31st March during last four years is given below:(Figures in Lakhs)

Sl. No. 1 2 3 4

Date 31.3.2008 31.3.2009 31.3.2010 31.3.2011

Govt. Securities 2408.92 2498.73 1541.61 1546.27

Table.6.1. Comparative position of investments in govt. and trustee securities

Graphical representation of the amount invested in govt. and trustee securities for the last four years:

46

Fig.6.1. Graphical representation of amount invested in govt. & trustee securities

2. Investment in short-term deposits and other investments: The Bank invested a total amount of Rs.27083.50 lakhs in Short-Term / Special Term Deposits with SBI and other nationalized Banks as on 31st March, 2011 as against Rs.26621.02 lakhs in the previous year including investment with NABARD. Investment in Short Term Deposits & Long Term Deposits for the last three years as given below:
(Amount in Lakhs)

Year March 2009 March 2010 March 2011

Amount 23861.76 26621.02 27083.50

Table.6.2. Comparative position of investments in short-term deposits & other investments

47

Fig.6.2. Graphical comparison of investment in short-term deposits & other investments

A total of Rs. 28629.77 lakhs was invested by Assam State Co-Op Apex Bank Ltd. in the financial year 2010-11.

48

CHAPTER-7

7
FINANCIAL POSITION

Share Capital & Membership

The Authorized Share Capital of the bank is Rs.50000.00 lakhs made up of 500,000 share of Rs.100.00 each out of which Paid up
49

Share Capital is Rs.19235.31 lakhs only. The Net Worth of the bank stood at Rs.5993.19 lakhs as on 31.3.2011 and complying the Sec.11 (1) of the B.R. Act 1949 (AACS). The break-up of the Paid-up Share Capital and Membership with last year is shown below: (Amount in lakhs) Sl. No. 1. 2. 3. 4. State Govt. Societies Others ICDP Nominal Membership Total Categories Members 31.3.20 31.3.20 10 1 95 1 97 11 1 103 1 105 Amount 31.3.2010 31.3.2011 1919380000. 00 3444900.00 0 677530.00 1923502430 .00 1919380000 .00 3462800.00 0 688580.00 192353138 0.00

Table.7.1. Share capital and membership

The Share Capital of the Bank was strengthened by the Govt. of Assam by infusing Rs.18000.00 lakhs only to enable the bank to comply the Sec.11 (1) of the B.R. Act 1949 (AACS). As per the norms of the Revival Package under Vaidyanathan Committee Recommendations, the percentage of shares of the State Govt. should not exceed 25% of the total Paid-up Share Capital of the bank. As such the Govt. of Assam shall be approached to convert the Share Capital contribution above the prescribed limitation in to the Grants with compliance of Sec.11(1) of the B.R. Act and as well as guidelines of VC Recommendations.

Reserve Fund & Provisions

50

As the Bank has sufficient amount of Accumulated loss, it could not make any appropriation of the profits earned during previous years. The Reserve Funds, Other Reserves and Provisions of the bank stood at Rs.20525867.87 only which has been kept outside the business operation by keeping in Fixed Deposits with SBI.

Borrowing & Refinance

The bank has availed an Over Draft of Rs.18052.56 lakhs from State Bank of India in 2007 against Fixed Deposit Account of Rs.22500.00 lakhs only to meet the customer`s demands which has been brought down to Rs.14194.28 lakhs as on 31.3.2011. The bank has also obtained a Soft Loan for Rs.2000.00 lakhs only from Govt. of Assam and paying annual interest regularly. The outstanding borrowing position as on 31st March for the last five years is given below: (Fi gures in Lakhs) Sl. No. 1 Particulars Borrowing from 2 other 1.54 1.54 2001.54 2000.00 2000.00 banks Borrowing from 3 4 State 998.96 10.46 1.61 0 0.79 0 0.39 46.25 0 46.88 Govt. Refinance from NABARD Borrowing from ICDP Total Mar0 Mar08 Mar09 Mar10 Mar11 7 266.73 18052.56 16698.29 14719.22 14194.28

1277.6 18055.72 18701.62 16765.86 16241.16 9

51

Table.7.2. Borrowing and refinance

Investment in Govt. & Trustee Securities

The Bank has invested Rs. 1546.27 lakhs during the year 2010-2011in the Central Govt. Securities and complied Statuary Liquidity Ratio (SLR) requirement under Sec.18 of the B.R. Act.

Investment in Short-term Deposit & Other Investment

The Bank has invested a total amount of Rs.27083.50 lakhs in Short-Term / Special Term Deposits with SBI and other nationalized Banks as on 31st March, 2011 as against Rs.26621.02 lakhs in the previous year including investment with NABARD.

Deposit Mobilization
The deposit of the bank had increased to Rs.722913190.37 as on 31.3.2011 from Rs.629692436.81 only as on 31.3.2010 which is encouraging and building up the confidence of the people. Further, Bank has been able to reduce the cost of its deposits substantially as a low cost deposit contributes to 75.19 % to the total deposits.

Loans& Advances
During the year 2010-2011 the bank had a modest lending of Rs.191.57 lakhs only to various priority and non-priority sectors. Out of 191.57 lakhs, the amount advanced to priority sector was Rs.131.32 lakhs only and to non-priority sector was Rs. 60.25 lakhs only.

52

The outstanding loans and advances during the year 2010-2011 was Rs. 10804.65 lakhs. The outstanding loans and advances on priority sector as on 31st march 2011 was Rs. 2155.45 lakhs only as compared to Rs. 2004.68 lakhs only on 31st march 2010. And, outstanding loans and advances on non-priority sector as on 31st march 2011 was Rs. 8649.20 lakhs as compared to Rs. 8957.86 lakhs on 31st march 2010.

Recovery
The Bank is making all efforts for recovery of dues of the bank in a time bound manner. The Bank had recovered Rs.1028.19 lakhs during the year 2010-11 as compared to Rs. 1839.26 lakhs during 2009-2010. The recovery positions with last three years are given below: Out of total recovery, a sum of Rs.814.27 lakhs recovered under Bakijai cases during 2010-2011.

Comparative Financial Position

The Bank has been maintaining steady progress in almost all its business & financial parameters and the comparative financial position indicating the progress under different heads for the last three years is indicated below:

(Figures in Lac) Sl. No 1. Particulars Paid Up Share Capital

53

March 2009 19283.85

March 2010 19235.02

March 2011 19235.31

2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15

Reserve Fund & other Reserves Provisions for NPA Deposits Borrowings from NABARD/State Govt./NCDC Borrowings from SBI Cash & Bank Balance Investment in Govt. Securities Money at Call & Short Notice Loans & Advances Fixed & Other Assets Working Capital Net Profit/(Loss) Accumulated Profit/(Loss) No. of Branches

168.03 13785.80 6722.86 2000.00 16700.63 2948.58 2498.70 23861.76 12044.92 1413.80 44866.08 319.39 (15507.36 ) 32

191.76 14378.31 6296.92 2046.64 14719.22 1772.16 1541.77 24967.69 10968.89 3793.60 43031.55 892.77 (14614.59 ) 32

205.26 12941.23 7229.13 2046.88 14194.28 1609.31 1546.27 25586.80 10804.65 3377.13 42923.82 1167.21 (13447.38 ) 32

Table.7.3. comparative financial position

WORKING RESULTS PROFITABILITY OF THE BANK

The Bank has started earning operating Profit since last three years continuously and a sum of Rs.1167.20 lakhs has been booked during 201011 after meeting all expenditures. As a result, the accumulated loss has been reduced to Rs.13447.38 lakhs only from Rs.14614.59 lakhs in the year 2010.

54

Fig.7.1. Profitability of the bank

Fig.7.2. Accumulated loss of the bank

55

Profit & loss A/c

Particulars For the year ended 31/3/11 (Rs.) For the year ended 31/3/10 (Rs.)

Income: Interest earned Other income Total Expenditure: Interest expended Operating expenses Provisions & Contingencies 178094461.38 77239090.93 -----179133834. 74 63165217 .03 52854724 Total Profit/ Loss: Net profit/ (loss ) for the year Provisions no longer 783046.74 95) 115937857.52 (1461459175.64) 92656624 .00 (1550736094. 69) (1461459175. 64) (3379704. 255333552.31 .00 295153775. 77 253610202.74 2506396.31 288565123. 28 3208947. 54 256116599.05 82 291774070.

required written back Profit/ (loss) brought forward Total: (1344738271.38)

56

Appropriations: Transfer to Statutory 00. Reserves 00 00.00 Transfer to Other Reserves 00. Transfer to Govt./ Proposed 00 00.00 dividends Balance carried over to 00. Balance 00 00.00 Sheet (1344738271.38) (1461459175. 64) Grand Total (1344738271.38) (1461459175. 64) Basic earnings per share Diluted earnings per share 07 6. 07 4.64 6. 4.64

Table.7.5. Profit and loss A/C

Balance Sheet
As on 31/3/11 (Rs.) Capital & Liabilities: Capital Reserves & Surplus Deposits Borrowings Other liabilities & provisions 7
57

As on 31/3/10 (Rs.) 1923502430.00 19175974.8

1923531380.0 0 20525867.8 7 7 722913190.3

629692436.81 1676585799.35 1516292532.07

1624115683.0 9 1346691187.2 5 Total 8 Assets: Cash with Reserve Bank of India Balances with bank & Money at 1 call & short notice Investments Advances Fixed assets Other assets Profit & loss A/c (debit balance) Total 8 2708350153.15 154627200.50 1080465266.88 20843861.95 316869586.01 1344738271.38 5637777308.5 0
Table.7.6. Balance sheet

5637777308.5 0 11882968.7 9

5765249173.1

11261464.4

2662101702.79 154177526.05 1096889150.32 17752600.4 8 361607553.33 1461459175.64 5765249173.1

58

CHAPTER-8

8
RECOVERY AND REVIVAL INITIATIVES

59

As per the inspection report of NABARD, with reference to financial position as on 31-03-2000, the Bank failed to comply with Section 11(1) of the B.R. Act, 1949 (AACS). The bank was granted an exemption in the first instant up to 31st March 2003. As the bank failed to comply in the first phase, exemption was extended up to 31st March 2006 for the second time. The real and exchangeable share capital, reserves, provisions, etc. was estimated at (-) Rs. 13150.19 lakhs as on 31-3-2007. The bank continued non-compliance with the provisions of sec. 11(1) of BR Act 1949 (AACS) on account of following reasons: 1. Low level of recovery and high level of NPA. 2. High level of cost of management. 3. Low level of per staff and branch business. 4. High cost of deposits. 5. Weak monitoring and supervision. 6. Lack of professional management. 7. Too much political interferences. 8. Excessive disbursement of loans.

Reasons for downfall of the Bank:

Some of the major reasons for downfall of the Bank are as follows: Constitution of BOD & appointment of Chairman by the State Govt.:The Bank was managed by a BOD consisting of 9 members: 4 Govt. nominees, 4 elected from the member Coop. Societies, and MD of the bank as Member Secretary. The Chairman is nominated by the State Govt. and accordingly elected amongst the nominated members of Coop. Societies. It
60

was observed that these members instead of functioning efficiently rather contributed to the downfall especially by the govt. nominee of Coop. Society. The Govt. all the times was well aware of the above fact and thus superseded the Board several times for mismanagement of the affairs of the Bank. It was also observed that whenever there is any change in Govt. or change in leadership in ruling Party, they dissolved the Board and reconstituted the same with their own men in the Board. All this facts proved that the politician of the State converted this financial institution into a political playground which badly affected the reputation and image of the Bank.

Opening of Branches:As the Chairman of the Bank was nominated by the State govt., they try to open bank branches in their constituency without considering the viability or profitability of the institution just to gain popularity.

Appointment of Staff:The last recruitment of the staff through open competition was done during 1989-90 and thereafter all the appointments were done by the Govt. nominee of the Coop. Societies. Without conducting any proper interview, lead to overcrowding of unproductive staffs. As such, there was excess staff at all the times and the bank could not go for formal recruitment & thus deprived from having professional/skilled hands. As a result, there was no work culture developed in the bank.

Sanctioning of Loans & Advances :As the Govt. nominee from the Coop. Societies were from political background they never discussed or planned in any Board meeting about the betterment of the bank, instead engaged themselves in whimsical loan disbursement activities etc. All the members of BOD have utilized the banks

61

money as their own and availed huge amount of loans and advances in their names and also in the names of their kit & kins.

Granting of loans during suppression periods :Even during the period when the Board was superseded, the Govt. Officers (Jt.RCS) who was appointed as an Administrator of the Bank sanctioned huge loans ignoring the warning given by the NABARD to the State Govt. & bank which is the supervisory/controlling authority of the SCBs in the country.

PDS loans to Private Contractors: Prior to private contractors in the State, the Coop. Societies were entrusted with the job of PDS in every nook and corner of the State with the financial assistance from the Apex Bank. But due to change in govt. policy, the said job was entrusted to private contractors and as a result huge amount under coop. sector was blocked. Thereafter fresh loans disbursed to the private contractors also blocked due to nonpayment of their bills by the FCI and other concerned dept. of the State Govt. Thus, has affected the liquidity position of the bank.

Rescue Initiatives
The state govt. initiated measures to rescue the bank and following steps have been taken for its revival:
1. The state govt. superseded the Board of Management of the bank on

17th Nov, 2005 as gross mismanagement was observed, and appointed Administrator of the rank of Commissioner, govt. of Assam.

62

2. The state govt. constituted a High Power Committee for revival of the bank.
3. At present, the state govt. has appointed Commissioner/ Secretary

(Co-op) govt. of Assam, as Administrator of the bank in place of Board of Management and an Advisory Committee of the Administrator has been constituted. 4. The State Govt. has also constituted a Monitoring Committee for regular monitoring of Bank on quarterly basis.

The State Govt. has initiated following steps to achieve the recovery target:
i) A District Level Recovery Committee under the Chairmanship of DC

has been constituted for recovery of bank loans in all the districts to gear up the recovery drives. ii) All the DCs have been directed to make immediate recovery of bank loans. iii) Bakijai cases have been filed under Bengal Public Demand Recovery Act, 1913.
iv) Instructions have been issued by the State Govt. to all concerned

department to release payments of Govt. contractors subject to NOC of A.P. State Coop. Apex Bank Ltd. v) The State Govt. has assisted by providing short term credit of Rs.200.00 crores to the Bank for promoting profits which was refunded in time.

Initiatives taken by the Bank:

63

i) The management of the bank has also initiated actions by filing /lodging criminal cases against 29 officers/officials who have allegedly committed financial irregularities as per Audit Report. Among them 06 have been terminated from the services of the bank. ii) Austerity measures taken for control of expenditure of revenue and capital nature. iii) Various types of expenses of the branches are sanctioned at Head Office level.
iv) The Bank is pursuing the State Govt.`s suggestion for implementation

of the Vaidyanathan Committee Recommendations as the MoU has already been signed in between the Govt. of Assam and Govt. of India and NABARD for refinancing and restructuring of PACS/SCB. v) A separate recovery cell headed by a senior officer has been set up at Head Office to keep the close liaison with the District Recovery Committee and to monitor and supervise the entire recovery drive.
vi)

One Time Settlement Scheme has been introduced by the bank for

recovery of chronic over dues. vii) Personal persuasions for recoveries have been initiated with the borrowers by the branch managers. viii) A Standing Counsel has been appointed on behalf of the bank for all kind of legal cases. ix) Branch wise recovery and deposit targets have been fixed. pertaining to the cooperative sectors and submission of x) Standing Committee has been constituted to deal all the subjects recommendations to the RCS and the management of the Bank for inventive decisions. xi) The Inter-Branch Accounts have been reconciled. xii) Priority in lending will be given to SAO-KCC, Govt. sponsored program, SHG, Cooperative Sector, Salaried Persons, small business, SRTO under priority sectors.

64

xiii) The Bank has started non-fund business like Bancassurance Business as tied up with the Metlife Insurance Company. xiv) The Management of the Bank has constituted i) Audit Committee, ii) Monitoring Committee, iii) Vigilance Committee, iv) Special Committee of Boards for Monitoring Frauds, v) Risk Management Committee.

Future strategies to revive the bank:

Switch over the manual banking to Core Banking Solutions (CBS) to lift the face of the bank. Imparting of Professional and IT training to the staff. Strengthening of Recovery more effectively. Implementation of Financial Inclusion. Expansion of Non-Fund business. Formation of SHGs and Farmers Clubs aggressively. Initiation of all efforts to increase the deposit base of the bank. Pursuance to the State Govt. for parking of Non-Treasury Funds with the Bank. Diversification of banking business from banking products to Customer Need Products.

Recovery:
The Bank is making all out efforts for recovery of dues of the bank in a time bound manner. The Bank has recovered Rs.1028.19 lakhs during the year 2010-11. The recovery positions with last three years are given below: (Amt in Lac) Year 2008-09 2009-10
65

Amount 1447.36 1839.26

2010-11

1028.19

Table.8.1. Comparative recovery position

Fig.8.1. Graphical comparison of recovery position

A) Recovery through Bakijai Court: In the year 2010-11, Rs. 814.27 lakhs out of Rs. 1028.19 lakhs was recovered under the Bakijai court. B) Recovery through One Time Settlement (OTS) Scheme -2009: Under Loan Recovery policy, the Bank had introduced One Time settlement Scheme (OTS) in the year 2009-10. The Bank has received 499 nos. of proposals out of which 427 nos. amounting to Rs. 10,83,97,326.00 has been approved by RCS. So far, 127 nos. of proposals amounting to Rs. 2,44,58,106.00 have been recovered. The process of settlement is in progress and most of the cases will be settled by the financial year end. Further, 72 nos. of proposals are under process for approval.

66

C) Recovery under Agricultural Debt Waiver & Debt Relief (ADW&DR) Scheme-2008: i) The GoI had introduced Agriculture Debt Waiver & Debt Relief Scheme -2008. The Bank has also implemented the scheme during 2008-09 and received Rs.79,40,000/- during the year 2009-10. Hence, the Bank has received a total amount of Rs. 2,37,05,000.00 through NABARD . ii) After the adjustment of the amount received from GoI, the remaining outstanding interest balance of Rs. 80,48,856.00 charged by the Bank after cut- off date of NPA which does not come under the purview of Scheme. Hence, the Bank has proposed in 22nd AGBM to write-off the aforesaid interest amount for cleansing the book of accounts and Balance Sheet of the bank as there is no further scope for recovery.

IMPLEMENTATION PACKAGE

OF

VAIDYANATHAN

COMMITTEE

REVIVAL

For implementation of Vaidyanathan Committee Recommendations on Reform & Revival Package to Short Term Credit Structure (STCCS) in Assam, a MoU was signed by Govt. of Assam with GoI and NABARD on 4th May2007. Accordingly, almost all the requisite formalities have been completed and a sum of Rs.4014.75 lakhs only has been worked for recapitalization of the Bank as per Special Audit Report. Out of which, 10% of State Govt. share would be Rs.405.74 lakhs only and rest balance of 90% is receivable from GoI through NABARD. The latest status of the Revival Package is illustrated below: Sl. no. Issues 1 Execution of MoU 2 Special Audit of PACS Status The MoU among GoI, State Govt. and NABARD executed on 04th May 2007. Special audit of 32 LAMPS completed in
67

3 4

Special audit of SCB. Release Recapitalization assistance LAMPS to PACS /

2009. Special audit of SCB is completed in 2010. of a)Total amount Rs.941.32 Lakhs. b)Received SCB. c) 90% of GoI share Rs. 847.19 Lakhs yet to e receive. of a) Total amount Rs.4017.51 lakhs b) 10% of GoAP share Rs.405.75 lakhs yet to receive. c) 90% of GoI share Rs.3651.75 lakhs 10% of GoAP share Rs.94.13 Lakhs and parked with the

5.

Release Recapitalization assistance to SCB.

Share contribution

yet to receive. Capital At present, Paid-up share capital of the under Bank is Rs.19284.00 lakhs. Out of which, GoAP- Rs.19141.00 lakhs. The State Govt. is permitted to participate in excess of 25% paid-up share capital

special package for NER.

7. 8. 9. 10.

under special package. Amendment of APCS Act APCS Act amended in 2009. Amendment of Bye-laws The Bye-laws of the Bank is amended. of PACS/LAMPS. Amendment of Bye-laws The Bye-laws of the Bank is amended. of SCB Status of the election of Board of Directors PACS / LAMPS. Election of Board Directors of SCB All LAMPS are having the management

of of Board of Directors. of The Secretary (Co-operation) GoAP has requested to NIMC for consideration for continuation the management of the Bank under the Administrator. Reply is awaited.
68

11.

12.

Fit & Proper Criteria of Shri CEO of SCB

Tsering

Thongdok

has

been

appointed as Managing Director of the

13.

Bank as per fit & proper criteria. CAS & MIS for PACS / a) Printing of books of accounts LAMPS completed for issue. b) Trained 4 Master Trainers. c) Training is being imparted to

14.

Computerization PACS/LAMPS

of

LAMPS officers/officials shortly. a) Three LAMPS have been selected for computerization (dry run): Rupa LAMPS, Tawang LAMPS, and Dibang Valley LAMPS. b) Purchased 3 sets of computers by SCB for issuing to LAMPS after downloading of CAS software received from NABARD. c) Process of selection of a Vendor by SCB is under process for implementation of the Project. d) SCB is arranging training to all the LAMPS for CAS and to 3 LAMPS for computerization. One Officer from Co-operation Deptt, has been imparted Master Trainers Training on BDP of PACS / LAMPS at BIRD, Lucknow and Four Officers (3 from APCTC and 1 from SCB) have been imparted Master Trainers Training for CAS at IICM, Guwahati. However, training modules of I to IX to
69

15.

HRD

be organized.
Table.8.2. Illustration of Revival package

70

CHAPTER-9

9
PERFORMANCE OF ASCABL
71

The performance of Assam State Co-Op Apex Bank Ltd during the year 2010-2011 is as follows: 1. The Authorized Share Capital of the bank is Rs.50000.00 lakhs made up of 500,000 share of Rs.100.00 each out of which Paid up Share Capital is Rs.19235.31 lakhs only. The Net Worth of the bank stood at Rs.5993.19 lakhs as on 31.3.2011 and complying the Sec.11 (1) of the B.R. Act 1949 (AACS). 2. The Reserve Funds, Other Reserves and Provisions of the bank stood at Rs.20525867.87only which has been kept outside the business operation by keeping in Fixed Deposits with SBI.
3. The deposit of the bank has increased to Rs.722913190.37 as on

31.3.2011 from

Rs.629692436.81 only as on 31.3.2010

which is encouraging and building up the confidence of the people. Further, Bank has been able to reduce the cost of its deposits substantially as a low cost deposit contributes to 75.19 % to the total deposits.
4. During the year 2010-2011, Assam State Co-Op Apex Bank Ltd has

sanctioned/disbursed a modest amount of Rs.191.57 lakhs only to various priority and non-priority sectors including Kisan credit card, SGSY, SJSRY, SRWTO, self help groups, agriculture loans, rural housing loans, industries, etc. 5. The Bank is making all out efforts for recovery of dues of the bank in a time bound manner. The Bank has recovered Rs.1028.19 lakhs during the year 2010-11. 6. Out of total recovery, a sum of Rs. 814.27 lakhs recovered under Bakijai cases.

72

7. The Bank has invested Rs. 1546.27 lakhs in 2010-11 in the Central Govt. Securities and complied Statuary Liquidity Ratio (SLR) requirement under Sec.18 of the B.R. Act.
8. The Bank invested a total amount of Rs.27083.50 lakhs in Short-

Term/Special Term Deposits with SBI and other nationalized Banks as on 31st March, 2011 as against Rs.26621.02 lakhs in the previous year including investment with NABARD. 9. The bank has availed an Over Draft of Rs.18052.56 lakhs from State Bank of India in 2007 against Fixed Deposit Account of Rs.22500.00 lakhs only to meet the customer`s demands which has been brought down to Rs.14194.28 lakhs as on 31.3.2011.
10. The Bank`s borrowing from NABARD/state govt. /NCDC stands at

Rs.2046.88 lakhs as on 31st march 2011.

11. The Bank is regular in repayment of its dues to State Govt. and other

Institutions as per the schedules.

12. The Bank has started earning operating Profit since last three years

continuously and a sum of Rs.1167.20 lakhs has been booked during 2010-11 after meeting all expenditures. As a result, the accumulated loss has been reduced to Rs.13447.38 lakhs only from Rs.14614.59 lakhs in the year 2010.
13. In order to professionalize the bank, a total of 32 no. of officers and

employees was deputed for training and development programme in the year.

COMUPERIZATION WITH CORE BANKING SOLUTION (CBS)

73

As directed by RBI the Assam State Co-Op Apex Bank Ltd has undertaken computerization of bank with CBS in a phase manner for which comprehensive DPR has been prepared and submitted to NABARD and NCDC for financial assistance. While the NABARD has declined the proposal, the Chief Director, NCDC has visited the bank for project appraisal and the proposal is under consideration in the pattern of loan cum subsidy. The bank is contemplating to roll out first phase within current financial year.

CHAPTER-10

74

10
SWOT ANALYSIS
SWOT is an acronym for the internal Strength and Weaknesses of an organization and environmental Opportunities and Threats facing that organization. SWOT analysis is a systematic identification of these factors and the strategy that reflects the best match between them. It is based on the logic that an effective strategy maximizes an organization`s strengths and opportunities but at the same time minimizes its weakness and threats. This simple assumption, if accurately applied, has powerful implications for successfully choosing and designing an effective strategy.

Opportunities:
An opportunity is a major favorable situation in the organization`s environment. Key trends represent one source of opportunity. Identification of a previously overlooked market segment, changes in competitive or regulatory circumstances, technological changes, and improved customer relationships could represent opportunities.

75

Threats:
A threat is a major unfavorable situation in an organization`s environment. It is a key impediment to the organization`s current and/ or desired future position. The entrance of a new competitor, slow market growth, increased bargaining power of a key buyers or supplier, major technologies change, and changing regulations could represent major threats to an organization`s future success. The second fundamental focus in SWOT analysis is identifying key strengths and weakness based on examination of the organization profile. Strengths and weaknesses can be defined as follows:

Strengths:
Strength is a resource, skill, or other advantage relative to competitors and the needs of markets an organization serves or anticipates serving. Strength is a distinctive competency that gives the organization a comparative advantage in the marketplace. Financial resources, image, market leadership, and customer/ supplier relationships are examples.

Weaknesses:
A weakness is limitation or deficiency in resources, skills, and capabilities that seriously impedes effective performance. Facilities, financial resources, management capabilities, marketing skills, and brand image could be sources of weaknesses. SWOT analysis helps resolve one fundamental concern in selecting a strategy: what will be the principal purpose of the grand strategy? Is it to take advantage of a strong position or to overcome a weak one? SWOT analysis provides a means of answering this fundamental question.

76

Strengths of the Bank:

It is sponsored by Govt. of Assam.

It gives highest rate of return on deposits. It charges lowest rate of interest on loans & advances. Most of the employees are Arunachalee, thus, it can use its human resources in a better way.
Supports various various govt. sponsored schemes such as KCC, SGSY,

SJSRY,SHGs, Rural Housing, etc.

Weaknesses of the Bank:

In the days of modern technology, they are doing all work with their hands i.e., it lacks computerization. Political interferences. Bad image because of liquidity crisis during Aug, 2006 to July, 2007. Large nos. of NPAs i.e., ineffective loan recovery. Time taking transactions because of no completion within the organization.

Low morale among the employees and less motivation from the management.

Opportunities of the Bank:

It can provide ATM facility.

77

 Core Banking should be introduced New branch should be opened in those areas where number of banks is less or nil. New and skilled employees should be recruited. Good promotional activities to make aware of the common mass about the bank`s attractive schemes

Threats to the Bank:

Competitions have increased because there are number of other banks available in the locality.
Change in consumer`s choice. Now consumers have less time and

want to finish their work as quickly as possible.

Changing Govt. regulation which affects the functioning of the bank.

78

CHAPTER-11

11
SUGGESTIONS
In order to educate the population, the bank should organize more awareness camp to promote various schemes of the bank.
79

 The bank should have more working capital so as to expand the scope of its operation over the rural areas of the state. It should check on its declining working capital over the years. The bank should advance loans after careful verification of all the relevant documents. The bank should adopt more effective loan recovery strategies as the loan amount is very high and bears the risk of becoming NPA. The bank should give emphasis on the promotional sector so as to attract more customers and hence increase deposits. The bank should open more branches for customers` accessibility. The bank should maintain its current trend of growth and should be more careful from the past experience. The bank should try to reduce its borrowing from other financial institution, state govt. and other commercial banks. More training and development programme should be provided so that it can professionalize its employees.
It should immediately computerize the bank so that it can minimize

time consumption and have arithmetic accuracy. The bank should provide ATM facility. Political interferences should be minimized. It should function as an independent body.
Since ASCABL is state`s own bank, the authority should try to convince

state govt. to credit state govt. employee`s salary in its bank account instead of SBI.

80

81

CHAPTER-12

12
CONCLUSION

82

Assam State Co-Op Apex Bank Ltd is a schedule bank sponsored by Govt. of Assam. The objective of ASCABL is to uplift the poor people of the state and bring an all-round development in agricultural activities. The bank helps in improving the economic status of state by providing loans and advances; and encourages the people to save their hard earned money in the form of deposits. Since its establishment, the bank has been providing various loans and advances to local populace in the form of KCC, SGSY, micro finance through SHGs, farm mechanization schemes, agricultural /horticultural scheme, animal husbandry schemes, etc. However, due to liquidity crisis during 2005-07, it suspended lending operation, but from 2007 it resumed the operation. The bank is also investing in various govt. securities, NABARD bonds, short term investments with UTI etc. In order to increase the efficiency and bring about changes in attitudes of employees towards job and the organization; and towards life various training & development progammes are conducted each year. The Bank suffered badly during the year 2005-07 due to financial crisis because of mismanagement of funds. But the assistance provided by state govt., central govt., NABARD helped in reviving and regaining its lost glory. Now the bank has been earning operating Profit since last three years continuously with increasing deposits and investments. As a result, the accumulated loss is reducing. In order to win confidence, the bank will construct new head office building. As instructed by the RBI the bank is all set to computerize its office and all its branches.

83

ANNEXURE
QUESTIONAIRE
Sir/ Madam, I am an MBA student from Rajiv Gandhi University. I am conducting a survey on Assam State Co-Op Apex Bank Ltd. This survey is meant for educational purpose only. With the help of this survey we will be able to know how it functions and it will also be useful and beneficial for the improvement of working of the bank in near future. This type of survey is often conducted for the betterment of the bank in terms of quality, level of customer satisfaction, etc. Thus, I would be grateful if you could spare few minutes to complete this questionnaire.

Interview Details:
Name of Interviewee:

Address 1:

Address 2:

Phone/ mobile no.: Email Id:

Name of the Interviewer: ...

...

84

Interview Date:... Interview Place:..

Start End

Time:. Time:...

1. How many public deposit schemes are available at Assam State Co-Op

Apex Bank Ltd? What are they?

2. Give information about total deposits in various schemes of the bank for the last three years.

3. What were the interest rates charged on loans and advances; and interest paid to customers on deposits in last three years?

4. After accepting deposits from public, what does the bank do with the same? If invested, then in which area it is invested? If no, then how the amount is utilized?

5. What are the interest rates on various investments?

6. Give investment details of last three years?

7. Do you think the bank is satisfying the needs of local people?

8. Any suggestions for the betterment of the bank?

85

BIBLIOGRAPHY

1. Annual Reports of ASCABL (1999-2011)

2. Balance Sheet 2010-2011

3. Human Resource Management- VSP Rao

4. Project Management- Prasana Chandra

5. Compensation Management- Tapomoy Deb

6. Website: www.google.com

86

7. Provisional Position (31st march 2012)

ABBREVIATIONS
87

Co-Op: Co-Operative Ltd: IRDP: SGSY: NPAs: LIC: MTL: STL: Limited Integrated Rural Development Program Swarnajayanti Gram Swarojgar Yojana Non Performing Assets Life Insurance of India Medium Term Loan Short Term Loan

SRWTO:-Small Road & Water Transport Operators Scheme FD: RD: Fixed Deposits Recurring Deposits

NABARD:-National Bank for Agriculture and Rural Development HRD: SSI: NGO: p.a:RBI: SLR: GCC: OTS: Human Resource Development Small Scale Industries Non Government Organisation per annum Reserve Bank of India Statutory Liquidity Ratio General Credit Card One Time Settlement

ADDS: - Apex Daily Deposits Scheme MCC: CBS: Multicity Cheque Facility Core Banking Solution

88

ATM: -

Automatic Teller Machine

ADW: - Agricultural Debt Waiver IRDA: - Insurance Regulatory and Development Authority NSC: - National Savings Certificate B.R Act: - Banking Regulation Act BOD: - Board of Director

89