Performance Assessment of Urban Co-operative Banks (UCBs) A Case Study of Tirupati UCB.

By

K. Manohar Lecturer in Commerce Govt. Degree College, Puttur - 517 583, Chittoor District Andhra Pradesh, India manoharkoppolu@gmail.com

Dr. Himachalam Dasaraju Professor & Chairman (PG) in Commerce Sri Venkateswara University, Tirupati - 517502 E-mail : dhchalam@gmail.com

Dr Kota Srinivasa Murthy Principal Seshachala Institute of Management Studies Puttur 517 583, Chittoor District Andhra Pradesh, India E-mail: kotamurthy@gmail.com

Performance Assessment of Urban Co-operative Banks (UCBs) A Case Study of Tirupati UCB.

Abstract This article made an attempt to review the progress of UCBs and the analysis of financial performance of the Tirupati Urban Co-operative Bank (UCB) in Chittoor district of Andhra Pradesh based on the observation in the financial statements and problems. Appropriate suggestions are also offered for he development of UCBs in Chittoor district in general and Tirupati Urban Co-operative Bank in particular. The Tirupati UCB was established in 1918 with a motive of Each for All and All for Each and to promote thrift and self-help among Tirupati urban people. It has 5 branches in and around Tirupati Town. This paper is an attempt to examine the progress and performance of Tirupati UCB in regard to membership, deposits, working capital, loans & advances and operational efficiency. It covers a period of 10 years from 20002001 to 2009-10 and is based on secondary data. The analysis is carried out by using simple statistical tools such as linear growth rate and compound growth rates and tvalue is computed for testing the significance of the variables. The bank has employed 137 persons and it is the only bank which has the greatest numbers of employees amongst the UCBs in Chittoor District. Since its inception the bank has been running on profit lines. The study reveals that the overall analysis shows the bank performance is good. Key Words:-Urban Co-operative Banks (UCBs) - Chief Executive Officer ( C.E.O)Bankruptcy - Silver Jubilee - Golden Jubilee - Platinum Jubilee Centenary - Current Deposits (C.D) - Saving Deposits (S.D) - Fixed Deposits (F.D). Introduction Urban Co-operative Banks (UCBs) provide a wide range of financial services to small investors and depositors. They play a very important role in providing micro finance to the middle classes and poorer sections of the Urban areas. The urban co-operative banks have dual status, dual responsibilities, and are subject to dual control. They have to face enormous challenges to survive in the present day competitive environment. They were brought under the regulatory ambit of the Reserve Bank by extending certain provisions of the Banking Regulation Act, 1949, effective from March 1, 1966 1. 2

Origin and Development of UCBs : The origin of the Urban Co-operative Banking Movement in India can be traced to the close of nineteenth century. The Urban bank is modelled after Schulze Banks of Germany and Luzzatti Banks of Italy. The enactment of the Co-operative Credit Societies Act, 1904, gave the real impetus to the movement 2. The first Urban Co-operative Credit Society was registered in Kanjeepuram in the erstwhile Madras province in October 1904 3. There after, a few more societies were organized in Chennai and Mumbai. About 78 percent of these Banks are located in five states such as, Maharashtra, Karnataka, Gujarat, Andhra Pradesh and Tamil Nadu 4. The regional disparity in the growth of urban co-operative movement is mostly due to strong co-operative initiative exhibited in these states and absence of similar co-operative leadership in the other states. The main objective of Urban co-operative banks is to collect deposits from members as well as non-members for issuing loans to members as well as non-members and to promote thrift and self-help among the members. The Urban co-operative organizations primarily cater to the banking needs and credit requirements of the weaker sections, lower and middle income class people comprising small entrepreneurs, village artisans, wage earners, retail traders, businessmen, factory workers, salaried class as well as other self employed persons and the like. Origin of Urban Co-operative Banks in Chittoor District: The enactment of the Co-operative Societies Act, 1904 augured well for Chittoor because the Urban co-operative movement started just after three years and continued up to Independence, perhaps with a few gaps. The year 1907 was epoch making one An Urban Co-operative Bank was established at Chittoor (April-1907) in the Chittoor District. During 1918s Tirupati Urban Co-operative Bank was established in Titupati Town, Srikalahasti UCB in 1920, Madanapalli UCB in 1923, Kuppam UCB in 1932 and Balaji UCB, Tirupati in 1999. As on March 2011, six UCBs with nine Branches were functioning efficiently.

Table-1 Profile of UCBs in Chittoor District as on 31-3-2010 Name of the Bank Tirupati Madanapalli Kuppam Chittoor Srikalahasti Balaji Place Tirupati Madanapalli Kuppam Chittoor Srikalahasti Tirupati No. of Branches 5 2 Nil 2 Nil Nil No. of employees 137 24 11 52 10 5 Audit Classific ation A A A B B B Premises Owned Owned Owned Owned Owned Rented Area of operation Municipality Municipality Grampanchayati Municipality Municipality Municipality

Source : Compiled from field study. Objectives of the study The objectives of the present study are (1) To study the overall progress of the Tirupati Urban Co-operative Bank. (2) To examine the mobilization of share capital of Tirupati UCB. (3) To examine the pattern of deposit mobilization of Tirupati Urban Bank. (4) To make suitable suggestions based on findings of the study. Methodology This study is fully based on secondary data information. It has been obtained by way of interaction and discussion with officials of the bank cited. For the purpose of analyzing the data various statistical tools and techniques are adopted to analyse the growth in the variable, viz. Linear Growth Rates (L.G.R) and Compound Growth Rates (C.G.R) are compiled for the data. Development of the Tirupati Urban Co-operative Bank : The Tirupati Urban co-operative Bank came into existence in the early 20th century on 2-2-1918. The bank was established with an initial membership of 91 and a share capital of Rs.3000/-. Its banking operations are widespread. It has established five 4

branches in the town. It has employed 137 persons and it is the only bank which has the greatest numbers of employees amongst the UCBs in Chittoor District, it has its own premises in the municipal area. It had acquired spacious own building in the heart of the temple city in the year 1937. It faces stiff competition from about 25 commercial banks. One striking feature of the bank is that it has 750 Lockers. It has taken up computerization of all the activities. Since its inception, the bank has been running in the lines of profit. In Andhra Pradesh it occupied the eighth place in the area of collection of deposits and run on profit lines. It had celebrated Silver Jubilee, Golden Jubilee and Platinum Jubilee and in near future it is going to celebrate centenary functions. The following table1 shows the progress of the bank since inception. Table-2 Progress of Tirupati Urban Co-operative Bank (Rs. in Lakhs) Years 1918 1943 1968 1978 1988 1998 2008 2010 Mean S.D C.V L.G.R tvalue No. of Members 91 1901 15304 35082 70103 85222 129134 128825 58207.75 53200.61 91.40 36.45 5.262 ** Share Capital 0.03 0.99 10.99 34.09 98.66 144.72 533.21 610.01 179.09 248.37 138.69 49.17 * 2.896 Reserve Deposits fund 0.00 0.47 3.47 8.07 25.51 90.87 295.71 355.52 97.45 144.84 148.63 51.85 2.671 * 0.03 1.46 14.46 42.16 124.17 235.59 828.92 Owned funds 0.003 5.52 61.2 246.8 1055.1 3721.21 9187.92 Working Loans capital outstanding 0.33 6.98 75.66 288.96 1179.27 3956.8 10016.84 14033.93 3694.81 5414.42 146.54 37.73 2.689 * 0.03 3.11 85.63 219.73 989.34 3061.67 7775.82 10426.85 2820.27 2730.65 Net Profit 0.001 0.07 1.34 3.44 4.77 56.44 90.74 77.50 29.29 38.91

965.53 13068.40 276.54 392.88 142.07 50.08 2.815 * 3418.27 5024.93 147.00 37.59 2.675 *

178.68 132.87 70.86 1.471 ns 47.22 * 2.797

Source: Annual reports of Tirupati UCB Note: ** significant at 0.01 percent * significant at 0.05 percent Figure-1 5

The Tirupati UCB was established in 1918 with the membership of 91. Then the membership was gradually increased from 1901 in 1943 to 1,28,825 in 2010, registering a linear growth rate (L.G.R) of 36.45 percent which is significant at one percent level (see table-2). The share capital of the Tirupati UCB has gradually gone up from Rs.003 lakhs in 1918 to Rs.60.01 lakhs in 2010, registering a growth rate of 49.17 percent which is significant at five percent level. The co-efficient of variance stood at 138.69. The bank maintained an average share capital of Rs.179.09 lakhs and its standard deviation stood at 248.37. Though the reserve fund is only Rs.0.47 lakhs in 1943, it raised steeply to Rs.355.52 in 2010, registering a growth rate of 51.85 percent, which is significant at five percent level. The deposits which have stood at Rs.0.03 lakhs in 1918 have shot up steeply to Rs.965.53 lakhs in 2010. The progress in deposit base during the aforesaid period was 50.08 percent, which is significant at five percent level. The C.V. is 142.07 At the time of inception, the owned funds stood at Rs.0.003 lakhs only which were multiplied many folds to go up to Rs.13068.40 lakhs in 2010, registering a growth rate of 37.59 percent, which is significant at five percent level. The working capital was Rs.0.033 lakhs only in 1918 vis-a-vis Rs.14033.93 lakhs in 2010, establishing a L.G.R of 37.73 percent, which is significant at five percent level. The Tirupati Urban Cooperative Bank is providing loans to its members since its inception. The loan advanced was increased from Rs.0.03 lakhs in 1918 to Rs.10426.85 lakhs in 2010. The L.G.R was 70.86 percent, which is not significant. Though the net profit of the bank increased from Rs.0.001 lakhs in 1918 to Rs.90.74 lakhs in 2008, but it decreased to Rs.77.50 lakhs in 2010. The LGR was 47.22 percent, which is significant at five percent level. It may be concluded that there is a phenomenal progress in the capital base of Tirupati UCB. As a result, loans advanced record an upward trend. Therefore, the increased trend in loans advanced may be the index for future growth of the bank. 6

Analysis of performance: Membership in UCB is of Two types- regular members and associate members. The regular members contribute to the share capital and they have the right to vote. The associate members have no right to vote and they are not required to contribute to the share capital. An Urban bank must raise adequate share capital to serve as the main foundation as and a security to the depositors and other creditors. The following table shows the growth of members and share capital of Tirupati UCB. Table- 3 Progress of Tirupati UCB for the study period 2000-2010 Growth of Members, No. of shares, Share Capital and Share Capital per Member in Tirupati UCB Year 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 L.G.R t.value C.G.R t-value Members 1,46,300 1,46,918 1,35,906 1,33,897 1,32,104 1,31,497 1,30,030 1,29,134 1,28,795 1,28,740 -1.493 5.349 ** No. of Shares 7,08,177 7,20,940 8,98,614 9,77,657 9,51,596 9,48,289 9,83,896 10,66,420 11,55,165 12,19,845 5.348 8.655 5.648 ** Share Capital Rs. 3,54,08,867.00 3,60,47,020.00 4,49,30,712.00 4,88,82,852.00 4,75,79,810.00 4,74,14,459.00 4,91,94,802.00 5,33,21,047.00 5,77,58,273.00 6,09,92,293.00 5349 8.655 5.648 ** Share Capital per member Rs. 242.00 245.00 331.00 365.00 360.00 361.00 378.00 413.00 448.00 474.00 6.633 9.370 7.209 7.667 ** **

-1.456

** ** ** 5.546 7.815 7.815 Source: Compiled from the records of Tirupati UCB Note: ** = Significant at 0.01 level. Figure- 2

The Table 3 shows that although the membership in Tirupati UCB declined, the number of shares and the share capital showed an mushrooming trend. The membership is very high but declined from 1, 46,300 in 2000-01 to 1, 28,740 in 200910. After an initial increase, the membership started declining from the third year and fell gradually registering negative L.G.R (-1.493) and C.G.R (-1.456) which is significant at 1 percent level. The number of shares increased from 7, 08,177 in 200001 to 12, 19,845 in 2009-10 with positive growth rates of 5.348 (L.G.R) and 5.648 (C.G.R) which are significant at 1 percent level. The total share capital also increased from Rs.3.54 crores to Rs.6.09 crores between 2000-01 and 2009-10 with growth rates smaller to the number of shares. As the share capital increased while the membership declined the share capital per member increased from Rs.242 in 2000-01 to Rs. 474 in 2009-10 with significant (at 1% level) growth rates, L.G.R is 6.633 and C.G.R. is 7.209. Thus it can be concluded that the membership is quite high but declined during the period. As the number of shares increased, the total share capital increased significantly. The share capital per member increased more significantly because of decline in membership and increase in share capital. The reason for increase in share capital in last four years would be due to the tendency of the public to deposit their surplus funds in banks, awareness of the baking system and also good customer service. Owned Funds: Owned funds represent aggregate of share capital and reserve of UCB. The following table shows the pattern of owned funds of Tirupati UCB. Table-4 Pattern of owned funds in Tirupati UCB in Chittoor District. 8

(Rs. in lakhs) Year 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 L.G.R. t-value C.G.R t-value 9.204 Share Capital 354.17 (68.20) 360.55 (68.10) 449.00 (71.65) 466.70 (70.82) 475.80 (69.68) 474.00 (69.60) 491.00 (62.41) 533.20 (64.32) 577.50 (62.79) 610.00 (63.18) 5.455 10.279 ** Reserves 165.12 (31.80) 168.92 (31.90) 177.73 (28.36) 192.30 (29.18) 207.00 (30.32) 207.00 (30.40) 295.71 (37.59) 295.70 (35.67) 342.30 (37.21) 355.50 (36.82) 9.635 8.775 ** Owned Funds 519.29 (100.00) 529.47 (100) 626.70 (100) 659.00 (100) 682.80 (100) 681.00 (100) 786.70 (100) 829.00 (100) 919.80 (100) 965.50 (100) 6.853 14.539 **

5.733 **

9.971 ** 10.472

7.137 16.256 **

Source: Compiled from the records of Tirupati UCB Note: Figures in parentheses indicate percentages ** Significant at 0.01 level Figure- 3

The table-4 reveals the share capital of Tirupati UCB increased from Rs. 354.17 lakhs to 610.00 lakhs between 2000-01 and 2009-10 with fluctuations. After an initial increase to Rs. 360.55 lakhs, the share capital declined gradually until 2005-06 to Rs.474.00 lakhs and increase again to Rs.610.00 lakhs in the end year. The growth rates are moderate at 5.455 and 5.733 which are significant at 1% level. The reserves increased gradually from Rs.165.12 lakhs to Rs.355.50 lakhs with high LGR of 9.635 and C.G.R of 9.971 significant at 1 % level. The owned funds increased from Rs.519.29 lakhs to Rs.965.50 lakhs with growth rates of 6.853(LGR) and 7.37 (CGR) which are significant at 1 percent level. The proportion of share capital in the owned funds decreased by five points from 68.20 to 63.18 percent also with fluctuations, the percentage reached a high level of 71.65 after which it fluctuated and reached 63.18 percent in the last year. The reserves as proportion of owned funds increased from 31.80 to 36.82 percent between 2000-01 and 2009-10 fluctuating between 28.36 percent and 37.59 percent in the intervening years. Thus, it can be observed from the table that the share capital increased with fluctuations, during the study period. But, the reserves increased gradually and also at higher rate than the share capital did. That is why, the owned funds increased gradually. Also, the percentage of reserves in the owned funds increased while that of share capital decreased, of course, with fluctuations in both the proportions. Pattern of Deposits: 10

Deposits of UCBs broadly consists of fixed deposits, saving deposits, current deposits, recurring deposits and miscellaneous deposits. The following table represents pattern of deposits in Tirupati UCB. Table-5 Pattern of Deposits in Tirupati UCB in Chittoor District (Rs. in Lakhs) Time Deposits F.D,R.D,D.D Staff Security Deposits & Special Total Term Deposits Deposits 9866.27 (92.61) 11255.17 (92.63) 11141.51 (91.60) 1160.18 (10.36) 1032.08 (11.94) 1112.59 (13.17) 1178.25 (1414) 1357.61 (14.78) 1376.83 (13.10) 1511.38 (11.57) -28.554 3.401 ** 10653.69 (100) 12150.74 (100) 12162.92 (100) 11200.60 (100) 8644.00 (100) 8451.00 (100) 8330.28 (100) 918792 (100) 10506.83 (100) 13068.38 (100) -1.781 0.410 **

Year

Demand Deposits (C.D & S.D)

2000-2001 2001-2002 2002-2003 2003-2004 . 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

787.42 (7.39) 895.57 (7.37) 1021.41 (8.40) 10040.42 89.64 7611.92 (88.06) 7338.41 (86.83) 7152.03 (85.86) 7830.31 (85.22) 9130.10 (86.90) 11557.00 (88.43) 17.185 4.165 **

L.G.R t-value C.G.R t-value

35.034

-22.471

-0.900 0.473 **

** ** 4.149 3.055 Source: Compiled from the records of Tirupati UCB Note: Figures in parentheses indicate percentages. **significant at 0.01 level

11

Figure - 4

Table-5 clearly shows that the time deposits of Tirupati UCB have decreased from Rs 9866.27 lakhs in 2000-01 to Rs.1511.38 lakhs in 2009-10 with wide fluctuations in the intervening years. The linear and compound growth rates are negative and very high at -28.554 and -22.471 respectively and are significant at 1 percent level. The demand deposits have increased from Rs.787.42 lakhs to Rs.11557.00 lakhs during the study period with L.G.R and C.G.R as 17.185 and 35.034 which are significant at 1% level. The time deposits were greater than the initial year for two years and then declined very sharply. The demand deposits also declined after an initial increase for three years only to reach a level higher than the initial year in the end of the study period. The total deposits increased in the first two years from Rs. 10653.69 lakhs to Rs.12162.92 lakhs in 2002-03 and then declined to Rs. 8330.28 in 2006-07 to increase again to reach Rs.13068.38 lakhs in 2009-10. However, the L.G.R and C.G.R are negative at -0.781 and -0.900 which are not significant. The percentage of demand deposits in total deposits increased slowly from 7.39 to 8.40 and then very steeply to 88.43 by 2009-10 while that of time deposits declined from 92.61 to 91.60 and then steeply to 11.57 in 2009-10. Thus it can be concluded that the demand deposits increased, though with fluctuations during the study period while the time deposits declined after an initial increase. The total deposits also increased in the beginning, but showed declining trend

12

during the period. As proportion, the percentage of demand deposits increased while that of time deposits decreased very sharply. Working Capital The working capital of UCBs is constituted by share capital, reserves, deposits and borrowings. The working capital of UCBs consists of interest bearing capital and interest free capital. Since the reserves carry no interest, it is cheapest source of capital. The next source of capital is members share capital which carries limited dividend, but dividend need not necessarily be paid unless the financial position is sound and it is decided by general body. Another source of working capital for UCBs is deposits. Deposits are collected from members and non-members. It is interest bearing external source of capital. Table- 6 Working Capital of Tirupati UCB Year 2000-2001 2001-2002. 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 L.G.R t-value C.G.R Amount (Rs. in Lakhs) 11172.00 12680.00 12789.00 11859.00 9327.00 9132.00 9116.00 10016.00 11425.00 14033.00 -0.289 0.161 ns Growth Rate% 100.00 113.49 114.47 106.47 83.48 81.74 81.59 89.65 102.26 125.60

-0.429 ns 0.239 t-value Source : Compiled from the records of Tirupati UCB. 13

Figure - 5

Table-6 shows working capital of Tirupati Urban Co-operative Bank. Working Capital increased in the initial three years of the study period from 100 percent to 114.47 percent between 2000-2001 and 2002-2003 and slowly decreased to 89.65 per cent by 2007-08. It may be due to the fact that the depositors had with drawn their amount on account of some of the UCBs became bankruptcy in Andhra Pradesh. At present UCBs are regaining peoples confidence, Hence working capital of Tirupati UCB was slowly increased in last two years of study period. Further L.G.R and C.G.R registered negative growth rates -0.289 and -0.429, respectively and also t-value is not significant. Loans & Advances: Loan and Advances act as back bone of banking business. Lending is one of the principal activities of every bank due to their social obligation to cater to the needs of different sections of the community. The loan portfolio is typically the largest asset and the predominant source of revenue. Tirupati UCB is lending under different categories (Mortgage loans, jewel loans, deposit loans, surety loans, cash credit, short term loans, medium term loans, staff loans, business loans, vehicle loans etc.) Total loans and advances outstanding under study in Tirupati UCB is presented below.

14

Table-7 Growth and Composition of Loans & Advances in Tirupati UCB (Rs. in lakhs) Year Short Term Loans One year below 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 LGR t-value Source: Annual Reports of Tirupati UCB Note: Ns=Not significant 883.56 932.48 852.48 872.48 991.48 1265.48 1605.43 1997.43 2443.43 3263.43 Medium Term Loans 3 years below 1814.54 1797.67 1813.00 1525.00 1294.00 1050.00 813.00 708.00 609.00 503.00 Long Term Loans More than 3 years 3948.00 4739.00 5288.00 4825.00 4536.00 3900.00 3763.00 5069.00 6034.00 6659.00 6646.1 7469.15 7953.48 7222.48 6821.48 6215.48 6181.43 7774.43 9086.43 10425.43 3.25 1.918 ns 868.00 1107.00 1203.00 1123.00 1100.00 1132.00 1039.00 1654.00 2223.00 2634.00 13.05 14.81 15.12 15.54 16.12 18.21 16.80 21.27 24.46 25.26 Total Loans& Advances Overdue Percentage of Overdue on Loans Percentage of Loans to Working Capital

59.48 58.90 62.19 60.90 73.13 68.07 67.80 77.62 79.58 74.29

15

Figure - 6

Figure - 7

Figure - 8

16

Table-7 shows the Loans and Advances outstanding of Tirupati UCB. The per centage of loans and advances to working capital was more than 60 percent in all the years under the study. The Linear Growth Rate registered at 3.25 percent, t-value 1.918, which is not significant. But percentage of overdues on loans increased from 13.05 percent in 2000-2001 to 25.26 percent in 2009-10. It had a bad impact on the financial position of the bank. Hence the Bank should take necessary steps for reducing the percentage of overdues. Because Financing without recovery has no fruit, similarly recovery without financing has no seed. Income, Expenditure and Profit &Loss Account The particulars of Income, Expenditure and Profit & Loss of Tirupati UCB for the period 2000-2010 have been gathered and presented in the table below. Table- 8 : Income, Expenditure & Profit of Tirupati UCB during 2000-2010 Year 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 L.G.R t-value C.G.R t-value Total Income 1692.00 2034.52 2193.08 2115.34 1575.67 1435.53 1406.85 1431.53 1723.16 1850.06 -2.376 1.338 ns Total Expenditure 1583.71 1990.05 2028.58 2028.65 1478.02 1342.69 1152.25 997.31 1271.59 1662.36 -4.776 2.130 * Gross Profit/Loss 108.29 4447 164.50 86.69 97.65 92.84 254.60 434.22 451.57 187.70 17.061 20657 * Provisions & Contingencies 30.62 11.21 111.33 28.04 52.54 51.89 172.46 343.50 385.50 110.25 23.032 2.614 * (Rs. in Lakhs) Net Profit/Loss 77.67 33.26 53.17 58.65 45.11 40.95 82.14 90.72 66.07 77.45 4.670 1.452 5.200 1.466 ns ns

-2.282

-4.752

19.367

33.250 3.354 **

ns * ** 1.306 2.102 2.938 Source: Compiled from records of the Tirupati UCB.

*Significant at 0.05 level, **Significant at 0.01 level. 17

Figure - 9 Incomes, Expenditure &Profit of Tirupati UCB during 2000-2010.

The total income of the Tirupati UCB has shown a declining trend after initial increase from Rs.1692.00 lakhs in 2000-01 to Rs2193.08 lakhs in 2002-03. It gradually decreased to Rs.1406.85 lakhs and then again increased to Rs.1850.06 lakhs in 2009-10. The growth rates are negative at -2.376(L.G.R) and -2.282(CGR) and are not significant. The total expenditure also increased in the beginning from Rs. 1583.71 lakhs in 2000-01 to Rs.2028.65 lakhs in 2003-04 and then declined to a level of Rs.997.31 lakhs in 2007-08, after which it increased to Rs. 1662.36 lakhs in 2009-10. The growth rates are negative at -4.776(L.G.R) and -4.752(C.G.R) but are significant at 5 percent level. The profits increased from Rs.108.29 lakhs to Rs.187.70 lakhs between 2000-01 and 2009-10 with wide fluctuations between Rs.44.47 lakhs and 451.57 lakhs, the former in the second year and the latter in the penultimate year of the study period. The growth rates are very high at 17.06 (L.G.R) and 19.367(C.G.R) and the former is significant at 5 percent level and the latter is significant at 1 percent level. The provisions and contingencies also increased from Rs.30.62 lakhs to Rs.110.25 lakhs, after fluctuating between Rs.11.21 lakhs and 385.50 lakhs with very high L.G.R and C.G.R of 23.032 and 33.250 respectively, the former significant at 5 percent level and the latter at 1 percent level. The net profit which was Rs. 77.67 lakhs in 2000-01 decreased to Rs. 77.45 lakhs with L.G.R of 4.670 and C.G.R of 5.200 which were not significant. Thus, it can be concluded that both the total income and total expenditure increased between the beginning and ending year of the study period. But, the lower levels of income and expenditure in some of the intervening years resulted in negative growth rates. As the negative growth rate of expenditure is greater than that of the total income, gross profit increased significantly. But as the provisions and contingencies 18

also increased significantly. The net profit remained almost stagnant between the beginning and end year of the study period. Findings of the Study 1. The number of members declined during the study period. 2. The total share capital of the bank increased significantly. 3. The bank increases reserve fund adequately for managing uncertainties. 4. The demand deposits increased, while the time deposits declined during the study period. 5. The Working Capital of the bank increased from 100 per cent to 125.60 per cent for the study period with fluctuations. 6. The Loans & Advances decreased during 2004-05 to 2006-2007 and slowly increased trend in the last year of the study. 7. The Overdues position of the bank also shows unfavourable condition during the study period. 8. The total income and total expenditure increased between the beginning and the end year of study period. 9. The Net Profit showed fluctuation trend during the study period. Suggestions (1) The bank must try to undertake effective steps to attract the members and retain the existing members. (2) The bank can consider increasing the share capital in the coming financial years. (3) The bank must make an advertisement to increase its deposits in the form of saving, current and fixed deposits. (4) The bank should reduce fixed deposits and must increase current and savings deposits for the purpose of reducing its interest. (5) The bank must try to increase its lending activity. It has to increase the lending activity for earning income. (6) The bank must adopt safe lending practices. (7) The bank must take necessary steps for reducing over dues. (8) Mouth publicity is a great source of publicity. So Tirupati UCB can tie up the neighbouring colleges and universities and give the community oriented projects to the students of MBA, M.Com, Banking and Finance, and thus it can increase the number of members of the Bank. 19

(9) Many people in rural areas are doing business worth of thousands of rupees of business like dairy, poultry, fruit farming etc., and for that they have emergency of finance or they want to deposit their daily amounts, but the banks and their branches are not available in this area. So the Tirupati UCB can open their extension counters in those areas. This system will increase the deposits from the rural areas also. (10) The Tirupati UCB has a branch at Tirumala without having any transactions with Tirumala Tirupati Devasthanams. Hence the Bank Directors or CEO may make an attempt in this regard so that TTD may deposit some amount in the bank, so that bank working capital may be increased. In turn it will enhance the lending potentiality of Bank (11) It is not worthy to mention that the pigmy deposit and mini deposit schemes are the special features of the UCB. It is suggested that the voluntary attitude of the sub staff in the mobilization of such deposits may be rewarded suitably. This in turn may strengthen the saving habits of the public at large. (12) The bank should come up with attractive loan schemes during festival seasons, which will surely increase their business. The overall analysis shows that the performance of Tirupati Urban Co-operative Bank performance is good. One of the important activities of the bank is to enhance the members and make the concentration on improving the sources of other income for the bank and also it has to reduce the Risk cost. The study reveals that the bank has large scope for further development and expansion in future.

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References: (1) Mathur B.S.(1975) Co-operative in India, Sahitya Bhavan, Agra. 269-270. (2) Madan G.R. (1994) Co-operative Movements in India Mital Publications, New Delhi. (3) The Tamil Nadu Journal of Co-operation, published by the Tamil Nadu Co-operation Union at Chennai. January 2000. (4) RBI (2005), Report of the High Power Committee on Urban Co-operative Banks, RBI Bulletin Mumbai. (5) Rao, P.R.G.(2002), strengthening urban Co-operative Banks through corporate Governance, Academy of corporate governance Bombay. (6) Singh, Kartar (2003), Governance in co-operative Banks-Need for Reforms Kurukshetra. (7) Pitoe, Vidya (2003) Urban Co-operative Banks: Issues and Prospects Economic and Political Weekly April 12, 2003. (8) Chalan, A.V. (2008), Financial Performance of Co-operative Bank, NCDC Bulletin: 7-15. (9) Kumar, Uttametal (2008) Appraisal of Financial Performance of Urban Co-operative Banks- A case study. The Management Accountant March, 2008 PP.170-174. (10) Karnachi, T.H (2009) Performance of Alnavar Urban Co-operative Bank Southern Economist, July 1, 2009. (11) Annual Reports of Tirupati UCB (12) www.rbi.org.in (13) www.nf.ucb (14) www.ncui.net.in (15) www.cooperation.ap.gov.in PP

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Born in 1966 at Koppedu Village, Chittoor District of Andhra Pradesh, India Mr K. Manohar did his B.Com., in 1983, M.Com., in 1986. He has been working as a Lecturer in Commerce, Govt. Degree College, Chittoor district, Andhra Pradesh (INDIA). He is having 15 years of teaching experience. He is pursuing Ph.D in Commerce under the guidance of Prof D. Himachalam, Department of Commerce in Sri Venkateswara University, Tirupati. He has participated in various national seminars, workshops, etc. and also published 5 articles in reputed National and International journal Prof. Himachalam Dasaraju, born in 1953 at Repallawada (Chittoor District) in Andhra Pradesh, did his M.Com in 1978, M.Phil in 1982 and Ph.D in 1989. As an active researcher, he is particularly interested in such areas as Accounting & Finance, Entrepreneurship, Corporate Governance and consumer affairs. To date Prof.Himachalam Dasaraju has completed 10 Major Research Projects, 2 of which were consultation projects, funded by the UGC, ICSSR and the Ministries of Govt. of India. He has published 5 books and 75 articles. He was declared Man of the year 2002 by the American Biographical institute, U.S.A. He is now collaborating with Prof. Serge Evraert, University of Montesque, Bordeaux, France, in studies of Corporate Financial Reporting System and Corporate Governance Practices in France and India. He has been a subject expert and panel member far several Indian universities. He worked in Essex Business School, University of Essex,Colchester, UK as Commonwealth visiting Fellow for 6 months in 2008-2009. The University of Essex, UK, has nominated him as Visiting Professor for 3 years up to 2012. He is visiting UK, France and Italy during May July 2011 for various academic purposes.

Born in 1971 at Nellore in Andhra Pradesh, India Dr. Kota Sreenivasa Murthy did his B.Com., in 1992, M.Com., in 1994 and M.Phil., in 2007. He has been working as a Principal in Seshachala Institute of Management Studies, Puttur, Chittoor district, Andhra Pradesh (INDIA). He was awarded Ph.D in Commerce in 2011 by Sri Venkateswara University, Tirupati. He has participated in various national seminars, workshops, etc. He got short term doctoral fellowship from ICSSR, New Delhi and also published 10 articles in reputed National and International journals.

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