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ORIGINAL ARTICLE

ISSN:- 2231-5063

Golden Research Thoughts


Abstract:A Co-operative organisation is a form of economic organisation, in which persons voluntarily pool
their resources on the basis of equality of advancement of their economic interests. The user-owners are
known as member they derive two kinds of benefit from the Co-operative First, the members can receive
more and better service from Co-operatives, if they use it properly. Second, profits are distributed to the
member. It functions on the basis of certain conditions or principles, which the participants agree to
observe. Some definitions given by prominent Co-operative leaders all over the world have been quoted

below:According to International Co-operative Alliance, a Co-operative is an autonomous association of


persons united voluntarily to meet their common, economic, social and cultural needs and aspirations
through a jointly owned and democratically controlled enterprise. According to the Co-operative
Planning Committee (1946), Co-operation is the form of organisation, in which persons voluntarily
associate together on the basis of equality for the promotion of their economic interests. Those, who come
together, have a common economic aim, which they cannot achieve by individual, isolated action because
of the weakness of the economic condition of a large majority of them. This element of individual
weakness is overcome by the pooling of their resources by making self-help effective through mutual aid
and by strengthening the bonds of moral solidarity between them.

Keywords:
financial perform of TNSC bank,

A STUDY ON FINANCIAL PERFORMANCE


OF TAMIL
NADU STATE CO - OPERATIVE BANK
N. Sudhakaran1 and N. Ramu2
1

Ph.D Research Scholar, Department of commerce, Annamalai


University ,Annamalai Nagar, Tamil Nadu.
2
Associate Professor, Department of Commerce, Annnamalai
University,Annamalai nagar, Tamil Nadu .

www.aygrt.isrj.org

A STUDY ON FINANCIAL PERFORMANCE OF TAMIL NADU STATE CO - OPERATIVE BANK

1.0 INTRODUCTION
Co-operative principles are concrete realities and not mere abstractions. They are just a code of
conduct for a Co-operative organization, the practice of which may change according to the local
conditions. Broadly speaking, there have been three types of Co-operative systems, which are based more
or less on the same principles, but which differ from each other in the mode of operation. These three
systems are the Rockdale system, the Raiffeisen system and the Schulze- Delizsch system, concerned with
the consumers, farmers and the traders respectively. Principles laid down by Rockdale pioneers have been
commonly adopted all over the world. They are democratic control, open membership, limited interest on
capital, patronage dividend, cash trading, political and religious neutrality and promotion of education.
With the spread of Co-operative Movement the need was felt for adopting new procedures. Consequently,
international Co-operative alliance provided the following principles
REVIEW OF LITERATURE
Jangid in his doctoral thesis titled Cooperative Banking in Punjab attempted to assess the
progress of cooperative banking in Punjab The study showed that cooperative banks were playing a vital
role as an instrument of development. There was a considerable progress in the resources of cooperative
banks. The operational efficiency of these banks showed signs of improvement. It was suggested that with
wide resources mobilization, rational allocation, and better supervision, cooperative banking can be geared
to achievedsocio economic betterment of Punjab.
Kanagasaba made an attempt to study the Determinants of Profitability A Case Study of a State
Cooperative Bank, For this the parameters, viz. shortterm loans to total loans, time deposits to total
deposits, borrowing to owned funds were taken for a period of 1970-71 to 1979-80. agriculture advances,
proportion of time deposits to total deposits and level of borrowings affect the profitability of the bank or
not. It was found that these factors affect the profits of the bank positively. So, it was suggested that the bank
should design suitable strategies to improve these ratios in order to increase the profitability.
Asaithambi in his Performance Appraisal of Andaman & Nicobar State Cooperative Bank,
assesses the performance of Andaman & Nicobar State Cooperative Bank on different parameters, i.e.,
deposits, advances and overdues. It was found that the bank has been maintaining high degree of efficiency
in every aspect and the success of the bank is due to farsightedness of the management and dedicated
services of its employees.
Central Co-operative Banking in a Developing Economy was undertaken by
GovindParrekin the study was intended to scrutinize the financial viability of District Central Co-operative
Banks in Rajasthan. The study revealed the poor financial position of all Central Co-operative banks in the
state. It also disclosed the critical financial condition and some sort of undeclared insolvency position faced
by eight DCCBs in the state.
OBJECTIVES
1.To analyse the efficiency of funds management by TNSC Bank.
2.To the effectiveness in funds management by TNSC Bank with respect to resource utilization.
METHODOLOGY
Descriptive as well as analytical design is used. The present study is based on the secoundary data.
The secondary data were analysed with the help of appropriate tools of analysis.
Table -1
Compound Model For Own Fund, Deposits, Short Time Liabilities, Working Fund, and
Borrowing
(`In Crores)
Own Fund
Yea
r

Actua
l
value

Predicte
d
Value

2001 253.73

233.12

2002 315.19

284.97

2003 340.98

348.36

2004 384.93

425.84

2005 468.61

520.57

2006 549.08

636.36

Predicte
d
Value

short time
liabilities
Actua Predicte
l
d
value
value

2383.88

257.50

213.86

2585.33

177.03

210.48

2803.80

180.59

207.15

3040.74

205.68

203.88

3297.70

184.68

200.65

3576.37

196.53

197.48

Deposits
Actual
value
2621.8
5
2678.9
9
2910.7
0
3096.2
2
3053.2
9
3115.8
5

Golden Research Thoughts | Volume 4 | Issue 5 | Nov 2014

Working fund
Actual
value
3877.9
8
3987.2
2
4164.5
5
4504.8
6
4788.7
6
5068.4
3

Borrowing

Predicte
d
Value

Actual
value

Predicte
d value

3637.43

774.88

554.32

3919.22

815.01

586.79

4222.84

132.28

621.17

4549.99

818.03

657.55

4902.48
5282.28

1082.1
8
1206.7
6

696.07
736.85

A STUDY ON FINANCIAL PERFORMANCE OF TAMIL NADU STATE CO - OPERATIVE BANK

2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
R
square
value
F value
P value
Inter
receipt
(a)
Growth
Rate (b)

787.67
1043.70
1258.45
1427.66
1565.01
1681.95
.
.
.
.
-

777.90
950.93
1162.45
1421.02
1737.10
2123.48
2595.81
3173.20
3879.02
4770.86
5794.01

3226.49
3964.94
5018.36
5901.83
6118.67
7285.46
.
.
.
.
.

3878.60
4206.36
4561.82
4947.32
5365.39
5818.80
6310.52
6843.80
7422.13
8049.67
8729.78

205.91
219.09
346.54
101.67
163.04
191.71
.
.
.
.
.

194.36
191.28
188.26
185.28
182.35
179.47
176.63
173.84
171.09
168.41
166.75

5244.98
5886.94
6964.56
7691.96
9458.82
10827.9
.
.
.
.
.

5691.50
6132.42
6607.51
7119.39
7670.94
8265.21
8905.52
9595.43
10338.80
11144.60
12008.31

878.22
608.40
830.58
896.21
2177.77
2327.91
.
.
.
.
.

780.01
825.71
874.08
925.28
979.48
1036.86
1097.60
1161.90
1229.96
1302.40
1379.22

0.978

0.826

0.24

0.950

0.077

350.52
<0.001**

37.91
<0.001**

0.20
.668

152.82
<0.001**

0.670
0.438

190.701

2198.12

217.297

3375.89

523.644

1.2224

1.0845

0.9842

1.0775

1.0586

1.Note: 1. ** denote significant at 1% level


2.*denote significant at 5% level
Source: Annual reports of the TNSC bank Ltd
The TNSC Bank has obtained funds from various sources, which are classified under four major
categories owned funds, deposits, borrowings and short liabilities. These components and their respective
shares in the working funds are also shown in Table 5.1The R Square value for own fund is 0.978, which
indicates that97.8 per cent of own fund is extracted over the period of time and is significant at 1 per cent
level, it can be inferred that the F value is 350.52 and P Value is less than 0.01, since Inter receipt value is
190.701. The growth rate of own fund is 1.2224, which indicates 22.24 per cent increase over the period
from 2001 to 2012. The predicted values for the years 2013, 2014, 2015, 2016 and 2017 are 2595.81,
3173.20, 3879.02, 4770.86, and 5794.01respectively.
The R Square value for the Deposits is 0.826, which indicates that 82.6 per cent of deposits is
extracted over the period of time and is significant at 1 per cent level; it can be inferred that the F value is
37.91 since P Value is less than 0.01, and Inter receipt value is 2198.12. The growth rate of deposits is
1.0845, which indicates 8.45 per cent of increase over the period from 2001 to 2012. The predicted values
for the years 2013, 2014, 2015, 2016 and 2017 are 6310.52, 6843.80, 7422.13, 8049.67 and 8729.78
respectively.
The R Square value for the short liabilities is 0.24, which indicates that 24 per cent of short
liabilities is extracted over the period of time and is significant at 1 per cent level;it can be inferred that the F
value is 0.20 since P Value is less than 0.01, and Inter receipt value is 217.297. The growth rate of short
liabilities is 0.9842, which indicates 98.42 per cent of increase over the period from 2001 to 2012. The
predicted values for the year 2013, 2014, 2015, 2016 and 2017 are 176.63, 173.84, 179.09, 168.01 and
166.75 respectively.
The R Square value for the working fund is 0.950, which indicates 95 per cent of working fund is
extracted over the period of time and is significant at 1 per cent level, it can be inferred that the F value of
152.82 since P Value is less than 0.01, and Inter receipt value is 3375.89. The growth rate of working fund is
1.0775, which indicates 7.75 per cent of increase over the period from 2001 to 2012. The predicted values
for the years 2013, 2014, 2015, 2016 and 2017 are 8905.52, 9595.43, 10338.80, 11144.60 and 12008.31
respectively.
The R Square value for the Borrowings is 0.077, which indicates that 7.7 per cent of Borrowings is
extracted over the period of time and is significant at 1 per cent level;it can be inferred that the F value is
0.670 since P Value is less than .438, and Inter receipt value is 523.644. The growth rate is 1.0586, which
indicates 5.86 per cent of increase over the period from 2001 to 2012. The predicted values for the years
2013, 2014, 2015, 2016 and 2017 are 1097.60, 1161.90, 1229.96 1302.40 and 1379.72 respectively.
SIGNIFICANCE OF THE STUDY
The Central government announced a number of programmes which would help in meeting the
credit requirements of the urban and rural sector. The credit programmes were designed to augment the
flow of credit to the poor. The main thrust of these programmes was to provide financial assistance to the
poor at concessional rate of interest, coupled with capital subsidy to enable them to cross the poverty line.
The poor must occupy the centre stage in any socio-economic planning or the socio-economic development
of the rural and urban poor, an institutional approach is poverty depends largely on availability of credit.
Not only agricultural development but all other activities largely depend on the available monetary
resources.
In order to protect the poor from the economic exploitation and moral degeneration, TNSC Bank
have been set-up. The TNSC Bank is the institution established with the objectives tofu facilitate rural
credit and to promote thrift and self help among the economically weaker sections of the society. The study

Golden Research Thoughts | Volume 4 | Issue 5 | Nov 2014

A STUDY ON FINANCIAL PERFORMANCE OF TAMIL NADU STATE CO - OPERATIVE BANK

unit TNSC bank functioning in Chennai, Tamil Nadu. The main aim of the bank is to develop the economy
by providing credit for the purpose of the development of agriculture and allied activities, animal
husbandry, industrial development and other productive activities. Moreover, the bank plays a very
important role in developing the banking facilities in Chennai. The researcher has made an attempt to
evaluate the customer relationship management of the bank as the primary motives of the bank are to satisfy
the customer needs. necessary, so that, a poor man can have access to assets and services. The institutions
especially co-operative institutions must support as it has poverty reducing capacity, providing
employment opportunities and lead to an increase of income and improved standard of living of the poor.
Eradication of
ORIGIN AND STAGE OF TNSC BANK
The establishment of TNSC Bank in 1905 was not a chance event, neither was it the result of a
mammoth deal brought off at a single stroke. It was rather the fulfilment of a long cherished idea which
developed and took shape over a period of years, motivated step by step by a single mastermind like Sir P
Rajagopalachariar, who was the first Registrar of Cooperative Societies in the old Madras Presidency. The
idea of organizing a bank for financing Cooperative Credit Societies emanated from him.
In this grand mission, the man who guided him was DewanBahadur S SubramanianAyer (18421922). It was a brilliant and original idea because the Cooperative Societies Act X of 1904 which became
law on 25 March, 1904, whether by design or oversight, merely contemplated the establishment of Primary
Societies which were expected to finance themselves. It was Sir V C Desikachariar, the first Secretary of the
Madras Central Urban Bank Limited who gave a practical shape to the proposals formulated by the first
Registrar of Cooperative Societies, Sir P.Rajagopalachariar
STATEMENT OF THE PROBLEM
The Central government announced a number of programmes which would help in meeting the
credit requirements of the urban and rural sector. In order to augment the flow of credit to the poor. With the
adoption of multi-agency approach, TNSC Bank is facing a stiff competition from other financial
institutions such as commercial banks and regional rural banks in mobilizing deposits and lending. Hence,
the bank should make efforts for tapping deposits from urban and rural areas. So that, these resources may
be made available for agricultural and rural development.
Over recent years, the financial health of the urban co-operative sector has shown an
improvement. In 2011-12, the sector showed an increased return on assets and a further fall in the ratio of
Non- Performing Assets (NPAs). As per the new CAMELS rating model, 61 per cent of the UCBs,
accounting for about 78 per cent of the total banking business of the UCB sector, had ratings of A and B,
indicating the good financial health of this sector. As regards rural co-operatives, State Co-operative Banks
and District Central Co-operative Banks showed some signs of improvement in profitability and asset
quality in 2010-11, partly attributable to the prudential regulatory reforms and implementation of the
revival package for the short-term rural co-operative sector. However, long-term rural co-operatives, such
as State and Primary Co-operative Agriculture and Rural Development Banks, showed very weak financial
health. Going forward, it is necessary to persevere with recapitalisation and regulatory reforms so that the
rural co-operative sector can lend support to financial inclusion and agriculture.
REFERENCE
1.Statement on the Co-operative identify, ICA, Geneva, 2006, p 1-2.
2.Report of the Co-operative Planning Committee, 1946.
3. R. Philips, Economic Nature of Co-operative Association, p.74.
4. http://www.nabard.org/introduction.asp
5.India banking sector: http://www.scribd.com/doc/8361020/india-banking-sector
6.http://www.rbi.org.in/scripts/fun_urban.aspx
7.www.TNSC.com
8.Aggarwal, R.C.; Prasad, B.; and Arora, V.P.S. Problems and Prospects of Cooperative Credit: A Case
Study, IndianCooperative Review, Vol. IX, No. 3, April, pp. 417-422.
9.Jangid, SatyaNarayanCooperative Banking in Punjab, Doctoral Thesis, University Business School,
Panjab University, Chandigarh.
10.Kanagasabai, N. (1984), Determinants of Profitability A Case Study of a State Cooperative Bank,
Indian Cooperative Review, Vol. XXI, No. 3, January, pp. 221-224.
11.Asaithambi, K. (1988), Performance Appraisal of Andaman & Nicobar State Cooperative Bank,
Indian Cooperative Review, Vol. XXV, No. 4, April, pp. 395-402.
12.GovindParrek, Central Co-operative Banking in a Developing Economy, (Jaipur: National
Publishing House), 1990, P.45.
13.Chakaraborty, study on Maharashtra state co-operative bank, International Journal of Consumerism.
Vol.1(1), 1996, pp.34-35.
14.Debabrata Das, Co-operative Banking in Arunachal Pradesh, - A Case Study, Indian Co-operative
Review, July 2000, pp.48-53.
15.Ganesan, N. A Study on the Performance Analysis of the State Cooperative Banks in India, Prajnan,
Vol. XXXIV, No. 4,pp. 311-321.

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