DCCBs-Submission of Statutory Returns

DCCBs are required to submit to Reserve Bank of India/NABARD various statutory returns prescribed
under various provisions of the B.R.Act, 1949/RBI Act 1934 The, submission of statutory return is a
legal obligation of the banks and any complacency/casual approach in submission and deliberate
violation would attract penal provisions.
Name of
Statutory
Return
Nature of return Periodicity Due Date Return Due Date
Form-I (Section 18 & 24 of B R Act, 1949,
(AACS)- CRR/SLR (Monthly return on
Cash Reserve/Liquid Assets).
Monthly Before 20th of every
month a return
showing the amount
so held on alternate
Fridays during a month
with particulars of its
Demand and Time
Liabilities in India.
Form II Section 20 of B R Act, 1949 (AACS) -
Unsecured loans and advances granted
by Cooperative Bank to companies in
which anyof its Directors is interested as
director ormanaging agent or
guarantor.
Monthly Before the close of the
month succeeding that
to which the return
relates.
Form VI Section 23 of B R Act, 1949 (AACS)
(Rules 12) - Form of application for
permission, to open a new place of
business or change the location
(otherwise than within the same
city,town or village) of an existing place
of business.
As and when the bank
intends to open new
office of business
Form VIII

Section 26 of B R Act, 1949 (AACS)
Submit a return of unclaimed deposits
in the prescribed form and manner to
RBI which have not been operated upon
for ten years.
Annual Within thirty days after
the close of each
calendar year.
Annual
Accounts
and
Balance
sheet
Section 29 & 31 of B R Act 1949 (AACS) -
Accounts and Balance Sheet together
with the auditors report shall be
published.
Annual Within six months
from the end of the
period to which they
refer.
Form IX

Section 27 of B R Act, 1949 (AACS)
Assets and liabilities in India as at the
close of business on the last Friday of
every month or if that Friday is a public
holiday under the N.I. Act, 1881, the
close of business of the preceding
working day.

Monthly Before the close of the
month succeeding that
to which it relates.

Off-site
Surveillance
Sec. 27(2) & 27(3) of BR Act, 1949
(AACS) Half-Yearly OSC.01 Status of
Half yearly
31March and 30
31 May for March
Statement

Returns to NABARD
Sr.
No
Return
No
Name of the return Periodicity
1 OSR 1 -3 Statement on Assets and Liabilities Quarterly Quarterly
2 OSR 2 Statement on Earnings DO
3 OSR 3 Statement on Segment/ Sector-wise Advances DO
4 OSR 4 Statement on Asset Quality DO
5 OSR 5 Statement on NPAs, OTS, Write-off and Large
Advances
DO
6 OSR 6 Statement on Management Yearly
7 OSR 7 Statement on CRAR DO
8 OSR 8 Statement on Bank Profile and Frauds Quarterly

And various return and reports such as report on KCC, recovery NPA and as required by PSCB from
time to time are submitted.


Recovery
The timely recovery of the loans lent both by the DCCB directly as well as
through PACS will determine if the loan assets are performing or non
performing.
The longer the loans remain unrecovered, the quality of loans become that much
worse. Apart from this, poor recovery of loans will also impair the ability of the
DCCB to get funds from the State Cooperative Banks as well as refinance from
higher financing agencies like NABARD, SIDBI, NHB etc.
The approaches for recovery of loans can be classified into three. These are
preventive steps, corrective steps and coercive steps. Some elements of these
are indicated below:
(OSS)
returns
NPAs

September 31 Oct. for Sep
Statement
OSC.02 - Details of large loan accounts



OSC.04 - SLR & Non-SLR Investments


Annual :
OSC.03 - Management
OSC.05 - Capital Adequacy
Half yearly



Half yearly



Annual
Annual
30 June for March
Statement, 31 Oct. for
Sept statement

31 May for March
statement, 31 Oct for
Sept statement

31 May
30 Apri
1. Preventive steps
(i) Proper scrutiny and appraisal of loan proposals.
(ii) Proper assessment of the borrower regarding his/her ability to utilise the
loan and willingness to repay.
(iii) Regular and effective follow up
(iv) Proper documentation
(v) Regular monitoring of the loan portfolio at the bank level to catch early
warning signals.
(vi) Raise demand notices in time to remind the borrowers about prompt
repayment.
2. Corrective Steps
i) Personal visit to houses/business centres of defaulting clients.
ii) Joint visits by DCCB and PACS officials.
iii) Special recovery efforts by members of the board, particularly the elected
Directors from PACS.
iv) Motivate staff for regular follow up through acknowledging performance,
monetary incentives etc.
v) Adopting innovative strategies like using Self Help Groups to encourage
villagers to repay, holding recovery camps, organising farmers clubs,
facilitating marketin g of crop produce at right prices, promoting contract
farming etc.
3. Coercive Steps
i) Repeated visits to the member
ii) Sending legal notices
iii) Attaching security of available through legal process.
iv) Using Lok-Adalats for quick settlement.
v) Conducting public auction of previously attached properties.
vi) Using revenue recovery act.

Procedure for Sanction of loans
Suitable loan application form may be devised in respect of loans to individuals,
firms etc. Similarly separate application form may be devised for loans under
NFS activities.
The application when received by the bank, should be marked with the date,
stamp and entered serially in the 'Loan Application Register'. The banks should
maintain separate loan application registers for different types of agricultural
and non agricultural loans. The applications on receipt should be carefully
scrutinized by the concerned loan clerk to ensure that all the details have been
filled in. The loan application together with the office note should be put up to
the sanctioning authority either for sanction of the advance applied for, sanction
of a reduced amount or for rejection. The sanctioning authority should indicate
on the application the fact of sanction or otherwise and other terms such as rate
of interest, security to be obtained, margin, terms of repayment, etc. In case an
application is rejected, reasons therefor should also be recorded. The date and
amount of sanction should be recorded in the loan application register which
should be duly authenticated by a responsible official of the bank. When an
advance is sanctioned, the name of borrower, rate of interest, margin, if any
documents taken and the validity period of such documents, cheque series
issued, if any, repayment schedule, operative instructions, etc. should be
entered in the respective personal ledger of the borrowers.
The terms and conditions of loan/advance facility sanctioned should be
communicated to the individual concerned. The banks should maintain
borrower-wise register showing details of limits sanctioned for various
purposes.
Documentation
After the loan is sanctioned, the borrower may be asked to execute various
documents in favour of the bank. The nature and type of documents to be
executed by the borrower will depend on the type and nature of advance
granted. The bank may ordinarily obtain the following documents:
i. Demand/Time promissory note
ii. Letter of continuity in the case of cash credits and overdrafts
iii. Letter of pledge/hypothecation, etc. creating a charge on the assets offered as
security
iv. Mortgage and guarantee deeds.
The documents obtained from the borrowers should be carefully examined by
the bank. It should, in particular, be ensured that the authorized persons have
signed on behalf of the borrowers, the signatures of the persons signing the
document tally with those available on the bank's record and the terms and
conditions of sanction have been duly incorporated in the various documents.
Documents are taken to create a legally valid and effective charge over these
assets and also bind the borrower and guarantor personally. Documents contain
specifically and precisely the terms and conditions of the contract between the
bank and the borrower and will be minutely examined and interpreted by the
Court of Law in case of legal recourse. It is, therefore, imperative that right type
of documents, properly filled up, adequately stamped and correctly executed
must be taken. Documents as well as their execution will vary according to:
(a) Type of borrower, and
(b) Nature of security offered and the type of charge to be created upon.
The court may reject the documents or impose penalties in any of the following
six situations:
1. When documents are kept blank or incomplete.
2. When documents are unstamped or under stamped.
3. When documents are not registered, which are required to be registered?
4. When documents are attested, which do not require attestation?
5. When documents are not attested, which require compulsory attestation?
6. When documents are barred by limitation

Investments
Although the investment portfolio of the DCCBs may not be significant in
comparison to other institutions, the bank should have a defined investment
policy approved by the board, within the boundaries of which the DCCB
management can operate.

Exposure Norms
As a prudential measure aimed at better risk management and
avoidance of concentration of credit risk, the primary (urban) co-operative
banks have been advised to fix limits on their exposure
to individual borrowers and group borrowers,
to specific sectors, and
towards unsecured advances and unsecured guarantees
In addition, these banks are also required to observe certain statutory
and regulatory restrictions in respect of :
(i) advances against shares, debentures and bonds
(ii) investments in shares, debentures and bonds
Exposure Ceiling to Individual/Group Borrowers
Primary (urban) co-operative banks are required to fix, with the approval of their Board of Directors,
exposure ceiling in relation to bank's capital funds. The exposure for the purpose shall comprise both
credit exposure (loans and advances and investment exposure (Non SLR so that
(i) the exposure to an individual borrower does not exceed 15 per cent of capital funds, and
(ii) the exposure to a group of borrowers does not exceed 40 per cent of capital funds.
The exercise of computing the exposure ceilings may be conducted every year after the finalisation
and audit of balance sheet of the bank and the exposure ceilings may be advised to the loan
sanctioning authorities and the investment department in the bank. In view of the linking of share
holding to lending, accretion to or reduction in the share capital after the balance sheet date, may be
taken into account for determining exposure ceiling at half-yearly intervals, with the approval of their
Board of Directors. Accordingly banks may, if they so desire, fix a fresh exposure limit taking into
account the amount of share capital available as on 30th September. However, accretion to capital
funds other than to share capital, such as half-yearly profit etc., will not be eligible for reckoning the
exposure ceiling. Banks should also ensure that they do not take exposures in excess of ceiling
prescribed in anticipation of infusion of capital on a future date.
Banks are allowed to invest in A or equivalent and higher rated Commercial Papers (CPs), deb
entures, and bonds that are redeemable in nature. Investments in perpetual debt instruments are,
however, not permitted. Banks are also allowed to invest in Units of Debt Mutual Funds and Money
Market Mutual Funds.
a) Investments in non-SLR secu rities should be limited to 10% of a banks total deposits as on
March 31 of the previous year.
b) Investments in unlisted securities should not exceed 10% of the total non-SLR investment s at any
time. Where banks have already exceeded the said limit, no incremental investment in such securities
will be permitted.
c) All investments as above will be subject to the prescribed prudential individual/ group exposure
limits.
d) All fresh investments under Non-SLR category should be classified under Held for Trading (HFT)
/ Available for Sale (AFS) categories only and marked to market

Reserves Requirement
As per Section 18 of the Banking Regulation Act 1949 [As applicable to
Cooperative Societies (AACS)] every cooperative society is required to
maintain cash reserve ratio (CRR) equivalent to 3% of its demand and time
liability. The CRR is to be maintained by the bank by way of cash with itself or
by way of balance in a current account with RBI or State Cooperative Bank or
by way of net balance in current accounts with SBI/subsidiary/nationalised
bank. In addition to CRR, cooperative banks are required to maintain in cash or
in unencumbered approved securities, an amount equivalent to 25% of their
demand and time liability as statutory liquidity ratio (SLR) as per the provisions
of Section 24 of BR Act 1949 (AACS).