Journal of Interdisciplinary Cycle Research ISSN NO: 0022-1945

A STUDY ON THE WORKING PERFORMANCE OF THE TAMILNADU STATE APEX CO-

OPERATIVE BANK LTD (TNSCB)

[Link] SELVI
[Link], Department of Co-operation,
The Quaide Milleth College for Men, Medavkakam, Chennai -100
Tamilnadu, India -600 100.
Email : kalaimohanraj@[Link]

ABSTRACT:
The Co-operative societies in India in fact are playing multifunctional role in both rural as well
as urban areas for the betterment of the people which is functioning on three tier basis. There are
primary credits societies working at village level, Central Co-operative Banks are working at the district
level and at State level there is a State Co-operative bank. The Tamil Nadu State Apex Cooperative
Bank is working as pivot at the apex level of three tier cooperative credit structure in the State. The
Bank acts as banker’s bank to the co-operative banks. It provides the connecting link between money
market, and cooperatives and NABARD. It acts as a financial center of all cooperative banks and other
societies in the State. The TNSC Bank plays an important role in the mobilization and lending of
resources to agriculture and allied activities in Tamil Nadu. The study makes an attempt to evaluate the
financial health and to identify overall performance of Tamilnadu State Cooperative Apex Bank for the
period of 12 years from 2006-2007 to 2017-2018 through descriptive statistics of some selected
financial indicators such as Share Capital, Reserves, Deposits, Borrowings, Loans , Investments and
working results.

KEYWORDS : Apex Bank, Co-operatives, Working Performance, Credit Co-operatives.

INTRODUCTION:

The Cooperative Banks functioning in Tamil Nadu are fulfilling the credit requirements of the
farmers, weavers, rural artisans, consumers of urban area. These institutions are known as Cooperative
Credit Institutions. The Coop. institutions are functioning under two category. They are: long-term coop.
credit institutions, short-term coop. credit institutions. The coop. credit institutions functioning under
short-term credit structure are of three-tier in nature. At the grass root level, the Primary Agricultural
Coop. Banks (PACBs) are functioning at village level. At the district level, the Central Coop. Banks
(CCBs) are functioning with the headquarters at district capital and their branches in various places of
the districts concerned. At the apex level, the Tamil Nadu State Apex Coop. Bank Ltd.,(TNSC Bank) is
functioning at Chennai which co-ordinates the entire short- term coop. credit structure. The Tamil Nadu
State Apex Co-operative Bank Ltd., commenced its business during November 1905 as an Urban Coop.
Bank. It was subsequently changed into a District Central Coop. Bank during July 1920.

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At present, the Bank is functioning at Chennai with 44 branches, an Extension Counter and H.O. TNSC
Bank is guiding the Dist. Central Coop. Banks / Primary Agricultural Coop. Banks in their functioning
and it is playing a major role in the coop. movement of Tamilnadu. TNSC Bank was formed in the year
in which the coop. movement of Tamilnadu was formed. As such, the Bank has been serving the people
of Tamil Nadu for a centenary for their economic development. As far as Indian coop. movement is
concerned, the Bank has commenced its business from the very next year of the formation of coop.
movement in India. TNSC Bank is the first ever State Coop. Bank having the credit of celebrating the
centenary year. TNSC Bank has got the licence of Reserve Bank of India to carry on the banking
business. TNSC Bank is a Scheduled Coop. Bank and has been listed under the Second Schedule of RBI
Act. TNSC Bank is a member of the Deposit Insurance and Credit Guarantee Corporation (DICGC) and
is an insured coop. bank as per DICGC Act. TNSC Bank has got the privilege of having its share capital
by the Government of Tamil Nadu. TNSC Bank has been under close supervision and monitoring of the
higher financing agencies, viz., RBI, NABARD. Periodical inspection and supervision are done by
NABARD as per RBI guidelines. In this context, this paper makes an attempt to examine the working
performance of the Tamilnadu State Co-operative Apex Bank ltd (TNSCB) has been taken.

REVIEW OF LITERATURE :

A number of studies have been conducted the world over to see the functioning of cooperative
banking in the country and abroad. However, the literature on the working performance of State
Cooperative banking in India is found more or less absent. Some of the related literatures of reviews are
as follows.

Rajiv Kumar and Kaur Jasmindeep [ December, 2010] in their article “Financial Appraisal of
Haryana State Co operative Apex Bank” concluded that results of the study showed that in the
membership of the bank, major share was of cooperatives. Whereas, individuals and government had
very less percentage share and in paid up share capital, the maximum share was in the hands of
cooperative, government share was minimum in it.
Hooda, Vijay (2011) examines the performance of SCBs and Schedule Commercial Banks and
forwarded comparative assessment between them through some selected financial ratios. He observed
that SCBs and Scheduled Commercial banks differ significantly as per these selected ratios during the
years of study. In another study, Hooda examines the financial performance of DCCBs in India & found
that all the financial variables increased with higher growth rate during the study period.

Das, S. K. & Chaudhury, Dr. S.K. (2011) examines the performance of SCBs in the NER and
also make a comparative study on the growth and financial performance of SCBs. They observed that
SCBs in NER is not performing well at par with all India level. The SCBs in the NER suffers from low
profitability and high NPAs which hinders the growth of SCBs in North East.

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Sanjay Kanti Das [March, 2012] in their article “Operational and financial performance analysis of
Meghalaya cooperative Apex Bank” concluded that MCAB is one of the top most cooperative banking
institutions in Meghalaya and renders services towards the common people as friend, philosopher and
guide. The bank earned consistent profit during the years from inception except a few years.

A lot of studies were made to analyze and evaluate the performance of SCBs in India or in
respect of SCBs in different states. However, only a few researches is undertaken to study the
performance of SCBs in Tamilnadu which is predominantly an agrarian economy and most of the
districts are rural based. Hence the situation demands to study the working performance of Tamilnadu
State Apex Cooperative bank.

NEED FOR THE STUDY:

Financial inclusion as the process of ensuring access to financial services and timely and
adequate credit where needed by valuable groups such as weaker sections and low income groups at an
affordable cost. Co-operative bank a play a free dominate role to fulfill this gap. The present study is
intended to appraise the working performance of the Tamilnadu State Apex Co-operative bank.

OBJECTIVES OF THE STUDY:

The purpose of the study is to identify the working performance of Tamilnadu State Apex
Cooperative Bank. To achieve the main purpose, the following objectives are set forth,
 To identify the progress of Share capital, Reserve Fund position of the bank.
 To analyze the Growth of Deposits of the bank.
 To analyze the performance of Loans & advances, Investment and Working results of the Bank.
 To offer suitable suggestions for the working performance of the bank.

METHODOLOGY OF THE STUDY:

The present study is based on secondary data. Data relating to Share capital, reserve fund,
deposits and lending, Investments and Working results were collected from the published annual reports
of the TNSC Bank for the period from 2006-2007 to 2017-2018. Necessary informations were collected
from the website of the National Federation of State Cooperative Banks Limited and the website of the
National Bank for Agriculture and Rural Development. The data collected are analyzed with the help of
statistical tools like Arithmetic Mean, Standard Deviation, Co-efficient of variations and the Compound
Annual Growth Rate.

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RESULTS AND DISCUSSIONS:

SHARE CAPITAL

Share capital is the prima facie fact of the volume of business and the quality of services
rendered to the people who have become members on their own. An individual who is desirous has an
obligation to buy at least one share of the State Cooperative Bank to enjoy the right of membership as
well as the banking services extended by it. However, no member is allowed to hold 100 shares at any
point of time. The State Cooperative Bank secures share capital by the issue of shares to the member.

TABLE NO 1
POSITION OF SHARECAPITAL
([Link] Crores)
[Link] YEAR AMOUNT
1 2006 -2007 56.6
2 2007-2008 61.07
3 2008-2009 61.07
4 2009-2010 61.07
5 2010 -2011 95.82
6 2011-2012 106.7
7 2012-2013 191.91
8 2013 -2014 289.59
9 2014-2015 302.7
10 2015 -2016 307.56
11 2016-2017 312.03
12 2017 -2018 312.03
Mean 179.85
SD 116.17
C.V% 64.60
CAGR 21.92
Source: Audit and Annual Reports of the TNSCB for the relevant years

The above table showed that the share capital position of the bank seem to be an increasing
during the study period. The year wise analysis showed that the share capital position of the bank was
stagnant in the last two years of the study period. However, this bank has a strong base of share capital
showing Rs.56.6 crores in the year 2006-07and increased to Rs.312.03 crores in the year 2016-2017.
Mean share capital of TNSCB was stood at Rs179.85 crores. However, the growth rate of this bank was
21.92 during the study period.

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RESERVE FUND:

Creation of reserve fund is a statutory obligation for meeting the unforeseen losses and for
building up of internal resources. As per the Taminadu Cooperative Societies Act 1983, 25 percent of
the net profit should be distributed to the reserve fund. It is one of the constituents of owned fund and
component of the working capital (Nakkiran,S & John Winfred, A.:1988,p.173). The reserves
maintained by SCB included Statutory Reserve fund and Other Reserves.
TABLE NO :2
POSITION OF RESERVE FUND
([Link] Crores)
AMOUNT
[Link] YEAR TOTAL
STATUTORY RESERVES OTHER RESERVES
1 2006 -2007 162.84 398.03 560.87
2 2007-2008 171.4 455.36 626.76
3 2008-2009 175.26 457.28 632.54
4 2009-2010 185.86 474.81 660.67
5 2010 -2011 195.1 490.16 685.26
6 2011-2012 205.31 500.8 706.11
7 2012-2013 205.31 492.91 698.22
8 2013 -2014 226.71 383.52 610.23
9 2014-2015 235.1 382.42 617.52
10 2015 -2016 245.83 181.38 427.21
11 2016-2017 256.7 163.55 420.25
12 2017 -2018 267.68 187.59 455.27
Mean 211.09 380.65 591.74
SD 34.98 129.26 103.52
C.V% 18.31 28.31 15.98
CAGR 4.69 -8.63 -3.21
Source: Audit and Annual Reports of the TNSCB for the relevant years

The above table reveals that the Statutory Reserve fund position of the bank has steadily
increased from Rs. 162.84 crores in the year 2006-07 to Rs. 267.68 crores in the year 2017- 2018. The
other reserve fund position of the bank has increased from Rs. 398.03 crores in 2006-2007 to Rs. 500.8
crores in 2011-2012 further it was declined year by year . The mean value of other reserve fund of
TNSCB was higher (380.65) than the Statutory reserve fund (211.09) of the bank. Growth rate statutory
reserves were appreciable which helps to increase the profitability position of the bank and Growth
rates were negative in other reserves which affects the profitability position of the bank.

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DEPOSITS:

Financial self-reliance can be achieved when the TNSCB is able to mobilize savings in the form
of deposits by inspiring and invoking local interest and by expanding and diversifying their business
operations. Deposits provide reliable, low cost, long term resources to a banking institution. Normally
deposits form more than 70% of their resources. No bank can survive without deposits. Therefore
mobilization of deposits will not only enable the SCB to reduce the cost of funds but also reduce greatly
their dependency level on external funds. Depending on the nature of functioning of SCB, they can
mobilize two types of deposits viz., Demand deposits and Term deposits. Normally, the demand deposits
are of two types viz., Current Deposit and Savings Deposit. The current deposit mostly meets the daily
liquidity requirements of business community. Therefore, the demand deposits of SCB mainly comprise
savings deposit which is repayable on demand. The term deposits viz., fixed deposit, cash certificate,
recurring deposit, reinvestment deposit etc. are repayable after a fixed time as per contract with the
customer. SCB has adequate scope to mobilise savings deposits and term deposits from its members.
TABLE NO 3
GROWTH OF DEPOSITS
([Link] Crores)
[Link] YEAR AMOUNT
1 2006 -2007 3263.50
2 2007-2008 3993.71
3 2008-2009 4429.16
4 2009-2010 5146.00
5 2010 -2011 5435.84
6 2011-2012 6525.82
7 2012-2013 7788.13
8 2013 -2014 9507.33
9 2014-2015 7767.79
10 2015 -2016 8212.37
11 2016-2017 9090.32
12 2017 -2018 8305.54
Mean 6622.13
SD 2111.54
C.V% 36.65
CAGR 9.48
Source: Audit and Annual Reports of the TNSCB for the relevant years

It is noticed from the above table, the highest amount received Rs. 9507.33 crores as deposits
in the year 2013-2014 further it was fluctuated at various years. The Mean value for Deposits in TNSCB
during the period of 2006-2007 to 2017-2018 was 6622.13 (2111.54) and it was registered 9.48
percentage Compound Annual Growth rate.

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BORROWINGS:

The TNSCB is getting refinance assistance by way of borrowings from National Bank for
Agriculture and Rural Development (NABARD) for extending credit facilities to the farmers for short-
term agricultural operations, and medium-term loans through DCCBs, weavers finance through the
DCCBs / Co-optex, from Small Industries Development Bank of India (SIDBI) for extending credit
facilities for small scale industries, National Coop. Development Corporation (NCDC) and from
National Handicapped Finance Development Corporation (NHFDC) for financing for the development
of physically challenged persons through DCCBs.

TABLE NO 4
TOTAL BORROWING POSITION OF THE BANK
([Link] Crors)
[Link] YEAR AMOUNT
1 2006 -2007 878.23
2 2007-2008 608.40
3 2008-2009 830.59
4 2009-2010 896.21
5 2010 -2011 2177.77
6 2011-2012 2327.91
7 2012-2013 3139.54
8 2013 -2014 2766.18
9 2014-2015 3309.24
10 2015 -2016 3768.72
11 2016-2017 4605.05
12 2017 -2018 2844.2
Mean 2346.00
SD 1304.20
C.V% 76.58
CAGR 18.80
Source: Audit and Annual Reports of the TNSCB for the relevant years

It is observed from the above table that the Mean Value for Borrowing position of TNSCB
which stood at 2346.00 (1304.20). Moreover, the Co-efficient of variation was 76.58 percentage with
18.80 percentage of Compound Annual Growth Rate.

WORKING CAPITAL:
Working capital of TNSCB comprises both internal (owned funds consist of share capital plus
reserves) and external (borrowed funds consisting of deposits plus borrowings) sources of funds plus
some other sundry sources.

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TABLE NO 5
WORKING CAPITAL POSITION OF THE BANK
([Link] Crores)
[Link] YEAR AMOUNT
1 2006 -2007 5244.98
2 2007-2008 5886.94
3 2008-2009 6964.56
4 2009-2010 7691.96
5 2010 -2011 9458.82
6 2011-2012 10827.05
7 2012-2013 13010.37
8 2013 -2014 14512.03
9 2014-2015 13377.54
10 2015 -2016 14401.18
11 2016-2017 16514.63
12 2017 -2018 13504.88
Mean 10949.58
SD 3803.69
C.V% 41.35
CAGR 10.67
Source: Audit and Annual Reports of the TNSCB for the relevant years

It is understood from the above table the Mean value for working capital of TNSCB was
accounted at 10949.58 (3803.69).However, the CAGR value was 10.67 percentage during the entire
study period.

INVESTMENTS:

The Bank has to make investments in Government approved securities for the statutory liquidity
ratio (SLR) purposes. The Bank has been investing its funds in the Central Government / State
Government’s approved securities. The Bank has a separate Treasury Section to deal with treasury
operations on its behalf as well as its affiliates, viz. , DCCBs and Urban Co-op. Banks.

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TABLE NO 6
TOTAL INVESTMENT POSITION OF THE BANK
([Link] Crores)
[Link] YEAR AMOUNT
1 2006 -2007 1083.74
2 2007-2008 1458.51
3 2008-2009 1646.57
4 2009-2010 2320.31
5 2010 -2011 1953.04
6 2011-2012 2138.99
7 2012-2013 2325.57
8 2013 -2014 2942.14
9 2014-2015 2831.04
10 2015 -2016 3154.47
11 2016-2017 3632.19
12 2017 -2018 3234.32
Mean 2393.41
SD 782.14
C.V% 39.43
CAGR 9.94
Source: Audit and Annual Reports of the TNSCB for the relevant years

It is interesting to note that the TNSCB was registered 2393.41 (782.14) as Mean Value for Total
Investment and that of CAGR was 9.94 Percentage during the study period from 2006-2007 to 2017-
2018.

LOANS & ADVANCES:

Through DCCBs, TNSC Bank has been extending a credit facility to the PACBs for short- term /
medium-term agricultural purposes. Depending upon the needs of the farmers the Bank has been
extending advances upto Rs.1000 crores per year. Further, the Bank has been extending credit facilities
through the above channel for the allied activities of farmers like purchasing milch animals, sheep
rearing, poultry farming, bullock carts, sericulture at lesser interest rates. The Bank has been extending
credit facility to the DCCBs for extending loans directly by them to small industries and Urban Coop.
Banks from the refinance facility availed from SIDBI. The Bank has been extending cash credit limits
for financing Coop. Sugar Mills, Coop. Spinning Mills, Coop. Wholesale Stores, and other coop.
institutions. The availment of jewel loans at rural and urban areas has been increasing year after year. In
order to meet this credit needs, the Bank has been extending refinance facility to the DCCBs for issuing
jewel loans directly by them and also through PACBs. Out of the refinance availed by the Bank from
NHFDC, the Bank has been extending finance to the DCCBs for issuing loans to physically challenged
persons. The Bank has been extending various loans to individuals directly through the Branches and
H.O. at Chennai. Further, the Bank has been extending jewel loan facility at lower interest rate to the
middle-income group people.

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The Bank has also been extending Computer Loan, Education Loan, Building Mortgage Loan,
Housing Loan, Rain Water Harvesting Loans, Home Needs Loan, Loans against Securities, through the
Branches and Head office.

TABLE NO 7
TOTAL LOAN OUTSTANDING POSITION OF THE BANK
([Link] Crores)
[Link] YEAR AMOUNT
1 2006 -2007 3242.96
2 2007-2008 3336.26
3 2008-2009 3296.01
4 2009-2010 4599.41
5 2010 -2011 6798.78
6 2011-2012 7538.78
7 2012-2013 9459.62
8 2013 -2014 8440.29
9 2014-2015 8082.00
10 2015 -2016 7353.08
11 2016-2017 5589.97
12 2017 -2018 6372.1
Mean 6175.77
SD 2153.25
C.V% 36.88
CAGR 7.76
Source: Audit and Annual Reports of the TNSCB for the relevant years

It is evident from the above table that the TNSCB provided the huge amount of loan for its
members as indicated the Mean value of 6175.77 (2153.25). In addition to that CAGR of loan
outstanding was 7.76 percentage.

NET PROFIT:

Profitability is an indication of the efficiency with which the operations of the banks are carried
out. Poor operational efficiency results in poor profits. Members are interested to know the profitability
of the banks as it indicates the return which they can get on their investments. Even though State
Cooperative Banks is not profit-making institutions, some amount of profit is to be earned in order to
augment their own sources to provide for statutory and other reserves and to pay a reasonable return on
its share capital. Besides, profit also helps in boosting public confidence. So an evaluation of the
profitability of the banks is dispensable which may indicate the overall efficiency of the banks.

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TABLE NO 8
NETPROFIT/LOSS POSITION OF THE BANK
([Link] Crores)
[Link] YEAR AMOUNT
1 2006 -2007 21.78
2 2007-2008 15.12
3 2008-2009 33.74
4 2009-2010 18.8
5 2010 -2011 40.69
6 2011-2012 41.51
7 2012-2013 43.24
8 2013 -2014 32.23
9 2014-2015 41.38
10 2015 -2016 43.31
11 2016-2017 43.70
12 2017 -2018 81.83
Mean 38.11
SD 17.18
C.V% 55.62
CAGR 10.73
Source: Audit and Annual Reports of the TNSCB for the relevant years

The Bank has been making profit continuously since its inception. The profit is the symbol of
surveillance of any business; hence the researcher observed that 10.73 CAGR which is positive
indication for the performance of TNSCB. Further, the Mean value is noted as 38.11 (17.18) with 55.62
percentage of Co-efficient of variation.

FINDINGS:

The following suggestions would helpful to improve the working performance of the Tamilnadu
State Apex Co-operative bank.

The Performance of the statutory reserves maintained by the bank was appreciable. But bank
should take sufficient care to maintain the various types of reserves which will support to meet out the
future precautions.

The bank performance in mobilization deposits was satisfactory; there are opportunities to
accumulate more deposits, which help to strengthening the working capital and the performance. For
this purpose the deposit drive with celebrations, personnel contact programs, member related programs,
incentive to the employees, etc., may be arranged.

The bank should have to take steps to increase the working capital which will help to increase
the borrowing position of the bank.

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CONCLUSION:

The study revealed that the working performance of the Tamilnadu State Apex Co-operative
Bank was quite appreciable in the study period. Share capital, Reserves and Deposits of the bank had
shown increasing trend during the study period. This trend led to sound working capital position of the
bank.

REFERENCES:

[Link], N and Kumar, K (2015), “Comparative performance evaluation oh Himachal Pradesh

Co- operative Bank and Kangra central Co-operative Bank”, International Journal of Scientific Research
and Management, vol.3, Issue 7, pg 3316-3323.

2. Das, Sanjay K & Chaudhury, Dr. S.K. 2011, “International Journal of Consumerism: A Study of State
Cooperative Banking System in the North Eastern Region of India’, Vol-1 (1).

3. Hooda, Vijay.2011. International Journal of Computing and Business Research: SCBs Vs St CBs: A
comparison of three financial ratios’, Vol.2 May.

4. Nakkiran,S & John Winfred, A treatise on Co-operative Banking in India A.:1988,p.173.

5. Rajiv Kumar and Kaur Jasmindeep [ December, 2010] in their article “Financial Appraisal of Haryana
State Co operative Apex Bank” published in Advances in management, Volume 3,Issue No. 12, Pp. 41-
48.
6. Sanjay Kanti Das [March, 2012] in their article “Operational and Financial Performance Analysis of
Meghalaya cooperative Apex Bank” published in Journal on banking financial services and insurance
research, Volume 2,Issue No. 3, Pp 20-3).

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