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A Summer Internship Project Report

On
Lending and Investment Policy
Of Urban Co-Operative Bank

UNDER THE GUIDANCE OF

MR. R.K MISHRA

BRANCH MANAGER
URBAN CO-OPERATIVE BANK, ROURKELA

SUBMITTED BY:

VINIT KUMAR SAHOO

MBA 2ND YEAR
REGD NO – 1761301065

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DECLARATION

I,Vinit kumar sahoo, a student of MBA, IBCS SOA UNIVERSITY, Bhubaneswar

bearing roll no – 1761301065 do hereby declare that the project work entitled
“lending and investment policy at URBAN CO-OPERATIVE BANK UDITNAGAR
ROURKELA submitted by me for the partial fulfilment towards the award of
degree of MBA in management is a record of my own research work.

The report embodies the original finding based on my study and observation
and has not been submitted earlier for the award of any degree or diploma to
any institute or university.

Place: ROURKELA

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Date:Signature:
Acknowledgement

The satisfaction that accomplishes the successful completion of any project would be
incomplete without the people whose constant guidance and encouragement crowns all
efforts with success. I convey my sincere gratitude to MR. R.K MISHRA,CEO, Urban Co-
Operative Bank, Rourkela for giving me an opportunity and his constant inspiration and
motivation in preparing my project work in URBAN CO-OPERATIVE BANK.

I am also thankful to all the faculty and staff of URBAN CO-OPERATIVE BANK, UDITNAGAR
for their unstinted support and cooperation, constructive criticism and valuable guidance as
and when needed during the course of the project work.

Finally, I like to say that I have tried heart and soul to prepare this report
accurately.however, there might be some errors and silly mistakes due to our limited
aptitude & time constraints. In this regard, I seek your kind consideration as I am in the
process of learning.

Place: Rourkela
Date:

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CERTIFICATE

This is to certify that the project entitled “Lending and investment management of Urban
Cooperative Bank” is a bondable record carried out by Mr. VINIT KUMAR SAHOO a Student
of IBCS SOA UNIVERSITY BHUBANESWAR, bearing University Registration number
1761301065 (session 2017-2019), has successfully completed his Summer project for the
Business of SOA UNIVERSITY,BHUBANESWAR, Odisha. To the best of my worked sincerely
under my guidance. The summer project report has not been submitted earlier to these
University/institutions.

Wishing him good luck for a successful career and all the future endeavours.

Internal examiner External Examiner

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PREFACE

The successful completion of this project gives a unique experience for me because by
visiting many places and interacting with many peoples I achieved a better knowledge
about this project.

The experience which I gained by doing this project was essential at this turning point of my
career. This project is being submitted which content details of the research under taken by
me.

The Research provides an opportunity to the student to devote their skills, knowledge and
competence required during technical session.

The research is on the topic “Lending and investment management of Urban cooperative
bank”.

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VINIT KUMAR SAHOO

Contents

Sl. NO Topic Page no.

1. Introduction to banking industries 7

1.1 Global scenario of banking industries 10

1.2 Indian scenario of banking industries 11
1.3 Indian banking system 13
2. Urban cooperative bank 13
2.1 About the branch 16
2.2Achievements 18
2.3 Present status 19
2.4 Board of directors 19
3. Lending policies of urban cooperative bank 20
3.1 Types of customer 20
3.2 Types of loans, interest rates, & 22
eligibility
4. Investment policy of urban cooperative
bank

4.1 Investment 24
4.2 Authority & responsibility of UCB 26
4.3 Holding of investments 29
5. Research and methodology 33
6. Data analysis and interpretation 34
7. Findings 39
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8. Conclusion 40
9. Recommendation
10. BIBILOGRAPHY

1. INTRODUCTION

Banking Industries
Bank may be defined as a financial institution engaged in the business of keeping money for
savings and checking accounts or for the issue if loans and credits etc.

A set of services intended for the private customers and characterized by a higher quality
than the services offered to retail customers.

Based on the nation of tailor-made services, it aims to offer advice on investments,

inheritance plans and provide active support for general transaction and the resolution of
asset-related problems.

The essential function of a bank is to provide services related to the storing deposits and
extending of credit. Basic function may provide credit collection, issuer of banking notes,
depositor of money and lending of loans. Now a days banking is not in its traditional form
with the advancement of technology it’s focusing on more comfort of customer providing
service such as:

 Online banking
 Investments banking
 Electronic banking
 Internet banking
 PC/mobile banking
 E-Banking

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The importance of banking sector is immense in the progress and positivity of any state or
country. The economic progress and prosperity comes from the well-rounded development
and an impeccable banking management. But in general, governmental and private have
eased our financial transactions, security, and facilitated the funding for establishing a
business or industry.
Business banking industry Is the industry in business banking dealing with the different
banking transaction which takes place while conducting a business. Business banking can
also refer as a commercial banking. Business banking industry deal with all the functions
ranging from transferring funds, business loans, online business transaction etc, the success
of a business largely depends on the correct bank section for carrying out all the
transactions effectively.

Banks falling under the category of business banking industry offer different charges and
rated for the different business banking services, one needs to check and compare the
charges offered by the different banks.

One needs to understand that opening an account under the business banking industry.
Many prefer banks with the same bank where one has the personal banking, it can work to
an advantage for the different business banking services offered by the business banking
industry. There are some banks which impose fees for performing monetary transactions
on behalf of the business banking account holder. One needs clarify the same.

The business banking industry also requires that the bank offering business banking services
should have a local branch situated in the city of the business banking account holder once
a bank is selected an individua; is required to open an account the type of account one
should go for is determined by the number of transactions taking place every day.

Under the business banking industry, the following types of business banking accounts may
be requested by an entrepreneur. Current account, this can be used for carrying out
everyday transactions including payments, taking deposits.

Instant access deposit account:

This type of bank is not needed for daily transactions.

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Term deposit account:
In this type of account, the money is not required for the daily transaction. Not only that
the money is not likely to be required for quite some time.
Foreign currency account:
This account is required when an entrepreneur wishes to trade in a foreign country.

Loan account:
When an entrepreneur is intending to take a loan for business purpose.

Merchant account:
With the help of merchant account, one is able to carry outtransaction involving credit
cards and debit cards.
There are some banks which impose fees and charges for every transaction made. There
are yet others whose fees system may be different.

Changing banks account to one’s convenience

In the event when one is not happy with the service of existing bank providing the business
banking services, one may at once change banks for better services,

Transaction with foreign currency

If an individual need to constantly deal with the foreign currency as a part of one’s business
requirement one should check as to how the bank offering business banking facilities with
regard to the following matters offers guidance with to dealing with one’s business
products in the light of foreign countries as well.
Foreign currency: How one should restructure one’s strategy with the changing currency
rates and the risks involved in the same. The utilities in carrying out transaction with the
foreign currency.

Providing credit cards and debit cards for one’s business:

The bank providing debit cards and credit cards which are universally accepted. Business
banking industry that the bank should provide debit cards or credit cards to the bank
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individual offer the maximum or optimum advantages as per the requirements of the
business banking holder.

Accepting payments by the means of credit cards as well as debit cards:

One should furnish all the details of one’s business to the bank offering business banking
services. One can avail of a card transaction system by fulfilling the formalities with the
bank. The risk in accepting payments by plastic cards should be reckoned.
Payments:
If a business firm decides to accept payments through the internet, appropriate
arrangement in accordance to the banking norms are set up for carrying out transaction on
line.
Online transaction is more susceptible to fraud and one needs to be extra careful if at an
online payment acceptance method is opted for.
1.1 Global scenario of banking industries
The world of commercial is undergoing a deep transformation as a result if marketable
instrument competing with loans on demand deposits because of this strong competition,
commercial banks is struggling to make acceptable margins from their traditional business
entering into investment banking.

Increasing competition has forced banks for more income at the expense of more risks.
Banks that lend heavily in Asia in search for better returns than those available in western
markets are now being blamed for bad credits decisions; the Asian crisis has renewed
interest on credit risk management casting doubts on the effectiveness of current credit
regulations.

Technological changes have also heightened by making it easier to imitate bank services.
The traditional advantage of physical proximity to clients given by ectended funds for
deposits business, commercial papers, and medium-term notes for bank loans as margins
are squeezed, commercial banks in US and Europe have been forced to cut costs and
branches while diversifying into pensions, insurance, asset management, and investment
banking. In the United States, many banks call themselves financial service companies even
in their reported financial statements.

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Diversifications however, has not always proved to be an effective strategy, and many
banks have everted to a concentrated business. These examples illustrate how commercial
banks are reinventing themselves, not just that but many times. All these changes are
creating an identity crisis for old-fashioned bankers, leading to a key question, “what is
bank today?”. The question is difficult, but evidence suggests that the concept of banking is
being modified and the traditional barrier between the financial service sub industries
(retail banking, private banking, investment banking, asset banking, insurance, etc.) is
vanishing.

Illustrating what an entity does or serves for often is a useful way to define it. The identity
crisis of banks-especially commercial banks stems from deep and rapid changes in their
traditional body of activities (especially retail and corporate banking). On the other hand,
investment banking, private banking and bank assurance are the most profitable and
advance growing segments of the financial service industry.

As banks undertake new activities, they also incur new risks. Since boundaries are
weakening, if not vanishing, banks like all other financial service companies must redefine
themselves in terns of the product they offer and the consumer they serve.

1.2 Indian scenario of banking industries

Banking in India originated in the last decade of the 18th century. The fastest banks were
the General bank of INDIA, which started in 1786, and Bank of Hindustan, which started in
the year 1790, both are now defunct. Th oldest bank in existence in India is the State of
India, which originated in the Bank of Calcutta in June 1806, which almost immediately
became the bank of Bengal.

This was one of the three presidency banks, the other two being the Bank of Bombay and
Bank of Madras, all the three of which were established under charters from the British
East India Company. For many years the presidency banks acted as quasi-central banks, as
did their successors. The three banks emerged in 1921 to form the Imperial Bank of India,
which, upon India’s independence, became the State Bank of India.

Indian merchants in Calcutta, established the Union Bank in 1839, bu it failed in 1848 as a
consequence of the economic crisis 1849-49. The all Allahabad bank, established in 1865
and still functioning today. is the oldest joint stock bank in India (joint stock bank: a
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company that issues stock and requires shareholders to be held liable for company’s debt).
It was not the first though.
That honour belongs to the Bank of Upper India, which was established in 1863, and which
survived until 1913, which it failed, with some of its asset and liabilities being transferred to
the Alliance Bank of Shimla.

When the Civil War of America stopped the supply of cotton to Lancashire from the
Confederate States, promoters opened banks to finance trading in Indian cotton. With the
large exposure to speculative ventures, most of the banks opened in India that period
failed.

The depositors lost money and lost interest in keeping deposits with banks, subsequently,
banking in India remained the exclusive domain of Europeans for next Several decades until
the beginning of 20th century.

Foreign banks too started to arrive, particularly in Calcutta in the 1860’s. The comptoire
d’escompte de Paris opened a branch in Calcutta in 1860, and another in 1862. Branches in
Madras and Pondicherry, then a French colony, followed. HSBC established itself in Bengal
in 1869. Calcutta was the most active trading port in India, mainly due to trade of British
empire, and also became in banking centre.

The firstly entirely Indian joint stock bank was the Oudh Commercial bank, established in
1881 in Faizabad. It failed in 1958. The next was Punjab national bank, established in Lahore
1895, which has survived to the present and now is one of the largest banks in INDIA.

Around the turn of the 20th century the Indian economy was passing through a relative
period of stability. Around five decades had elapsed since the Indian mutiny, and the social,
industrial and the other infrastructure had improved. Indians have established small bank,
most of which particular ethnic and religious communities.

The presidency banks dominated banking in India but there were also some exchanges
banks and a number of joint stock banks, mostly owned by European concentrated on
financing foreign trade.

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Indian joint stock banks generally undercapitalized and lacked the experience and maturity
to compete with the presidency and exchange banks. The segmentation let Lord Curzon to
observe. “in respect of bankingit seems we are behind times. We are like some old-
fashioned sailing ships, divided by solid wooden bulkheads into separate and cumbersome
compartments”.

The period between 1906 and 1931 saw the established of banks inspired by the swadeshi
movement. The swadeshi movement inspired local businessmen and politician figures to
find banks for the Indian community. A number of banks then have survived to the present
such as Bank of India, Corporation Bank, Indian bank, Bank of Baroda, Canara Bank and
Central Bank of India.

The fervour of Swadeshi movement lead to established of many private banks in Dakshina,
Kannada and Uddupi district which were infied earlier and known by the name South
Canara district.
Four nationalized banks started in this District and also leading private sector bank, hence
undivided Dakshina Kannada district is known as “Cradle of Indian banking”

1.3 Indian banking system

Indian banking system

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URBAN CO-OPERATIVE BANK

The term co-operative banks (UCBs) through not formally defined, refers to primary co-
operative banks located in urban and semi-urban areas. The banks, till 1996, were allowed
to lend money only for agriculture purposes. The distinction does not hold today. These
banks were traditionally centred on communities, localities work place groups. They
essentially lent to small borrowers and businesses. Today, their scope of operations has
widened considerably.

The beginnings
The first known mutual aid society in India was probably the “Anyonya sahakari mandali”
organised in the erstwhile princely State of Baroda in 1889 under the guidance of Vithal
Laxman also known as the Bhushaeb Kavathekar. Urban cooperative credit societies, in
their formative phase came to be organized in a community basis to meet the
consumption-oriented credit needs to their members. Salary earnerssocieties inculcating
habits of thrift and self-help played a significant role in popularizing the movement,
especially amongst the middle class as ell as organized labour. From its origin the to today,
the thrust of UCB’s historically, has been to mobilize savings from the middle and
lowincome urban froups and historically, has been to moboilize savings from the middle

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and low income urban fgroups and survey credit to their members-many of which belonged
to weaker sections.

The enactment of cooperative credit socities act, 1904 however gave the real impetus to
the movement. The first urban cooperative credit society was registered in
canjeevram(kanjivaram) in the erstwhile madras province in October, 1904. Amongst the
prominent credit societies were the pioneer urban in Bombay (November 11, 1905, the
no.1 military accounts mutual help cooperative credit society in Poona (January 9, 1906),
cosmos in Poona (January 18, 1906), Gokak Urban (February 15, 1906) and Belgium pioneer
(February varavade weavers urban credit society (March 13, 1906) in south Ratangiri (now
Sindhugarg) district. The most prominent amongst the early credit societies was the
Bombay Urban cooperative credit society, sponsored by Vithaldas Thackeresey and
Lallubhai Samaldas established on January 23, 1906.

The cooperative credit society act, 1904 was amended in 1912, with a view to broad basing
it to enable organisation of non-credit societies, the Macglan committee of 1915 was
appointed to review their performance and suggest measures for strengthening them. The
committee observed that such institution was eminently suited to cater to the needs of the
lower and middle-income strata of the society and would inculcate the principles of banking
among the middle classes. The committee went a long way in establishing the Urban
cooperative credit movement in its own right.

In the present-day context, it is the interest to recall that during the banking crisis in 1913-
1914, when no fewer than f7 joint stock banks collapsed, there were flight deposits from
joint stock banks to cooperative Urban banks. Mac lagan committee chronicled this event
thus:
as a matter of fact,the crisis had a contrary effect, and is most provinces, there was a
movement to withdraw deposits from non-cooperative and place them in cooperative
institutions, the distinction between two classes of security being well appreciated and
preference being given to the later owing partly to the local character and publicity of
cooperative institution but mainly, we think, to the connection of government with the
cooperative movement.

Under state purview

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The constitutional reforms which led to the passing of the government of India act in 1919
transferred the subject of “cooperation” from government of India to the provincial
governments. The government of Bombay passed the first state cooperative societies act in
cooperative activites and stressed the basic concept of thrift, self help and mutual aid. Ither
states followed this marked beginning of the second phase in the history if cooperative
credit institutions.

The first study of urban cooperative banks was taken by up by RBI in the year 1958-1959.
The report published in 1961, acknowledged the widespread and financially sound
framework of urban cooperative banks, emphasized the need to established primary urban
cooperative development. In 1963, Varde committee recommended that such banks should
be organised at all urban centres with a population of 1lacs or more and not by any single
committee or caste. The committee introduced the concept of minimum capital
requirement and the criteria of population of defining the urban centres where UCB’s were
incorporated.

Duality of control

However, concerns regarding the professionalism of urban cooperative banks gave rise the
view that they should be better regulated. Large cooperative banks with paid-up share
capital and reserve of Rs. 1 lac were bought under the preview of the banking regulation
Act 1949 with effect from 1st March, 1966 and within the Ambit of The Reserve Bank
supervision. This marked the beginning of a new era 2 ality of control over these banks.
Banking related functions (viz. licensing, area of operations, interest rates, etc) way to be
governed by RBI and registration, management, audit, and liquidation, etc. Governed by
State governments after the provinces of respective States act 1968, UCB'S what extended
the benefits of deposit insurance.

Towards the late 1916 that have been debate was not debate on the promotion of small
scale industries. UCB's came to be seen as important players in the context. the working
group on industrial financing through the cooperative banks, 1968 known as Damry group
attempted to broaden the scope of activities of urban cooperative banks by the
commanding that 20 banks should find out the small and cottage industries. This was
reiterated by banking Commission (1969).
The Madhavas committee (1979) evaluated the role played by the urban cooperative banks
in Greater detail entry road map for the future Bole commanding support from RBI and
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government in the establishment of such banks in backward areas in prescribing viability
standard.
The late working group (1981) desired better utilisation of banks are closed funds and that
the percentage of the cash revenue ratio (CRR) and the statutory liquidity ratio (SLR) of
these Banks should be brought at par with commercial banks, in phased manner. While the
Maratha committee (1969) redefine the viability norms and ushered in the year of
liberalisation, the Madhav Rao committee (1999) focused on the consolidation control of
sickness, better professional standards in the Urban Co-Operative banks and the sought to
online Darpan banking moment with the commercial banks.
a feature of government committee has been 8 hydrogens is character and its uneven
geographical spread of the most banks concentrated in the streets of Gujarat, Karnataka,
Maharashtra and Tamilnadu. why most of the banks are you need banks without any
branch network, branch some of the large banks have established their presence in many
states won at their best multistate banking was allowed in 1985. Some of these banks are
also authorised dealers in foreign exchange.

2.1 About the branch

The Urban Co-Operative Bank Limited, Rourkela is a primary urban Cooperative Bank
registered under state Orissa cooperative societies act 1962 (Act 2 of 1963) having
registration number 1/SG dated 10.05.1988 and functioning like a commercial bank under
the total control of Reserve Bank of India and Government of Odisha. The banking licence
was obtained from the Reserve Bank of India in the year 1989 and started his banking
business in 24 September 1990.

During short period of functioning of the bank was achieved uninstall my ability and could
be able to obtain pranks licence for 5 years in the year 1995 out of which 4 branches were
opened in the same year. One branch licence for Sundargarh location was surrendered due
to distance factor. during the span of functioning the bank could be able to establish trust
remarkable growth and for which it has been awarded as the best Urban Co-operative bank
of the state for last decade. Barium operation of the registrations stage was hall 11
University boxing the garden there after it has been extended to guideline value if 6 lacs
Jharsuguda and Keonjhar. Till 31st March 2010, the membership position is at 15466
against the paid-up share capital of Rs. 441.59 lakhs. the bank is functioning of CBS platform
and could be able to provide delivery package of services / products to the customers. Since
Inception, Bank is earning profit and paying dividend to the shareholders and 12% which is
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at par the maximum capital fixed under the OCS act. Like other commercial banks, the
remittance facilities like RTGS and issuance of drug etc. Places like all over India available in
all the branches in tie up arrangement with other market players.Also, the bank is the
leading player in the local clearing house and direct members and possesses proportionate
market share in business of the locality.
and a token of social responsibility and commitment the Welfare activities like construction
of souchalaya in the campus RGH, Rourkela, providing medical equipments to hospital and
books for libraries etc. has been undertaken by us out of common good fund created on
appropriation profit.

2.2 Achievements
Functioning from 2014 to 2018, the bank is able to achieve remarkable growth in business
(amount in lacs)
SL. Particulars As on As on As on As on As on
NO. 31.02.2014 31.02.2015 31.02.2016 31.02.2017 31.02.2018

1 Paid up share capital

a Individual members 493.50 551.97 558.20 570.09 586.38

b Government 1.00 1.00 1.00 0.00 0.00

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2 Deposits 10834.15 10521.10 10962.81 12367.00 12495.48

3 Loans and advances 7368.07 7269.97 6907.35 7581.11 8365.01

4 Borrowings 0.00 0.00 10.00 0.00 0.00

5 Investments 4660.69 4664.39 5817.25 6208.28 5588.71

6 Working capital 15564.30 16020.97 16661.53 18943.58 18866.45

7 Reserves 1203.70 1203.75 1337.26 1383.99 1456.75
8 Provisions 2634.64 3286.19 3244..02 3529.55 3434.52
9 Profit (+)/Loss (-) 68.69 -57.65 122.10 141.14 235.38
before tax (PBT)

10 Net profit after 48.35 0.00 104.38 95.78

tax(PAT)
11 CRAR (%) 17.79% 17.79% 21.82% 19.76% 16.04%

12 Cost of management 2.89% 2.40% 2.95% 2.69% 2.84%

13 Per employee 219.30 219.64 220.62 252.51 270.92

business

14 Return on assets 0.30% 0.00% 0.61% 0.50% 1.23%

15 Gross NPA (%) 15.55% 29.93% 27.40% 22.08% 17.17%

16 Net NPA (%) 3.22% 15.55% 11.06% 6.31% 4.57%

17 % of collection 87% 87% 89% 89%

18 CD Ratio 68.01% 69.10% 63.01% 61.30% 66.94%

19 No. of employees 78

20 YEAR OF 1988
ESTABLISHMENT
21 No. of branches + 5+1
HO
2.3 Board of directors

Sl. NO NAME Designation

1 Sri. Rajest Mohapatra President

2 Sri. Purnima Kerketta Vice-president

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3 Sri. Aditya Kumar Mohapatra Director

4 Sri. Sukanta KumarMohapatra Director

5 Sri. Akhaya Kumar rout Director

6 Sri. Shailendra Kumar morathia Director

7 Sri. Rohit Kumar samal Director

8 Sri. Machindra kalet Director

9 Sri. Sudarshan Mishra Director

10 Sri. Sangram keshri smanatray Director

11 Sri. Bibhunanda tripathy Director

12 Sri. Ananta Kumar jena Director

13 Smt. Sandhyarani rout Director

14 Smt. Bhagyalaxmi parida Director

15 Smt. Lalita nayak Director

3 LENDING POLICY OF URBAN COOPERATIVE BANK

A bank is a financial intermediaries and money created that create money by lending
money to a borrower, thereby creating corresponding deposits on the banks balance sheet.
Lending activities can be performed directly loading and directly by capital markets. Due to
their importance in the financial system and influence on national economies, banks highly
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regulated in most countries. Most Nation have institutionalized a system known as
fractional reserve banking, Central banking, under which the bank holds liquid assets = only
a proportion of their current liabilities.

Sanctioning authority
the power of sanctioning of loan given to the committee of management of the bank. On
the behalf of the management, the president or CEO of Arena search other officer it
authorised in in this Bihar to record the order of sanction in the loan life.

Exposure limit

Exposure limit should be fixed by the board of management from time to time as per
modalities prescribed by the Reserve Bank of India. Besides the exposure limit, the
maximum amount of loan under different schemes of a fixed by the board of management
from time to time. Provided that in no case, the maximum limit fixed for different category
of loans all exceed the limits so fixed of the exposure limit.

Loan application
The loan application is to be made by the applicant in the format prescribed for different
type of loan schemes.
All application received by branch shall be recorded in a register called as “loan processing
register” which food contain the columns like date of reciept, name of the applicant,
amount applied for, date and amount of sanction or rejection, date and amount of
disbursement is sanctioned. The register should be maintained scheme wise.

3.1 types of customers

As per the law of the banks, no finance can be made to the non-members accept in case of
the demand loan, and Gold loan.
 Minor
 Reminder is a person who has not completed 18 years of age. If the guardian is
appointed by the court the age of majority is 21 years.
 All the way minor can be admitted to the benefits of partnership firms, feasibility is
restricted to his share in the firm’s property or profits.

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 A minor is not competent to enter any contract and name contract with a minor is
void ab initio.
Sonu loan should be granted to any minor while granting loans to partnership firms in
which a minor enjoys the benefits of profit, the above all aspects should be carefully
examined.
 Insolvent
When a person is unable to pay the Dept sinful than a phone is adjust is ion as
insolvent, is attachable properties taken as possession by the official receive of the
official is find under orders of quote court. v the receiver realizes the debtor’s
property and distributes the profits among the creditors. So, the bank should not
lend to an undischarged insolvent or a person against insolvency proceedings and
pending.

 Lunatics
This is the person with unsound mind. You can a bird that if it is provided that he was
of unsound Mind at the same time of borrowing. It is always safe to avoid landing to
person who fall in this category.

 Sole proprietorship
It is carried by individual owner in his name or trade name. He is required to take a
declaration in form from the sole proprietor that no other person has any interest in
the business. He is the only person dealing and obligation. Documents required like
OST/VAT registration certificate pump/pry, electricity bill for telephone bill.

 Death aur insolvency

When an individual house sole proprietor dies, is adjusted insolvent, the operation of
the account should be immediately stopped in the claim we made the estate of
deceased or insolvent person.

 Clubs and institution

As per Company Act 1956 the club and institution have known legal entity and have
no powers to enter into contractual relations. General extending of credit facilities to
club and societies should be avoided.

While granting loans to corporate bodies following river should be examined:

 The body should be registered.

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 the memorandum of association and article of association should be examined with a
view to ascertain in the scope of borrowing power, purpose of which advance can be
raised etc.
 General extending of credit facilities of society should be awarded.

Rules for cash and credit loans

1. Cash can be granted only to the person/firm/ Limited companies etc. Engaged in
Bonafide trade or business or industry.
2. The place of business must be within the area of operation of the bank.
3. Before entering the proposal of cash credit, the transaction of current account either
with the bank or any other Institutions should be examined to know the annual
turnover and business Trend.
4. The borrowers shall maintain 25% and emerging hours minimum according to nature
of trade as shall be determined by the bank.

Term loan
Usually term loans are granted with CC accommodation in case of industrial units which
required fix acids like infrastructure, work shed and plant machinery for business purposes.

Rules for lending term loans are:

1. You should be granted for fixed assets like construction of infrastructure, plant and
machinery for business purposes.
2. Precautions should be taken to avoid purchase of old machinery and perception.
3. Coverage of insurance in respect to plant and machinery asset is mandatory.

3.2 Types of loans, interest rate and its criteria

House building loan
Eligibility: individuals and cooperative group housing societies.
Amount of loan: the maximum amount of loan should be 25 lacs for
residentialhouses.
Margin: The borrower has to contribute 30% to 40% the margin includes cost of
prime land and the existing infrastructure if any.
Rate of interest:Up to 2 lacs 12% and above 2 lacs 12.50%

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Consumer durable loan
Eligibility:shareholders/ account holders, state and central government employee.
Employee of RSP/OCL/ferro scrap nigam.
Amount of loans: The maximum amount of loan shall be 3 lacs.
Rate of interest: 15%

Gold loans

Eligibility: The individual/unemployed educated youths, partnership firm for self-help

engagement, car to salaried personal use, drivers with license having no vehicle.
Amount of loans: the maximum amount should be 50% of the purchased cost.
Margin:the margin shall be minimum 20%
Rate of interest: Up to 5 lacs 11.50% and above 5 lacs 12%

Group finance scheme

Eligibility: Small traders/vendors having allotted/owned shop.
Amount of loans: The margin shall be minimum 5% of the loan amount.
Margin: The maximum amount shall be 50 thousand
Rate of interest: 18%

Two-wheeler loan scheme

Eligibility: employee of RSP and a person who is member of this bank.
Amount of loans: The maximum amount shall be the cost of the vehicle.
Rate of interest: Up to 24 months 14% and above 24 months 15%.

Subharna niwas housing loan scheme

Eligibility: The individual who are working under RSP/IDL/FERRO SCAP NIGAM.
Amount of loan: The amount of loan for 7 years 2 lacs, 7 to 12 years 3 lacs, above 12 years
3 lacs.
Rate of interest:16%
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Personal loan scheme

Eligibility: Should be a member of the bank.
Amount of loans: The amount shall be 5 lacs.
Rate of interest: 16%
Loans against other security
Eligibility: Member of the bank.
Amount of loans:Maximum amount shall be 90%.
Rate of interest: 13%

4 investment policy of urban Cooperative Bank

4.1 Investments
A bank makes investment for the purpose of earning profit. First aid keeps primary and
secondary reserves to meet its liquidity requirements. this is essential to satisfy the credit
needs of the society by granting short term loan of its customers. whatever is left with the
bank after making advances is invested for long period to improve its earning capacity.

Before discussing the investment policy of a commercial bank, it is destructive to distinguish

between alone and an investment because the use of practices to record the two
assynonyms. The bank job Salon to a customer for short period of repayment.

It is the customer who asks for a loan. By advancing a loan, the bank careers credit which is
the temporary source of fund for the bank. An investment by the bank, on the other hand,
HD outlay of its funds for a long period without creating any credit. Bank makes
investments in government securities and in the stocks of large reputated industrial
concerns, in the case of a loan the bank advances money Indian recognised securities and
bills. However, the goal of birth is to increase its earnings.

the investment policy of a bank consists of earning high returns on its unloaded resources.
But it has to keep in the view the safety and liquidity of its resources to estimate the
potential demand of its customers.

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since the objective of profitability corn flakes with those of safety and liquidity, the wise
investment policies to strike a judicious balance amount them. Therefore, a bank should lay
down its investment policy in such a manner so as to ensure the safety and liquidity of its
funds and at the same time maximize its profits. This required adherence to certain
principles.

Cash reserve ratio (CRR)

Scheduled commercial banks in India are required to hold a certain proportion of the
demand and time liabilities with RBI as per section 42 (1) of The Reserve Bank of India Act,
1934. This minimum ratio is stipulated by the RBI and is known as the CRR of cash reserve
ratio. It is the tool used by the RBI to control liquidity in the banking system. The present
cash reserve ratio was quoted as 4% on Monday February 22. Banks deposits increased by
rupees 100, and If the cash reserve ratio is 9%, the banks will have to hold rupees 9 with the
RBI and will be able to use only rupees 91 for investment purposes. Therefore, the higher
the ratio, the lower the amount of the bank will be able to invest, lend or use in credit
purposes.

Less power of Reserve Bank of India is to reduce the lendable amount by increasing the CRR
makes it an instrument in the hands of Central Bank through which it can control the
amount the banks lend.

SLR (statutory liquidity ratio)

Every bank is required to maintain at the close of business everyday, a minimum proportion
of their net demand and time liabilities and liquid assets in the form of cash, gold and
unencumbered for approved securities. The ratio of liquid assets demand and time
liabilities is known as the statutory liquidity ratio (SLR). RBI is empowered to increase in SLR
also restricts the bank’s leverage position to pump more money into the economy. The
present SLR as recorded in 2016 is 21. 5%.
Cash, foreign gold value today price not exceeding the current market price or in
unencumbered investment in the following instruments:
Treasury bills of the Government of India
State development loans

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Any other instruments as may be notified by the Reserve Bank of India. Maximum limit of
SLR is 40%. Procedure for computation of statutory liquidity ratio similar to other procedure
followed for CRR process. Include interbank Assets of term deposits/term borrowings are
liabilities of all maturities in 'liabilities to banking system’. Include Janta Bank Assets of term
deposits and term lending of all maturity in 'assets with the banking system’ for
computation of NDTL for SLR purposes.

Demand liabilities
This include liabilities that are payable on demand.
Current deposits, 25% of savings bank deposits, margins held against letter of
credit/guaranteed, balance in overdue fixed deposits, caste certificates in
cumulative/recurring deposits, outstanding telegraphic transfer mail transfer, demand
draught, unclaimed deposits, credit balances in the cash credit account and opposes held at
security services which are payable on demand.

Time liabilities
Time liabilities are those which are payable otherwise than on demand.
Fixed deposits, caste certificate, cumulative and recurring deposits, 75% of Savings Bank
deposit, staff security deposits comedian held against letters of credit, gold deposits and
other payables.

RBI uses CRR 2 release funds needed for the growth of the economy from time to time.
Higher the ratio, the lower is the amount that banks will be able to use for lending in
investment.
This power of RBI to reduce the lendable amount by increasing the CRL makes it an
instrument in the hands of Central Bank through which it can control the amount that
banks lend. Thus, it is the tool used by RBI to control liquidity in the banking system.

4.2 Authority and responsibility of UCB

Board of management
 Notwithstanding anything contained in the rules, the management of the bank is
the competent authority for approval of this rule for implementation also powers
for of time to time revision/ amendment in pace to the changes and as per the
requirement vests with the management. provided the all the rules including
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subsequent amendments survey in consonant with the relevant rules/acts and
directives issued by the Reserve Bank of India. registrar in government or
otherwise shall be void.
 The management of their own motion or in Recommendation of audit
committee/chief executive/treasury manager/ALCO committee maybe amend
revise any of the clauses fully or partially correct the specific date of enforcement.
 Any decision or revision of the rule, if not found to be Bonfire shall be not in
content with the Orissa cooperative societies act and rules, are the rules of the
land/directives, circulars and guidelines issued by the Reserve Bank of
India/government in this regard install be determined to the interest of the bank,
the accountability shall be the authority passing social decision for
revision/amendment.

Responsibility

the management of the bank being the authority in next to the General Body is a sign with
the responsibility of overall supervision and functioning of the bank therefore the
management shall:
 Review all the transaction and investment portfolio in transaction wise for each case
periodically.
 Reviewing in improving the investment decision/transaction since previous board
meeting.
 To engage/appoint an external auditor either one of the concurrent auditors
appointed by AGCS/ Registrar or one chartered accountant to undertake the audit of
investment transaction quarterly.
 To assign audit committee for review of auditor’s report on investment of each
quarter ratify the findings of the audit committee on such auditor’s report.

To prescribed the exposure limit/panel of brokers/delegation of powers to sanction to

undertake securities transaction, authorisation of officers to manage treasury function,
fixing the limit of sanction, stop loss limit etc.

To continue the investment comedian delegation PowerShell function with limits to the
investment committee/chief executive

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Investment committee
A committee consisting of the following membership function as investment and meet on
every Saturday to review the fund position.
 President/management in charge
 CEO
 Manager accounts
 Manager system
 Branch manager, main branch
Powers and responsibility of investment committee:
The investment committee so constituted is vested with powers of sanction for
investment/securities transaction within the limit and parameters as discussed here after.

Powers and responsibility of chief executive:

 The chief executive chef at the head of the investment committee and monitor all
transaction as supervisory personnel on behalf of the management.
 Furnish the summary of the transaction to the management on each board meeting

Basic rules to be remembered while taking decisions:

These are considered as prime because the success of the bank depends upon these
principles.
They include:
 Safety: the bank is a dealer in other people's money. So, it can not indulge in reckless
risk. it should ensure the safety of funds while taking decisions regarding lending’s
and Investments. To avoid credit risk, the bank may call for acceptable securities,
which will give full value and maturity.
 Liquidity: this means debility of a bank to meet the demand of customers for his
money.
It should be convertible into cash quickly and easily.
It should be converted into cash without any risk loss of value.

 Profitability: while making investment bank should satisfy himself that the
investment is profitable to the bank after compliance of all guidelines of RBI and RCS
as well as law of the land. Investment management should not be considered as a
mechanism nearly for maintenance of SLR but should Wizard in efficient funds
management and thus improve banks profitability.
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4. 3 Holdings of investment
The securities may be held in any of the three forms wire:
 Physical script form.
 Subsidiary general ledger (SGL) account and
 Indian dematerialised account with depositories (NSDL/CDSL, NSCCL)
In respect of securities with SGL facilities, the SGL account can be maintained in the banks
online directly with the Reserve Bank of India, all India constitute SGL account opened with
any scheduled commercial bank/State Cooperative Bank/primary dealer of Stock Holding
Corporation of India Limited SHCIL primary (urban) cooperative banks are not allowed to
open and maintain CHASL account of other PCBs other entities like Charitable Trust,
Institutions etc.

Non-scheduled primary (urban) cooperative banks DTL of rupees 25 crores and above and
all skills Road primary cooperative banks are required to maintain investments in
government securities only in SGL accounts with Reserve Bank of India or in constituent SGL
accounts with PDs, scheduled commercial banks, state cooperative banks, depositories and
SHCIL.
 Banks are not undetectable ready for word used in government securities, including
the treasury bills. No ready forward and double ready forward use should be put
through among banks and even all their investments account in other securities such
as public-sector bonds, unity of UTI, etc.
 Non-scheduled banks main place deposits with strong schedule primary cooperative
banks, fulfilling following norms:
The bank is complying with the prescribed level of CRAR
Net NPA has not deposited in the maintenance of CRR/SLR requirements for the last
2 years.
The bank has declared net profits for the last three consecutive years.
The bank is complying with Prudential norms on income recognition, asset
classification and provisioning, exposure ceilings and loans and advances to the
directors.
Conditions to be fulfilled before making non SLR Investments
 Suitable enabling provisions should exist for search investments in the respective
state cooperative societies/Multi State cooperative society’s at and special
permission should be taken from the concerned Registrar of cooperative societies of
the state.

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 There should be no default in maintenance of CRR and SLR.
 the bank should have achieved the targets under priority sector advances and
weaker section advances.
 Overdue should not be more than 15% of its outstanding loans and advances.
 The bank should comply with the RBI instructions regarding income recognition
norms.

Transaction through SGL account

Banks are required to follow the instruction for purchase/sale of the securities through SGL
account under delivery versus payment system in the transfer of securities takes place
simultaneously with the transfer of funds, as under:
 All the transaction in government securities for which SGL facility needs available or
to be put through SGL account only.
 Under no circumstances, an SGL transfer from issued by bank in favour of another
bank account for want of sufficient balance of funds in the current account of the
buyer.
 The SGL transfer from received by purchasing banks need to be deposited in their
SGL account immediately i.e. the date of lodgement of SGL form with the RBI shall be
within on working days after the date signing of the transfer form.
 No scale should be affected by way of Return of SGL form held by the bank, etc.

Uses of bank receipt (BR)

 No Bank receipt can be issued under any circumstances in respect of transaction in
government securities for which SGL facility is available.
 No Bank receipt can be issued on the basis of a bank receipt (of another bank) held
by the bank and no transaction can take place on the basis of mere exchange of bank
receipts held by the bank.
 event in the case of other securities, Bank received may be issued for ready
transaction only (under certain circumstances)
 Bank receives could we should be covering transaction relating to banks on
investment accounts only know bank receipt can be issued by the banks covering
transactions related to either the accounts of portfolio management scheme (PMS)
clients are other constituents accounts including brokers.
 No Bank receipt remains outstanding for more than 15 days.
 A bank receipt can be read only by actual delivery of scripts and by cancellation of
the transaction/set off against another transaction.
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 Maintenance of separate register of bank receipts and banks should also have a
proper system for the custody of unused Bank receipt forms in their utilisation etc.
Retailing of government securities
Government securities with non-Bank clients subject to the following condition:
 search retailing can be on outright basis there is no restriction on the period between
sale and purchase.
 The retailing of government securities may be on the basis of on going market
rate/yield curve emerging out secondary market transaction.
Internal control system
 There must be a clear function separation of
Trading
Settlement, monitoring and control
accounting, besides trading and back office function relating to banks on
investment accounts portfolio management scheme (PMS) clients accounts and other
constituents accounts
 Compliance of a loader operational instruction of accounting, recording,
reconciliation balance at quarterly intervals with the balances in the book of PDOs.
 Any bouncing off CGL transfer forms issued by selling banks in favour of the buying
Bank mayimmediately be brought to the notice of the regional office of department
of Banking supervision of RBI by the bean bank.
 Banks are required to put in a place a reporting system to report the top
management, on a weekly basis.
 The banks management is supposed to ensure that they are adequate internal
control and Audit procedures for ensuring proper compliance of the instructions in
regard to the conduct of the investment portfolio, etc.
Limit on banks exposure to capital markets
The aggregate exposure of a bank to the capital markets in all forms (both fund based and
non-fund based) shall not exceed 40% of its net worth March 31 of the previous year on
solo bases and 40% on of consolidated net worth in case off on consolidated basis. Within
the overall ceiling, the banks direct investment in shares, convertible bonds/debentures
units of equity oriented mutual funds and all exposure to venture capital funds (VCFS) {both
registered and unregistered} should not exceed 20% of its net worth/consolidated worth.

 Classification

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The entire investment portfolio the banks (including SLR securities and non SLR
securities) should classified under three categories, viz.
Held to maturity (HTM)
Available for sale (AFC)
Held for trading (HFT)

 HELD TO MATURITY (HTM)

 The securities acquired by the banks with the intention to hold them after maturity
will be classified under held of maturity (HTM). banks are allowed to include
investments included in the category of to 25% of the total investment. Banks may
hold the following securities under HTM.

 SLR securities up to 25% of their DTL as on the last Friday of the second preceding
fortnight.

 Non SLR securities included under HTM as on September 2, 2004.

 Fresh recapitalisation bonds received from the Government of India towards their
recapitalisation requirement and held in investment portfolio.
 Fresh investment in the equity of subsidiaries and joint ventures
 RIDF/SIDBI/RHDF deposits.
 Investment in long term bonds (who is the minimum residual maturity of 7 years)
issued by companies engaged in infrastructure activities.

Available for sale

 The security required by the banks with the intention to trading by taking advantage
of the short-term price/interest rate movements will be classified under 'held for
trading (HTF)'.
 The securities will not fall within the above two categories i.e. HTM & HFT will be
classified under “available for sale (AFS)”
 The banks will have the freedom to decide on the extent of holding under HTF & AFS
considering various aspects such as basis of intent, trading strategies, risk
management capabilities, tax planning, manpower skills, capital position etc
 The investment classified under HFT would be those from which the bank expects to
make Again by the movement in the interest rates/market rate. Debt securities are to
be sold within 90 days. Profit or loss on sale of investment in both categories will be
taken to the profit and loss account.
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Shifting amount categories

 Banks may shift investments to/from once a year, normally at the beginning of the
accounting year with approval of the board of directors.
 Shifting of investments from HFT to AFS is generally not allowed. However, it will be
permitted only under exceptional circumstances like not being able to search the
security within 90 days due to tight liquidity conditions, or extreme volatility.
 Transfer of script of investment from AFS/HFT category should be made at lower of
book value or market value.

RESEARCH AND METHODOLOGY

The report is based on primary as well as secondary; how was primary data collection was
given more importance since it is overhearing factor in attitude studies. one of the most
important uses of research methodology is that it helps in identifying the problem,
collecting, analysing the required information that is required information data and
providing an alternative solution to the problem. It also helps in collecting the vital
information that is required by the top management to assist them for the better decision-
making day to day decision and critical ones.

Data sources:
Research is totally based on primary data. Secondary data can be used only for the
reference. Research has been Don primarily by data collection and it has been collected
through various websites, Janu, annual reports, interaction with stars etc.

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4. DATA ANALYSIS AND INTERPRETATION

Paid up share capital

Series 1
600

580

560

540

520

500

480

460

440
as on 31.03.2014 as on 31.03.2015 as on 31.02.2016 as on 31.03.2017 as on 31.02.2018

Series 1

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Loans and advances

Series 1
9000
8365.01

8000
7581.11
7368.07 7269.97
6907.35
7000

6000

5000
5000

4000

3000

2000

1000

0
Column 1 as on 31.03.2014 as on 31.03.2015 as on 31.03. 2016 as on 31.03. 2017 as on 31.03.2018

Series 1

Interpretation: Loans and advances of Urban cooperative bank for the last five years as it
has been increased to 8365.01 as in 31.03.2018.

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INVESTMENTS

SERIES 1
Series 1

7000

6208.28

6000 5817.25
5588.71

5000
4660.69 4664.39

4000

3000

2000

1000

0
as on 31.03.2014 as on 31.03.2015 as on 31.03.2016 as on 31.03.2017 as on 31.03.2018

Investment for the Urban cooperative bank for the last 5 years.

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Deposits

Series 1
13000

12495.48
12500
12367

12000

11500

10962.81
11000
10834.15

10521.1
10500

10000

9500
as on 31.03.2014 ason 31.03.2015 as on 31.03.2016 as on 31.03.2017 as on 31.03.2018

Series 1

Deposits of Urban cooperative bank for the last 5 years.

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Reserves

SERIES 1
Series 1

1600

1456.75
1383.99
1400 1337.26

1203.7 1203.75
1200

1000

800

600

400

200

0
as on 31.03.2014 as on 31.03.2015 as on 31.03.2016 as on 31.03.2017 as on 31.03.2018

The reserves of the Urban cooperative bank in the last 5 years.

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 7. Findings

Different banks have different schemes for different age groups. Some banks are
giving privilege to senior citizens wireless to child group etc. Urban Co-Operative has
many such schemes targeted to different age groups.
 The formation of a cooperative society is very simple as compared to the formation
of any other form of business organisation. Any 10 adults can join together and form
a cooperative society. The procedure inbox in the registration of cooperative society
is very simple and easy. No legal formatting formalities required for the formation of
cooperative society.
 The membership of the cooperative society is open everybody. Nobody is obstructed
to join on the basis of religion, caste, Creed, sex and colour etc. a person can become
a member of a society at any time he likes and can leave the society when he does
not like to continue as members.
 The Co-operative financial institution is facing severe problems which have restricted
their ability to ensure smooth flow of credit. Limited ability to mobilize resources low
level of recovery and high transaction of cost administrative rate of rate structure for
a long time.
 Advertising is not appropriate come as many people are not aware of the Urban Co-
Operative Bank
 The Co-operative Bank is managed by the elected members from and among
themselves. Every member has equal rights through it single volt but can take active
part in the formulation of the policies of the bank.Thus, all members are equal
important to the bank.
 Government put their nominee in the board of management of cooperative bank.
They influence the decision of the board which may or may not be available for the
interest of the society. exercise state regulation, interference with the flexibility of its
operation effects adversely the efficiency of the management of the bank.
 The Cooperative Bank does not maintain any Secrets in business because they faced
of the society and openly discussed in the meetings.
 There is no ATM system of the bank.
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8. Conclusion

The overall financial performance of the UCBs in all fronts namely, membership, share,
capital of common deposits, loans and advances, profits and reserve funds, working capital,
over dues, loans issued etc. A showing a significantly and disturbing trend through the
application of different statistical tools applied in the study.Therefore, it may beyond doubt
fully concluded that UCBs are the road to progress. This also clears that, the UCBs is
enjoying a predominant position in the banking industry.
Every authority concerned with cooperative banks will have to play its parts in insurance
that the aspiration of the Urban Co-operative banking sector is nurtured in manner that
depositors interest in the public interest at large are protected. The role of RBI could, thus
to be frame regulatory and supervisory region that is multi-layered to capture the hat
rigidity of the structure and implement policies that would provide adequate elbowroom
for the sector to grow in a non-disruptive manner. The state and Central governments
could recognise that the UCBs are not just cooperative. this will recognise the systematic in
fact that inefficient functioning of the entities in the sector is they support, facilitate and
empower the RBI to put in place the mechanism and system that would enable these UCBs
to perform their banking function in a manner that is in the overall interest of the
depositors and public at large.

As a prudential measure, Reserve Bank has prescribed certain minimum share to

borrowings ratio. Normally, share capital of UCBs is subscribe to buy the borrowers to meet
this requirement. In fact, shares of UCBs are generally not purchased as an investment
option. Who are these being attractive as an investment, the UCBs concerned are reluctant
to issue shares as they are a costly source of funds in view of the high dividend paying not
by the profit making UCBs couple with statutory requirements of having no issue share only
at face value, i.e. without any premium. in such cases there is scope of arbitrage by
borrowing from the bank of investment in its shares.
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9. Recommendation

The banks should adopt the modern methods of Banking like internet banking, credit
cards ATM, etc.
 The bank should plan to introduce new schemes for attracting new customers and
satisfying the present ones.
 The banks should improve their Customer services of the bank to better extent.
 The bank must take strong steps in promoting the investment option generates
desire and interest towards the products. A complete new marketing strategy needs
to be formulated.
 the banks should target the existing customers BF investment plan and try to
increase their awareness levels.

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