A STUDY ON FINANCIAL PERFORMANCE OF VEMBAYAM

SERVICE
CO-OPERATIVE BANK LTD.NO.3121
A project report submitted to the Institute of Co-operative Management in
partial fulfillment of the requirements for the award of the Higher
Diploma in Co-operative Management

Submitted by

SHAKIRA SHAFEEK
Register Number : 20212739

Under the guidance of

LAXMI SURESH BABU
Faculty, ICM

INSTITUTE OF CO-OPERATIVE MANAGEMENT

POOJAPPURA, THIRUVANANTHAPURAM
2020-2021

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 INSTITUTE OF COOPERATIVE MANAGEMENT
POOJAPPURA, THIRUVANANTHAPURAM

This is to certify that the project report entitled “A STUDY ON FINANCIAL

PERFORMANCE OF VEMBAYAM SERVICE CO-OPERATIVE BANK

LTD.NO.3121” submitted here is a bonafide record of the work done by SHAKIRA
SHAFEEK under guidance in partial fulfillment of the requirement for the award of the
Higher Diploma in Co-operative Management and this work has not been submitted by her for
the award of any other degree, diploma or title of recognition earlier.

Mr. R.K.MENON Smt. LAXMI SURESH BABU

Director of ICM Project Guide

Faculty, ICM

Place : Thiruvananthapuram

Date :

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 DECLARATION
I hereby declare that the project report entitled “A STUDY ON FINANCIAL

PERFORMANCE OF VEMBAYAM SERVICE CO-OPERATIVE BANK LTD.NO.3921” is carried

out by me and submitted to the Institute of Co-operative Management for the partial fulfillment of
the requirements of award of the Higher Diploma in Co-operative Management. The report has not
been submitted for the award of any other Degree of this institute or any other university.

Place : Thiruvananthapuram SHAKIRA SHAFEEK

Date :

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 ACKNOWLEDGEMENT
I wish sincerely this opportunity to acknowledge different persons who encourage and
render service for doing this project.

First and foremost I would like to express my deep sense of gratitude to Lord Almighty for
the invisible guidance and blessings rendered upon me for the successful completion of this
work.

I am extremely thankful to Mrs. Anitha Kumari . R, Secretary of Vembayam Service

Cooperative Bank Ltd.No.3921, for granting permission to do my project work. I express my
sincere gratitude to all staff members for their valuable guidance and suggestions rendered
during this work.

I express my sincere thanks to the Director of ICM, Mr. R. K. Menon.

I take the opportunity to express my sincere thanks to Smt. Laxmi Suresh Babu., Faculty
member of ICM, Thiruvananthapuram, for having consented to be my project guide and
provided with facility for my work.

I owe much to my beloved parents, relatives and friends for their support and motivation
throughout the project, without whom I would not have completed my project successfully.

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 CONTENTS

CHAPTER TITLE PAGE NO.

I DESIGN AND EXECUTION OF STUDY
8 to 19
II ORGANISATIONAL PROFILE
20 to 34

III DATA ANALYSIS AND INTERPRETATION 35 to 56

IV FINDINGS AND SUGGESTIONS 57 to 61

LIST OF TABLES

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TABLE NO. TITLE PAGE NO.

1 Ratio of working fund Growth Rate 38

2 Ratio of share capital to working fund 39

3 Ratio of owned fund to working fund 40,41

4 Ratio of deposits to working fund 42

5 Ratio of borrowed fund to working fund 43

6 Ratio of loans to working fund 44,45

7 Ratio of credit deposit ratio 46

8 Ratio of yield assets and its growth rate 47

9 Ratio of miscellaneous income to working fund 49

10 Ratio of loans to yield assets 50

11 Ratio of yield on investment 51

12 Ratio of cost of borrowing 52,53

13 Ratio of cost of deposit 53

14 Ratio of yield on loans 54,55

15 Ratio of interest expense to interest income 55,56

LIST OF CHARTS

CHART NO. TITLE PAGE NO.

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1 Ratio of working fund growth rate 38

2 Ratio of share capital to working fund 40

3 Ratio of owned fund to working fund 41

4 Ratio of deposits to working fund 42

5 Ratio of borrowed fund to working fund 44

6 Ratio of loans to working fund 45

7 Ratio of credit deposit ratio 46

8 Ratio of yield assets and its growth rate 48

9 Ratio of miscellaneous income to working fund 50

10 Ratio of loans to yield assets 51

11 Ratio of yield on investment 52

12 Ratio of cost of borrowing 53

13 Ratio of cost of deposit 54

14 Ratio of yield on lopp88ans 55

15 Ratio of interest expense to interest income 56

CHAPTER – 1

DESIGN AND EXECUTION OF STUDY

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8
INTRODUCTION
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. The primary purpose of a co-operative is to
satisfy the social and economic needs of its members. A strong membership base is the
foundation of a strong co-operative enterprise, everywhere, every time and for everyone.
Building strong membership and human resources not necessarily capital, is the basis for
building cooperatives that are both economically strong and sustainable.

Co-operative principles play an integral role in development of co-operatives and give

clear guidance as to how co-operative should operate. These principles ensure the
replications of this promising model to garner social and economic benefits for all. Each and
every member in some way should participate in the business of co-operatives regularly.
They also repose their confidence in their own organization. Participation in the business is
the key to the success of a co-operative enterprise. It helps in refining the methods and
techniques of doing business and making member services more efficiently.

The primary objective of every Cooperative is to provide goods and services to its
members and thus enable them to attain increased income and savings, investments,
productivity and purchasing power and promote among them equitable distribution of net
surplus through maximum utilization of economies of scale, cost-sharing and risk-sharing
without however, conducting the affairs of and available to all individuals regardless of their
political, racial or religious background the cooperative for charitable purposes. Every
Cooperative shall conduct its affairs in accordance with the universally accepted principles.

The primary aim of co-operative organization is to improve the economic situation of

its members, who are generally economically, weak and powerless. Co-operation as an
institution suits the world capitalist, socialist and mixed economy. Therefore, it has existed
and it exists in countries in one form or other. The motto of co-operation is “Each for All and
All for Each”. That is, each member looks after the interest and welfare of the whole body
of the members.

The cooperative principles are guidelines by which cooperatives put their values into
practice. These are the foundation for understanding cooperatives and their functioning.
These principles make cooperatives distinct from other organizations. They provide
standards to help decide whether an organization can be called a cooperative or not.

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 The cooperative principle includes:

 Open and Voluntary Membership

 Democratic Member Control
 Member Economic Participation
 Autonomy and Independence
 Cooperative Education, training and Information
 Cooperation among Cooperatives
 Concern for community

COOPERATIVE MOVEMENT IN THE WORLD

The cooperative movement began in the Europe in the 19 th century, primarily in
Britain and France, although The shore Porters Society claims to be one of the world’s first
Cooperative being established in Aberdeen in 1498 (although it has since demutualized to
become a private partnership). The industrial revolution and the increasing mechanism of
the economy transformed society and threatened the livelihood of many workers. The
concurrent labour and social movements and the issues they attempted to address describe
the climate at the time. The first documented consumer cooperative was founded in 1769,
in a barely furnished cottage in Fenwick, East Ayrshine, when local weaver’s man handled a
sack of oatmeal into John Walker’s White washed front room and began selling the contents
at a discount, forming the Fenwick Weavers Society.

In the decades that followed, several Cooperatives or Cooperatives Societies formed

including Lennox town Friendly Victualling Society, founded in 1812. By 1830, there were
initially successful, but most cooperative founded in the early 19 th century had failed by
1840. However, Luck Hurst Lane Industrial Cooperative Society (founded in 1832 and now
Heart of England Cooperative Society), and Galashiels and Hawick cooperative societies
(1839 or earlier, merged with the Cooperative Group) still trade today. It was not until 1844
when the Rochdale society of Equitable Pioneers established the Rochdale Principles on
which they ran their cooperatives, that the basis for development and growth of the
modern cooperative movement was established.

Financially, credits unions were invited in Germany in the mid 19 th century first by
France Hermann Schulze – Delitzsch (1852, Urban), then while Schulze-Delitzsch us
chronologically earlier. Raiffeisen has proven more influential over time. In Britain, the

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friendly society, building society and mutual savings bank aware earlier forms of similar
institutions.

Robert Owen (177-1858) is considered as the father if the cooperative movement. A

Welshman who made his fortune in the cotton trade, Owen believed on putting his workers
in a good environment with access to education for themselves and their children. These
ideas were put into effect successfully in the cotton mills of New Lanark, Scotland. It was
that the first cooperative store was opened. Spurred on by the success of this he had the
idea of forming, “Villages of Cooperation” where workers would drag themselves out of
poverty by growing their own food, making their own clothes and ultimately becoming self-
governing. He tried to form such communities in Orbiston in Scotland and in Scotland and
New Harmony, Indian in the United States of America, but both communities failed.

Although Owen inspired the Cooperative movement, others such as Dr William King
(1786-1865) took his idea and made them more workable and practical. King believed in
starting small, and realized that the working classes would need to set up cooperatives for
themselves, so he saw his role as one of the instruction. He founded a monthly periodical
called the Cooperator, the first edition of which appeared on 1 st may 1828. This gave a
mixture of cooperatives philosophy and practical advice about running a shop using
cooperative principle. King advised people not to cut themselves off from society, but
rather to form a society within a society.

The Rochdale society of Equitable Pioneers was a group of 10 weavers and 20 others
in Rochdale Englad that was formed in 1844. As the mechanization of the Industrial
Revolution was forcing more and more skilled workers into poverty, these tradesmen
decided to band together to open their own store selling food items they could not
otherwise afford. With lessons from prior failed attempts at cooperation in mind, they
designed the now famous Rochdale principles, and over a period of four months they
struggled to pool one pound sterling per person for a total of 28 pound of capital. On
December 21, 1844, they opened their store with a very meager selection of butter, sugar,
flour, oatmeal and few candles. Within three months, they expanded their selection t
include tea and tobacco, and they were soon know for providing high quality, unadulterated
goods.

In France Charles Focirier (1722-1837) published a treatise on Domestic Agricultural

Association I 822, first tie 9n cooperative and Saint Simon (1760-1865) worked on various
theories of association. Schulze-Delitzsch (1808-1865) was the promoter of Urban
Cooperative and Cooperative in handicraft, while F.W. Raiffeisen (1818-1888) did the same
for rural credit cooperatives.

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 Early the 20 th century, the cooperative movement spread to India and gradually to
others Asian and African countries; mainly courtesy of the colonial administration. The
cooperative movements become a form of business organization recognized as an
international movement. Although some associate it with socialist or communist countries,
the cooperative movement also operates in capitalists countries such as the Unite States of
America, Canada, Israel and Australia.

CO-OPERATIVE MOVEMENT IN INDIA

Co-operative movement in India would be almost and 100 years old in the near
future. Co-operation as a movement in the country was born in the early years of the
present century mostly as a result of official’s initiative and patronage. The first Act
governing co-operative society was enacted in 1904. But considerable amount of spade
work started much earlier. All are aware of the important land mark in the history of co-
operative movement after 1904. Co-operative societies Act of 1912 became a part of
statute. In 1919 Montague Chelmsford Reform made some important recommendations
regarding co-operative movement and cooperation was put as a subject in the jurisdiction of
the State government.

Even today after the constitution of India came into being, co-operation remains
subject to the state list under our federal constitution. Co-operation occupies an important
place in Indian economy today. In no country in the world is the co-operative movement as
large and diversified and involves participation of as many people as in India. The
introduction of the Cooperative Credit Societies Act in 1904 marked the beginning of the
cooperative movement in India. Mr. Henry Wolff hailed it as ‘a turning point in economic
and social history’. The trend of co-operative movement in India can be analyzed under two
phases;

 Cooperative movement in pre-independence era

 Cooperative movement in post-independence era

These two phases are briefly discussed below:

 Cooperative Movement in Pre-Independence Era:

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 The pages of Indian history cite much evidence of cooperative activities from earliest
times. However, the first recorded activity began in 1904 when this movement was officially
set up by the British Government. Before that in the year 1892, Derrick Nicholson, tried to
find out ways and means to establish institutions so as to help the agricultural sector. He
gave the suggestions for setting of cooperative societies. Within those decades, India faced
a terrible famine in 1899.

The Government appointed the Second Famine Commission 1901 to suggest

measures for the victims. The commission recommended for a number of development
activities and setting up of new institution. The most important among them was the strong
recommendation and in 1904 “cooperative Societies Act” was passed. The aim was Schulze
Delitzsch Bank Model. Due to this Act a number of Cooperative Societies grew up in rural
area, but they could not function effectively. The major defects were.

 There was no provision for setting up of Non-Credit Cooperative

Societies in rural area
 No special Central agency was created for financing and supervising
the activities of these societies.
 The division of the Credit Cooperative Societies into two types rural
and urban stood as a barrier since no specific arrangements could be
done for either due to the overlapping nature of such classification.

The year 1928 saw a worldwide economic depression. The prices of agricultural
commodities fell down to a great extent and unemployment along with other economic
crisis grew up. The creditors had no way to repay the loan. This brought many cooperative
societies in to a standstill position. In year 1933, the Reserve Bank of India was set up. The
bank took some initiative to recognize the cooperative movement. It had a separate
department for cooperative credit. It helped to keep the movement alive which was
gradually decaying.

In 1937, the popular Congress Government came to power in several states. The
popular leaders took much more initiative in organizing and extending this movement. But
much progress could not do due to outbreak of Sound World War. During this time, the
ministry resigned. It was left in the hands of British Government again. But the war itself
gave a boost to cooperative societies. The war brought sudden increase in the prices of
agricultural products and other food grains.

The rural farmer got extra economic gains. Non – credit societies grew up. The
working capital of cooperative societies also increased. The number of different credit and

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non-credit cooperatives increased rapidly. The cooperative movement gathered
momentum.

The all India Cooperative Planning Committee in 1945 also worked a lot in this direction.

 Cooperative movement in Post-Independence Era:

After independence for the first 3 years that is up to no significant development

could be made. It was mainly due to the problem created by partition and absence of
concrete programme for national re-organization. However, the leader of free India could
the importance of cooperative structure of country and various provisions were made
through different Five Year Plan. The cooperative movement complete its 50 years dump
the first plan. The Golden Jubilee was celebrated throughout the country with much
excitement. This made the people feel the importance of such a movement. Attention was
given to utilize the credit in productive activities.

The First Plan also recommended for training of personnel’s and setting up of
cooperative Marketing Societies. The Second Plan laid down proposals for extending
cooperative activity into various fields. It gave special emphasis in the warehousing
cooperative at the State and Central level. The Third Plan brought still new areas under
cooperatives societies. The cooperative society for sugarcane, cotton, spinning, milk supply
was proposed. Some concrete steps were taken to train the personnel’s. The cooperative
Training College at Pune and many regional centers were established to train the workers.

The Fourth Plan emphasized for consolidation of cooperative system. The new
programme for high yielding crops was stated. Different credit societies were organized to
serve this programme. The Fifth Plan made special provisions for improvement of Central
Banks and no viable primary agricultural societies, reorganizing marketing as well as
consumer societies. It also recommended for establishment of Farmer’s Service Societies.
The Sixth Plan laid down a point programme for cooperative societies. It aims at
transforming the primary village societies to multipurpose societies;

 To reconstruct the policies and of cooperative so that it can bring about economic
development of people.
 To extend cooperative activities to the fields if food processing, poultry farming,
dairy farming, fishery and many other related fields.
 To give necessary training and guidance for development skilled the efficient
personnel’s.

The Seventh Plan has also given more importance on the growth and expansion of
cooperative societies to ensure public participation to achieve its main objective i.e. the

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movement towards social justice has to be faster and there must be a sharper focus on
employment and poverty alleviation.

CO-OPERATIVE MOVEMENT IN KERALA

The Kerala state came into existence on 1 st November 1956. The geographical
area of state mainly consists of three parts viz, the states of Cochin, Travancore and Malabar
area of the former Madras province. These three parts had their own separate Co-operative
societies Act.

The Co-operative movement started in the Travancore state only after the
enactment of Co-operative societies Act of 1912 (Central Act). The first co-operative
legislation in the former Travancore state was the Travancore co-operative societies Act of
1914. Mr. C. Govindapillai was the Registrar of co-operative society. The co-operative
society registered under this Act is said to be the Trivandrum Central Co-operative Bank,
which several reorganizations became the present Kerala State Co-operative Bank (K.S.C.B).
The bank was formed with the object to provide financial assistance to primary societies.
Most of them were on F.W. Raiffeisen model in Germany, with limited liability. Soon it was
realized limited liability will be more suitable for the efficient working of societies and
provisions were incorporate in the act of the registration of such societies. The first taluk
bank was started at Nagercoil in 1923 with in a short time such were started in all taluks.

The first co-operative legislation in the former Cochin state was the Cochin
cooperative societies regulation, which was subsequently replaced by the Cochin co-
operative society act of 1913. Sri. Gopalachary who was the registrar of co-operative
society in Cochin State was appointed as Diwan Peshakar subsequently in Travancore. The
first co-operative society registered under this Act was the Edavanakkad Co-operative
Society with unlimited liability. Entire borrowed and owned funds could not be lending as
loan able funds. Allocation from these two categories of funds is made for several purposes
and the balance of the fund could be used as loan able funds. The fund raised by co-
operatives is invested for various purposes. Co-operative banks prepare their credit
planning for their loan policies.

There are at present about 14000 Cooperative Societies under the Registrar of
Cooperative Societies of these 10503 societies are function satisfactorily. This includes the

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apex institution like State Cooperative Bank, The State Agricultural and Rural Development
Bank, 60 Urban Bank, 48 Primary Agricultural and Rural Development Bank and 1602
Primary Lending Societies. The total deposit in the Cooperative sector is 40000 cores. About
75% of this is distributed as loans.

The Cooperative sector in Kerala is a wide spread one. It plays its role in the
traditional money lending, Marketing, consumer, housing, women’s welfare, educational,
health and construction sector. The functioning of these institutions help to provide the
people service of various kinds at low costs.

The co-operative must employee their funds prudently and the role of financial
management comes in for the utilization of finance there should not be too much
investments in establishment, building, furniture etc. Large bank balances should be
avoided optimum accounts receivable must be kept and unnecessary stock of merchandise
should be avoided. Co-operative capital should be employed judiciously and in the most
economical and fruitful manner so as to derive maximum with minimum expenditure in
relation to result gained. The efficient management of funds calls for developmental
approach in the diversified direction without sacrificing the main principles of banking,
liquidity, safety and profitability. The better employment of funds not openly improves the
image and income earning capacity of the bank but also reduce regional and functional
imbalances.

THREE-TIER SYSTEM IN COOPERATIVES

SCBs

DCCBs

PACs

CREDIT COOPERATIVES

The Cooperative Credit Movement in India was officially launched in 1904 after the
famous prescription of Nicholson to find Raiffeisen”. The Indian Credit Structure is divided
into two.

 Agricultural credit

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  Non-Agricultural credit

STATE COOPERATIVE BANK (SCBs)

The State Cooperative Bank is the apex of the cooperative credit structure in each
state. The SCB finance and control the working of the District Central Cooperative Bank
(DCCBS) in the state. The SCBs act as a link between NABARD and the DCCBS and the PACs.

DISTRICT CENTRAL COOPERATIVE BANK (DCCBs)

These operate at district level and hence called the District Central Cooperative Bank
(DCCBs). All the base level societies are affiliated to the DCCBs at the district level. The
DCCBs are in turn affiliated to the State Cooperative Bank.

PRIMARY AGRICULTURAL CREDIT SOCIETIES (PACs)

The PACs is an association of borrowers and non-borrowers residing in a particular

locality and taking interest in the affairs of one another and taking interest in the affairs of
one another. A Cooperative Credit Society can be formed by a minimum of 10 persons
normally belonging to a village. Membership of the society is open to any person above the
age of eighteen. It means to help the nation, drive for increasing agricultural production by
making available to the farmer adequate credit in cash and kind.

Function of service cooperative bank includes:

 The provision of short term and medium credit.

 Supply of agricultural and other production requirements
 Distribution of improved seeds, chemicals, fertilizers, insecticides etc to the
members.
 Marketing of agricultural products
 Helps, formulate and implement a plan of agricultural production for the village.
 To provide house hold goods.
 Undertake such educate advising and welfare works as may be feasible.

1.1. STATEMENT OF THE PROBLEM

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This study is concentrated on the financial performance of the Vembayam Service Co-
operative Bank. It helps to know the financial strength of the firm to make their best use
and spot out financial weaknesses of the firm to make plans and take suitable corrective
actions through comparing the financial performance of the past five years and find out the
liquidity and profitability of the bank.

1.2. OBJECTIVES OF THE STUDY

The present study has the following objectives.

 To study the financial performance of the organization by finding out the financial
ratios.
 To study the liquidity and profitability of the bank.
 To offer suggestions for improving the efficiency of the bank.

1.3. RESEARCH METHODOLOGY

1.3.1. NATURE OF THE STUDY

The study is descriptive in nature and case study method is adopted for the study.

1.3.2. SOURCES OF DATA

Both primary data and secondary data were obtained for the study. Primary data are
collected through oral contact with the president, secretary and staff members of the bank
during the visit in the society. Secondary data are collected from the books and records of
the bank.

1.4. TOOLS USED FOR ANALYSIS OF DATA

Ratio analysis is the tool used for analyzing the financial statements of the society. Further
appropriate graphical representation has been made where ever necessary.

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1.5. PERIOD OF THE STUDY
The study covers a period of 12 days – 19/04/2021 to 14/05/2021 (Five year commencing
from 2015-16 to 2019-20)

1.6. LIMITATIONS OF THE STUDY

1. The study is limited to one branch only.

2. The period of study is limited to 12 days only. Therefore all detailed information cannot
be included.

3. The study is affected by the non availability of required information due to official
constraints.

CHAPTERISATION

The project report is prepared and presented under 4 chapter as follows:

CHAPTER 1: Gives a brief description about design and execution of study

CHAPTER 2: Organization profile of the study

CHAPTER 3: Analysis and Interpretation of data

CHAPTER 4: Summarizes the finding, suggestions and conclusions

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 CHAPTER – II

ORGANIZATIONAL PROFILE

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VEMBAYAM SERVICE CO-OPERATIVE BANK
LTD.NO.3121
The Vembayam service co-operative bank Ltd. No. 3121has been registered in
18/02/1950. It started functioning in 09/05/1951 and has been extending its services
ever since with a healthy working capital of more than 48 crores at present. The
society is in Nedumangadu Taluk and the area of operation of the society is whole of
the Vembayam Panchayath. It provides core banking facilities, RTGS/NEFT for the
valued customers and its members, Further services includes locker facilities in head
office and branches.

The board of directors consists of 11 members including one seat reserved for
SC/ST members and three seats for women members. The members of the board of
directors shall be elected by the general body among the members for a period of 5
years as per the byelaw. The chief executive of the bank is the secretary. At present
the secretary is Anitha Kumari R.

The objective of the bank is to provide the principles of thrift, self help and self
efficiency among the members. And also to procure and distribute fertilizers,
agricultural implements etc. to the agricultural sector. Besides, the bank provides
short term and medium term loans to the members. There are many other loans
providing by the bank, they are medium term not agricultural loan, Business loan,
housing loan, gold loan, Marriage loan, ordinary loan, hire purchase loan, agricultural
gold loan etc.

The bank is awarding cash price in each year to the students studying in the
nearby schools for their outstanding achievements in the examination.

The head office of the bank is located in Konchira, Vembayam and the bank is
currently having three branches:

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  Kanyakulangara

 Ayirooppara

2.1. PROFILE SNAPSHOT

Name of the organization : Vembayam Service Co-operative Bank

Ltd.No.3121
Address : Vembayam Service Co-operative Bank ltd
No.3121 Konchira P.O, Vembayam,
Trivandrum PIN 695615
Date of registration : 18/02/1950

Date of commencement : 09/05/1951

Type : Society

Liability of member : Limited

:Theeppukal,Nannattukavu,Konchira,
Kanyakulangara,Perumkoor,Vettinad,
Mottamoodu,kanangode, mulankad,
chiramukk,panthalacode,Ayiroopara,
Area of Operation
Kuttyani, Vettupara, Cheeranikkara,
Thekkada,Mayiladum Mugal,Neduveli,
Vazhaykkad,Vattavila,karamcode

Name of President : A M Farooq

Name of Secretary : Anitha Kumari R

No. of Board Members : 11

Number of Members

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 : A class -3860
B class -4262
C class -52

Authorized Share Capital : 18100000

Maximum Borrowing Power : 2500000

Individual Maximum Borrowing Power : 1000000

Society Classified :B
Audit Classification :B
Working Capital : 483457543.76
Deposits : 458275503.72

2.2. OBJECTIVES

 To provide the principles of thrift, self help and self efficiency among the
members.

 To procure and distribute seeds, pesticides, fertilizers, agricultural implements

etc. to the agricultural sector.
 To provide short term, medium term, long term, ordinary loan, gold loan and
agricultural loan to the members.

 Implement agricultural production scheme for the members

 To act as an agent for selling of seeds, fertilizers and agricultural implements.

 To acquire movable and immovable properties needed for the progress of

agricultural operations under special circumstances.
 To own online godowns for collecting and storing agricultural products of the
members.
 To give sufficient support to its members for preparing new varieties of seeds.

 Arbitrate any group disputes that may or may not occur between the
Members of the society.

 Conduct chits, kuris, investment schemes, cooperative banking business etc.

for the financial growth of the society and its members.

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  To perform such other activities conclusive or incidental for the objectives
said.

2.3. MANAGEMENT OF THE BANK

The activities of the bank are vested with the BOD. The Board of Vembayam Service
Cooperative Bank includes 11 members. The members of the board of directors shall
be elected by the general body among the members for a period of five years as per
the byelaw. The board of directors is appointed for a period of 5 years.The rights and
duties as stated in the byelaw of the bank. The last election held on 21.01.2021. The
chief executive of the society is secretary. At present the secretary is Anitha Kumari R.
The seat reservation in Board of Management includes: President – One, Women –
Three, SC/ST – One, General – six. The details are as follows:
President : Sri. A M Farooq
Committee Members : Sri. Vijayan S
Smt. Krystal Bhai B S
Smt. Geetha Kumari R
Sri. V B Gopakumar
Sri. Gopi pillai B S
Smt. Jalaja Kumari S
Sri. Babu Theeppukal
Sri. Shanthappan R
Sri. Saji kumaran Nair S
Sri. Sadashivan Pilla M

2.4. MEMBERSHIP

Any person who wants to become a member of this bank, must attained the age of 18
years, a resident or having landed property within the jurisdiction of the bank and
who is not an unsound mind can become a member of the bank. Application for
admission as a member and allotment of shares shall be made to the secretary in the
form if any prescribed by the society for the purpose. Every such application shall be
disposed of by the board of directors who shall have the power to grand admissions
or refuse it after recording reasons for such refusal provided however that any person

24
whose application has been refused by the board may appeal to the registrar so
directs he shall be admitted as a member by the society. Each member shall be paid
an admission fee of Rs.100 per share and each member shall sign and need the
byelaw of the society using his/her membership rights. After satisfying all conditions
in the byelaw a person shall be used his/her rights of a member. The bank should
maintain all the details of all members. Any member shall be admitted as associate
members but this associate member shall not have the right of a member and not
have any right in profit of the bank and he/she should not have any voting rights.

The bank offers two types of membership that is ‘A’ class ‘B’ class and ‘C’ class.

Types of membership Face value Total number of membership

A class 100 3860

B class 500 4262
C class 25 52

2.5. SHARE CAPITAL

Share capital is the primary source of fund collected from members of the society.
The share capital includes authorized share capital and paid up share capital. The
authorized share capital of the society is Rs.18100000. The paid up share capital of
the society is the actual amount of the share capital raised by the society from its
members. The details of share capital are given below:

Year Authorised Share Capital Paid up Share Capital

2015-16 18100000 4543710

2016-17 18100000 4828240
2017-18 18100000 4900410
2018-19 18100000 5612975
2019-20 18100000 6129570

25
2.6. AUDIT CLASSIFICATION
YEAR CLASSIFICATION

2015-16 B class
2016-17 B class
2017-18 B class
2018-19 B class
2019-20 B class

2.7. SOURCES OF FUND

a) Shares
b) Deposits
c) Borrowings

2.7.1. SHARES
Share capital is the primary source of fund collected from the members of the society.

The details of shares for the last five years are as follows:

Shares 2015-16 2016-17 2017-18 2018-19 2019-20

A class 3638 3662 3672 3765 3860
B class 2946 3033 3147 3227 4262
C class 50 50 50 52 52
Total shares 6634 6745 6869 7044 8174

2.7.2. DEPOSITS
Deposits are the most important fund of the bank. The bank receives deposit from
members and non-members. The following are the main types of deposits:

 Fixed Deposit
 Recurring Deposit
 Savings Bank Deposit
 Thrift Deposit
 Home Safe Deposit
 Kettuthengu Deposit

26
 Fixed Deposit:
Fixed deposits or Time deposits are those deposits with the bank for a fixed period
which is specified at the time of making the deposit. Fixed deposits are repayable on
the expiry of the specified period, chosen by the depositor to suit his purpose. As the
date of repayment is certain, they are able to invest the money for long periods and
thus earn a higher return on the investments.

Savings Bank Deposit:

A savings bank account is meant for the people of the lower and middle classes who
wish to save a part of their current income to meet their future and also indent to
earn an income from their savings. Certain restrictions are also imposed on the
opening and operation of saving deposits. Here the society offered savings deposits.
The deposit should keep a minimum balance of 100 Rs. in their accounts.

Recurring Deposit:
Recurring or cumulative deposits account is intended to inculcate the habit of savings
on a regular basis as an inducement is offered in the form of comparatively higher
rate of interest. A depositor opening a recurring deposit account is required to
deposit an amount chosen by him, generally a multiple of Rs.5 or 10, in this account
every month for the access period selected by him. Any person can open these
deposit by putting a fixed amount on a regular basis.

Home Safe Deposit:

Home safe is the deposit scheme which creates a thrift among people who makes in
their home. A box is fixed on their home of each individual. They made their small
savings in it.

The details of various deposits for the last five years are as follows:

Deposits 2015-16 2016-17 2017-18 2018-19 2019-20

SB deposits 15853098 18071323 28071234 33608755.31 40026143.41
FD deposits 18797625 23224462 33214456 37943324 46034944
Recurring deposits 1852345 2230890 3703650 4222050.09 5435300.02

27
Thrift deposits 2899844 2999865 4831446 52339925 5437095
Other deposits 206220906.1 242143347.1 235449748.1 234117083.1 361342021.3
Total deposits 245623818.1 288669887.1 305270534.1 362231137.5 458275503.72

Rate of Interest of Deposits

Type of deposits Interest rates

SB deposit 3%
FD deposit 6%
Home safe deposit 6%
Recurring deposit -

2.7.3. BORROWINGS

The borrowings made by the Vembayam Service Cooperative Bank are loan from

NCDC .

Borrowings 2015-16 2016-17 2017-18 2018-19 2019-20

From NCDC 15245301 16206685 20192634 25999697 37460486
Total 15245301 16206685 20192634 25999697 37460486

2.8. LOANS

The bank issues different types of loans for agricultural activities and other purposes.
The society mainly issue short term, medium term and long term loans. The bank
issue loans only to members. The loans are issued only with prior approval of the
Director Board of the bank. But in urgent situations the loans upto Rs.10000 are
issued by the president with approval of secretary. The loans issued in the way should

28
 get approval of the next Director Board meeting. The total loans issued to each
member should not exceed the maximum credit limit. The time lag between
submission of application and issue of loans is one month. For availing loans to the
members the bank requires some documents that is; original tax receipt, title deed,
possession certificate, encumbrance certificate, PAN card, Aadhar card etc.
Agricultural loans, gold loans, ordinary loans and hire purchase loans etc are available
in the bank.

The details of loans for the last five years are as follows.

Loans 2015-16 2016-17 2017-18 2018-19 2019-20

Short term loan 161224 133132 142224 112123 132224
Gold loan 8437978 9067898 6132112 11217007 11925842
Ordinary loan 6202116 5432223 507534 7286858 7776954
Marriage loan 22000 22000 22000 22000 22000
Others 101577225.6 106113509.8 125413466.6 157728243.1 213077307.6
Total loan 116400543.60 120768762.82 132217336.60 176366231.1 232934327.6
0

2.9 WORKING CAPITAL

YEAR AMOUNT
2015-16 302239543
2016-17 331262234
2017-18 36982344
2018-19 425663112.43
2019-20 483457543.76

29
2.10. DETAILS OF COMPUTERIZATION
a) Software : - Perfect Core Solution

b) Platform : - Windows

c) Agency : - Cochin Computer

d) Different

modules : - Deposit, share, loan, borrowing, account etc.

2.11. RECOVERY POLICY AND MECHANISM

Unpaid amount of loans are recovered through some procedures. The sale
officer is doing the recoveries properly. The procedures are as follows;

• Contacting through phone

• Sending ordinary notice
• Sending registered notice
• Visiting the home
• Sending final notice
• Filing ARC (Arbitration Reference Case)

2.12. DETAILS OF GEHAN

Gehan filing is doing through online. For land mortgage loan the society filing a
Gehan against the land to those who have membership in the bank and the loan area
is within the Nedumangadu taluk. The president assigns two members of the
subcommittee to see the property and they write a report of the property. Then
secretary signs the report and send to the sub-registrar’s office. After getting the
report the sub-registrar examines and signs it and provides Gehan number. Only 1/3
of the total value should be given as loan.

2.13. NON-INTEREST INCOME

 CHITTY COMMISSION

Year Amount

30
 2015-16 758400
2016-17 830540
2017-18 1094325
2018-19 834650
2019-20 1221230

 GROSS PROFIT

Year Amount
2015-16 658700
2016-17 765450
2017-18 124320
2018-19 755500
2019-20 1533050.83
 OTHERS

Year Amount
2015-16 798465
2016-17 2081737.90
2017-18 1605451.34
2018-19 2041667.98
2019-20 1156345.76

2.14. ESTABLISHMENT AND CONTINGENCIES

Year Amount
2015-16 5713250.27

31
 2016-17 6472089.8
2017-18 5477519.72
2018-19 30321242
2019-20 12586453.76

2.15. LOAN DOCUMENTATION

For loan documentation (generally for land mortgage loans) the following
documents are required;

 Original tax receipt

 Original deed
 Title deed
 Possession certificate
 Encumbrance certificate of 30 years
 Sketch, plan , location certificate of the property
 Two passport size photo of the applicant
 Ration card, Identity card, Aadhar card, Pan card etc.
 Building tax receipt

2.16. PROCEDURE FOR ISSUE OF LOANS

The above said documents are collected along with the application form.
Then the secretary checking the documents and also doing field visit. After the field
visit secretary send the files to the legal advocate for legal report; if any legal issues
are founded, he may notify it in the legal report. The secretary rectifies the report
and submitting it in the Board meeting. The loan is issued only after getting the
approval of Board of Directors.

 Membership
 Documentation Clearing
 Loan Form

32
  Legal opinion from advocate
 Site Valuation
 Gahan Registration
 Latest Encumbrance Certificate
 Submitting the reports in the Board Meeting
 Approval

2.17. RECORDS MAINTAINED BY THE SOCIETY

 Cash book
 Subsidiary day book
 General ledger
 Minutes book
 Stock register
 Coin bar register
 Loan register
 GDCS register
 Deposit register

2.18. PREPARATION OF BUDGET

Budget preparation is the calculation of expecting incomes and expenses
based on the previous year’s incomes and expenses. So that, the receipts &
disbursement statements and the trial balance etc. can be compared to estimate the
budget for the next year. The budget is submitting in the Annual General Body
Meeting for the approval of the Board of Directors. Then the General Body Sanctions
the budget.

33
2.19. ORGANISATIONAL STRUCTURE
Board of Directors

Secretary

Internal Auditor

Accountant

Senior Clerk

Junior Clerk

Attender

Appraiser

Peon

Watchman waww

Part time sweeper

34
 CHAPTER - III

DATA ANALYSIS AND

INTERPRETATION

35
FINANCIAL ANALYSIS

Financial analysis is the process of determining the significant operating and financial
characteristics of a firm from accounting data. The profit and loss account and
balance sheet are indicators of two significant factors profitability and financial
soundness. Analysis of financial statement means such a treatment of the
information contained in the two statements as to afford a full diagnosis of the
profitability and financial position of the firm concerned.

TOOLS OF FINANCIAL ANALYSIS

The analysis of financial statements consists of a study of relationship and trends to

determine whether or not financial position of the concern and its operating
efficiency have been satisfactory. In the process of this analysis various tools or
methods are used by the financial analyst. The analytical tools generally available to
an analyst for this purpose are as follows:

 Comparative Financial Statements

 Common-size Financial Statements

 Trend Analysis

 Fund Flow Analysis

 Cash Flow analysis

 Average Analysis
 Ratio Analysis

RATIO ANALYSIS

Ratio analysis is the analysis of financial statements with the help of ratios. It includes
comparison and interpretation of these ratios and their use for future projection. It
does not provide an end in itself, but only a means to understand the financial
position and performance of business concerned. It is an important tool for checking

36
the efficiency of a firm. It helps the financial management in evaluating the financial
position and performance of the firm. Some ratios indicate the trend or progress or
downfall of the firm.

This study uses ratio analysis techniques for analyzing the financial performance of
Vembayam Service Co-operative Bank.

37
3.1. CALCULATION OF WORKING FUND GROWTH RATE

Table No.1
(in lakhs)

Year Share Reserves NP Deposit Borrowings Working Growth

Capital fund Rate

2015-16 45.43 35 33 2456.23 152.45 2722.11 _

2016-17 48.28 40 37 2886.69 162.06 3174.03 16.60

2017-18 49.00 46 20 3052.70 201.92 3369.62 6.16

2018-19 56.12 49 20 3622.31 259.99 4007.42 18.92

2019-20 61.29 52 20 4582.75 374.60 5090.64 27.03

Note: Growth rate = current year working fund – previous year working fund ÷ previous year
working fund × 100

Chart No.1

Growth Rate
30 27.03

25
18.92
20 16.6
Growth Rate
15

10 6.16

5
0
0
2015-16 2016-17 2017-18 2018-19 2019-20

38
Interpretation

The above table shows the working funds held by Vembayam service cooperative
bank during the period under study. Further the study also reveals the growth rate of
working fund. During the year 2015 -16 growth rate is nil (base year). There is an
increase in working fund in the next year and followed by a diminished growth in the
period 2017-18. Again the rate increases in the period of 2018-19 and it increases at a
higher level in last year 2019-20.

3.2. CALCULATION OF RATIO OF SHARE CAPITAL TO WORKING FUND

Table No.2

(in lakhs)

Year Share Working fund Ratio

Capital

2015-16 45.43 2722.11 1.66

2016-17 48.28 3174.03 1.52
2017-18 49.00 3369.62 1.45
2018-19 56.12 4007.42 1.40
2019-20 61.29 5090.64 1.20

Note: Ratio of share capital to working fund = 𝑃𝑎𝑖𝑑 𝑢𝑝 𝑠ℎ𝑎𝑟𝑒 𝑐𝑎𝑝𝑖𝑡𝑎𝑙 ÷ 𝑊𝑜𝑟𝑘𝑖𝑛𝑔
𝑓𝑢𝑛𝑑 × 100

39
 ChartNo.2

Ratio of Share Capital to Working Fund

1.8
1.6
1.4
1.2
Ratio
1
1.66
0.8 1.52 1.45 1.4
1.2
0.6
0.4
0.2
0
2015-16 2016-17 2017-18 2018-19 2019-20

Interpretation

The ideal ratio for share capital to working fund is above 3% for a good bank. But the
bank has not maintained the ideal ratio in any of these five years under study. The
graph shows that the ratio of share capital to working fund in the year 2015-16 was
1.66% and it decreases in the remaining four years.

3.3. CALCULATION OF RATIO OF OWNED FUND TO WORKING FUND

Table No.3

(in lakhs)
Year Share Capital Reserves Owned Working Ratio
fund fund
2015-16 45.43 35 80.43 2722.11 2.95

40
 2016-17 48.28 40 88.28 3174.03 2.78

2017-18 49.00 46 95 3369.62 2.81

2018-19 56.12 49 105.12 4007.42 2.62

2019-20 61.29 52 113.29 5090.64 2.22

Note : Ratio of owned fund to working fund = 𝑂𝑤𝑛𝑒𝑑 𝑓𝑢𝑛𝑑 ÷ 𝑊𝑜𝑟𝑘𝑖𝑛𝑔

𝑓𝑢𝑛𝑑 × 100

Chart No : 3

Rati o OF owned fund to working fund

Ratio
2.95 2.78 2.81 2.62
2.22

2 0 1 5 -1 6 2 0 1 6 -1 7 2 0 1 7 -1 8 2 0 1 8 -1 9 2 0 1 9 -2 0

Interpretation

The ideal ratio for owned fund to working fund is above 5%. The graph depicts that in
all the five years of the study the ratio is below 5% that is in the year 2015-16 the

41
ratio is 2.95%, in 2016-17 the ratio decreased to 2.78%, in 2017-18 it was slightly
increased to 2.81%, in 2018-19 it was again decreased to 2.62% and in the last year it
highly decreased to 2.22%.

3.3. CALCULATION OF RATIO OF DEPOSITS TO WORKING FUND

Table No.4 (in lakhs)

Year Total deposits Working fund Ratio

2015-16 2456.23 2722.11 90.23

2016-17 2886.69 3174.03 90.94

2017-18 3052.70 3369.62 90.59

2018-19 3622.31 4007.42 90.39

2019-20 4582.75 5090.64 90.02

Note: Ratio of deposits to working fund = 𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑠 ÷ 𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝑓𝑢𝑛𝑑 ×

100
Chart No.4

42
 RATIO OF DEPOSIT TO WORKING FUND

90.02 90.23

2015-16
2016-17
2017-18
2018-19
2019-20
90.39 90.94

90.59

Interpretation

The ideal ratio for deposits to working fund is not less than 80%. The above graph reveals
that the bank has maintained the ideal position in all the five years of study that is, in the
year 2015-16 the ratio is 90.23%, in 2016-17 it was 90.94%, in 2017-18 it was 90.59%, in
2018-18 it was decreased to 90.39% and in the last year again it was slightly decreased to
90.02%.

3.4. CALCULATION OF RATIO OF BORROWED FUND TO WORKING FUND

Table No.5

(in lakhs)

Year Deposits Borrowings Borrowed Working Ratio

fund fund
2015-16 2456.23 152.45 2608.68 2722.11 95.83

2016-17 2886.69 162.06 3048.75 3174.03 96.05

2017-18 3052.70 201.92 3254.62 3369.62 96.58

43
2018-19 3622.31 259.99 3882.3 4007.42 96.87

2019-20 4582.75 374.60 4957.35 5090.64 97.38

Note: Ratio of borrowed fund to working fund = 𝐵𝑜𝑟𝑟𝑜𝑤𝑒𝑑 𝑓𝑢𝑛𝑑 ÷ 𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝑓𝑢𝑛𝑑 × 100

Chart No.5

RATIO OF BORROWED FUND TO WORKING

FUND

2019-20

2018-19
Ratio

2017-18

2016-17

2015-16

95 95.5 96 96.5 97 97.5

Interpretation

The above graph depicts that the ratio of borrowed fund to working fund in all the
five years is above 95%. In the year 2015-16 the ratio is 95.83%, in 2016-17 it was

44
96.05%, in 2017-18 it was increased to 96.58%, then it again increases to 96.87 in
2018-19 and in 2018-19 the ratio is increased to 97.38%.

3.5. CALCULATION OF RATIO OF LOANS TO WORKING FUND

Table No.6
(in lakhs)
Year Loans Working Ratio
Fund
2015-16 1164.00 2722.11 42.76

2016-17 1207.68 3174.03 38.04

2016-17 1322.17 3369.62 39.23

2017-18 1763.66 4007.42 44.00

2018-19 2329.34 5090.64 45.75

Note: Ratio of loans to working fund= loan outstanding ÷ working fund × 100

Chart No.6

45
 RATIO OF LOANS TO WORKING FUND

50
45
40
35
30 Ratio
25
20
15
10
5
0
2015-16 2016-17 2017-18 2018-19 2019-20

Interpretation

The above graph reveals the ratio of loans to working fund. In the year 2015-16 the
ratio is 42.76% and 2016-17 it decreased to 38.04%. Then in 2017-18 it slightly
increased and it highly increased in 2018-19 the ratio becomes 44%, in 2017-18.Again
it increased to 45.75% in the last year.

3.6. CALCULATION OF CREDIT DEPOSIT RATIO

Table No.7
(in lakhs)
Year Loan Borrowings Loans o/s Deposit ratio
Outstandin on basis of o/s

46
 g deposit
2015-16 1164.00 152.45 1011.55 2456.23 41.18

2016-17 1207.68 162.06 1045.62 2886.69 36.22

2017-18 1322.17 201.92 1120.25 3052.70 36.69

2018-19 1763.66 259.99 1503.67 3622.31 41.51

2019-20 2329.34 374.60 1954.74 4582.75 42.65

Note: Credit deposit ratio = loan o/s on the basis of deposit/deposit × 100

Chart No.7

CDR
42.65 41.18

2015-16
2016-17
2017-18
2018-19
2019-20
36.22
41.51

36.69

Interpretation

The above graph indicates credits deposit ratio. The ideal position for the ratio
is above 80%. But the bank has not maintained the ideal ratio in any of these five
years under study, in first year ratio is 41.18% ,in 2016-17 credit ratio is decreased to
36.22%.In 2017-18 ratio slightly increased to 36.69% .In 2018-19 ratio becomes 41.51%
and in the last year it again increased to 42.65%.

47
3.7. CALCULATION OF YIELD ASSETS AND ITS GROWTH RATE

Table No.8
(in lakhs)
Year Bank Shares Investment Loans Yield Ratio
s Asset
2015- 24.6 25.7 11.23 1164.00 1225.53 0
16

2016- 44.7 26.00 15.23 1207.68 1293.61 5.55

17

2017- 53.81 29.68 30.17 1322.17 1435.83 10.99

18

2018- 61.9 29.87 39.33 1763.66 1894.76 31.96

19

2019- 81.42 32.65 21.41 2329.34 2464.82 30.08

20

Note: Growth rate of yield asset = Current year Y A – previous year yield asset ÷ previous
year working fund * 100

ChartNo.8

GROWTH RATE OF YIELD ASSET

48
 3000

2500 2464.82

2000
1894.76

1500 1435.83

1293.61
1225.53

1000

500

5.55 10.99 31.96 30.08

0
0
2015-16 2016-17 2017-18 2018-19 2019-20

Yield Asset Ratio

Interpretation
The above graph represents the growth rate of yield assets. As per the ideal position
the proportion of yield assets should be increased. Here this table also shows
increasing tendency from the year 2015 to 2020.

49
3.8. CALCULATION OF RATIO OF MISCELLANEOUS INCOME TO WORKING
FUND

Table No.9
(in lakhs)
Year Miscellaneous Working fund Ratio
income
2015-16 42.24 2722.11 1.55

2016-17 49.65 3174.03 1.56

2017-18 56.83 3369.62 1.68

2018-19 57.14 4007.42 1.42

2019-20 76.89 5090.64 1.51

Note: Ratio of miscellaneous income to working fund = 𝑀𝑖𝑠𝑐𝑒𝑙𝑙𝑎𝑛𝑒𝑜𝑢𝑠 𝑖𝑛𝑐𝑜𝑚𝑒 ÷

𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝑓𝑢𝑛𝑑 × 100

Chart No.9

50
 RATIO OF MISCELLANEOUS INCOME TO WORKING
FUND

80
70
60
50
40
30
20
10
0
2015-16 2016-17 2017-18 2018-19 2019-20

Miscellaneous income Ratio

Interpretation

The above graph reveals the ratio of miscellaneous income to working fund. The
ideal position for the ratio is not less than 0.5%. In all the five years of study the bank
maintains the ideal position that is in the year 2015-16 the ratio is 1.55%, in 2016-17
the ratio is 1.56%, in 2017-18 the ratio becomes 1.68%, in 2018-19 the ratio is 1.42%
and in 2019-20 the ratio becomes 1.51%.

3.9. CALCULATION OF RATIO OF LOANS TO YIELD ASSET

Table No.10
(in lakhs)
Year Bank Shares Other Loans and Total yield Ratio
investment advances asset

2015-16 24.6 25.7 11.23 1164.00 1225.53 94.97

2016-17 44.7 26.0 15.23 1207.68 1293.61 93.35

2017-18 53.81 29.68 30.17 1322.17 1435.83 92.08

2018-19 61.9 29.87 39.33 1763.66 1894.76 93.08

2019-20 81.42 32.65 21.41 2329.34 2464.82 94.50

Note: Ratio of loans to yield asset = 𝐿𝑜𝑎𝑛𝑠 ÷ 𝑌𝑖𝑒𝑙𝑑 𝑎𝑠𝑠𝑒𝑡 × 100

51
 RATIO OF LOANS TO YIELD ASSET

94.5
2 0 1 9 -2 0

93.08
2 0 1 8 -1 9
Ratio
92.08
2 0 1 7 -1 8

93.35
2 0 1 6 -1 7

94.97
2 0 1 5 -1 6

Interpretation
The above graph indicates the ratio of loans to yield asset. In all the five years of
study the ratio is above 50%, so that it is better for the bank to invest their funds in
giving loans.

3.10. CALCULATION OF RATIO OF YIELD ON INVESTMENT

Table No.11
(in lakhs)
Year Other Interest on Ratio
Investment investment
2015-16 11.23 0.23 2.04

2016-17 15.23 1.88 12.34

2017-18 30.17 1.76 5.83

2018-19 39.33 3.07 7.80

2019-20 21.41 4.25 19.85

52
 Note: yield on investment = interest on investment / investment * 100

Chart.No.11

RATIO OF YIELD ON INVESTMENT

4% 2015-16
2016-17
26% 2017-18
41% 2018-19
2019-20

12%
16%

Interpretation

The above graph depicts the ratio of yield on investment. The yield on investment is
42% in 2019-20, maximum and minimum in the year of 2015-16 is 4%.

3.10. CALCULATION OF RATIO OF COST OF BORROWING

Table No.12

(in lakhs)
Year Borrowings Interest on Ratio
borrowings
2015-16 152.45 5 3.27

2016-17 162.06 3 1.85

2017-18 201.92 4 1.98

2018-19 259.99 4 1.53

53
 2019-20 374.60 6 1.60

Note : Ratio of cost on borrowings = interest on borrowings/borrowings *

100

Chart.No.12

RATIO OF COST ON BORROWINGS

3.27

Ratio
1.98 Linear (Ratio)
1.85
1.53 1.6

2015-16 2016-17 2017-18 2018-19 2019-20

3.11 CALCULATION OF RATIO OF COST OF DEPOSIT

Table No.13

Year Deposit Interest on Ratio

Deposit
2015-16 2456.23 122.8 4.9

2016-17 2886.69 129.90 4.49

2017-18 3052.70 183.16 5.9

2018-19 3622.31 163.00 4.49

2019-20 4582.75 229.13 4.99

Note : Ratio of cost of deposits = interest on deposits /deposits * 100

54
 ChartNo.13

Rati o OF COST OF DEPOSIT

5.9

4.9 4.99
4.49 4.49
Ratio

2015-16 2016-17 2017-18 2018-19 2019-20

Interpretation

The above table 3.10 and 3.11 shows the cost of borrowings and cost of deposits. Here
cost of borrowing is less than cost of deposits. The ratio of cost of borrowing is below 2
% in all five years of the study, and it is favourable to the working of the bank. The
bank having higher amount of deposits. It reveals the reputation and customer
support.

3.11 CALCULATION OF RATIO OF YIELD ON LOANS

Table No.14 (in lakhs)

Year Loans and Interest on Ratio

Advances loans
2015-16 1164.00 144.58 9.8

2016-17 1207.68 153.73 12.7

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 2017-18 1322.17 157.60 11.91

2018-19 1763.66 163.54 9.27

2019-20 2329.34 214.28 9.19

Note:Ratio of yield on loan = Interest on loan / loan * 100

Chart No.14

RATIO OF YIELD ON LOAN

2019-20 9.19

2018-19 9.27

Ratio
2017-18 11.91

2016-17 12.7

2015-16 9.8

0 2 4 6 8 10 12 14

Interpretation

It gives the ratio of interest charged to loans provided by the society. The above table
and figure shows the ratio of loans and advances and interest on loan .Good yield loan
is necessary for the smooth functioning of the bank. The ideal range of ratio of yield on
loan is 3 or more. Here the margin was very good in all 5 years .

3.12 CALCULATION OF RATIO OF INTEREST EXPENSE TO INTEREST

INCOME

Table No.15 (in lakhs)

Year Interest Interest income Ratio

expense
2015-16 1303.21 1334.63 97.64

2016-17 1473.62 1548.24 95.18

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 2017-18 1485.14 1505.32 98.65

2018-19 1483.21 1554.21 95.43

2019-20 1610.23 1643.31 97.98

Note:Ratio of interest expense to interest income=Interest expense/Interest income*

100

ChartNo.15

RATIO OF INTEREST EXPENSE TO INTEREST

INCOME
99

98

97
Ratio
96 98.65
97.64 97.98
95
95.18 95.43
94

93
2015-16 2016-17 2017-18 2018-19 2019-20

Interpretation

The above graph represents the ratio of interest expense in interest income. The ideal
position for the ratio is upto 65%. But in all the five years of study the ratio is above
65%. In the year 2015 -16 the ratio is 97.64% ,in 2016-17 it is 95.18% and in 2017-18 it
increased to 98.65%.Again decreased to 95.43% in 2018-19 and in the last year ratio is
97.98%.

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 CHAPTER – IV

FINDINGS AND SUGGESTIONS

58
FINDINGS

1. Working fund growth rate is fluctuating.

2. The ratio of share capital to working fund is not satisfactory.
3. The ratio of owned fund to working fund is below the standard ratio ie, less
than 5%.
4. The ratio of deposits to working fund is satisfactory, because bank maintains
the ideal position in all those five years under the study .
5. The ratio of borrowed fund to working fund fluctuates in all the years of study,
because of the amount of borrowed fund is less than that of working fund
6. The ratio of loans to working fund is fluctuating.
7. The study of CDR reveals that ratio of which is below the standard position of
CDR.
8. The ratio of growth of yield asset is increasing which reflects the efficient fund
management.
9. In all the five years of study the bank maintains the ideal position for the ratio
of miscellaneous income to working fund.
10. The ratio of loans to yield asset shows a fluctuating trend in all the five years.

11. The ratio of yield on investment has a tendancy of fluctuation.

12. The ratio of cost of borrowing is less than cost of deposits. The ratio of cost of
borrowing is below 2% and it is favourable to the bank.

13. The bank has higher amount of deposits. It reveals the reputation and
customer support.

14. Standard ratio of yield on loans is 3% or more. Here it is favourable for the
bank.

15. The ratio of interest expense to interest income is not satisfactory in all the
five years of study, because the amount of interest expense and interest

59
 income is fluctuating throughout the year.

SUGGESTIONS

1. The bank should promote more low cost deposit (deposit with less interest
rate like savings bank account).
2. The bank must take necessary steps to improve their own fund.

3. The bank should take immediate steps to increase the interest on loan.

4. The bank should try to increase the amount of loans in the coming years.

5. It is better for the bank to invest their funds in loans and advances rather than
using it for other investments.
6. The bank should reduce expense and increase income for the betterment of
business.

7. The bank must manage the funds properly and keep its funds in yield assets
rather than in non yield assets.
8. The bank should concentrate with the changes happened in the competitive
atmosphere.

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CONCLUSION

The co-operative banking plays a very important role in developing the rural
economy as well as the social relations. It enables individuals to achieve the goals
that they may not otherwise be able to achieve by themselves. A small depositor or a
small borrower feels comfortable in dealing with the local staff of co-operative bank
than to the staff of nationalized banks and private sector banks.

From the study, it has been found that the overall financial performance of
Vembayam Service Co-operative Bank Ltd.No.3121, during the past five years
commencing from 2015-16 to 2019-20 was an average trend. The main activity of the
institution is to collect different types of deposits and lending it to the public for
reasonable interest rate. The bank plays a very important role in providing banking
services to the common people with in the area of operation. The analysis of the
financial data reaches a conclusion that the bank is currently running at a profitable
position.

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BIBLIOGRAPHY

BOOKS

• KCS Act 1969 – Law text

WEBSITES

• http://en.m.wikipedia.org>wiki>History
• http://www.ica.coop>cooperatives>history
• Shodhganga.inflibnet.ac.in

REPORTS OF THE BANK

• Audit reports
• Annual reports of 2015-2020
• Byelaw

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