Credit management & npa of co operative bank ltd.1

Financial Statement Analysis of RDC Bank, Rajkot.

A PROJECT ON

FINANCIAL STATEMENT

ANALYSIS

S.K.PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES


FINANCIAL STATEMENT ANALSIS OF

RAJKOT DISTRICT CO-OPERATIVE BANK LTD.

(RDC BANK)

A PROJECT REPORT SUBBMITTED IN PARTIAL FULFILLMENT OF THE M.B.A. DEGREE

PROJECT GUIDE

Mr. PARSOTAMBHAI TALAVIYA, STATISTICS OFFICER, RDC BANK LTD.

SUBMITTED BY

DHAMSANIA VISHAL (ROLL NO. )

S.K.PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIESGANDHINAGAR, INDIA

JULY 2005



RAJKOT DISTRICT CO-OPEARTIVE BANK (H.O.)



Preface

The banking activities play a crucial role in overall economic development, in case of developing country. This now progresses rapidly along with its various activities.

I represent to you SHRI RAJKOT DISTRICT CO-OPERATIVE BANK a joint venture sector enterprise promoted by the Gujarat state co-operative bank.

The Rajkot District Co-Operative Bank provided me the golden opportunity for me to enrich my knowledge by comparing theoretical knowledge with practical knowledge, and also helped me to understand how important it is to important aspect of any study. It helps to students to observe and analysis real life practical with the help of theoretical knowledge. Project report is a part of study in the curriculum to know the practical aspect of activities in banking. It provides opportunity to work with people and interact with them.

It was a privilege for me to work in such a reputed bank like RDC bank, RAJKOT. This has given me an opportunity to work in truly professional environment where teamwork scores over individual efforts. This study was undertaken during the project work for the period of June-July 2006, as partial fulfillment of MBA programme of GUJARAT UNIVERSITY.

DATE :-

VISHAL DHAMSANIA



We learn in Management is “Manage + Men + T (Time, Task, etc.)”. I agree with this statement & wish to include that it would have been not possible to complete this project with out help and support of many people. I am thankful to all of them.

First and foremost I am thankful to Mr. M. B. Ladani, Additional Deputy Manager and my Project Guide Mr. P. S. Talaviya, RDC Bank for giving me this valuable opportunity to have our Summer Project at the well-known Co-Operative Bank, RAJKOT DISTRICT CO-OPERATIVE BANK LTD. I thank them to take keen interest in my work, and guide me throughout the project.

I would like to take this opportunity to thank my college, S. K. PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES, GANDHINAGAR, for giving me this tremendous opportunity to work in the banking industry for the real-time project.

It is with a deep sense of gratitude that I would like to acknowledge our Director Prof. S Chinnam Reddy and all Faulty members who have been kind enough to me in regard to completion of the project.

I would like to acknowledge with thanks the resource full service and support rendered by Librarian and Lab assistant at SKPIMCS.

It would be an incomplete acknowledgement if I don’t remember my Parents. This report would not have become a reality without blessing of my Parents who constantly inspired me, supported me, and contributed their precious knowledge toward my project. I sincerely extend my gratitude to them for their inspiration and prayer.

Last but not the least I thank to almighty GOD who gave an opportunity to me to work on this project with the co-operation of others and I have reached this milestone successfully. I am also thankful to my seniors, my classmates and other friends who helped me in getting through this project work, smoothly. Special thanks to those who inspired me to go for this project, and also to those who think “Why This & Why Not This”!



OVERVIEW OF BANKING

INDUSTRY



INDIAN BANKING INDUSTRY

The Indian banking can be broadly categorized into nationalized

(government owned), private banks and specialized banking institutions. The

Reserve Bank of India acts as centralized body monitoring any discrepancies and

shortcoming in the system. Since the nationalization of banks in 1969, the public

sector banks or the nationalized banks have acquired a place of prominence and

has since then seen tremendous progress. The need to become highly customer

focused has forced the slow-moving public sector banks to adopt a fast track

approach. The unleashing of products and services through the net has

galvanized players at all levels of the banking and financial institutions market

grid to look a new at their existing portfolio offering. Conservative banking

practices allowed Indian banks to be insulated partially from the Asian currency

crisis. Indian banks are now quoting all higher valuation when compared to

banks in other Asian countries (viz. Hong Kong, Singapore, Philippines etc.) that

have major problems linked to huge Non Performing Assets (NPAs) and

payment defaults. Co-operative banks are nimble footed in approach and armed

with efficient branch networks focus primarily on the ‘high revenue’ niche retail

segments.

The Indian banking has finally worked up to the competitive dynamics of

the ‘new’ Indian market and is addressing the relevant issues to take on the

multifarious challenges of the globalization. Banks that employ IT solutions are

perceived to be ‘futuristic’ and proactive players capable of meeting the

multifarious requirements of the large customer’s base, Private Banks have been

fast on the uptake and are reorienting their strategies using the internet as a

medium. The internet has emerged as the new and challenging frontier of



marketing with the conventional physical world tenets being just as applicable

like in any other marketing medium.

The Indian banking has came from a long way from being a sleepy

business institution to a highly proactive and dynamic entity. This

transformation has been largely brought about by the large dose of liberalization

and economic reforms that allowed banks to explore new business opportunities

rather than generating revenues from conventional streams (i.e. borrowing and

lending). The banking in India is highly fragmented with 30 banking units,

contributing to almost 50% of deposits and 60% advances. Indian nationalized

banks (banks owned by the government) continue to be the major lenders in the

economy due to their sheer size and penetrative networks which assures them

high deposit mobilization. The Indian banking can be broadly categorized into

nationalized, private banks and specialized banking institutions.

The Reserve Bank of India acts as a centralized body monitoring any

discrepancies and shortcoming in the system. It is the foremost monitoring body

in the Indian financial sector. The nationalized banks (i.e. government-owned

banks) continue to dominate the Indian banking arena. Industry estimates

indicate that out of 274 commercial banks operating in India, 223 banks are in

the public sector and 51 are in the private sector. The private sector bank grid

also includes 24 foreign banks that have started their operation here. Under the

ambit of the nationalized banks come the specialized banks institutions. These

co-operatives, rural banks focus on areas of agriculture, rural development etc.

INDIAN BANKING SYSTEM:



Banking segment in India function under the umbrella of Reserve Bank of

India the regulatory, Central bank. This segment broadly consists of

1. Commercial Banks

2. Co-operative Banks.

The banking system has three tiers. These are the scheduled commercial

banks; the regional rural banks that operate in rural areas not covered by the

scheduled bank & the co-operative and special purpose rural banks.

1. Commercial Banks :

The commercial bank structure in India consist of

A) Scheduled Commercial bank

B) Nonscheduled bank.

Scheduled & Non Scheduled Bank :

There are approximately 50 scheduled commercial banks. Indian &

foreign almost 200 regional rural banks. More than 350 central co-operative

banks. 20 land development bank and No. of primary agriculture credit societies.

1. Co-Operative Banks :

There are two main categories of the co-operative banks.



A) Short term lending oriented co-operative bank -- within this category

of banks, State Co-operative bank, District co-operative bank &

Primary agricultural co-operative societies.

B) Long Term lending oriented co-operative bank – within the second

category there are land development bank at three level, state level,

district level & village level.

The Co-Operative banking structure in India is divided into different co-

operative banks.

i) Primary urban Co-operative banks.

ii) Primary Agricultural co-operative societies

iii) District central co-operative banks

iv) State co-operative banks

v) Land development banks.

BANKING INSTITUTIONS :

The magnitude of resource mobilization by banking institutions is related

to the capacity of these institutions to reach numbers and their success and

efficiency in looking after their clientele. For instance, if the banking offices

were confirmed to a few centers of the country only, very naturally, the capacity

of the banks to mobilize deposits from the public would remain limited to that

extent. And if the network of banking offices were extended to all parts of the

country and most of the population could reach one or the other bank office

conveniently, the deposits would be of a larger order. Similarly, if the banking



institutions functioned efficiently and made rigorous efforts to provide

satisfaction to the savers irrespective of the fact how big were the deposits of a

saver-the bank could still improve their effectiveness in deposit collections. In

developing economy banking institutions have a special role in making people

‘bank minded.’ For a large majority of those who can save, opening of an

account in a bank would be a new experience. And therefore utmost care would

need be taken in seeing to it that the experience is not so unfortunate that an

average saver would decide to never visit a bank office again. If a visit to a bank

office could be made a pleasant experience the banks would become still better

institutions of deposit mobilization. This aspect needs to be underlined since

very often it is not realized that in undeveloped economies, the savers are not as

enlightened as to always bother to look into the economies of returns of their

savings. Their values and decisions are dependent upon, at least equally, on

considerations other than the interest rates. And one of the important factors is

the security of definite and the personalized service and the consideration they

would receive from the bank staff. The importance of enhancing savings may

not be fully appreciated by an ordinary man. For this one can only say that if the

banks can draw out financial surpluses from the community by way of the

deposits to that extent the buying power in the community gets contracted. And

by the magnitude there is a reduction in the aggregate consumption with a

corresponding release of physical resources which can be diverted towards the

creation of additional national capital.

Similarly, by practicing selected credit policies the banks can influence

the consumption pattern in the society. The banks are important agencies for

ensuring greater savings to help economic development. The capacity and will to

save on the part of the savers is not itself sufficient to ensure deposits. What is

equally important is the existence of an institutional framework which makes it



convenient to save. One has no measure to assess the level of willingness but it

would not be too wrong to presume that everyone, whether rich or poor, would

have a desire to save. The degree of will power would, however, vary from one

individual to another. In a county which recognizes private property and rights to

inheritance an average man would undoubtedly like to save. But the real

problem is that of impressing upon the savers that the function of saving was

also a national obligation and each person must save by habit and in an

organized manner. The task of making ‘saving’ conscious is only possible if

there was an institutional framework which would undertake this task vigorously

and continuously. And further to this the set up must ensure the necessary

physical and organizational conveniences to the savers. It is in the context that

one has to evaluate the capacity of the existing financial structure as instruments

of enhancing and further mobilization of savings.

It has been pointed out that the commercial banking in India has remained

concentrated in urban centers and also in the comparatively advanced states of

the country. It would not be correct to form an impression that banking offices

are evenly spread over space within the urban centers or in the comparatively

better off states.

From this view point of savings potential, it would be appropriate to

mention the general belief that the poorer sections in the Indian society have

very little savings capacity is completely misplaced. In fact the savings with the

lower income groups in the urban centers which will equal the middle income

groups of the rural population are of a significant order. While the middle

income groups enter into a race for consumption of ‘prestige goods’ and become

victims of the ‘demonstration effect’ and have lesser savings willingness to save

in the lower-income groups are still conservative and do effect savings.



Considering the number involved even small saving when aggregated

would come to a fairly significant order. There is no doubt that dealing with very

small amounts and with large numbers of comparatively lesser educated

depositors would involve higher costs of administration of these bank offices.

The same is true about rural areas. But the benefits of such savings are many

times more than the costs of deposit collections. But this approach can only be

followed by such institutions which have the proper perspective of their role and

are even prepared to bear short term promotional losses in the overall and long

term interests of the societies.

RURAL BANKING

For a long time the official view regarding the provision of banking facilities to

the rural areas has been that extension of banking facilities to the rural sector

should be earmarked for the cooperatives and urban banking should be largely

left for the commercial banks. The Imperial Bank of India, it also argued that the

private commercial banks cannot reach the villages because opening of branches

in the rural areas was not a profitable proposition. It was, therefore, suggested

that with the nationalization of the Imperial Bank, the State Bank of India would

have special responsibility to provide banking facilities in smaller towns and

villages. Thus, the official attitude seems to have been that the State Bank of

India and the cooperatives would specialize in rural banking and the private

commercial banks would confine their activities to the urban centers. The

implication of this division of areas between the public sector banking (State

Bank of India) and the cooperatives vis-à-vis the private commercial banks is

that the non profitable banking should be the main responsibility of the public



sector institutions whereas the profitable ones should be earmarked for private

banking institutions. It is recognized that since rural banking is not a profitable

business (and that is why private banks do not attempt this) therefore, the

cooperatives and the State Bank of India have to be adequately subsidized for

such bank offices which run under loss and were opened with the intention of

covering rural area.

Such an approach would be all right if it was clearly understood that the

cooperatives and the public sector banks were not to be judged on the same

criteria as the other commercial banking institutions. The public sector banking

institutions may, therefore, be judged on different standards than the private

ones. But unfortunately it is argued that private banks do not want to go to rural

areas because it was not profitable and therefore the public sector (State Bank of

India) should undertake the responsibility of entering into the losing business. In

the same breath it is also expected that the State Bank should show at least the

same profits as other private banks. This really means that the non-profitable

propositions are meant for the pubic sector and the profitable ones for the private

sector. And then we turn bank to judge the efficiency on private profit criteria.

No logic could strange than this.



CO-OPERATIVE BANKING

Co-Operative Societies :

As for the role of co-operatives in rural banking is concerned, it is high

time that we understood what the cooperatives can do and what these cannot.

We must understand the structural handicaps of the cooperative credit system in

an economy like ours. It is only after a proper appreciation of the capacity of the

cooperatives that one can decide a to how far the cooperatives can offer a

solution to the problem of providing banking facilities in the rural areas.

It should, however, be made clear that we do not doubt the importance and

the role that cooperatives in ameliorating the economic and social conditions of

the rural areas in general and the farmers in particular. Basically, the

cooperatives movement is a sound one and has many a merit. For instance,

agricultural, marketing, service, industrial and consumers’ cooperatives are of

great significance in a developing society like ours. However, the need for

opening of bank offices in rural areas is not purely the provision of credit ot

agriculture. It is more than this. In this respect that we need to understand some

of the structural and other inherent limitations of the cooperative credit societies.

Also one has to take due note of the present defects in the cooperative

movement. No doubt some of the defects in the cooperative credit movement

can be set right with appropriate reforms. But, the inherent limitations of this

movement for purposes of extending banking facilities to rural areas can hardly

be met by such actions. At the same time we visualize that opening of branches

of the organized banking institutions in rural areas would help to strengthen the

cooperative credit movement in the country side. The existence of organized



banking is not a substitute or a rival development to cooperative credit societies.

On the other hand, in our view organized banking is a complementary and a pre-

requisite for effective functioning of the cooperative credit institutions. In

principle the credit cooperative societies need not necessarily be dependent upon

the governmental finance alone. The objective of establishing cooperatives in

India, as also anywhere else in the world, is to bring the various economic

functionaries together for mutual help.

For instance, credit societies, it was expected, would receive deposts from

those of their members who had surplus resources, and in turn, these resources

would be lent to those who need financial assistance. In this manner, the

cooperatives could eliminate the money lenders who discharged this function of

receiving deposits and lending credit to the farmers. In this manner the

cooperatives could provide a system of mutual help and eliminate the

exploitation of the private moneylenders. The cooperatives, viewed from this

angle, are an institutional reform where intermediaries are attempted to be

eliminated. This is the spirit of cooperative movement. In the initial stages, the

Government and other public institutions could provide financial assistance to

the cooperatives if the requirements of the members of the cooperatives were

more than what the cooperatives could raise from their own members. But

unfortunately, in India cooperative credit movement has come to a stay as

heavily dependent upon the governmental finance. It is evident from the fact that

out of a total working capital of the cooperative credit institutions of Rs. 2101.44

crores in 1963-63, nearly Rs. 500 crores was the share capital and resources. The

rest was provided by the Reserve Bank of India, by the Government and other

public institutions. Since the credit cooperating societies have not succeeded in

resource mobilization from their members or otherwise, these have remained

instruments of one way flow of finance from the Government to the members of



these cooperatives. Thus the credit cooperatives are in practice only credit

distributing agencies.

No doubt this is an important function in itself. But this certainly is not

banking for rural area. The cooperative movement has been heavily subsidized

by the way of cheap and easy credit by the Reserve Bank of India. Because of

this most of the cooperatives were organized by those only who wanted to avail

of the governmental financial assistance. Right from the beginning the objective

of organizing cooperative credit societies was to avail facilities rather than to

become a forum to local farmers and other ruralities for mutual help. Secondly,

the cooperative societies’ being each independent of the other has to function in

isolation and therefore these societies cannot offer the normal banking facilities

which an organized bank can. Due to this handicap, very naturally the depositors

prefer to maintain their surplus either with the moneylenders or hoard the

amounts in cash with them than handing over the same to a local cooperative

credit society which cannot allow similar and easy withdrawal facilities as a

private moneylender can. Of course provision of other banking facilities like

transfer of funds from one place to another and safe deposit facilities are out of

question. Therefore, the depositors are not encouraged to use the cooperative

credit societies as institutions where they can deposit their surplus financial

resources. Also, because of the advantage offered and the considerable subsidy

element, the membership of the cooperatives (which is true about all types of

cooperatives) is taken to be closed for others and is confined to a small section

of the population of a village. A number of studies conducted by the Reserve

Bank of India and other scholars on the working of the cooperative credit

societies indicate that majority of the cooperatives can hardly be described as

genuine cooperative societies. These are either group organization or family

organizations.



A study of the Central Cooperative Banks would also indicate that the

control and management of the cooperative finance is generally in the hands of a

family or a group of persons and the functioning of the cooperative banks is not

much at variance from any other private financial institution. Even as credit

distributing agencies the cooperatives have not made the desired impact. The

main reason for this has been the unwillingness on the part of the cooperatives to

depart from the credit-worthiness criteria for extending financial

accommodation. As a result of this cooperative credit has been availed by those

only who could even otherwise raise capital of their own if they choose to do so.

A study of the Cooperative credit distribution would indicate that a large share

of total credit has gone to a fraction of the population comprising of big

landlords and so on. This to some is unavoidable in a society whose membership

comprises of a heterogeneous groups with a few dominating the decisions and

functioning of the society. There cannot be any meaningful cooperation between

the unequal. The situation can, however, be better dealt with by such organized

agencies which are independent of local and vested interest and would function

on considerations of merit, not always, and only based on the conventional

criteria of credit worthiness of a borrower.

Another structural defect of the cooperatives, mainly dealing with farmers

is that a good part of the financial resources remain idle during the year. For

instance credit needs of the farmers are the most in the sowing seasons and the

pre-harvest periods. The loan recoveries are made after the harvest. Since there

is time gap between the sowing and harvesting seasons, during the middle

periods the finances of the cooperatives cannot be idle. However, the

requirements of the agricultural trade and processing industries are the most in

the post-harvest period. But because of the absence of any institutional mutual



arrangements the idle resources of the cooperatives do not become available for

the latter purposes. This cannot be helped if the cooperatives remain in isolation

of the organized banking structure. The net result of the division of

responsibility between the private commercial banks and the Reserve Bank of

India in financing of industry and the trade on the one hand and agriculture on

the other respectively has been a fragmentation of India’s financial system into

two water tight compartments. The private commercial banking system operates

in unplanned isolation from the needs of the rural sector while the cooperative

banking system finances agriculture without any coordination with the needs of

the industrial and urban sectors. The inevitable economic consequence is that

there is misallocation of financial resources between the two sector. This comes

about because the funds earmarked for the rural sector remain idle for a major

part of the year while the idle funds of the private commercial system during the

lean period cannot be utilized for short term financing of the agricultural

operations. Inevitably, too much finance is thus tied up merely because the

financial system is fragmented into thee two broad divisions. If the private

banking system were to be nationalized, it would be possible for the Government

to integrate the financial system of the country into one complete whole. This

would help to save idle resources of both financing sectors as well as help to

coordinate and integrate their financing operations into a system of planned

development. Moreover, the killed personnel of the cooperative financial sector

as well as of the private commercial banks can be integrated with one another in

order to provide a much large cadre of trained personnel in banking operations

of the country. Such integration of two major financing sectors in the country

would also help to curb the flow of financial resources into the unorganized

money market which plays havoc with the economy in the present situation of

acute scarcities and shortages. Once the two financing sectors, that is the private

commercial banks and the cooperative sectors are integrated, they would



constitute a major source of attraction for all voluntary savings of the

community in so far as they would reach out to all the areas of the country from

the highest to the lowest range of society, and provide the best security for the

deposits of all savers, big or small. Moreover, in the presence of such a unified

financial system the unorganized money market would lose much of its

attraction and concealed power to engage any financing operations which will be

beyond the purview of the organized financial system. Let us not imagine that

the unorganized money market in the country operates entirely outside the

banking system. There are strategic points of linkage, between the unorganized

money market and the banking system. These linkages would come to full view

once the banking system is fully unified under the State control, and it will be

easy to keep a watch and regulate the activities of the unorganized money

market far more effectively than has been possible hitherto.

REGULATION OF COOPERATIVE BANKS IN INDIA :

A spate of functioning of these banks can be improved through a variety

of ways, including by enabling depositors to enforce market discipline failures in

recent years has raised concern about the working of cooperative banks.

The question as to whether banks need to be regulated, and to what extent,

has been at the heart of many debates in academia and among central bankers

the world over. Many academics believe that regulation b central banks should

be effectively combined with market discipline. Though there is no clear cut

answer on how much weight should be placed on the market, there is a growing

consensus that market discipline should be an integral part of any regulatory

policy of monitoring banks. Apart from the question about the optimal weight to



be placed on market discipline, another question that arises pertains to the kind

of regulatory policies required by the central bank and the implementation of

these policies.

Failure of banks is a subject that is much despised by politicians and

central bankers. Generally, it is very rare that one hears of the failure of banks.

Most often, there is a revival of the failed bank or merger with a healthy bank.

The justification that is often provided is that the social costs of a bank failure

are huge. Firms that borrow from the failed bank are unable to substitute credit

and there is a loss of valuable information about borrowers, which in turn

hampers economic development. These arguments hold greater validity in the

case of smaller banks like cooperative banks that primarily deals with small and

more opaque borrowers. This brings us to the issue of cooperative banks in

India.







BALANCE SHEETOF

RAJKOT DISTRICT CO-OPEARTIVE BANKRs. In lacs

Sr. No.

CAPITAL & LIABILITIESDt. 31/03/06

Amt. Rs.Dt. 31/03/05

Amt. Rs.Dt. 31/03/04

Amt. Rs.

1. Share Capital 2135.00 1903.44 1851.65

2. Reserve Fund & Other Reserve 8548.01 7896.05 7298.27

3. Deposits & Other Accounts 67767.62 67545.72 66149.87

4.Subsidiary State Partnership Fund A/c

5.36 6.01 7.88

5. Loans 11906.90 8279.02 12915.59

6. Bills for Collection 60.91 65.60 61.21

7. Bank Adjustment 137.45 134.37 48.66

8. Overdue Interest Reserve 1187.09 1188.09 1200.00

9. 31.24 32.84 37.15

10. 386.37 87.58 95.42

11. Payable Interest 149.98 147.19 152.99

12. Other Liabilities 979.77 587.93 732.17

13. Profit & Loss A/c 1065.00 950.00 1000.00

94360.75 88823.91 91550.92



BALANCE SHEETOF

RAJKOT DISTRICT CO-OPEARTIVE BANKRs. In lacs

Sr. No.

ASSETS & RECEIVABLESDt. 31/03/06

Amt. Rs.Dt. 31/03/05

Amt. Rs.Dt. 31/03/04

Amt. Rs.

1. Cash 2779.01 2978.45 2648.21

2. Bank Balance (in other banks) 5967.36 12121.58 23102.41

3. Investment 12923.47 13239.67 9532.67

4.Subsidiary State Partnership Fund Investment

5.36 6.01 7.88

5. Loans 67397.13 56681.31 51853.78

6. 386.37 87.58 95.42

7. Interest Receivables 2780.65 2363.43 3326.44

8. Bills for Receivables 60.91 65.60 61.21

9. Branch Adjustments -- -- --

10. Building (less Depri.) 1217.04 1068.48 721.21

11. Furniture (less Depri.) 694.39 123.23 117.48

12. Computer (less Depri.) 30.70 11.80 13.96

13. Other Assets 118.33 76.71 70.20

94360.75 88823.91 91550.92



PROFIT AND LOSS A/cOF

RAJKOT DISTRICT CO-OPEARTIVE BANK

Rs. In lacs

Sr. No. DEBIT Dt. 31/03/06

Amt. Rs.Dt. 31/03/05

Amt. Rs.Dt. 31/03/04

Amt. Rs.

1. Interest on deposits and Loan’s 4827.25 4828.30 6201.15

2.Salary, allowances & Provident Fund

1761.94 1629.53 1551.15

3.Fees & allowances to Director & Local Committee

6.53 6.62 5.86

4.Rent, taxes, insurance, electricity, repairing etc.

118.11 101.59 70.11

5. Law Charges 4.37 1.23 1.86

6. Postage & telegraph 17.96 14.61 13.66

7. Audit Fees 14.67 15.57 14.66

8. Depreciation 127.96 58.46 56.56

9. Stationery Printing 1.27 10.32 9.47

10. Other Expenses 158.44 115.27 64.38

11. Other Provisions 369.60 82.01 410.29

12. Profit 1065.00 950.00 850.00

8473.15 7811.56 8905.70



PROFIT AND LOSS A/cOF

RAJKOT DISTRICT CO-OPEARTIVE BANK

Rs. In lacs

Sr. No. CREDIT Dt. 31/03/06

Amt. Rs.Dt. 31/03/05

Amt. Rs.Dt. 31/03/04

Amt. Rs.

1.Interest from Advances & Investment

8336.05 7647.74 9774.70

2.Commission, Discount received, Brokerage

44.13 30.05 29.25

3. Subsidy and Donation received -- -- --

4.Income from non-banking assets and profit from sale of or dealing with such assets

13.48 -- --

5. Other Income 79.48 133.75 79.32

8473.15 7811.56 9883.26



ACCOUNTING POLICIES

Accounting policies refers to the specific accounting principles and the methods of applying that principle adopted by the enterprise in the preparation of the financial statement. There is no single list of accounting principles, which are applicable to all the circumstances. An enterprise operates in a situation of diverse and complex economic activities. The choice of the appropriate accounting policies and the methods of applying those principle in the specific circumstances of each enterprise call for considerable judgment by the management of the enterprise/bank.

The purpose of accounting policies and standard is to promote better understanding of financial statement. It also facilitates more meaningful comparison between financial statement of different enterprise/bank.



RATIO ANALYSIS

Ratio analysis is widely used tool of financial anaylsis. It is defined as the systematic use of ratio to interpret the financial statement so that the strength and weakness of the firm as well as its historic performance and current financial condition can be dertermined. The term ratio refers to the numerical or quantitative relationship between two items/variables. This relationship can be expressed as

Percentage Fraction Proportion of number

These alternative methods of expressing items, which are related to each other, are for the purpose of financial analysis refered to as ratio analysis. The rational of the ratio analysis lies in the fact that it makes related information comparable. A single figure byitself has no meaning but when expressed in term of a related figure, it yields significant interference.

Since we are using the terms “RATIO”


Education

Credit management & npa of co operative bank ltd.1