PROJECT REPORT ON

CO-OPERATIVE BANKING SECTOR

SUBMITED TO

UNIVERSITY OF MUMBAI
FOR THE ACADIMIC YEAR OF TYBCBI

2011-2012
SUBMITED BY

AKSHAY.G.BHATT VIVA COLLEGE OF ARTS COMMERCE AND SCIENCE

SR.NO
1 2 3 4 5 6 7 8 9 10 11 12

TABLE OF CONTENTS TOPIC

INTRODUCTION TO BANKING TYPES OF BANKS INTRODUCTION TO CO-OPERATIVE BANKING HISTORY OF CO-OPERATIVE BANKING ROLE OF CO-OPERATIVE BANKING OPERATION OF CO-OPERATIVE BANKS FEATURES OF CO-OPERATIVE BANKS TYPES OF CO-OPERATIVE BANKS URBAN CO-OPEARTIVE BANKS RURAL CO-OPEARTIVE BANKS STRUCTURE OF CO-OPERATIVE BANKS PROGRESS OF CO-OPERATIVE BANKS CO-OPERATIVE BANKS v/s OTHER BANKS CONCLUSION BIBLIOGRAPHY

PAGE.NO

INTRODUCTION TO BANKING DEFINITION OF BANK: Section S of Banking Regulation Act,1949 defines Banking as Accepting for the purpose of lending or investing of deposit of money from the public,repayable on demand or otherwise and withdrawable by cheque ,draft or otherwise. An organization usually a corporation character by a state or federal government,which does most or all of the following:receives demand deposit and time deposit ,honors instruments drawn on them,and pays interest on them;discount notes,makes loans,and invest in securities;collects cheques,drafts,and notes and issue drafts and cashiers cheques.

DEFINITION OF FINANCE: Finance considers the relationship ofmoney to time and risk.One of the main subsets of finance is the study of credit and banking,as this involves money, time,and risk all together.Finance may deal with personal or corporate issues,such as how will an individual or company acquires the money needed to perform a certain act. It is branch of economics concerned with resource allocation as well as resource management,acquisition and investment.Simply,finance deals with matters related to money and the markets.

CH. 1. INTRODUCTION TO CO-OPERATIVE BANKING

DEFINATION:

A Co-operative bank, as its name indicates is an institution consisting of a number of individuals who join together to pool their surplus savings for the purpose of eliminating the profits of the bankers or money lenders with a view to distributing the same amongst the depositors and borrowers.

The Co-operative Banks Act, of 2007 (the Act) defines a co-operative bank as a co-operative registered as a co-operative bank in terms of the Act whose members

1. are of similar occupation or profession or who are employed by a common employer or

who are employed within the same business district; or 2. have common membership in an association or organisation, religious, social, co-operative, labour or educational group; or 3. have common membership in an association or organisation, including a business, religious, social, co-operative, labour or educational group; or 4. Reside within the same defined community or geographical area. including a business,

CO-OPERTIVE BANKING - AN INTRODUCTION: Co-operative bank, in a nutshell, provides financial assistance to the people with small means to protect them from the debt trap of the moneylenders. It is a part of vast and powerful structure of co-operative institutions which are engaged in tasks of production, processing, marketing, distribution, servicing and banking in India. A co-operative bank is a financial entity which belongs to its members, who are at the same time the owners and the customers of their bank. Co-operative banks are often created by persons belonging to the same local or professional community or sharing a common interest. These banks generally provide their

members with a wide range of banking and financial services (loans, deposits, banking accounts). Co-operative banks differ from stockholder banks by their organization, their goals, their Values and their governance.

The Co-operative Banking System in India is characterized by a relatively comprehensive network to the grass root level. This sector mainly focuses on the local population and microbanking among middle and low income strata of the society. These banks operate mainly for the benefit of rural areas, particularly the agricultural sector.

OPERATION OF CO-OPERATIVE BANKING: Establishments: Co-operative bank performs all the main banking functions of deposit mobilisation, supply of credit and provision of remittance facilities.

Co-operative Banks belong to the money market as well as to the capital market.

 Co-operative Banks provide limited banking products and are functionally specialists in agriculture related products. However, co-operative banks now provide housing loans also.

UCBs provide working capital loans and term loan as well.

The chief functions of Co-operative banks are:

a. To attract deposit from non-agriculturist,

b. To use excess funds of some societies temporarily to make up for shortage in another,

c. To supervise and guide affiliated societies.

The basic principles on which a Co-operative bank works are: A co-operative character of activities and trait of mutual aid of credit granted. Catering for collective organizations and their members. Restriction on the number of individual votes. As a result, during 2007-08, the Primary Cooperative Agriculture and Rural Development Banks have again started lending for the Non-Farm Sector including Jewel Loans.

 Aiming at high rates on deposits and low rates on lending. Limitation of dividends out of profits and bonus to depositors and borrowers or grants to cultural or co-operative endeavour.

These banks are constituted of voluntary association, self-help and mutual aid, one share one vote and non-discrimination and equality of members. The co-operative banks are the organizations of and for the people.

CH. 3. ROLE OF CO-OPERATIVE BANKING

ROLE OF CO-OPERATIVE BANKING IN INDIA:

Co-operative Banks are much more important in India than anywhere else in the world. The distinctive character of this bank is service at a lower cost and service without exploitation. It has gained its importance by the role assigned to them, the expectations they are supposed to fulfill, their number, and the number of offices they operate. Co-operative banks role in rural financing continues to be important day by day, and their business in the urban areas also has increased phenomenally in recent years mainly due to the sharp increase in the number of primary co-

operative banks. In rural areas, as far as the agricultural and related activities are concerned, the supply of credit was inadequate, and money lenders would exploit the poor people in rural areas providing them loans at higher rates. So, Co-operative banks mobilize deposits and purvey agricultural and rural credit with a wider outreach and provide institutional credit to the farmers. Co-operative bank have also been an important instrument for various development schemes, particularly subsidy-based programmes for poor.

The Co-operative banks in rural areas mainly finance agricultural based activities like: Farming Cattle

Milk Hatchery Personal finance

The Co-operative banks in urban areas finance in activities like: Self-employment Industries Small scale units Home finance Consumer finance Personal finance

Some of the forward looking Co-operative banks have developed sufficient core competencies to such an extent that they are able to challenge state and private sector banks. The exponential growth of Co-operative banks is attributed mainly to their much better contacts with the local people, personal interaction with customers, and their ability to catch the nerve of the local clientele. The total deposits and lendings of Co-operative banks are much more than the Old Private Sector Banks and the New Private Sector Banks.

IMPORTANCE OF CO-OPERATIVE BANKING

Co-operative bank forms an integral part of banking system in India. This bank operates mainly for the benefit of rural area, particularly the agricultural sector. Co-operative bank mobilize deposits and supply agricultural and rural credit with the wider outreach. They are the main source for the institutional credit to farmers. They are chiefly responsible for breaking the monopoly of moneylenders in providing credit to agriculturists. Co-operative bank has also been an important instrument for various development schemes, particularly subsidy-based programmes for the poor. Co-operative banks operate for non-agricultural sector also but their role is small.

Though much smaller as compared to scheduled commercial banks, co-operative banks constitute an important segment of the Indian banking system. They have extensive branch

network and reach out to people in remote areas. They have traditionally played an important role in creating banking habits among the lower and middle income groups and in strengthening the rural credit delivery system.

CH. 4. HISTORY OF CO-OPERATIVE BANKING

HISTORY OF CO-OPERATIVE BANKING

The origins of the cooperative banking movement in India can be traced to the close of nineteenth century when, inspired by the success of the experiments related to the cooperative movement in Britain and the cooperative credit movement in Germany, such societies were set up in India.

Now, Co-operative movement is quite well established in India. The first legislation on cooperation was passed in 1904. In 1914 the Maclagen committee envisaged a three tier structure for co-operative banking viz. Primary Agricultural Credit Societies (PACs) at the grass root level, Central Co-operative Banks at the district level and State Co-operative Banks at state level or Apex Level.

In the beginning of 20th century, availability of credit in India, more particularly in rural areas, was almost absent. Agricultural and related activities were starved of organised, institutional credit. The rural folk had to depend entirely on the money lenders, who lent often at usurious rates of interest.

The co-operative banks arrived in India in the beginning of 20th Century as an official effort to create a new type of institution based on the principles of co-operative organisation and management, suitable for problems peculiar to Indian conditions. These banks were conceived as substitutes for money lenders, to provide timely and adequate short-term and long-term institutional credit at reasonable rates of interest.

The Anyonya Co-operative Bank in India is considered to have been the first co-operative bank in Asia which was formed nearly 100 years back in Baroda. It was established in 1889 with the name Anyonya Sahayakari Mandali Co-operative Bank Limited, with a primary objective of providing an alternative to exploitation by moneylenders for Baroda's residents.

In the formative stage Co-operative Banks were Urban Co-operative Societies run on community basis and their lending activities were restricted to meeting the credit requirements of their members. The concept of Urban Co-operative Bank was first spelt out by Mehta Bhansali Committee in 1939 which defined on Urban Co-operative Bank . Provisions of Section 5 (CCV) of Banking Regulation Act, 1949 (as applicable to Co-operative Societies) defined an Urban Cooperative Bank as a Primary Co-operative Bank other than a Primary Co-operative Society were made applicable in 1966.

With gradual growth and also given philip with the economic boom, urban banking sector received tremendous boost and started diversifying its credit portfolio. Besides giving traditional lending activity meeting the credit requirements of their customers they started catering to various sorts of customers viz.self-employed, small businessmen / industries, house finance, consumer finance, personal finance etc.

CH. 5. FEATURES OF CO-OPERATIVE BANKING

FEATURES OF CO-OPERATIVE BANKING

1.Co-operative Banks are organized and managed on the principal of co-operation, self-help, and mutual help. They function with the rule of "one member, one vote". function on "no profit, no loss" basis. Co-operative

banks,

as

principle,

do

not

pursue

the

goal

of

profit

maximization.

2. Co-operative bank performs all the main banking functions of deposit mobilisation, supply of credit and provision of remittance facilities.

3. Co-operative Banks provide limited banking products and are functionally specialists in agriculture related products. However, co-operative banks now provide housing loans also.

4. Co-operative banks are perhaps the first government sponsored, government-supported, and government-subsidised financial agency in India. They get financial and other help from the

Reserve Bank of India, NABARD, central government and state governments. They constitute the "most favoured" banking sector with risk of nationalisation. For commercial banks, the Reserve Bank of India is lender of last resort, but co-operative banks it is the lender of first resort which provides financial resources in the form of contribution to the initial capital (through state government), working capital, refinance.

5. Co-operative Banks belong to the money market as well as to the capital market. Primary agricultural credit societies provide short term and medium term loans.

6. Co-operative banks are financial intermediaries only partially. The sources of their funds (resources) are: (a) Central and state government, (b) The Reserve Bank of India and NABARD,

(c) Other co-operative institutions, (d) Ownership funds and, (e) Deposits or debenture issues.

7. Some co-operative bank are scheduled banks, while others are non-scheduled banks. Cooperative Banks are subject to CRR and liquidity requirements as other scheduled and nonscheduled banks are. However, their requirements are less than commercial banks.

8. As said earlier, co-operative banks accept current, saving, and fixed or time deposits from individuals and institutions including banks.

9. In the recent past, the RBI has introduced changes in interest rates of co-operative banks also, along with changes in interest rates of commercial banks. The interest rates structure of cooperative banks is quite complex. The rates charged by them depend upon the type of bank, the type of loans, and vary from state to state.

10. Since 1966 the lending and deposit rate of commercial banks have been directly regulated by the Reserve Bank of India. Although the Reserve Bank of India had power to regulate the rate cooperative bank but this have been

exercised only after 1979 in respect of non-agricultural advances they were free to charge any rates at their discretion. Although the main aim of the co-operative bank is to provide cheaper credit to their members and not to maximize profits, they may access the money market to improve their income so as to remain viable.

11. Co-operative banks (COBs), in short, have played a pivotal role in the development of shortterm and long-term rural credit structure in India over the years. The co-operative credit effort is said to be the first ever attempt at micro-credit dispensation in India.

CH. 6. TYPES OF CO-OPERATIVE BANKS

TYPES OF CO-OPERATIVE BANKS

CLASSIFICATION OF CO-PERATIVE BANKS:

The Co-operative banking structure in India comprises of:

1. Urban Co-operative Banks

2. Rural Co-operatives

1. Urban Co-operative Banks:

Urban Co-operative Banks is also referred as Primary Co-operative banks by the Reserve Bank of India. Among the non-agricultural credit societies urban co-operative banks occupy an important place. This bank is started in India with the object of catering to the banking and credit requirements of the urban middle classes.

. Rural Co-operatives:

Rural Cooperative Banking plays an important role in meeting the growing credit needs of rural population of India. It provides institutional credit to the agricultural and rural sector. The

inadequacy of rural credit engaged the attention of RBI and Government throughout the 1950s and 1960s. One important feature of providing agriculture credit in India has been the existence of a widespread network of rural financial institutions.

BANK PROFILE

NKGSB was founded by a great visionary Sheth Shantaram Mangesh Kulkarni on 26th September, 1917. The Bank with a modest beginning in 1917, is now a Multi-State Bank having its area of operation in the States of Maharashtra, Karnataka, Goa, Gujarat and Union territories of Daman, Diu, Dadra and Nagar Haveli. Today the Bank has 42 branches spread over in the state of Maharashtra, Goa & Karnataka. Mumbai - 27 branches Navi Mumbai Vashi, CBD Belapur & Panvel (3 branches) Maharashtra other than Mumbai - Pune (Kothrud & Aund), Kolhapur (Kolhapur Main & Uma talkies. These are takeover of Shahu Co-operative Bank) & Nashik Goa- Ponda & Panaji Karnataka Karwar- Main. Karwar -Baad, Hubli, Belgaum & Sirsi. Bank opened its 42nd branch, 5th in Karnataka at Sirsi on 13th November, 2010 and will shortly be opening branches at Thane, Kalayan and Goregaon (W) during the financial year 2010-11 Over the years, the Bank has consistently shown robust growth both quantitatively and qualitatively. The Bank has not only grown in size of deposits and advances, but has multiplied its net worth making the institution financially sound and fundamentally strong. The Board of Directors of the Bank consists of well qualified professionals enriched with varied experience in the strategic fields of Finance, Technology, Business and Management. Being driven by the co-operative principles, management lays emphasis on profits but with focus on the welfare of our stakeholders. As a part of good governance practice, the Bank has adopted code of good business principles and accepted the responsibility to ensure that they are observed down the line as a

work culture in its true spirit. The business philosophy is based on four core values i.e. pillars of service excellence, customer focus, product innovation and resourceful people.

In terms of our commitment for harnessing the state of art technology, networking all 42 branches counter under Core banking solution, customers can access their accounts and perform banking operations anywhere anytime with value added services. The Bank has varied Deposit products to suit every needs of customers, so also the bank has occupied a place of pride with those who are financed for offering tailor-made complete credit solutions under one roof packaged at liberal, competitive and flexible terms, let it be personal finance or loan facilities for Short term as well Long term requirement of Small Businessman, Professionals, Small & Medium Enterprises and Corporates.

Financial Achievements of NKGSB CO-OP Bank LTD.

Financial achievements: 2000-2010v/s 1990-2000 Year 1990 2000 2009 2010 Significant growth Deposits (Rs cr) 48 438 1,840 2,298 path Net Profit (Rs cr) 0.5 5.1 27.2* 27.4* during No. of Employees 152 310 541 641 the Decade:

No. of No. of No. of Owned Branches A/Cs Members Funds 000 000 (Rs cr) 9 18 27 40 79 203 431 461 41 55 73 74 3.8 37.2 158.3 176.2

Advances (Rs cr) 29 229 1,089 1,370

Structure of Co-operative Banking (March 2007)

Institution

Number of Institute 107497 106781 31 369 97224 716 20 696

Number of Branch

Asset Share (%)

A. Rural Co-operative Credit Structure: 1. Short term: State Coop bank Central Coop bank Primary Agri Coop soc. 2. Long term: State Coop Agri and Rural Dev banks Primary Coop Agri and Rural Dev banks

112895 111090 938 12928 97224 1800 1104 696

67 58 15 29 14 8.3 4.4 3.9

B. Urban Co-operative Banks:

49805

56600

33

Co-operative banks v/s Other banks If we look at the return provided by various co-operative banks, we immediately find that they are higher than returns provided by the various nationalized and private banks. For amount less than 15 lakhs, The returns provided by various co-operatives banks, SBI and ICICI are as follows: Banks Name/ Period 91 181 1 year to 541 days to 2 years to 3 years to 2 years 3 years 5 years

days- days to 540 days 180 days 1 Year

Abhyudaya Cooperative Bank THE BHARAT Co-operative Bank (MUMBAI) LTD Saraswat Cooperative Bank Ahmedabad Mercantile Coop Bank State Bank of

6.50% 7.00%

7.25%

7.50%

7.75%

8.00%

5.50% 6.75%

7.25%

7.25%

7.00%

7.00%

5.25% 6.00%

6.50%

7.25%

7.25%

7.25%

5.50% 6.00%

7.00 %

7.00%

7.00%

7.00%

4.75% 5.25%

6.00%

6.00%

6.50%

6.50%

India (SBI) ICICI Bank 5.25% 6.00% 6.25% 6.25% 7.00% 7.50%

So, the first question which comes to our mind is why should not put our money in Cooperative banks rather than nationalized or private banks. But then there is a risk factor which comes in. In India 19 Co-operative banks have closed down in 2009! So, is it safe to park your valuable money in Co-operative banks? While Co-operative banks were closing down, the Reserve Bank of India (RBI) tried to bring them under tighter control. Till a few years ago, Urban Commercial Banks were not strictly monitored with two regulators in the RBI and the Registrar of Co-operative Societies. But now the RBI has taken various measures to bring them under control. It has signed MoUs with 11 states to set up task forces on Urban Co-operative Banks to work with the registrars on remedial action and take the tough decisions on the structure. It has also put a limit of 15 per cent of the own funds of the bank for loans to one borrower group, making it difficult for the banks to give a huge loan to one entity and compromise its stability, as was happening earlier. According to the RBI, Co-operative banks are intended primarily for members and all financial information pertaining to the bank is required to be made available to them. In addition, according to the existing regulations, a bank is required to publish its balance sheet in a newspaper in circulation in the main area of operations of the bank. They are also required to place their annual accounts before the annual general meeting. Certain minimum disclosures have been prescribed by RBI. All this information can be used by public in making investment decision.

However, the bank customer has to make his or her own choice, depending on which the bank offers the most suitable product. While the RBI is doing its bit, it says you should also run the following checks to ensure that you have a nice experience.

BOARD OF DIRCTORS OF NKGSB BANK

Board of Directors
Management Board of Directors is composed of eminent, well qualified professionals enriched with varied experience in the strategic fields of Finance, Technology, Business and Management. Being driven by the Co-operative principles, the management lays emphasis on profits but with entire focus on the welfare of stakeholders. As a part of good governance practice, the bank has adopted code of good business principles and accepted the responsibility to ensure that they are observed down the line as a work culture in its true spirit. The business philosophy is based on four core value pillars of service excellence, customer focus, product innovation and resourceful people. Chairman Mahesh Aras Vice - Chairman Kishore Kulkarni Directors Alka Diwadkar Nagesh Fovkar Shridhar Kamat Vasudev Masurekar Kaushal Muzumdar Ganpati Nadkarni Premanand Nadkarni Sujata Rangnekar Surendra Shanbhag Rajiv Nayak Civil Engineer B.A . (Hons.), LLB. B.Sc., LLB , D.T.M. B.Com. F.C.A., P.G.D.M. (IIMB) B.Com. F.C.A., F.C.S., AICS (U.K.) B.Sc., F.I.C.W.A. B.Com., LLB, ACA. M.A., CAIIB. B.A. (Hons.) B.Com. (Hons.), LLB, AICWA. B.Sc. (Hons.), LLB, ACA.

Branch Locator
REGISTERED OFFICE Laxmi Sadan, 361, V.P. Road, Girgaum, Mumbai 400 004. Tel: Fax: +91 (22) 6754 5000 +91 (22) 6754 5023

Secretarial Department Corporate Office Departments at Laxmi Sadan - Credit, Retail, Credit Monitoring Department, Marketing Department, Non fund based / Forex Dept Accounts, MIS, HRD Gorai - Administration Department Jogeshwari - RBC Premises - Recovery Department & Audit Department Ghatkopar - Demat Department STC GORAI Address: Gorai Bus Depot Bldg., Gorai, Borivali ( West), Mumbai - 400 091. Tel: Fax: +91 (22) 6527 6192 / 6527 2669 / 6527 6195 + 91 (22) 2869 9747 RBC JOGESHWARI Address: Bimal Appartments Hindu Friends Society Road Jogeshwari ( East) Mumbai - 400 060. Tel: +91 (22) 6527 6178 / 6517 6182 / 6527 6185 Fax: +91 (22) 2820 3603

Products Offered by NKGSB CO-OP. Bank

1.Savings DepositSavings Account is primarily meant to inculcate a sense of saving for your future financial requirements. The main objective is to save in small or large amount from time to time. Your savings remain liquid and safe, earning moderate interest. Our Savings Account comes with a host of convenient features and banking channels to transact through. Types of Savings Deposit Regular Savings Account Student Power- Savings account for younger generation with age above 14 years Dignity Saving- Savings account for senior citizens above 60 age Super Saving- Savings account for high net worth customers No Frill Account- Savings account for people of small means Non-Resident(External) NRE Saving Account- Savings account for NRE to maintain foreign currency earnings in Indian rupees 2. Current DepositsCurrent Account are ideal for carrying out everyday business transactions. You can access your account anytime and make unlimited payment with at Par Cheque, Deposit Cheque or Demand Draft, etc. Types of current deposits Current account- A regular current account. Gold Plus- Current account for high net worth customers Platinum Plus-Current Account for preferred elite customers 3.Term DepositTerm Deposit scheme to suit your requirement and future plan. You can not only earn higher income on your surplus funds by investing in any of our term deposit schemes, but also avail

loan against those funds. Thus fulfill your need, multiply your funds as well as keep your savings secure Types of term Deposits Short Term Deposit (SDR)- Easy liquidity still earn interest Fixed Deposit (FDR)- Invest and earn interest quarterly or half yearly Recurring Deposit (RD)- Regular savings leads to high investment Monthly Income Plan (MIP)- Earn Monthly interest on your investment Annapurna Tax Benefit Deposit Scheme- Save tax and maximize interest on your investment Quarterly Interest Re-Investment Plan (QIRP)- Gain more by earning interest on interest Automatic Renewal Certificate (ARC)- Automatic renewal of principal no need to visit for renewal process Flexi Quarterly Interest Re-Investment Plan- Break Investment without loss of interest.

Automatic Renewal Certificate with Interest- No renewal hassle guarantees automatic renewal with interest Non-Resident(External) NRE Term Deposit Account- Term Deposit account for NRE to maintain foreign currency earnings in Indian rupees 4. Retail LoanOffers a wide variety of Retail Loans. Whatever be your need, our range of retail loans will suit your requirement. The PLR of the bank is 13.5 %. Types of retail loan-

 Home - A Loan- Realize your dream with a complete package to meet all your housing finance needs Life Cycle Banking Scheme- Enjoy additional loan anytime without additional security or guarantee Profina- Fast track customized loan for professional Medifina- A red carpet welcome for medical professionals Vehicle Loan- Zoom ahead in your life Mortgage Loan- Mortgage your property to payoff various expenses Educational Loan- Fulfill your dream of higher education Personal loan- Buy your dream today with quick finance Consumer Loan- Acquire consumer durables, as your home is more than just four walls Swayamsiddha- Loan for professional women Stree Udyogika- Loan for women entrepreneurs Stree Sakhi- Loan for working women. 5.Corporate Finance Working Capital ( Cash Credit )- Working capital finance by way of cash credit to fund day to day business operations Busifina- Funds meant to augment working capital for small and medium business enterprise

 Over Draft Against Property- Overdraft against property, to increase business opportunity SME Finance- Funds to bolster the working of a small and a medium business enterprise Bank Guarantee- To satisfy your need of advance payment or performance guarantee. Letter of Credit- To satisfy your need to procure raw material or acquire fixed assets Term Loan- Finance for purchase of fixed assets Bill Discounting- To meet your business requirement LC Discounting- To meet your business requirement Rent Discounting- Discount your future income to multiply returns and investment in assets

Services Offered by NKGSB CO-OP. Bank

1. Any Branch Banking- Easy operational mobility in transacting business. Access account to withdraw money up to Rs. 25000/- across the counter or up to Rs. 15000 /through ATM from any branches, round the clock.

2.Quick ATM- To give flexibility to access your account 24 hours 365 days, bank has established network of ATM across all our branches 3.Ancillary Business- Bank offers various Value Added Services Demat- Our Bank has always been in the forefront to add on value to its products, to offer best of the services to customers with convenience. The bank has tied up with NSDL as a Depository Participant (DP) offering Demat services at all branches] Desk Drawing- Desk drawing facility through HDFC Bank across the country Life Insurance / Non - Life Insurance- We have entered into strategic alliance, both for Life & Non-life insurance products. We are a Corporate agent of MAX New York Life a leader in life insurance industry and Oriental Insurance Company Pvt. Ltd. a very reliable and sound name in non- life insurance. I-Connect- You can pay all your Direct taxes like Gift tax, Income tax, Wealth tax etc and Indirect taxes like Central Excise duty, Service tax etc through I Connect facility Stamp Franking- Stamp Franking activities have become a credible mode, in the interest of general public at large. In its quest of adding new products , bank has obtained license and introduce this value added facility at its branches to frank impression of stamps on a variety of instruments on which stamp duty is payable, under the provision of Indian stamp Act 1899 and the Bombay Stamp Act 1958 Safe Deposit Locker- Just relax, we safeguard your valuables. No worries any more. Forex- We are pleased to announce that the RBI has granted AD Category II licence to our bank to deal in foreign exchange.

4. Remittances Real Time Gross Settlement System (RTGS)- RTGS is a more robust payment system enabling inter-bank fund transfers of above Rs.1 Lac. Transfer of funds is

done by simple instruction to bank to transfer funds from your account to another bank account whereby settlement is done continuously. National Electronic funds transfer (NEFT)- Presently all our branches are CBS enabled to offer NEFT facility to our customers. This system facilitates an efficient, secure, economical, reliable and expeditious system to transfer fund below Rs 1 Lac. and clearing throughout India. 5. SMS BANKINGSMS BANKING is a service that enables you to access your bank accounts using a cellular mobile phone. Banking with a cellular mobile phone is like having a bank branch in your palm. You can access your bank any time, from any place. 6. Internet BankingOnline banking (or Internet banking) allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society.

INTRODUCTION
NABARD was set up by Government of India (GoI) as a development bank with a mandate for providing and regulating credit and other facilities for the promotion and development of agriculture, small scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas with a view to promoting integrated rural development and securing prosperity of rural areas, and for matters connected there with or incidental thereto. National Bank for Agriculture and Rural Development (NABARD) was established by an Act of the Parliament on 12 July1982. The agriculture credit functions of the Reserve Bank of India (RBI) and refinance functions of the then Agricultural Refinance and Development Corporation (ARDC) were transferred to NABARD on its formation.

The paid up capital of NABARD is Rs.2,000crore, subscribed by the GoI and RBI at Rs.550
crore and Rs.1,450 crore respectively.

MISSION
Promote sustainable and equitable agriculture and rural prosperity through effective credit support, related services, institution development and other innovative initiatives.

OBJECTIVES OF NABARD
Facilitate credit flow for agriculture, rural infrastructure and rural development. Promote policies, practices and innovations conducive to rural development. Strengthen rural credit delivery system through institutional development, Supervise Rural Financial Institutions (Cooperative Banks and Regional Rural Banks. Consultancy services.

NABARD (National Bank for Agricultural and Rural Development) has been formed to promote sustainable and equitable agriculture and rural development through effective credit support, related services, institutional development and other initiatives.

1. NABARD is an apex institution accredited with all matters concerning policy, planning and
operations in the field of credit for agriculture and other economic activities in rural areas.

2. NABARD operates throughout the country through its Head Office at Mumbai, 25 Regional
Offices and on Sub-Office, located in the capitals of all the states/union territories. It also has 4 training establishments.

3. It is an apex refinancing agency for the institutions providing investment and production credit
for promoting the various developmental activities in rural areas.

4. It takes measures towards institution building for improving absorptive capacity of the credit
delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of credit institution, training of personnel, etc.

5. It co-ordinates the rural financing activities of all the institutions engaged in developmental
work at the field level and maintains liaison with Government of India, State Governments, Reserve Bank of India and other national level institutions concerned with policy formulation.

6. It prepares, on annual basis, rural credit plans for all districts in the country; these plans form
the base for annual credit plans of all rural financial institutions. It undertakes monitoring and evaluation of projects refinanced by it. It promotes research in the fields of rural banking, agriculture and rural development.

FUNCTIONS OF NABARD

A. Credit Planning and Monitoring Preparation of district-wise annual Potential Linked Credit Plans (PLPs), mapping the exploitable potential in agriculture and allied sectors, rural non-farm sector, etc., available for development through bank credit, Preparation of State Focus Paper (SFP)based on the Potential Linked Credit Plans(PLPs), Formulation of policies and operational guidelines for Rural Financial Institutions(RFIs), Monitoring the flow of ground level credit to agriculture and allied sectors,

Coordination with various Government agencies and departments at district, state and
national level.

B.

Financial Services

Refinance by way of loans and advances to RFIs for financing investment and production purposes in rural areas. Loans to State Governments for developing critical infrastructure including social infrastructure in rural areas and strengthening cooperatives. Support for micro credit innovations of Non Governmental Organisations (NGOs) and other formal and non-formal agencies.

 Monitoring and evaluation of projects financed. Co-financing with financial institutions.

C. Promotion and Development

Capacity building of partner institutions, o Support to innovation and experimentation of new models and practices in rural development and credit delivery system, Dissemination of innovative products and ideas. Support Research and Development (R & D), Institutional development of client organisations including revitalisation, Assisting RBI and GoI in formulation of policies relating to rural credit, Promotion of micro credit innovations, Promotion of Farmers Clubs, Joint Liability Groups and Tenant Farmers, Promotion of Rural Non-Farm Sector (RNFS), Promotion of Kisan Credit Card (KCC) scheme, Consultancy services.

D. Supervision
On-site inspection of Cooperative Banks and Regional Rural Banks (RRBs), Off-site surveillance on the financial health of Cooperative Banks and RRB.

Schemes of NABARD

A) Swarnajayanti Gram Swarozgar Yojana (SGSY)

SGSY, formed by restructuring ongoing self employment programmes, viz. IRDP, TRYSEM, DWCRA, etc., is under implementation from 01, April, 1999. The programme envisages formation of SGSY Groups and their linkage with the banks. Individuals as also SGSY group members, below poverty line are assisted under the programme

B) Scheme for setting up of Agriclinic and Agribusiness centers

In pursuance of the announcement made by the Union Finance Minister in the budget speech for the year 2001-02, National Bank in consultation with the Ministry of Agriculture, GOI and select banks formulated a scheme for financing Agriculture Graduates for setting up Agriclinics and Agribusiness Centers The scheme aims at supplementing the existing Extension Network to accelerate the process of technology transfer to agriculture and supplement the efforts of State Agencies in providing inputs and other services to the farmers.

C) Scheme for financing farmers for purchase of land for Agricultural purposes
In response to the Hon'ble Union Finance Minister Mr. P. Chidambarams emphasis on the need to step up priority sector lending and to examine financing farmers for purchase of land for agricultural purposes, the Working Group constituted by Indian Banks Association formulated above scheme in consultation with the Government of India, RBI and NABARD. The objective of the Scheme is to finance the farmers to purchase, develop and cultivate agricultural as well as fallow and waste lands as also consider financing purchase of land for establishing or diversifying into other allied activities.

Eligibility

I.

Small and marginal farmers i.e. those who would own maximum of 5 acres of nonirrigated land or 2.5 acres of irrigated land including purchase of land under the scheme and

II.

Share croppers / Tenant farmers are eligible.

D) Central Sector Capital Subsidy scheme for Investment Promotion

A Central Sector Capital Subsidy scheme (Investment Promotion Scheme) launched by the Government of India in collaboration with NABARD for development of privately owned non-forest wastelands in the country is under implementation since 1998. Of the 40 schemes covering about 1500 ha sanctioned till date, the coverage is mostly confined to the States of Tamil Nadu, Andhra Pradesh and Maharashtra, with Tamil Nadu accounting for more than 20 schemes. The scheme provides for subsidy up to 25% of bank loan with a ceiling of Rs. 25 lakh for taking up plantation and other on-farm developments in private wastelands. In view of the availability of substantial area under non-forest wasteland in all States and the need to develop them, a nationwide awareness and publicity campaign was launched by the Government of India in association with NABARD for popularizing the Investment Promotion Scheme (IPS).

E) Refinance Scheme for financing Farmers Service Center (FSC)

NABARD has decided to extend 100% refinance facility to banks for financing Farmers Service Centers (FSC) set up in collaboration with Mahindra Shubhlabh Services Ltd (MSSL) for providing various extension services to farmers including supply of agri-inputs. FSC is intended to benefit farmers by way of higher yields and productivity through private sector participation in technology transfer and extension services.

FUTURE PLANS OF NABARD

1) CHEAPER POWER TO INDUSTRY, AGRICULTURE MUST FOR GROWTHIndia needs to bridge the gap between demand and supply of electricity and provide affordable power to industry and agriculture to ensure sustained economic growth, Prime Minister Manmohan Singh said. It is the only way to achieve higher rates of economic growth on a sustainable basis, Singh said after laying the foundation stone for the Rs 6,000-crore power equipment manufacturing plant at Mannavaram in Tirupati. A NTPC-BHEL joint venture, the plant will be ready by 2015. It will manufacture the power generation equipment including turbines, generators and boilers that is currently being imported. Singh praised the untiring efforts of former CM Y S Rajasekhara Reddy for ensuring that the plant came up in Andhra Pradesh. Later in the day, the Prime Minister laid the foundation stone for Tirupati airports new international terminal.

2) NABARD TO HELP FARMERS PRODUCE QUALITY SEEDSThe state regional office of National Bank for Agriculture and Rural Development (NABARD) will assist farmers in the state to produce quality certified seeds in the coming years.

NABARD is set to expand its pilot project seed village , which was started in five villages of Hamirpur district in Bundelkhand region, to 10 villages in Kanpur Dehat in the coming financial year. Informing about the initiative on Wednesday, D P Mishra, Chief General Manager of NABARD, UP Region, said Rs 8 lakh has been sanctioned to the Indian Institute of Pulse Research to implement seed village concept in selected blocks of Kanpur Dehat. According to sources, around 19 districts in the state have been selected to implement this project in the coming years. Mishra said: The farmers usually get government supplied seeds in UP which are not in adequate quantity or they have to depend on procuring high quality seeds from other states.

3) NABARD WILL BE ISSUING BONDSNABARD will be issuing 10-year zero-coupon Bhavishya Nirman Bonds by the end of this fiscal year. NABARD will be issuing 95,20,000 bonds with maturity value of Rs 20,000 each.

4) NABARD CLOCKS TWO-FOLD JUMP IN FINANCINGOn the back of a good monsoon, the National Bank For Agriculture and Rural Development (Nabard) has witnessed a two-fold increase in financing this fiscal and is eyeing a disbursement of Rs 40,000-crore by March 2011, a top official said. "This year, credit growth has been very healthy because of the good monsoons and we have already witnessed refinance disbursements doubling to Rs 10,000-crore as against Rs 5,000-crore last year," Nabard's Chairman U C Sarangi told reporters on the sidelines of a banking event here today. The bank is targeting to finance loans worth over Rs 40,000-crore in the current fiscal of which over Rs 26,000-crore would be for short-term credit and over Rs 13,000-crore for long-term, he said.

In FY10, the bank had done a financing of Rs 34,000-crore, Sarangi said. Nabard has not borrowed any money so far and has been deploying internal accruals for financing, he said. The specialty institution's borrowing cost has been constant and there has not been a hardening of interest rates as feared earlier which is helping the bank further, he said

CH. 10. CONCLUSION

Conclusion:

Now, It is very much clear that co-operative banks have very much importance in national development. Without the help of co-operative banks, millions of people in India would be lacking the much needed financial support. Co-operative banks take active part in local communities and local development with a stronger commitment and social responsibilities. These banks are best vehicles for taking banking to doorsteps of common men, unbanked people in urban and rural areas. Their presence in the social, economic and democratic structure of the country is essential to bring about harmonious development and that perhaps is the best justification for nurturing them and strengthening their base. These banks are sure to win in the race because they are from the people, by the people and of the people

BIBLIOGRAPHY

Banking Development In India 1947-2007 - Growth, Reforms and Outlook by Niti Bhasin

Banking Theory and Practice by K.C. Shekhar and Lekshmy Shekhar

Co-operative Banks in India Functioning and Reforms by Amit Bhasak

WEBSITES

 en.wikipedia.org/wiki/Cooperative_banking.

www.banknetindia.com/banking/cintro.htm.

Managing Director Nadkarni Chintamani ACA

BRANCH LOCATOR