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Vol 4 Issue 5 Nov 2014
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Volume-4 | Issue-5 | Nov-2014
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GRT
A STUDY ON FINANCIAL PERFORMANCE OF
TAMIL NADU STATE CO - OPERATIVE BANK
N. Sudhakaran1 and N. Ramu2
1
Ph.D Research Scholar, Department of commerce, Annamalai University ,Annamalai Nagar, Tamil Nadu.
Associate Professor, Department of Commerce, Annnamalai University,Annamalai nagar, Tamil Nadu .
2
Abstract:-A Co-operative organisation is a form of economic organisation, in
which persons voluntarily pool their resources on the basis of equality of
advancement of their economic interests. The user-owners are known as member
they derive two kinds of benefit from the Co-operative First, the members can
receive more and better service from Co-operatives, if they use it properly. Second,
profits are distributed to the member. It functions on the basis of certain conditions
or principles, which the participants agree to observe. Some definitions given by
prominent Co-operative leaders all over the world have been quoted
below:According to International Co-operative Alliance, “a Co-operative is an
autonomous association of persons united voluntarily to meet their common,
economic, social and cultural needs and aspirations through a jointly owned and
democratically controlled enterprise. According to the Co-operative Planning
Committee (1946), “Co-operation is the form of organisation, in which persons
voluntarily associate together on the basis of equality for the promotion of their
economic interests. Those, who come together, have a common economic aim,
which they cannot achieve by individual, isolated action because of the weakness of
the economic condition of a large majority of them. This element of individual
weakness is overcome by the pooling of their resources by making self-help
effective through mutual aid and by strengthening the bonds of moral solidarity
between them.
Keywords:financial perform of TNSC bank,
1.0 INTRODUCTION
Co-operative principles are concrete realities and not mere abstractions. They are just a code
of conduct for a Co-operative organization, the practice of which may change according to the local
conditions. Broadly speaking, there have been three types of Co-operative systems, which are based
more or less on the same principles, but which differ from each other in the mode of operation. These
three systems are the Rockdale system, the Raiffeisen system and the Schulze- Delizsch system,
concerned with the consumers, farmers and the traders respectively. Principles laid down by
Rockdale pioneers have been commonly adopted all over the world. They are democratic control,
open membership, limited interest on capital, patronage dividend, cash trading, political and
religious neutrality and promotion of education. With the spread of Co-operative Movement the need
was felt for adopting new procedures. Consequently, international Co-operative alliance provided the
following principles
N. Sudhakaran1 and N. Ramu2, “A STUDY ON FINANCIAL PERFORMANCE OF TAMIL NADU STATE CO OPERATIVE BANK ”, Golden Research Thoughts | Volume 4 | Issue 5 | Nov 2014 | Online & Print
1
. Study On Financial Performance Of Tamil Nadu State Co - Operative Bank
A
REVIEW OF LITERATURE
Jangid in his doctoral thesis titled “Cooperative Banking in Punjab” attempted to assess the
progress of cooperative banking in Punjab The study showed that cooperative banks were playing a
vital role as an instrument of development. There was a considerable progress in the resources of
cooperative banks. The operational efficiency of these banks showed signs of improvement. It was
suggested that with wide resources mobilization, rational allocation, and better supervision,
cooperative banking can be geared to achievedsocio economic betterment of Punjab.
Kanagasaba made an attempt to study the “Determinants of Profitability – A Case Study of a
State Cooperative Bank”, For this the parameters, viz. shortterm loans to total loans, time deposits to
total deposits, borrowing to owned funds were taken for a period of 1970-71 to 1979-80. agriculture
advances, proportion of time deposits to total deposits and level of borrowings affect the profitability
of the bank or not. It was found that these factors affect the profits of the bank positively. So, it was
suggested that the bank should design suitable strategies to improve these ratios in order to increase
the profitability.
Asaithambi in his “Performance Appraisal of Andaman & Nicobar State Cooperative
Bank”, assesses the performance of Andaman & Nicobar State Cooperative Bank on different
parameters, i.e., deposits, advances and overdues. It was found that the bank has been maintaining
high degree of efficiency in every aspect and the success of the bank is due to farsightedness of the
management and dedicated services of its employees.
“Central Co-operative Banking in a Developing Economy” was undertaken by
GovindParrekin the study was intended to scrutinize the financial viability of District Central Cooperative Banks in Rajasthan. The study revealed the poor financial position of all Central Cooperative banks in the state. It also disclosed the critical financial condition and some sort of
undeclared insolvency position faced by eight DCCBs in the state.
OBJECTIVES
1.To analyse the efficiency of funds management by TNSC Bank.
2.To the effectiveness in funds management by TNSC Bank with respect to resource utilization.
METHODOLOGY
Descriptive as well as analytical design is used. The present study is based on the
secoundary data. The secondary data were analysed with the help of appropriate tools of analysis.
Table -1
Compound Model For Own Fund, Deposits, Short Time Liabilities, Working Fund, and
Borrowing
(`In Crores)
Own Fund
Yea
r
Actua
l
value
Predicte
d
Value
2001 253.73
233.12
2002 315.19
284.97
2003 340.98
348.36
2004 384.93
425.84
2005 468.61
520.57
2006 549.08
636.36
Predicte
d
Value
short time
liabilities
Actua Predicte
l
d
value
value
2383.88
257.50
213.86
2585.33
177.03
210.48
2803.80
180.59
207.15
3040.74
205.68
203.88
Deposits
Actual
value
2621.8
5
2678.9
9
2910.7
0
3096.2
2
3053.2
9
3115.8
5
3297.70
184.68
200.65
3576.37
196.53
197.48
Golden Research Thoughts | Volume 4 | Issue 5 | Nov 2014
Working fund
Actual
value
3877.9
8
3987.2
2
4164.5
5
4504.8
6
4788.7
6
5068.4
3
Borrowing
Predicte
d
Value
Actual
value
Predicte
d value
3637.43
774.88
554.32
3919.22
815.01
586.79
4222.84
132.28
621.17
4549.99
818.03
657.55
4902.48
5282.28
1082.1
8
1206.7
6
696.07
736.85
2
. Study On Financial Performance Of Tamil Nadu State Co - Operative Bank
A
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
R
square
value
F value
P value
Inter
receipt
(a)
Growth
Rate (b)
787.67
1043.70
1258.45
1427.66
1565.01
1681.95
.
.
.
.
-
777.90
950.93
1162.45
1421.02
1737.10
2123.48
2595.81
3173.20
3879.02
4770.86
5794.01
3226.49
3964.94
5018.36
5901.83
6118.67
7285.46
.
.
.
.
.
3878.60
4206.36
4561.82
4947.32
5365.39
5818.80
6310.52
6843.80
7422.13
8049.67
8729.78
205.91
219.09
346.54
101.67
163.04
191.71
.
.
.
.
.
194.36
191.28
188.26
185.28
182.35
179.47
176.63
173.84
171.09
168.41
166.75
5244.98
5886.94
6964.56
7691.96
9458.82
10827.9
.
.
.
.
.
5691.50
6132.42
6607.51
7119.39
7670.94
8265.21
8905.52
9595.43
10338.80
11144.60
12008.31
878.22
608.40
830.58
896.21
2177.77
2327.91
.
.
.
.
.
780.01
825.71
874.08
925.28
979.48
1036.86
1097.60
1161.90
1229.96
1302.40
1379.22
0.978
0.826
0.24
0.950
0.077
350.52
<0.001**
37.91
<0.001**
0.20
.668
152.82
<0.001**
0.670
0.438
190.701
2198.12
217.297
3375.89
523.644
1.2224
1.0845
0.9842
1.0775
1.0586
1.Note: 1. ** denote significant at 1% level
2.*denote significant at 5% level
Source: Annual reports of the TNSC bank Ltd
The TNSC Bank has obtained funds from various sources, which are classified under four
major categories owned funds, deposits, borrowings and short liabilities. These components and
their respective shares in the working funds are also shown in Table 5.1The R Square value for own
fund is 0.978, which indicates that97.8 per cent of own fund is extracted over the period of time and is
significant at 1 per cent level, it can be inferred that the F value is 350.52 and P Value is less than 0.01,
since Inter receipt value is 190.701. The growth rate of own fund is 1.2224, which indicates 22.24 per
cent increase over the period from 2001 to 2012. The predicted values for the years 2013, 2014, 2015,
2016 and 2017 are 2595.81, 3173.20, 3879.02, 4770.86, and 5794.01respectively.
The R Square value for the Deposits is 0.826, which indicates that 82.6 per cent of deposits
is extracted over the period of time and is significant at 1 per cent level; it can be inferred that the F
value is 37.91 since P Value is less than 0.01, and Inter receipt value is 2198.12. The growth rate of
deposits is 1.0845, which indicates 8.45 per cent of increase over the period from 2001 to 2012. The
predicted values for the years 2013, 2014, 2015, 2016 and 2017 are 6310.52, 6843.80, 7422.13,
8049.67 and 8729.78 respectively.
The R Square value for the short liabilities is 0.24, which indicates that 24 per cent of short
liabilities is extracted over the period of time and is significant at 1 per cent level;it can be inferred
that the F value is 0.20 since P Value is less than 0.01, and Inter receipt value is 217.297. The growth
rate of short liabilities is 0.9842, which indicates 98.42 per cent of increase over the period from 2001
to 2012. The predicted values for the year 2013, 2014, 2015, 2016 and 2017 are 176.63, 173.84,
179.09, 168.01 and 166.75 respectively.
The R Square value for the working fund is 0.950, which indicates 95 per cent of working
fund is extracted over the period of time and is significant at 1 per cent level, it can be inferred that the
F value of 152.82 since P Value is less than 0.01, and Inter receipt value is 3375.89. The growth rate
of working fund is 1.0775, which indicates 7.75 per cent of increase over the period from 2001 to
2012. The predicted values for the years 2013, 2014, 2015, 2016 and 2017 are 8905.52, 9595.43,
10338.80, 11144.60 and 12008.31 respectively.
The R Square value for the Borrowings is 0.077, which indicates that 7.7 per cent of
Borrowings is extracted over the period of time and is significant at 1 per cent level;it can be inferred
that the F value is 0.670 since P Value is less than .438, and Inter receipt value is 523.644. The growth
Golden Research Thoughts | Volume 4 | Issue 5 | Nov 2014
3
. Study On Financial Performance Of Tamil Nadu State Co - Operative Bank
A
rate is 1.0586, which indicates 5.86 per cent of increase over the period from 2001 to 2012. The
predicted values for the years 2013, 2014, 2015, 2016 and 2017 are 1097.60, 1161.90, 1229.96
1302.40 and 1379.72 respectively.
SIGNIFICANCE OF THE STUDY
The Central government announced a number of programmes which would help in meeting
the credit requirements of the urban and rural sector. The credit programmes were designed to
augment the flow of credit to the poor. The main thrust of these programmes was to provide financial
assistance to the poor at concessional rate of interest, coupled with capital subsidy to enable them to
cross the poverty line. The poor must occupy the centre stage in any socio-economic planning or the
socio-economic development of the rural and urban poor, an institutional approach is poverty
depends largely on availability of credit. Not only agricultural development but all other activities
largely depend on the available monetary resources.
In order to protect the poor from the economic exploitation and moral degeneration, TNSC
Bank have been set-up. The TNSC Bank is the institution established with the objectives tofu
facilitate rural credit and to promote thrift and self help among the economically weaker sections of
the society. The study unit TNSC bank functioning in Chennai, Tamil Nadu. The main aim of the
bank is to develop the economy by providing credit for the purpose of the development of agriculture
and allied activities, animal husbandry, industrial development and other productive activities.
Moreover, the bank plays a very important role in developing the banking facilities in Chennai. The
researcher has made an attempt to evaluate the customer relationship management of the bank as the
primary motives of the bank are to satisfy the customer needs. necessary, so that, a poor man can have
access to assets and services. The institutions especially co-operative institutions must support as it
has poverty reducing capacity, providing employment opportunities and lead to an increase of
income and improved standard of living of the poor. Eradication of
ORIGIN AND STAGE OF TNSC BANK
The establishment of TNSC Bank in 1905 was not a chance event, neither was it the result of
a mammoth deal brought off at a single stroke. It was rather the fulfilment of a long cherished idea
which developed and took shape over a period of years, motivated step by step by a single
mastermind like Sir P Rajagopalachariar, who was the first Registrar of Cooperative Societies in the
old Madras Presidency. The idea of organizing a bank for financing Cooperative Credit Societies
emanated from him.
In this grand mission, the man who guided him was DewanBahadur S SubramanianAyer
(1842-1922). It was a brilliant and original idea because the Cooperative Societies Act X of 1904
which became law on 25 March, 1904, whether by design or oversight, merely contemplated the
establishment of Primary Societies which were expected to finance themselves. It was Sir V C
Desikachariar, the first Secretary of the Madras Central Urban Bank Limited who gave a practical
shape to the proposals formulated by the first Registrar of Cooperative Societies, Sir
P.Rajagopalachariar
STATEMENT OF THE PROBLEM
The Central government announced a number of programmes which would help in meeting
the credit requirements of the urban and rural sector. In order to augment the flow of credit to the
poor. With the adoption of multi-agency approach, TNSC Bank is facing a stiff competition from
other financial institutions such as commercial banks and regional rural banks in mobilizing deposits
and lending. Hence, the bank should make efforts for tapping deposits from urban and rural areas. So
that, these resources may be made available for agricultural and rural development.
Over recent years, the financial health of the urban co-operative sector has shown an
improvement. In 2011-12, the sector showed an increased return on assets and a further fall in the
ratio of Non- Performing Assets (NPAs). As per the new CAMELS rating model, 61 per cent of the
UCBs, accounting for about 78 per cent of the total banking business of the UCB sector, had ratings
of ‘A’ and ‘B’, indicating the good financial health of this sector. As regards rural co-operatives, State
Golden Research Thoughts | Volume 4 | Issue 5 | Nov 2014
4
. Study On Financial Performance Of Tamil Nadu State Co - Operative Bank
A
Co-operative Banks and District Central Co-operative Banks showed some signs of improvement in
profitability and asset quality in 2010-11, partly attributable to the prudential regulatory reforms and
implementation of the revival package for the short-term rural co-operative sector. However, longterm rural co-operatives, such as State and Primary Co-operative Agriculture and Rural
Development Banks, showed very weak financial health. Going forward, it is necessary to persevere
with recapitalisation and regulatory reforms so that the rural co-operative sector can lend support to
financial inclusion and agriculture.
REFERENCE
1.Statement on the Co-operative identify, ICA, Geneva, 2006, p 1-2.
2.Report of the Co-operative Planning Committee, 1946.
3. R. Philips, Economic Nature of Co-operative Association, p.74.
4. http://www.nabard.org/introduction.asp
5.India banking sector: http://www.scribd.com/doc/8361020/india-banking-sector
6.http://www.rbi.org.in/scripts/fun_urban.aspx
7.www.TNSC.com
8.Aggarwal, R.C.; Prasad, B.; and Arora, V.P.S. “Problems and Prospects of Cooperative Credit: A
Case Study”, IndianCooperative Review, Vol. IX, No. 3, April, pp. 417-422.
9.Jangid, SatyaNarayanCooperative Banking in Punjab, Doctoral Thesis, University Business
School, Panjab University, Chandigarh.
10.Kanagasabai, N. (1984), “Determinants of Profitability – A Case Study of a State Cooperative
Bank”, Indian Cooperative Review, Vol. XXI, No. 3, January, pp. 221-224.
11.Asaithambi, K. (1988), “Performance Appraisal of Andaman & Nicobar State Cooperative
Bank”, Indian Cooperative Review, Vol. XXV, No. 4, April, pp. 395-402.
12.GovindParrek, “Central Co-operative Banking in a Developing Economy”, (Jaipur: National
Publishing House), 1990, P.45.
13.Chakaraborty, “study on Maharashtra state co-operative bank”, International Journal of
Consumerism. Vol.1(1), 1996, pp.34-35.
14.Debabrata Das, “Co-operative Banking in Arunachal Pradesh”, - A Case Study, Indian Cooperative Review, July 2000, pp.48-53.
15.Ganesan, N. “A Study on the Performance Analysis of the State Cooperative Banks in India”,
Prajnan, Vol. XXXIV, No. 4,pp. 311-321.
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