Credit facilities & Recovery of Loans in Co operative Societies 2016

CHAPTER-1

INTRODUCTION

In the beginning of the human existence, needs were simple and every
Individual produced all that necessary to sustain life, he provided his own
Food of animal flesh and vegetables; prepared his own clothing and found
his own shelter.

After this stage, barter system came into existence. Barter system means
trade which exchange of goods, with absence of money. At this stage the
concept of dependence emerged in the routine life of the human beings. And
their dependency demanded co-operation that is how co-operation was born.

In course of time, people settled down in different occupations, and with

specialization, exchange of goods became wider. And the money was
introduced in trading, which was widely accepted for payment. As money
started getting importance co-operation was going hand with it.

So co-operation is important things, which place an important role in all for

goods and services and in settlement of debits. Money is given and received
without reference to the standing of the standing of the person who offers it
in payment.

According to D.H. Robertson “Money is anything which is widely accepted

in payment for goods or in discharge of other Kinds of business obligations”.

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1.1 OBJECTIVES

Following are the some of the major objectives of the project report:

 To know about the co-operative societies.

 To study the establishment of the Siddarameshwara credit co-

operative society Ltd.,

 To know the performance of Siddarameshwara credit co-operative

society Ltd., Hosadurga.

 To make a detail study of credit facilities and recovery of debits of

Siddarameshwara Credit Co-operative Ltd., Hosadurga.

 To express our own opinion about the societies development and

services.

1.2 AREA OF STUDY

SIDDARAMESHWARA CREDIT CO-OPERATIVE SOCIETY

LTD., HOSADURGA, that is located in B.H. Road, TB Circle,
Hosadurga, is selected for the study. This study involves in the
detailed report of the Siddarameshwara Credit Co-operative Society
ltd. Hosadurga about its credit facilities and recovery of debits since
from the year of its establishment.

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1.3 METHODOLOGY:

Primary and secondary data collected through survey. Survey was

conducted, questionnaire was prepared and the respondents were
selected on random sampling bases to avoid bias in collection and
analysis of the data, which reveals.

Secondary data has been collected from the manager and staff of the
society personally interviewed and from the by-law, annual report and
other documents of the society to study the various aspects of co-
operation service & finance.

1.4 IMPORTANCE OF THE STUDY

Following are the some major importance of the study:

1. It provides information about the co-operative principles, its origin

and importance in Indian society.

2. It helps to known the structure, organization and performance of

the Siddarameshwara Credit Co-operative Society Ltd., Hosadurga

3. The report helps to known the procedure principle and policies and
functions of the society.

4. We can get clear picture about the credit facilities and recovery of
debits of the Siddarameshwara Credit Co-operative Society Ltd.,
Hosadurga.

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1.5 LIMITATIONS OF THE STUDY:

There are certain limitations are found in doing the project report.
They are:

1. Members were selected on random basis. Hence they may not

represent the population.

2. Some members were hesitant to give out their opinion about the
society services. Hence, the information may be biased.

3. As the Society has been newly existed, so the researcher was able to
collect the information of 5 years only.

1.6 CHAPTER SCHEME

In the 1ST Chapter entitled “Introduction”, researcher wants to give

details about the design of the study. In this chapter mainly emphasize
on the objective, importance of the study and so on.

In the 2nd Chapter entitled “Review of Literature”

In the 3rd Chapter entitled “Concept of co-operation, researches deals

with the meaning and definition of co-operation and principles of co-
operation”.

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In then 4th chapter entitled” Co-operative Movement”, researcher

studies introduction, meaning and definition of co-operation, co-
operative movement in India, Cooperative movement in India

Stages, benefits, defects of Co-operative movement and co-operation

in five-year plan.

In the 5th chapter entitled “co-operative organizations,” researchers

studies meaning, features, types of co-operative society, and role of
co-operative society in social changes in India.

In the 6th Chapter entitled “Siddarameshwara Credit Co-operative

Society Ltd., Hosadurga. – A profile” researcher studies history,
features, deposits, share capital, net profit, management of
SiddarameshwaraCredit Co-operative Society Ltd., Hosadurga

In the 7th chapter entitled “credited facility in Siddarameshwara Credit

Co-operative Society Ltd., Hosadurga” researcher studies
introduction, meaning, definition and types of credit, credit facility
and types of loan granted in SiddarameshwaraCredit Co-operative
Society Ltd., Hosadurga.

In the 8th Chapter entitled “Recovery of loan in Siddarameshwara

Credit Co-operative Society Ltd., Hosadurga” researcher studies steps
taken by the society for the recovery of loans.

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In the 9 th Chapter entitled” Analyses and response” researcher studies

introduction, analyses and response and major summary of findings.

th
In the 10 chapter entitled “Suggestion and Conclusion” researcher
studies problems and also gives some suggestions to over come the
problem and finally comes out with the conclusion.

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Chapter 2
REVIEW OF LITERATURE

A number of studies related to performance of co-operative banking sector

in India have been conducted. Here, an attempt is being made to provide an
overview of various aspects and issues of this study through the review of existing
literature. Some of the main studies selected for review have been discussed
below.

2.1 Kalyankar (1983) in his study titled, “Wilful Default in Loans of Co-
operatives” examined the trends in deposits, share capital, working capital, loans
outstanding, advances, overdues and recoveries at the district level financing
institutes. Socioeconomic factors responsible in projecting and promoting future
development in the operations and approaches of the co-operative credit
organizations were also considered to examine the specific progress made by
Central Co-operative Bank of Parbhani District. The study revealed that the
cropping intensity, irrigation facility and working capital of the societies were the
major factors for explaining overdues at primary agricultural credit societies’ level.
The socio-economic factors were not responsible for increasing overdues at the
borrowers’ level, but overdues were mainly mounted due to the non-economic
factors in case of wilful defaulters.

2.2 Kurulkar (1983), in his published work on agricultural finance in backward

region, reported glaring defects in the set-up of co-operative credit system. He
pointed that out of the ten sample owners who obtained long- term credit from the
co-operative banks, 30% could not secure short- term credit. Lack of short- term or
production credit to the farmers who availed long-term credit resulted in lower
output per acre, thereby resulting in overdues.

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2.3 Reddy (1985), in his study titled, “Overdues Appraisal and Management in co-
operative societies” analysed the relationship between the lending and recovery of
an apex bank. His findings suggested that the lending and recovery of the apex
bank had not been proportionate, i.e., either the apex bank could not meet the
entire credit needs of the primary banks or the latter could not borrow the funds
from the apex bank. The primary banks were constituted by people not for co-
operative services but for their vested interests. With the help of Coefficient of
Variation technique, he proved that there was a wide dispersion in lending
followed by recovery. He finally concluded with the help of t-test that the
association between lending and recovery was not satisfactory.

2.4 Devadas (1987), in his book titled, “Co-operative Banking and Economic
Development” studied the role of Assam Co-operative Apex Bank Ltd. in
economy of the State. He found that apart from working as a commercial bank it
had to discharge three other functions, i.e., to finance primary credit societies, to
act as banking centre for primary societies, and to undertake supervision of
primary societies. He found that bank had not been able to achieve much in these
three fields due to lack of adequate support from government of the state.

2.5 Balister et al. (1994) conducted a study of overdues of loans in agriculture to

examine the repayment performance of defaulters in three blocks of Agra district
in Uttar Pradesh. They found that well-to-do agriculture families accounted for a
large share of overdues. They accounted 37 per cent of total defaulters and 57 per
cent of total overdues. Total amount of overdues and its relative share also
increased during the period of study. Lack of proper supervision over end use of
loan was identified a major reason for mis-utilisation of credit which leads to
increase in overdues.

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2.6 Murthi and Saraswati (1996), in their paper titled, “Reducing Overdues in
Credit Co-operatives: Some Alternatives” undertook a study to evaluate the
Quantitative Progress made in respect of supply of Institutional Credit. Using the
secondary data made available by RBI in Statistical Statements relating to Co-
operative Movement in India for a period of 6 years from 1978 to 1983 and
assessing the Loaning Policies of Girijan Co-operative Corporation,
Visakhapatnam, the study concluded that the progress in respect of supply of credit
was phenomenal over the period of study but this progress pales into significance,
if the magnitude of overdues was considered. It pointed out that the most
unnerving aspect of institutional credit was the alarmingly high percentage of
overdues, i.e., about 43% of loan recoverable in the second-half of the 80s in the
case of co-operatives. The study was conducted to find out whether it was possible
to reduce overdues by (1) making co-operatives the exclusive institutions of
economically weaker sections-BY RESTRUCTURING THEM; and (2) by
effective changes in the Loaning Policies-BY REVAMPING THEM. The study
suggested that making co-operatives as exclusive institutions of weaker sections,
i.e., making them homogeneous would not result in decline in overdues, as mere
homogeneity was not a sufficient condition. Further, regarding the Revamping of
Loaning Policies, the results were quite impressive as it resulted in significant
improvement in the Recovery Performance. It was finally concluded that the
change of Loaning Policies like Induction of Liaison Workers, efforts of Elders
Committee, Motivated Management would not have helped recovery of loans in
the absence of homogeneity.

2.7 Das (2001) in his study titled, “A Study on the Repayment Behaviour of
Sample Borrowers of Arunachal Pradesh State Co-operative Apex Bank Limited”,
examined the repayment behaviour of loanees, covering a period of 1994-95 to
1998-99. On the basis of primary data collected, researchers concluded that
incidence of default was highest among borrowers for agriculture allied activities
loans. Agriculture loanees, horticulture loanees, small business loanees and service
sector loanees were ranked 2 nd , 3 rd , 4 th and 5 th in a descending order on the

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basis of percentage defaulters. Study further revealed that the number of defaulter
loanees was highest in government sponsored schemes.

2.8 Heiko and Martin (2007) of IMF conducted a study on co-operative banks
and their financial stability. The study was based on individual bank data drawn
from the Bank Scope Database for 29 major advanced economies and emerging
markets that were members of the Organization for Economic Co-operation and
Development (OCED). They found that co-operative banks in advanced economies
and emerging markets had higher scores than commercial banks, suggesting that
co-operative banks were more stable. These findings, perhaps somewhat surprising
at first, were due to much lower volatility of co-operative banks’ returns, which
offsets their relatively lower profitability and capitalization.

2.9 Jangid (1976) in his doctoral thesis titled “Cooperative Banking in Punjab”
attempted to assess the progress of cooperative banking in Punjab and evaluated its
position and performance. 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 and the operational efficiency in Punjab was better.
It was suggested that with wide resources mobilization, rational allocation, and
better supervision, cooperative banking can be geared to socio economic
betterment of Punjab.

2.10 Chamola and Hasija (1980) made an attempt to analyse the progress of
Primary Agricultutral Credit Societies (PACS) in India after the Third Five Year
Plan and to appraise the progress of short and medium term cooperative credit and
establish the relationship between short term and medium term loans and between
membership with share capital, advances and deposits. It was observed that there is
equal growth rate of deposits, loans and share capital. But at the same time,
overdues are increasing which shows poor recovery rate due to ineffective
supervision and unsound lending policies. It was found that increase in

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membership results in 65 per cent increase in advances and 59 per cent in deposits.
The remaining change in deposits and advances was due to other variables.

2.11 Narayanasamy and Ramachandran (1987) analysed the profitability

performance of South Arcot District Central Cooperative Bank (DCCB). Various
ratios were used to measure the profitability performance. It was found that
profitability of the bank has decreased due to higher decline in spread ratio than
the burden ratio. Decline in burden ratio shows the efficiency of the business. The
spread ratio declined as a result of fall in interest earned ratio and rise in interest
paid ratio. It was suggested that the profits and profitability can be increased if
proper attention is paid on areas like recovery, deposit mobilization, branch
expansion, reduction in expenses and building of more owned funds and scientific
management of the funds.

2.12 Dayanandan and Sasi Kumar (1993) made an attempt to evaluate the
performance of Central Cooperative Banks (CCBs) in Kerala on the basis of their
progress in membership, share capital, deposits, reserve funds, loans overdue and
net profit earned. To analyse the growth rate, trend values were calculated on the
basis of three year moving averages. It was found that the CCBs have achieved
better performance in share capital, membership, deposits and reserve fund but
there is no achievement in net profit because of steady increase in overdues. It was
suggested that in order to have better performance in future management of these
banks should take suitable measures to control their overdues.

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CHAPTER - 3

CONCEPT OF CO-OPERATION

3.1 Meaning
The world “Co-operation” is derived from the Latin word “Co-operation”,
‘ co’ Man is social animal and he lives with, some group of people as a chain. He
is not left in isolation or single in the world. Human beings live together and also
work together. The entire human race has been based on mutual aid.

Co-operation means working or living together to accomplish the common goal

through co-operative principles.

When ever, the human think of groups and information of it, concept of co-
operation arises, as it is a vital element for endurance of the group. The progress
and development of human beings in all sphere, social, economics, religious and
is marked by sense of thinking and living together. In India, throughout on an
informal co-operate basis with regard to their religious, Social, economic and
cultural life.

Means together and ‘operari’ means to work. In other words, co-operation

means to work together to achieve a common goal.

3.2 DEFINITATION

Several authors have defined co-operation in different ways. Somes of the

definitions are as follows.

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According to C.R. FAY

From socio-economic point of view describes “ co-operation is an

association for the purpose of joint trading. Organizing among the weak and
conducted always in an unselfish spirit on such terms that all who are prepared to
assume the duties of members proposition the degree in which they use of their
association”.

According to prof. LAMBART

Observes “co-operation as an enterprise formed an association of uses,

applying with in itself the rules of democracy and directly intended to serve both
its own members and community as whole”.

According to Dr. K.N. KATIN

“ Co-operation is elf help as well as mutual help. It is a joint association on

enterprise of those who are not finically strong and are enable to stand on their
legs and therefore come together not with a view to get profits but overcome
disability arising out of want of adequate financial resources and thus, their
economic conditions”.

3.3 THE SEVEN PRINCIPLES OF CO-OPRATION

The principles are the guidelines by which co-operation such as essential

put their values into practice.

I principles: VOLUNTARY AND OPEN MEMBERSSHIP

Co-operation voluntary organizations. Open all persons able to use their

services and willing to accept the responsibilities of membership, without gender,
social, racial, political or religious discrimination.

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II. Principles: DEMOCRATIC MEMBER CONTROL

Co-operatives are democratic organizations controlled by their members,

who actively participate in setting their policies and making decisions. Men and
women serving as elected representatives are accountable to the membership. In
primary co-operatives members have equal voting rights (one member, one vote)
and co-operatives at other levels are also organized in a democratic manner.

III. Principles: MEMBERS ECONOMIC PARTICIPATION

Members contribute equitably to, and democratically control, the capital of

their co-operative. At least part of that capital is usually the common property of
the co-operative. Members usually receive limited compensation, if any, on
capital subscribed as a condition of membership. Members allocate surpluses for
any or all of the following purposes: developing their co-operative, possibly by
setting up reserves, part of which at least would be indivisible; benefiting
members in proportion to their transaction with co-operative; and supporting other
activities approved by the membership.

IV. Principles: AUTONOMY AND INDEPENDENCE

Co-operatives are autonomous, self-help organizations controlled by their

members. If they enter to agreements with other organizations. Including
governments, or raise capital from external sources, they do so on terms that
ensure democratic control by their members and maintain their autonomy.

V. Principles: EDUTATION AND TRAINING AND INFORAMTION

Co-operatives provide education and training for their members, elected

representatives, managers and employees so they can contribute effectively to the

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development of their co-operatives. They inform the general public-particularly

young people and opinion leaders – about the nature and benefits of Co-operation.

VI Principles: CO-OPERATION AMOMG CO-OPERATION

Co-operatives provide education and training for their members, elected

representatives, managers and employees so they inform the effectively to the
development of their co-operatives. They inform the general public-particularly
young people and opinion leaders – about the nature and benefits of co-operation.

VII. Principles: CONCERN FOR COMMUNITY

Co-operatives work for the suitable development of their communities’

trough policies approved by their members.

3.4 CO-OPERATIVE MOVEMENT

3.5 INTRODUCTION

Co-operative means “working together”. The principle of co-operative is an old as human

society. It is truly the basis of domestic and social life what is known as co-operative effort is

ultimately the group instinct in man. Which enables him to work together and help each other in

times of stress and strain Unconsciously the principle has always penetrated the life of human

race, the history of co-operation, for without it social and economic progress would have been

impossible

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3.6 MEANING AND DEFINITATION

Modern biologist believes that the co-operative forces are biologist more important and

vital.

According to EMERSON “co-operation has more evolutionary in the

development of a than the better competitive struggle for existence”.

According to MONTAGUE “Science points out the way to survival and

happiness for all mankind through love and co-operations”.

3.7 CO-OPERATIVE MOVEMENT IN INDIA

India is a country with a rural setting having more than 5,75,936 inhabited

villages studded with towns and villages. Which serve a centre of trade, commerce, industries,

education and administration 70% of working force still depends upon agriculture?

Towards the end of the last century, the peasantry or agriculturist was in the grip

of ‘Sahukar’ and the rural debt was daily mountain the condition of the agriculturists was readily

deplorable. As a result of increase in the population and the absence of rapid industrialization,

more and more people depended upon agriculture resulting in too much on land farmers. Who

were once prosperous become petty peasants with tiny holding of a few acres and were finally

reduced to the status of land less labors. They are in the clutches of the money lenders. Rural debt

was increasing and this increased the burden on the farmer. The farmer did not have the incentive

or the ability to improve the condition. The government fell that the farmers could help through

some type of a co-operative effort.

The credit of taking right action in this matter goes the government of Chennai

(Chennai). In 1882 the deputed Sri FREDERICK NICHOLSON to probe into the possibility.

In the basis of recommendations, it was passed into law in 1904, as the“ co-operative credit

society act”.

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Following are the stages of Co-operatives

I. STAGE OF THE MOVENMENT ( 1904 -11)

The introduction of the co-operative credit society act 1904 marked in the beginning of

the co-operative movement in India.

The essential features of this act were as follows:

1. Any ten person living in the same village or town could form a society

2. The co-operative societies were classified as rural and urban.

3. The act provided only for the formation of credit societies.

4. The societies could advance loans to members only on personal or real security.

5. No members could hold shares for a more than RS 1000.

II. STAGE (1912 -18)

The defects of the 1904 act were remained in 1912 when another co-operative society’s

act was enacted With the passing of this act, the movement enter on the second stage of this

progress.

The essential feature of this act are the following:

1. Under this act, society credit or otherwise may be registered which its object that the

promotion of the economic interest of this member in accordance with the co-operative

principles.

2. A federal society like the central bank could be registered

3. No member can more than 1/5th of the total share capital.

4. 1/4th of the net profit of as society must be carried to its reverse fund.

III. STAGE (1919-29)

During this period the movement continued to make a rapid progress. The number of

membership of agricultural credit in Societies increased three times, while their working capital

moved up four folds, In spite of this rapid expansion the proportion of the rural families brought

with in the co-operative fold was very small.

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IV and V. STATE (1929-39)

A Signification highlight of this period was the establishment of the “reserves bank of

India” in 1935, and its agricultural credit department, which was charged with the duty of

studying various problem relating, was charged with the duty of studying various problems

relating agricultural credit.

3.8 CO-OPERATIVE MOVEMENT AFTER INDEPENDENCE

After independence the co-operative movement has been making rapid progress in

various directions. The government has established various committee’s like the co-operative

planning committee (1946),. The all rural credit committee (1946), The vaikunth Lal Mehta

committee (1960) etc. further the co-operating has been assigned as important role in the country

plans.

Rural credit survey Committee:

The most important landmark in the history of the co-operative movement in India after

independence was the publication of the report of conducted by the committee in villages

THE FIRST FIVE YEAR PLAN (1951 -56)

The I five year plan, which was launched in 1950-51 described the co-operative

movement of planned in the country.

The main features of the I plan with reference to co-operative are the following:

1. Co-operative agencies in the village should have the closest possible relationship with

panchayat.

2. The target set by the co-operative planning committee is to cover 50% of Indian’s village

3. An attempt should be made to have a co-operative organization in each village, which

wills cater to the multiple needs of its members.

4. The state should encourage the information of co-operative firms.

The committee recommended on integrated rural credit based on the following principles.

a) State partnership

b) Long-term operations fund.

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c) Loans against Anticipated cops.

d) Large sized societies.

e) Special funds.

THE SECOND FIVE-YEAR PALN (1955-56)

During the II plan period in 1958 the National Development Council considered the role

of co-operative movement in intensifying agricultural production and building the rule economy.

Economy development at the village level should be placed fully on the village co-operative and

the village panchayath. The aim recommendations of the NDC was to ensure every family is

represented in the village co-operatives and co-operatives should make permanent arrangement in

the village for producing the seeds and origin and green manure’s needed, arranges for the supply

of these in kind to persons who cannot pay for them in advance, recoveries being made after

harvest. During this period a lot of attention was given to rural development and success is also

savvied.

Consumer’s Co-operative Movement made phenomenal progresses during the III plan an

A/C of government patronage and assistance under the centrally sponsored schemes.

THE THIRD FIVE – YEAR PLAN (1961-66)

During the III plan, the co-operative movement was accorded a special role in

implementing the schemes of economics development with special reference to rural areas. The

agricultural credit movement should cover all the villages and 60% of the agricultural population

by the end of the III plan.

Progress during the III plan:

As against 100% coverage aimed at in the III plan 80% of village were covered. Paddy

being on of the important crops. Which needs processing before it reaches the consumer the

consumer, co-operative was assisted to set up Rice Mills in III plan.

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At the end of the III plan there were 78 co-operative sugar factories. 155 cotton ginning

pressing societies, 329 paddy husking societies an mill, 298 oil- crushing societies and 22 fruit

and vegetable societies were present.

ANNUAL PLANS (1969-74)

After the III five – year plan, co-operative movement made headway under the annual

plan. In 1966-67, Rs33.5 corers: in 1967-68, Rs.36.3 corers and in 1968-69, Rs.34 Corers were

spending in this field.

THE IV FIVE YAR (1969-74)

In the IV plan, one of the main endeavors was to orient the policies and procedures of

credit co-operative and land development banks in favor of small cultivators.

The Governor of the Reserve Bank for reviewing the supply of the credit in the context of the IV

plan in general and the intensive agricultural programmer appointed all India Rural credit review

committee in particular. The recommendation made by this committee is: the re-organization of

the rural credit Board the setting up of a small farmer development agency in each of a number of

selected throughout the country.

The important recommendations made by the committee are listed below:

1. Need for viable primary co-poseurs.

2. Lending policies and procedures.

3. Small formers development agency

4. Term credit

5. Rural Electrification Corporation.

6. Role of the RBI

Progress during the IV plan

The performance of the co-operative movement during the IV plan period presents a

mixed picture, In respect of one item namely, co-operative marketing as agricultural produces, the

IV plan targets were exceeded.

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Another significant development in the course of the IV plan has been the establishment

of a consultancy for providing expert guidance to consumer co-operatives.

THE V FIVE – YEAR PLAN ( 1974-79)

Three specific objects have been stated for co-operative development during the v plan.

a) To strengthen the network of agricultural co-operatives.

b) To build up a viable consumer co-operative movement to enable it to function as

an important element in a consumer oriented distribution system.

c) To make efforts towards the correction of regional imbalances in the level of the

co-operative development particularly in the sphere of agricultural credit.

THE VI FIVE YEAR PLAN (1980-85) & VII FIVE YEAR PLAN (1985-90)

At the end of the VI plan the short loans and the medium terms loans, advanced amounted

to RS 2500 cores and RS 250 cores respectively. A major development in the field of credit

during the VI plan was setting up of “ NABARD” has emerged as an apex national institution

accredited with all material concerning policy planning and operations in the field of credit for

agriculture and other economic activities in the rural areas.

The major twist during the VI plans to ensure adequate flow of credit to the weaker

sections of the population and to the areas.

3.9 CO-OPERATION PROSPECTS

The co-operative movement has been in existence in the country for more than 90 years.

The movement was introduced with high hopes and lovely expectations. It was expected

to provide a lasting solution to the problems of our rural economy.

The co-operative movement is now a mammoth organization covering about 95%

of villages and 44 % of our rural population. In single village which is not covered by a

village co-operative.

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3.10 ACHIVEMENTS

The various achievements of the co-operative movement in India can be summarized

under the following heads.

1) ECONOMIC BENEFITS

The co-operative movement has been rendering invaluable services fro the economic

betterment and well being of the rural population. Some of the economic benefits

provided by the co-operative can be states as

a. cheap credit
b. Rescuing the peasantry from the clutches of money lender
c. Better use of credit
d. Popularizing modern inputs
e. Better prices to farmers
f. Rural entrepreneur
g. Developing banking habits
2)SOCIAL AND MORAL BENEFITS

The co-operative movement has also brought about a number of social and moral

benefits of the people. They are:

A. It is reaching people to live harmoniously on a community basis

B. It fosters a sense of responsibility integrity and diligence.

3) EDUCATIONAL BENEFITS

A good co-operative society is a continuous source of education for the member of rural

areas. It reaches the proper use of money, the true value of goods and better methods or

production.

Thus, co-operative movement is playing a significant role in the present economic setup, the

acknowledged on all hands. It cannot eliminate.

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CHAPTER 4

CO-OPERATIVE ORGANISATION

4.1 MEANING AND DEFINITION

Co-operative form of organization is different from other

organizations I,e., sole –trading concerns , partners firms and joint stock
companies in one basic aspects that the co-operative organization is not
set –up for rendering services to the voluntary basis fro the furtherance of
their common economic interest ( goal). The co-operative organization
may be defined as “a voluntary associated of person joining together in
equal basis for the promotion of certain economic or business interest of
the society”.

The International Labour Organization defined the co-operative

organization as “an association of persons, usually of limited, means who
have voluntary joined together to achieve a command economic end
through the formation of democracy controlled business organization
making equitable contributions to the capital required and accepting a fair
share of risks and benefits of the undertakings.

Prof. Paual Lambert, a leading authority on co-operations states:

“A Co-operatives society is an enterprises formed and directed by an

associated of users, applying within itself the sales of deco Marcy and
directly intended to serve both its own members and the community as
whole”

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4.2 Features of Co-operative organization

1. VOLUNTARY ASSOCIATION
A co-operative society is a voluntary association of person and
not of capital any persons irrespective of sex, creed casts etc. Any
person can join the society of his wish and he can leave it at any time
after giving the notice to the society. While leaving he has to
withdrawn his amount and he is not suppose to transfer the amount on
other person.

2. SOURCE OF FINANCE

The capital of co-operative society is raised from the members

by way of share capital. Since co-operatives organized by relatively
weaker section of society, the share capital will be limited. However,
it is a part of government policy to assist and encourage co-operative
societies and therefore, a co-operative society can usually arrange its
resources by loans from the state and central co-operative banks.

3 CONTROLS AND MANAGEMENT

Democracy is the keynote of the management of the co-

operative society since most of these societies operate on local scale:
the meetings of the members are generally well attended. At the time
of meeting the members elect the managing committee and lay down
the policy, which it must flow to promote their common interest,
each members, what ever may be state in the society has one vote
and proxy. Besides two amy carry on the organization and control of
a co-operative society or more members working in different
capacities and outsides may be employed only when the society
grows to large.

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4 SERVICE NOTICE
A co-operative society is organized primarily with the object of
rendering maximum service to its members in certain field. It does
not aim at the cast of its members for its formed basically for
providing certain essential facilities to members. This does not mean
that a co-operative society will have work for profit. It is quite used
for societies to earn profits by extending their services to maximum
members.

5. DISPOSAL OF SURPLUS
It is usual for commercial concerns to distribute profits among the
owner in the ratio of their capital centrifugation or in agreed ratio. A co-
operative society differs from trading company in their respect. Under the
co-operative form of ownership and organization, the surplus arising of a
years working is given to the members not directly or divided on shares held
by each of them. But inn the form of a Bonus which needed be proportionate
to their respective capital contribution.

6. FIXED RETURNS ON CAPITALS

The fixed or limited return on capital subscribed to the society must be

aped out of the surplus to then members making the payment of fixed
interest or paid up capital definitely a first charge on the trading surplus of
all those who joined the society a solid reason for leaving their saving in
deposits with it.

7. STATE CONTROL AND CO-OPERATIVE SATUS

Although voluntary in their basic chapter the co-operatives

societies are subject to considerable state considerable state control
and supervision.

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Although, the co-operative societies are voluntary in their basic

feature but they are subject to some considerable state control and
supervision.

The features of co-operative organization outlined above were

the basic principles on which the passing of time, some of them have
been modified of the peculiar needs and difficulties of certain types of
societies.

While a co-operative society is essentially a business unit

establish primarily for organizing and providing some services to the
members and the committee. It is a movement aiming at the end of
exploitation by private business and the development of self-help
among various sections of the society in voluntary basis. It is a social-
economic movement inspired by the idea of organizing and uplifting
the weaker section of the society through action.

4.3 TYPES OF CO-OPERATIVE SOCIETY

Co-operatives may be formed practically in any work of life. Some of

them concern themselves with the moral and social uplift of a weaker section
of the society. And some of them combine some business activity with
service to their members. Since co-operatives are been considered here as
force of business organization, only those societies, which are concerned
with some business purposes, needed an introduction here. The principle
types of business co-operatives are as enumerated below:

1. Consumer’s co-operative societies

2. Producer’s co-operative societies
3. Marketing co-operative societies
4. Housing co-operative societies
5. Co-operative credit societies
6. Co-operative forming societies

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1. CONSUMER’S CO-OPERATIVE SOCIETIES

These societies are formed by the ordinary or general people for
obtaining their day to day requirements of goods at cheaper prices. These
societies make their purchase in bulk from wholesalers at wholesale rates
and sell to members at market prices. The different is represented by the
surplus, which is distributed among the purchasing members in the form
of bonus on purchases.

This is the oldest form of co-operative organization in India consumer’s

co-operative societies have received impetus from government attempt to
check rise in prices of consumer’s goods and essential commodities.

2. PRODUCER’S CO-OPERATIVE SOCIETIES

It is also called as industrial co-operatives these societies are voluntary
association from the system industrial production. Some times consumer’s
societies may join hands with this association

3. MARKETING CO-OPERATIVE SOCIETIES

The marketing co-operative society or the sales co-operative

societies are voluntary association of independent producers organized for
the purpose of arranging for the sale of their output. As the central sales
agency for a member of producer, a marketing co-operative society quite
often performs some important functions of marketing such as, processing
and grading of the product delivered by the individual producers. Societies
of this kind are particularly useful for agriculturists, small producers and
artisans.

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4. HOUSING CO-OPERATIVE SOCIETIES

Housing co-operative societies are the association of persons who

are interested either in securing dealership of a house or obtaining
accommodation at fair and reasonable rent. Such societies are formed in
urban areas. Most intending builders of houses join together to form.

Co-operatives of this kind. Through these societies they can secure not
merely finance assistance, but also the economics of purchase of building
materials in bulk. The membership of such a society is open to also those
who are interested in securing house accommodation as well as you those
who are ready to deposit money in the society for interested. Each member
has to buy at least one share and the liability is generally limited to his
contribution.

6. CREDIT CO-OPERATIVE SOCIETIES

The credit co-operative societies are voluntary associations of the
people with moderate means formed with the object of extending short term
financial accommodation and developing the habit of thrift among them, the
funds of these societies consists of share capital contributed by the member.
The liabilities of the members are in generally unlimited. This helps the
society in rising funds from outsiders and ensures that every member shows
keen interest in the working of the society in granting loans, the society may
show concession for the poor people who apply for smaller loans. Besides
loans may generally be granted only for productive purpose. The society may
or may not ask for security of immovable property while making loans; the
rate of interest charged on the borrowings is kept as low as possible.

Credit co-operatives may be divided into two types:

a. Agriculture credit society

b. Non-Agriculture society

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7. FARMING CO-OPERATIVE SOCIETIES

These co-operative societies are generally agriculture co-operative

framed with the object of achieving the benefits of large scale framing and
maximizing agricultural output, such societies are advanced for those agricultural
countries like India, which suffer from excessive fragmentation or sub-division of
agricultural land holding by farmer. This membership generally confined to
farmers including those doing land and those who till the land.

4.4 ROLE OF CO-OPERATIVE SOCIETY IN SOCIAL

CHANGES IN INDIA

Co-operative societies are playing a very important role in modern society.

In olden days there was no co-operative society. People were not aware of the
concept itself, but the theory of co-operation is as old as human civilization. They
used this, to make their group for the purpose of living, hunting and working
together. He did know the importance of co-operative society in social life, when
one or other person exploited a common man.

In olden days people were exploited by there own masters. The laborer or the
peasant classes of people were ill treated. The people of low class and low caste
were neglected from the society not getting due respects. These low class people
suffered lot and they were exploited by the upper class and they were also kept
out from the education.

After the introduction of the co-operative movement in India in 1904, the

people who were exploited and who needed a change got ray of hop. They
started to educate themselves. They give birth to a feeling of oneness among them
and they started working not only for the people of themselves but also for
welfare of others. How ever, by making their co-operatives they enjoyed very
much. Their standard of living was raised. When government realized that the

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groupism is started, then to stop that groupies, the government took steps in
establishing co-operative societies like financial co-operatives, industrial co-
operatives and the government made some resolution to those co-operative by
passing their Act.

The co-operative system reduced many problems relating to finance

and industry. The people who were borrowing money from lords were now
able to get money or financial assistance by the co-operative societies. A man
by making himself a member can get an amount as loan and with in the
prescribed limit rate of interest. In the earning of profits of the societies he was
given his share of profit in the form of dividend according to hid capital in the
society. This reduced the burden of paying high interest and in turn he gets cash
profits from the co-operative society. By getting all these benefits the life style
and standard of living of common people have increased and totally it is
bringing change in society.

Thus, co-operative societies have made a lot of changes in the Indian

society. Any one due to the co-operative societies can exploit no one and a
common man is safe in the hands of co-operatives.

4.5 BENEFITS OR MERITS OF CO-OPERATIVE SOCIETIES:

Co-operative societies in India have provided many benefits. They are:

A. The most important service of co-operative societies in India is the

provision of agricultural credit. The co-operative societies have
provided cheap facilities to farmers. These societies, today, meet
about 43% of the credit requirement of the farmers, and there by
minimize the dependence of the farmers on money lenders.

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B. By supplying credit, better seeds, fertilizers, pesticides and

insecticides, irrigation facilities etc., co-operative societies have
raised the agricultural productivity and production in the country,
and thereby, contributed to the agricultural development of the
country, and thereby, contributed to the agricultural development of
the country. Infect, co-operative societies are partly responsible for the
“Green Revolution” that has taken place in some parts of the country
such as Punjab, Maharashtra, A.P etc.

C. The co-operative marketing societies have been instrumental in

securing remunerative prices for the farmers for their produce.

D. The primary credit societies in urban area have provided source

credit facilities to artisans, craftsman, small traders and industrial
workers and employees.

E. The producer’s co-operative societies or the industrial co-

operatives have provided a source of livelihood to artisans and
craftsman.

F. The customer’s co-operative societies have opened a chain of

stories and supplied good quality goods at fair prices to buyers in
both rural and urban areas. In fact, consumer’s co-operative
societies have helped the equitable distribution of essential
commodities at fair prices and helped the government to hold the
price line to a certain extent.

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G. The dairy co-operatives like the Amual ensured a regular supply of

good quality milk and milk products at reasonable prices to the
consumers in towns and cities and better prices for the producers of
milk. The dairy co-operatives are making effort to achieve” white
Revolution” in the country.

H. The fishers Co-operatives have contributed to large – scale

production and sale of fishes. They are partly responsible for the
“Blue Revolution”i.e., taking place in the country.

I. The co-operative societies have helped in pooling the resources of

the weaker section of the society for productive purposes.

J. The primary credits societies in rural areas have checked the

wasteful expenditure of the tenants and encouraged the habits of
thrift and savings among the people.

K. The co-operatives societies in rural areas have improved the moral

behaviour of the rural people. The made the villagers give up vices,
such as gambling, drinking, litigation etc

L. The co-operatives societies have rendered social services, such as

provisions of education to the illiterate, development of public
health and sanitation etc., and there by, contributed to social
improvements, especially in rural areas.

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M. The co-operatives societies have promoted the spirit of co-

operation and selfless services among the members.
Co-operation has taught the people the technique of self-
government and acted as training ground in self-government.

4.6 DEFECTS OF THE CO-OPERATIVE MOVENMENT IN

INDIA OR CAUSES FOR THE SLOW GROWTH OF CO-
OPERATIVE MOVENMENT IN INDIA:

The co-operative movement in India suffers from certain drawbacks.

That is way; its growth has been rather slow. The main defects of the co-
operative movement in the country are:

A. The co-operative movement in India has not come from the people. It
is only the government. Which has taken the initiative in starting the
co operative societies. So, it has become a movement of the
government and not of the people.

B. The masses of India have are illiterate. They are not able to understand
the objectives and the importance of co-operation.

C. The financial resources of the co-operative societies are manager. So,

they are not able to meet the growing needs of the members.

D. Generally, the management of the co-operative societies is not

efficient. Further, in many cases, the management of the societies has
fallen into the hands of dishonest and unscrupulous person.

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E. The recovery of loans from the borrowers is not efficient. Over dues
are increasing at an alarming rate.
F. Loans are given without proper enquiry. A number of loans are given
in ficitious names. in many cases, loans are given to the friends and
relatives of the member of the managing committee.

G. There is political intervention in the working of the co-operative

societies.

H. The co-operative credit societies have failed to mobilize deposits.

They are just acting as agents for the distribution of funds provided by
the government.

I. There has been too much of emphasis on co-operative credit societies

other types of co-operative societies have not been given much
importance.

4.7 EVOLUTION OF CO-OPERATIVE IN INDIA

The co-operative movement in India owners its origin to agriculture

and allied sectors. Towards the end of the 19th century. The problems of rural
indebtedness and the consequent conditions of farmers created an
environment for the chit funds and co-operative societies. The farmers
generally found the co-operative movement an attractive mechanism for
pooling their major resources for solving common problem relating to credit
supplies of inputs and making of agricultural produce. The experience
gained in the working of co-operative led to the enactment of co-operative
credit societies Act, 1904. Subsequently, a more comprehensive legislation
called the co-operative societies Act enacted. This act, interlaid, provided for
creation of the post of registrar of co-operative societies and registration of

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co-operative societies for various purposes and audit. Under the Montague-
Chelmsford reforms of 1919, co-operative became a provisional subject and
the provinces were authorized to make their own co-operative laws. Under
the government of India Act, 1935, co-operatives were treated as a
provisional subject. The item “ Co-operative societies” is a state subject
under entry No. 32 of the state list of the constitution of India.

In order to cover co-operative societies with membership from more

than one provinance, the government of India enacted the Multi-unit Co-
operative societies Act, 1942. This Act was an enabling legislative
instrument dealing with incorporation and winding up of co-operative
societies having jurisdiction in more than one provinance. With the of
emerge of national federations of co-operative societies in various functional
area and to obviate the plethora of different laws governing the same types
of societies, a needed was felt for a comprehensive central legislation to
consoled the laws governing such co-operative societies. Therefore, he
Multi – state co-operation societies Act 1984 was enacted by parliament
under entry No.44 of the Union list of the constitution of India.

After India attained independence in August 1947, Co-operatives

assumed a great significance in poverty removal and faster socio-economic
growth. With the advent of the planning process, co-operative became an
integral part of the five-year plans. As a result they emerged as distinct
segment in our national economy. Inn the first five year plan would be
judged among other things, by the extent it was implemented through co-
operative organization.

The All India Rural Credit Survey Committee Report, 1954 recommended
an integrated approach to co-operative credit and emphasized the need for
viable credit co-operative societies by expanding their area of operation,
encouraging rural saving and diversion business. The committee also
recommended for Government participation in the share capital the co-
operative.

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In the view of these recommendations, different states drew up various

schemes for the co-operative movement for organizing large – size societies
and provisions of state partnership and assistance. During 1960’s further
efforts were made to consolidate the co-operative societies by their
reorganization. Consequently, the number of primary agricultural co-
operative credit societies was reduced from around 2 lakh to 92 thousand.

4.8 EVALUTION

In 1958 the National Development Council (NDC) had

recommended a national policy on co-operatives. Jawaharlal Nehru
had a strong faith in the co-operative movement. While opening an
international seminar on co-operative leadership in south east Asia he
had said “ But my out look at present is not the out look of spreading
the co-operative movement gradually, progressively, as it has done.
My out look is to convulse India with the co-operative movement or
rather with co-operation to make it broadly speaking the basic
activity of India, in every village as well as elsewhere: and finally,
indeed, to make the co-operative approach the common thinking of
India… Therefore, the whole future of India really

depends on the success of this approach of ours to these vast

numbers, hundred of millions of people”

The co-operative sector has been playing a distinct and significant role
in the country’s process of socio-economic development. There has been a
substantial growth of this sector in diverse areas of the economy during the
past few decades. The number of all types of co-operatives increased from
1.81 lakh in 1950-51 to 4.53 in 1996-97. The total membership of co-

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operative societies increased from 1.55crores to 20.45 corers during the same
period. The co-operatives have been operating in various areas of the
economy such as credit, production, processing, marketing, input
distribution, housing, dairying and textiles. In some of the areas of their
activities like dairying, urban banking and housing, sugar and handlooms,
the co-operatives have achieved success to an extent but there are larger
areas where they are not successful. The failure of co-operatives in the
country is mainly attributable to dormant membership and lack of active
participation of members in the management of co-operatives. Mounting
over dues in co-operative credit institution, lack of mobilization of internal
resources and over – dependence on government assistance, lack of personal
management, political interference and over polarization have proved
harmful to their growth. Predominance of vested interests resulting in non-
percolation of benefits to a common member, particularly to the class of
persons for whom such co-operatives were basically formed, as also retarded
the development of co-operatives. These are the areas, which needed to be
attended to by evolving suitable legislative and policy support.

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CHAPTER 5

SIDDARAMESHWARA CREDIT CO-OPERATIVE SOCIETY LTD.,

HOSADURGA-A PROFILE

5.1 HISTORY

Siddarameshwara Credit co-operative society ltd., was

established on 4th April 1999 (Reg. No. DRD/RSR/CR.3/9722/98-99). The
scope of services of the society is limited to Hosadurga Taluk.

Before 1999 in Hosadurga town, even though there were

numbers of Co-operative Societies but they failed to meet the credit needs
of Hosadurga taluk. At that time, a few leaders of community decided to
establish a co-operative society in Hosadurga town.

The first president of the society was Sri. K.Lokeshwarappa and the
present president Sri R.Hanumanthappa and the first Manager of this
society Panchakshari and present Manager of Amruth.H.R, whose
service is ever to remember. This society was established mainly with a
view to provide credit facility to its members at reasonable rate of
interest.

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5.2 FEATURES OF THE SOCIETY

Following are the main features of the Siddarameshwara credit Co-
operative Society.

A. According to the by-law of the society board of directories are not

entitled for taking loan from the society.

B. Members are avail to the survey loan up – to Rs 25000.

C. Members are avail to the property loan up-to Rs 10,00,000

D. For the purchase of two wheeler vehicle the members can take ¾
amounts of the vehicles.

E. Loan facilities to the extent of Rs 2,00,000 granted on the security of

Gold.

F. The society is granting loan for businessmen of Rs 5,00,000.

5.3 DEPOSITS

The deposit of the society increases since from two years of its
working as the confidence of the member’s increases. The society receives
deposits from the members through the following accounts

1) Savings deposits account

2) Pigmi deposit account
3) fixed deposits account
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4) Recurring deposits account,

The following is the table shown the total deposits deposit by the
members during the year 2010-11 To 2014-15.

Sl . no Years Deposits

1 2010-11 1,80,00,000

2 2011-12 1,60,48,000

3 2012-13 1,71,38,000

4 2013-14 2,12,54,000

5 2014-15 1,46,06,000

5.4 SHARE CAPITAL

The following is the table showing the share capital and

shareholders of the society during the year 2010-11 To 2014-15

Sl . no Years Share capital

1 2010-11 22,13,000

2 2011-12 23,34,100

3 2012-13 24,90,000

4 2013-14 25,66,000

5 2014-15 26,18,000

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5.5 NET PROFIT

The net profit of the society is shown in the below table

Sl . no Years Net profit

1 2010-11 Nill

2 2011-12 6,22,000

3 2012-13 7,15,000

4 2013-14 17,65,000

5 2014-15 4,38,000

5.6 MANAGEMENT

The Management of the society rest in the board consisting of 12

directories elected annually at the general meeting. The president and the
vice-president are elected from among the directors. From the beginning the
society has been lucky in getting competent and self-sacarifying directories
as well as office bears. (Since from the beginning of the society the president
and vice-president have not changed).

No sitting or others fees is paid to the directories ( as it is in

developing or improving stage). with the increase in the number of members
and depositor and the consequent increase in staff, efficient management has
necessitated greater systematization of work.

5.6 STAFF

In this society there are totally 6 working staff i.e. Manager, 4 clerks
and another is at tender.

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CHAPTER - 6

CREDIT FACILITES IN SIDDARAMESHWARA CREDIT CO-

OPERATIVE SOCIETY LTD.

6.1 MEANING OF CREDIT

Credit means good opinion founded on the belief in a person’s

“veracity, integrity, ability and virtue”. Credit refers to the confidence in a
person’s willingness and ability to pay. A person’s credit depends on three
C’s - chapter, capacity and capital. It is a combination of all these qualities,
which go to make a man’ s credit. He must be honest and fair in his dealings
with others; he ,must also have capacity for making his business a success;
and he must be a man of substance. Credit is thus an attribute of the
borrower.

6.2 DEFINITION

The word ‘credit’ has been derived from Latin word ‘ Credo’,
meaning, “I believe”. Credo however is a combination of the Sanskrit word
meaning , “ Trust” and the Latin word ‘do’ meaning “I place”.

a. According to wing field Stratford, credit is “nothing more or less then

faith and faith no less on the stock exchange than before the alter, is the
substance of thing’s hoped for, the evidence of things not seen”.

b. According to Williams Stanley Jevons, credit is “nothing but deferring

of payment’.

c. According to cole, “credit is purchasing power not derived from

income, but created by financial institutions either as an offset to idle

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incomes held by depositors in the banks or as a net addition to the total

amount of purchasing power”.

6.3 KINDS OF CREDIT

In modern times credit is required for many purposes and is

employed by almost every sector of the economy.

Some of the main types of credit are studied under.

6.3.1 Classified on the basis of use

1. Productive credit
2. Consumer credit

PRODUCTIVE CREDIT

Producers undertake production on a large scale by depending upon the

banks of finance the purchase of raw material, wages payments by seeking
overdraft and cash credit facilities from the banks. The loan facilities given
for this purpose is called productive credit.

CONSUMERS CREDIT

In the developed countries of the world the purchases of most consumer

durables such as cars, refrigerators, TV, bank and other financial
intermediaries finance all sets and the like. The loan provided for this
purpose is called consumer credit.
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 Credit facilities & Recovery of Loans in Co operative Societies 2016

6.3.2. Classified on the basis of period of credit given

1. .Long term credit

2. Medium term credit
3. Short term credit

LONG - TERM CREDIT

This type of credit is given for a period between 5 to 25 years. This

type of loan is used to purchase to buildings, machineries or any other
fixed assets and to construct hours any modification of the machineries
etc..

MEDIUM - TERM CREDIT

It is granted for a period below 5 years and above one year. So, this
credit stands midway between long and short-term credit. Farmers to
setting up of pumps sets and other machineries use this type of loan.

SHORT – TERM CREDIT

It is credit or loan advanced by the banks or other financial institutions

for a period of few days or a few months. This loan is granted for the
purpose of purchasing raw materials, wage payments etc..

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6.3.3. Classified on the basis of security

1. Unsecured loan
2. Secured loan

SECURED LOAN

The banks generally grant loans and other financial agencies against
the security of tangible assets pledged by the borrower in favour of the
lender is called secured loan.

UNSECURED LOAN

Loans may however, be granted without requiring the borrower to

furnish any security of tangible assets are called unsecured loans

6.4 FUNCTIONS OF CREDIT

Credit performs many useful function for the economic prosperity of

country ,thus:

A. credit economies the use of metallic currency. Credit instrument serve in

place of coin and thus save much unnecessary expense.

B. It helping the financing of the industry by making possible huge loans to

businessman.

C. It increases the productivity of capital. Idle money, through the agency of

banks, is made available to people, who can use it productivity.

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 Credit facilities & Recovery of Loans in Co operative Societies 2016

D. By means of credit, banks against small cash reserves can lend large
sums.

TYPES OF LOANS PROVIDED BY SOCIETY

Following are the types of loan provided by the society to

its members

1. Surety loan

2. Property loan

3. Business loan

4. Deposit loan

5. Vehicle loan

6. General loan

7. Gold loan

Following is the table’s showing the credit facilities given by

the society to the members during the year 2010-2011 to 2014-2015.

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 Credit facilities & Recovery of Loans in Co operative Societies 2016

1. SURETY LOAN
The loan is given by society for its members on the security of other
members. It provides this loan up to RS 20000 for each member. The rate of
interest on this loan is 16% per annum.

The table showing surety loan granted by the society during the year
2010-11 To 2014-15

Sl .no Years Surety loans granted (RS)

1 2010-11 2693858

2 2011-12 3489662

3 2012-13 4070520

4 2013-14 6545861

5 2014-15 7013090

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 Credit facilities & Recovery of Loans in Co operative Societies 2016

Bar diagram showing the surety loan granted by the society during the
year 2010-11 To 2014-15 (in lakhs)

Surety loan granted (Rs)

80
70
60
50
surety loan granted (Rs)
40
30
20
10
0
2010-11 2011-12 2012-13 2013-14 2014-15

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 Credit facilities & Recovery of Loans in Co operative Societies 2016

2. PROPERTY LOANS

This loan is given by the society for its members against fixed
assets. It provides property loan up to Rs 1,00,000 for each member. That
rate of interest charged on property loan is 16% per annum.

The table showing property loan granted by the society during the year
2010-11 To 2014-15

Sl . No Years Property loan granted (RS)

1 2010-11 12,12,140

2 2011-12 14,88,040

3 2012-13 27,85,162

4 2013-14 38,42,790

5 2014-15 35,50,185

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 Credit facilities & Recovery of Loans in Co operative Societies 2016

Bar diagram showing the property loan granted by the society during
the year 2010-11 To 2014-15 (in 000)

property loan granted (Rs)

40
35
30
25
property loan
20 granted (Rs)
15
10
5
0
2010-11 2011-12 2012-13 2013-14 2014-15

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 Credit facilities & Recovery of Loans in Co operative Societies 2016

3 . BUSINESS LOAN

This loan is by given by society for its members in the form of

cash credit. It provides business loan up to Rs 20,000. The rate of interest
charged for business loan is 16% per annum.

The table showing business loan granted by the society during the
year 2010-11 To 2014-15

Sl . No Years Business loan granted (Rs)

1 2010-11 13,50,330

2 2011-12 17,38,322

3 2012-13 21,02,043

4 2013-14 24,90,390

5 2014-15 25,28,361

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 Credit facilities & Recovery of Loans in Co operative Societies 2016

Bar diagram showing the business loan granted by the society during
the year 2010-11 To 2014-15 (in lakhs)

Business loan granted (Rs)

30

25

20
Business loan
15 granted (Rs)
10

0
2010- 2011- 2012- 2013- 2014-
11 12 13 14 15

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 Credit facilities & Recovery of Loans in Co operative Societies 2016

4 . DEPOSIT LOAN

This loan is given by society for its members. On the basis of

deposit made by them. For example Fixed deposit loan,Recurring deposit
loan,Pigmy deposit loan etc.,

Table showing deposits loan granted by the society during the year
2010-11 To 2014-15

Sl . No Years Deposit loan granted (Rs)

1 2010-11 3,13.900

2 2011-12 12,96,140

3 2012-13 15,91,630

4 2013-14 9,81,260

5 2014-15 7,54,438

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 Credit facilities & Recovery of Loans in Co operative Societies 2016

Bar diagram showing the deposit loan granted by the society during the
year 2010-11 To 2014-15 (in lakhs)

Deposit loan granted (Rs)

16
14
12
10
Deposit loan
8 granted (Rs)

6
4
2
0
2010-11 2011-12 2012-13 2013-14 2014-15

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 Credit facilities & Recovery of Loans in Co operative Societies 2016

3 . VEHICLE LOAN

The society provides vehicle loan to its members . It provides loan

up to 75% of the worth of vehicle. The rate of interest charged on the
vehicle loan is 16% .

Table showing vehicle loan granted by the society during the year
2010-11 To 2014-15

Sl . No Years Vehicle loan granted (Rs)

1 2010-11 6,19,593

2 2011-12 10,29,845

3 2012-13 8,04,470

4 2013-14 9,07,050

5 2014-15 10,55,181

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 Credit facilities & Recovery of Loans in Co operative Societies 2016

Bar diagram showing the vehicle loan granted by the society during the
year 2010-11 To 2014-15 (in lakhs)

Vehicle loan granted (Rs)

12

10

8
Vehicle loan
6
granted (Rs)

0
2010-11 2011-12 2012-13 2013-14 2014-15

Conclusion:
Facilities and services are the order of the day. Each and every co-
operation societies are coming with a different type of facilities to satisfy its
consumers. Siddarameshwara credit co-operative society is not exceptional
to that. So Siddarameshwara credit co-operative society is rendering services
to its members by giving loan facilities like surety loan, property loan,
deposit loan etc.,

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Credit facilities & Recovery of Loans in Co operative Societies

CHAPTER - 7

RECOVERY OF LOANS IN SIDDARAMESHWARA CREDIT

CO-OPERATIVE SOCIETY LTD.

7.1 RECOVERY OF LOAN

The circle of funds will be completed only when the issued

amount on recovered and reissued. In other words recovery means the
collection of dues or repayment of loans amount.

Loan amount can not be recovered unless the loans are persuading
properly owning to their personal problems and other reasons. Sometime
loan borrowers are unable to repay the loan amount in time. In such case
they should contact personally and they will be granted further period to
repay their loans. This time extended to them is called extension of loans. A
special provision as made in the loans by institution to extension of time.

After the expiry of the original period of loan will be changed with
additional interest.It is called penal interest. Generally, penal interest will be
changed at 2% interest above the original rate of interest.

7.2 RECOVERY OF LOANS BY SIDDARAMESHWARA CREDIT

CO-OPERATIVE SOCIETY LTD.

Different type of loans issued by this society and amount recovered and its
performance would be glanced from the table given below.

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Credit facilities & Recovery of Loans in Co operative Societies

1 . SURETY LOAN

Table showing surety loan advanced and recovered by the society

during the year 2010-11 to 2014-15

Sl no Year Surety loan granted Surety loan

(Rs) recovered (Rs)

1 2010-11 26,93,858 17,77,282

2 2011-12 34,89,662 18,54,196

3 2012-13 40,70,520 16,59,142

4 2013-14 65,45,861 42,96,275

5 2014-15 70,13,090 31,22,771

Total 2,38,12,991 1,27,09,666

The above table reveals the performance of the society during the
period for 2010-11to 2014-15. It shows the table amount of surety loan
sanction I.e. RS 2,38,12,991 and the table amount of surety loan recovered
I,e Rs 1,27,666 by the society.

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Credit facilities & Recovery of Loans in Co operative Societies

Bar diagram showing the surety loan advanced and recovered by the
society during the year (in lakh)

80

70

60

50
Advanced
40
Recovered

30

20

10

0
2010-11 2011-12 2012-13 2013-14 2014-15

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Credit facilities & Recovery of Loans in Co operative Societies

2. PROPERTY LOAN

Table showing property loan advanced and recovered by the society

during the year 2010-11 to 2014-15

Sl Year Property loan Property loan

no advanced (RS) recovered(RS)

1 2010-11 12,12,140 10,40,965

2 2011-12 14,88,040 11,94,623

3 2012-13 27,85,162 24,15,043

4 2013-14 38,42,790 21,32,730

5 2014-15 35,50,185 12,92,605

Total 1,28,78,317 80,75,966

The above table reveals the performance of the society during the
period of 2010-11 to 2014-15. It shows the table amount of property loan
sanctioned i.e. RS 1,28,78,317 and total amount recovered i.e. RS 80,75,966
by the society.

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Credit facilities & Recovery of Loans in Co operative Societies

Bar diagram showing the property loan advanced and recovered by the
society during the year 2010-11 to 2014-15 (in lakh)

4500000

4000000

3500000

3000000

2500000
Advance
Recovered
2000000

1500000

1000000

500000

0
2010-11 2011-12 2012-13 2013-14 2014-15

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Credit facilities & Recovery of Loans in Co operative Societies

BUSINESS LOAN

Table showing business loan advanced and recovered by the

society during the year 2010-11 to 2014-15

Sl no Year Business loan Business loan

advanced recovered

1 2010-11 19,50,331 18,82,202

2 2011-12 17,38,322 16,47,009

3 2012-13 21,02,430 18,56,279

4 2013-14 24,90,390 19,51,113

5 2014-15 25,28,361 16.62.569

Total 1,02,09,447 89,99,172

The above table reveals the performance of the society during the
period of 2010-11 to 2014-15. It shows the total amount of business loan
sanctioned RS 1,02,09,447 and total amount recovered RS 89,99,170 by the
society.

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Credit facilities & Recovery of Loans in Co operative Societies

Bar diagram showing the business loan advanced and recovered by the
society during the year (in lakh)

30

25

20

Advanced
15
Recovered

10

0
2010-11 2011-12 2012-13 2013-14 2014-15

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Credit facilities & Recovery of Loans in Co operative Societies

2. DEPOSIT LOAN

Table showing deposit loan advanced and recovered by the

society during the year 2010-11 to 2014-15

Sl no Year Deposit loan Deposit loan

advanced (RS) recovered (RS)

1 2010-11 3,13,90 2,12,500

2 2011-12 12,96,140 5,06,860

3 2012-13 15,90,630 3,70,178

4 2013-14 9,81,260 3,13,005

5 2014-15 7,54,438 4,16,422

Total 49,37,368 18,18,965

The above table reveals the performance of the society during the
period of 2010-11 to 2014-15. It shows the total amount of deposit loan
sanctioned RS 49,37,368 and total amount recovered RS 18,18,965 by the
society.

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Credit facilities & Recovery of Loans in Co operative Societies

Bar diagram showing the business loan advanced and recovered by the
society during the year

16
14
12
10 Advanced
8 Recovered
6
4
2
0
2010-11 2011-12 2012-13 2013-14 2014-15

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Credit facilities & Recovery of Loans in Co operative Societies

3. VEHICLE LOAN

Table showing vehicle loan advanced and recovered by the

society during the year 2010-11 to 2014-15

Sl no Year Vehicle loan Vehicle loan

advanced (RS) recovered (RS)

1 2010-11 6,19,593 5,01,967

2 2011-12 10,29,845 3,27,498

3 2012-13 8,04,470 6,80,375

4 2013-14 9,07,050 5,20,420

5 2014-15 10,55,181 9,13,817

Total 44,16,139 29,44,077

The above table reveals the performance of the society during the period
of 2010-11 to 2014-15. It shows the total amount of vehicle loan sanctioned
RS 44,16,139 and total amount recovered RS 29,44,077 by the society.

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 Year Sl.No

Credit facilities & Recovery of Loans in Co operative Societies

Bar diagram showing the vehicle loan advanced and

recovered by the society during the year (in 000)

Deposists

1 1999-00 4,94,617=00

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Credit facilities & Recovery of Loans in Co operative Societies

2 2000-01 3,55,074=00

CHAPTER -8

ANALYSES AND RESPONSE

8.1 INTRODUCTION

Survey means going into the depth of the responses and collecting
inner expression for the purpose of knowing attitudes of the respondents
about which the survey is conducted.

The purpose of conducting the survey is the in-depth study of the

attitudes of the members and problems faced by them while dealing with
Siddarameshwara Credit Co-operative society Ltd. Hosadurga.

For the purpose of survey questionnaires were prepared and were

given to 50 members. The entire area covered by the survey is classified in
to different parts and the members are given the format of questionnaires and
are requested to fill it and return to us.

The survey has been successfully carried out an the respondents are
having close contact with the society. They have good and realistic answers
to the questions.

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Credit facilities & Recovery of Loans in Co operative Societies

Their answers and replies are analyzed as follows

8.2 ANALYSIS AND RESPONSE

TABLE I

For the purpose of survey the respondents are classified on the basis of
their age under four categories.

Table showing classification of members on the basis of their age group

Sl.No Age group No.of respondents %

1 18-25 10 20

2 25-40 10 20

3 40-50 20 40

4 Above 50 10 20

Total 50 100

The above table shows that 20% of respondents are from the age group of
above 50 years, followed 20% of the respondents from the age group of 18-
25 years, while 20% of respondents from the age group of 25-40 years and
40% of the respondents are from the age group of 40-50 years.

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TABLE – II

Table showing classification of members on the basis of gender

Sl.No Gender No.of respondents %

1 Male 40 80

2 Female 10 20

Total 50 100

In the above table, the response obtained from the male members are
in more in number i.e 80 % and remaining 20% of respondents are female
members who are less in number.

TABLE – III

Table showing classification of members on the basis of their monthly

income

Sl.No Income (in Rs) No.of respondents %

1 Below 3000 15 30

2 3000-6000 20 40

3 6000-10000 10 20

4 Above 10000 5 10

Total 50 100

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Credit facilities & Recovery of Loans in Co operative Societies

From the above table we came to known that 30% of respondents

belongs to middle income group followed by 40% of respondents belong to
below 6000, while 20% of respondents belong to income group of 10000 and
10% of respondents belongs to income group of above 10000.

TABLE – IV

Table showing distribution on the basis of opinion about society services

Sl.No Opinion No.of respondents %

1 Excellent 15 30

2 Good 12 24

3 Satisfactory 18 36

4 Bad 5 10

Total 50 100

In the above table 24% of the taotal respondents states that society
services is good. While 36% of total respondents states that satisfactory and
30% of respondents states that excellent followed by 10% of respondents
states that the society services is bad.

TABLE – V

Table showing distribution of respondents according to borrowings of

loans.

Sl.No Borrowings No. of %

respondents

1 Yes 31 62

2 No 19 38

Total 50 100

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Credit facilities & Recovery of Loans in Co operative Societies

From the above table it shows that 62% of the total respondents borrow
loan from the society and remaining 38% of the total replied that they have
not borrowed any loan from the society.

TABLE – VI

Table showing classification of respondents on the basis of the type of loan

borrowed by the respondents (Only APPLICABLE TO SO MEMBERS).

Sl.No Borrowings No.of respondents %

1 Long term 25 50

2 Middle term 13 26

3 Short term 12 24

Total 50 100

From the above table, we can easily understand that the long – term loan
borrowed by the members are in 57%, while 29% of the respondents are
borrowed medium –term loan and 14% of the borrowed short-term loan.

TABLE – VII

Table showing the classification of members on the basis of satisfaction

regarding loan facilities by the society.

Sl.No Satisfaction No. of %

respondents

1 Yes 38.5 77

2 No 11.5 23
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Credit facilities & Recovery of Loans in Co operative Societies

Total 50 100

In the above table 38.5% respondents were satisfied out of 11.5

respondents (77%) with loan facilities provided by the society and remaining
23% of total respondents are dissatisfied with loan facilities given by the
society.

TABLE – VII

Table showing the opinion of the members regarding interest charged on

loans.

Sl.No Satisfaction No. of respondents %

1 High 16 32

2 Reasonable 24 48

3 Low 10 20

Total 50 100

From the above table we can under stand it clearly that 48% of respondents
are satisfied with the interest charged on loan, while 20% of respondents
states that interest charged on loan by the society is low and 32% of
respondents states that interest charged on loan is high .

TABLE – IX

Table showing the opinion of members regarding installments for the

repayment of loan.

Sl.No Opinion No.of respondents %

1 More 13 26

2 Reasonable 29 58

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Credit facilities & Recovery of Loans in Co operative Societies

3 Less 8 16

Total 50 100
From the above table se can see that the 26% of respondents are
satisfied with installment facility given by the society for repayment of loan,
while 58% of the respondents are moderately satisfied and 16% of the
respondents are dissatisfied with the number of installment given by the
society fro repayment of loan.

CHAPTER 9

FINDINGS, SUGGESTION AND CONCLUSION

INTRODUCTION

For the improvement of any organization, it should take proper action

or measures for continuous improvement on the basis of opinion given by
the respondents and observations made during the survey. the following
suggestions have been given for improvement of performance. While dealing
with society some of the members are found satisfied and some of then are
found dissatisfied. However, measures should be taken to all categories of
members.

9.1 MAJOR SURVEY FINDINGS

Survey has been probed into the activities of co-operative society in

the general an d Siddarameshwara credit co-operative society ltd. in
particular. For the survey conducted the following are the summary o f the
observations.

1. For the purpose of survey members are classified into 4 categories i.e.
18-25, 25-40,40-50 and above 50 years. The age group of above 50
years is more in number and gives good suggestions. The society

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Credit facilities & Recovery of Loans in Co operative Societies

considers the suggestions. The society consider the suggestions given

by the senior members.

2. The society should concentrate on Female members because they are

less in numbers. And it should take necessary measures to increase
female members also.

3. The majority of members are belonging to middle income group.

Hence the society should concentrate on the mobilization of savings of
middle – income class members.

4. Majority of the respondents are satisfied with the services provided by

the society, but still tie society should improve its services because it
has existed only before 10 years, so it must pay attention to its
development.
5. The respondents who are borrowed loan from the society are more in
number and there are also members who have not borrowed loan from
the society. Therefore. Society should concentrate on those members
who are not borrowed loan from the society.

6. Most of the members are borrowed long –term and medium –term
loans. So, the society should increase long –term loan by reducing
short-term loans.

7. The loan facilities given by the majority of the members satisfy the
society. But, still society should take necessary measures to satisfy
other dissatisfied members.

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Credit facilities & Recovery of Loans in Co operative Societies

8. Interest charged on loan is moderately satisfied by members and so

society should decrease its interest rate to attract more members.

9. The number of installments given by the society for repayment of loan

is satisfied by maximum number of members .So society should try to
adopt new method to collect debts from the members .so that the
society may attract other members to borrow loan.

9.2 PROBLEMS AND SUGGESTIONS

While doing the survey some of the members gave opinion by

expressing their problems and some of them by giving suggestions for
their problems. they are:-

1. EDUCATION LOAN

Most of the members in the general society are not properly

educated. so, the society should concentrate on the education of the
member’s i.e. general society. For this purpose the society should
start giving education loan for the higher studies.

2. INCREASE LOAN AMOUNT

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Credit facilities & Recovery of Loans in Co operative Societies

Many of the people are complaining about loan amount. the

loan amount granted by the society is low. Because it is in developing
stage as it has started only before 10 years.

The society should increase the amount of loan paid to the members it
should lend lesser amount for those who will nay utilize the lent amount
properly and must increase the amount of loan lending for those who utilize
the money properly.

3. PROVIDING DIFFERENT TYPES OF LOAN

The society is providing only 5 types of loan as stated in the
previous chapter but it must give loan, pigmy loan, house construction loan
etc.

4. RECOVERY OF LOAN
Even through the society has recovered the loan in a good manner
in the first three years but in the fourth year it has made poor performance in
recovering the loan. so the society must take effective actions for the fast
recovering of loan.

5. SHARE CAPITAL
As the society is in developing stage for the development the
society should increase the share capital by raising funds not only for the
development of the society but the above said problems also require funds to
function effectively.

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Credit facilities & Recovery of Loans in Co operative Societies

10.3 CONCLUSION

No drought Siddarameshwara credit co-operative society working in

the right direction for the development. At the same time it is servicing its
members in various i.e. advancing loans as and when needed at cheaper rate
of interest, collect deposit from their savings, works fro the welfare of the
members etc,. Loan distribution and collection system is good and majority
of the members are satisfied. loan is allotted with out discrimination of
members. this is one of the Important and main reasons for the satisfaction of
the members and the members are also satisfied with the working of the
society.

but it is necessary that the society should always orient its activities
towards welfare of its members. it is well known fact that the main objective
of the society is “Each for all and all for each” and the main motto is
“rendring service to the members and not earning profit”. therefore, it is
necessary that the society should always aim at continue development which
will be more helpful to the members of its services. the opinion of each
members should be taken into account and must take the necessary required
steps for the development of the society.

But it is necessary that the society should always orient its activities
towards welfare of its members. It well known fact that the main objective of
the society is “Each for all and all for each” and the main mote is “rendering
service to the members and not earning profit”. Therefore, it necessary that
the necessary that the society should always aim at continue development
which well be more helpful to the members of its services. The opinion of
each member should be taken into account and must take the necessary
required steps for the development of the society.

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Credit facilities & Recovery of Loans in Co operative Societies

QUESTIONNAIRE
From :
Sandhya.H.J.
Mcom.,IV SEM,
G.F.G. College,
Hosadurga.

Respected Respondents,

It’s a matter of great pleasure to introduce myself as a Mcom student

from Govt. First Grade College, Hosadurga.

As I am obligated from my course to conduct a project report, I am

D.O.S in Commerce., PG Centre, G.F.G.College, Hosadurga – 577527 Page 79

Credit facilities & Recovery of Loans in Co operative Societies

doing my project work on “CREDIT FACILITUES AND RECOVERY OF

LOANS IN CO-OPERATIVE SOCIETY ”, with special reference to “
SIDDARAMESHWARA CREDIT CO-OPERATIVE SOCITY LTD., HOSADURGA.”

Hence, I request your co-operation in completing this work. Please

fill up the enclosed questionnaire and extend your co-operation.

THANKING YOU, YOURS SINCERELY.

SANDHYA.H.J.

( Please tick the mark in the bracket for your correct answer )

1.NAME: …………………………………

2. ADDRESS: ………………………………

……………………………….

1. AGE;
a) 18-25 [ ] b) 25-40 [ ]

c) 40-50 [ ] d) above 50 [ ]

2. GENDER:
a) Male [ ] b)Female [ ]

3. OCCUPATION:
a) Business [ ] b) Professional [ ]

c) Govt. employee [ ] d) Others [ ]

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Credit facilities & Recovery of Loans in Co operative Societies

4. INCOME:
a) Below 3,000 [ ] b) 3000-6000 [ ]

c) 6000-10,000 [ ] d) above 10,000 [ ]

5. ARE YOU AWARE OF CO-OPERATIVE SOCIETYS ?

a) Yes [ ] b) No [ ]

6. DO YOU FEEL THAT CO-OPERATIVE SERVICES ARE

ESSENTIAL ?
a) Yes [ ] b) No [ ]

7. ARE YOU A MEMBER OF SIDDARAMESHWARACREDIT CO-

OPERATIVE SOCIETY LTD., HOSADURGA ?
a) Yes [ ] b) No [ ]

8. SINCE FROM HOW MANY YEARS YOU ARE DEALING WITH

THE SOCIETY ?
a) 1-3 yr. [ ] b) 3-5 yr. [ ]

9. WHAT IS YOUR OPINION REGARDING SOCIETY SERVICES?

a) Excellent [ ] b) Good [ ]

c) Satisfactory [ ] d) Bad [ ]

12. HAVE YOU BORROWED LOAN FROM THE SOCIETY ?

a) Yes [ ] b) No [ ]

13. WHAT TYPE OF LOAN YOU USUALLY GO FOR ?

a) Short [ ] b) Medium [ ]

c) Long [ ]

14. WHAT TYPE OF LOAN YOU HAVE BORROWED ?

a) Surety loan [ ] b) Property loan [ ]

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Credit facilities & Recovery of Loans in Co operative Societies

c) Deposit loan [ ] d) Vehicle loan [ ]

e) Business loan [ ]

15. INTEREST CHARGED AGAINST LOAN AND ADVANCE IS

a) High [ ] b) Reasonable [ ]

c) Less [ ]

16. WHAT IS YOUR OPINION REGARDING INSTALMENT FOR

REPAYMENT OF LOANS ?

a) More [ ] b) Reasonable [ ]

c) Less [ ]

17. ARE YOU SATISFIED WITH THE LOAN FACILITIES /

SERVICES OF THE SOCIETY ?

a) Yes [ ] b) No [ ]

18. ARE YOU SATISFIED WITH THE RULES OF THE SOCIETY

WITH REGARD TO RECOVERY OF LOANS ?

a) Yes [ ] b) No [ ]

19. DO YOU EXPECT ANY CHANGES / IMPROVEMENT IN

EXISTING LOAN FACILIYIES ?

a) Yes [ ] b) No [ ]

IF YES SPECIFY

20. ANY MORE SUGGESTIONS:

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Credit facilities & Recovery of Loans in Co operative Societies

DATE:

PLACE: SIGNATURE.

BIBILOGRAPHY

TITLE AUTHOR

1.Elements of Indian Economics B.S Raman

2. Money Banking and Finance K.P.M. Sundaram

3. Co-operative Movement In India B.S. Mathur

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Credit facilities & Recovery of Loans in Co operative Societies

4. Indian Economics K.K. Deweh

S.P. Varma

M.L. Sharma

5. Annul Reports Siddarameshwara Credit

co-operative Society,

Hosadurga.

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