Topics:-1.Research on current recovery methods used at nagrik bank or 2.

research on improving present recovery process at nagrik bank

Features: 1.The Bank has completed its 58 yrs of dedicated services. 2.Convenient Banking hours. 3 Attractive higher rates of interest are offered to depositors compared to other banks. 4.Facility for Draft on all important centers in India 5.Facility for FREE RTGS/NEFT exclusively for our all dedicated customers.
Objective 2 and 3 clear karo

Objective 7 ane 8 same nathi?

Hypothesis avu muko "Profitability of NSB can be increased by using new recovery method." The new method you suggest must be according to RBI norms.

Name of Bank: Type Of Bank: Head Office Address : Number of Branches

Shree Bhavnagar Nagrik Sahakari Bank Co-operative Bank 14,gangajaliya talav,Bhavnagar 364001

Exploratory Research
As the term suggests, exploratory research is often conducted because a problem has not been clearly defined as yet, or its real scope is as yet unclear. It allows the researcher to familiarize him/herself with the problem or concept to be studied, and perhaps generate hypotheses (definition of hypothesis) to be tested. It is the initial research, before more conclusive research (definition of conclusive research) is undertaken. Exploratory research helps determine the best research design, data

collection method and selection of subjects, and sometimes it even concludes that the problem does not exist! Another common reason for conducting exploratory research is to test concepts before they are put in the marketplace, always a very costly endeavour. In concept testing, consumers are provided either with a written concept or a prototype for a new, revised or repositioned product, service or strategy. Exploratory research can be quite informal, relying on secondary research such as reviewing available literature and/or data, or qualitative (definition of qualitative research) approaches such as informal discussions with consumers, employees, management or competitors, and more formal approaches through in-depth interviews, focus groups, projective methods, case studies or pilot studies. The results of exploratory research are not usually useful for decision-making by themselves, but they can provide significant insight into a given situation. Although the results of qualitative research can give some indication as to the "why", "how" and "when" something occurs, it cannot tell us "how often" or "how many". In other words, the results can neither be generalized; they are not representative of the whole population being studied.
http://www.htm.uoguelph.ca/MJResearch/ResearchProcess/ExploratoryResearch.htm

Structure of co-operative bank

Primary cooperative bank

central

state

Introduction: Indian banking is the lifeline of the nation and its people. Banking has helped in developing the vital sectors of the economy and usher in a new dawn of progress on the Indian horizon. The sector has translated the hopes and aspirations of millions of people into reality. But to do so, it has had to control miles and miles of difficult terrain, suffer the indignities of foreign rule and the pangs of partition. Today, Indian banks can con fidently compete with modern banks of the world. Before the 20 th century, usury, or lending money at a high rate of interest, was widely prevalent in rural India Entry of Joint stock banks and development of Cooperative movement have taken over a good deal of business from the hands of the Indian money lender, who although still exist, have lost his menacing teeth. In the Indian Banking System, Cooperative banks exist side by side with commercial banks and play a supplementary role in providing need -based finance, especially for agricultural and agriculture- based operations including farming, cattle, milk, hatchery, personal finance etc. along with some small industries and self-employment driven activities. Generally, cooperative banks are governed by the respective co-operative acts of state governments. But, since banks began to be regulated by the RBI after1st March 1966, these banks are also regulated by the RBI after am endment to the Banking Regulation Act 1949 . The Reserve Bank is responsible for licensing of banks and branches, and it also regulates credit limits to state co oper ative banks on behalf of primary co operative banks for financing SSI units.

Banking in India originated in the first decade of 18

th

century with The General Bank of India coming into existence in 1786. This was followed by Bank of Hindustan. Both these b anks are now defunct. After this, the Indian government established three presidency banks in India. The first of three was the Bank of Bengal, which obtains charter in 1809, the other two presidency bank, viz., th e Bank of Bombay and the Bank of Madras, w ere established in 1840 and 1843, respectively. The three presidency banks were subsequently amalgamated into the Imperial Bank of India (IBI) u nder the Imperial Bank of India Act, 1920 which is now known as the State Bank of India. A couple of decades later, foreign banks like Credit Lyonnais started their Calcutta operations in the 1850s. At that point of time, Calcutta was the most active trading port, mainly due to the trade of the British Empire, and due to which banking activity took roots there an d prospered. The first fully Indian owned bank was the Allahabad Bank, which was established in 1865. By the 1900s, the market expanded with the establishment of banks such as Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai

 both of which were founded under private ownership. The Reserve Bank of India formally took on the responsib i lity of regulating the Indian banking sector from 1935. After Indias independence in 1947, the Reserve Bank was nationalized and given broader po wers. As the banking institutions expand and become increasingly complex under the impact of deregulation, innovation and technological upgradation, it is crucial to maintain balance between efficiency and stability. During the last 30 years since nationa lization tremendous changes have taken place in the financial markets as well as in the banking industry due to financial sector reforms. The banks have shed their traditional functions and have been innovating, improving and coming out with new types of s ervices to cater emerging needs of their
5

customers. Banks have been given greater freedom to frame their own policies. Rapid advancement of technology has contributed to significant reduction in transaction costs, facilitated greater diversification of por tfolio and improvements in credit delivery of banks. Prudential norms, in line with international standards, have been put in place for promoting and enhancing the efficiency of banks. The process of institution building has been strengthened with several measures in the areas of debt recovery, asset reconstruction and securitization, consolidation, convergence, mass banking etc. Despite this commendable progress, serious problem have emerged reflecting in

a decline in productivity and efficiency, and ero sion of the profitability of the banking sector. There has been deterioration in the quality of loan portfolio which, in turn, has come in the way of banks income generation and enchancement of their capital funds. Inadequacy of capital has been accompani ed by inadequacy of loan loss provisions resulting into the adverse impact on the depositors and investors confidence. The Government, therefore, set up Narasimham Committee to look into the problems and recommend measures to improve the health of the fi nancial system. The acceptance of the Narasimham Committee recommendations by the Government has resulted in transformation of hitherto highly regimented and overbureaucratized banking system into market driven and extremely competitive one. The massiv e and speedy expansion and diversification of banking has not been without its strains. The banking industry is entering a new phase in which it will be facing increasing competition from non banks not only in the domestic market but in the international m arkets also. The operational structure of banking in India is expected to undergo a profound change during the next decade. With the emergence of new private banks, the private bank sector has
6

become enriched and diversified with focus spread to the wholes ale as well as retail banking. The existing banks have wide branch network and geographic spread, whereas the new private banks have the clout of massive capital, lean personnel component, the expertise in developing sophisticated financial

products and us e of state of the art technology. Gradual deregulation that is being ushered in while stimulating the competition would also facilitate forging mutually beneficial relationships, which would ultimately enhance the quality and content of banking. In the fi nal phase, the banking sys tem in India will give a good account of itself only with the combined efforts of cooperative banks, regional rural banks and development banking institutions which are expected to provide an adequate number of effective retail ou tlets to meet the emerging socio economic challenges during the next two decades. The electronic age has also affected the banking system, leading to very fast electronic fund transfer. However, the development of electronic banking has also led to new are as of risk such as data security and integrity requiring new techniques of ris k management. Cooperative (mutual) banks are an important part of many financial systems. In a number of countries, they are among the largest financial institutions when

consid ered as a group. Moreover, the share of cooperative banks has been increasing in recent years; in the sample of banks in advanced economies and emerging markets analyzed in this paper, the market share of cooperative banks in terms of total banking sector assets increased from about 9 percent in mid 1990s to about 14 percent in 2004.( http://shodhganga.inflibnet.ac.in/bitstream/10603/2299/10/10_chapter%201 .pdf)

What is banking
Banking Industry is a service industry. It provides various services to its customers. Traditionally the services were restricted to deposits and loans. The started by taking deposits from people who had surplus of money and lending this money to borrowers who wanted money to invest. They charged interest from borrowers and gave interest to depositors. There was difference in rate of interest between deposits and lending and that constituted the major source of revenue for banks. Banking is a service industry providing services to those who want to lend, borrow or invest. This is putting it as simply as possible. Banking started like this, but today banking industry is one of the most complex and hugely diverse industries and offers a portfolio of large number of services. Now a days banks are large and complex organizations. Their clients range from individuals and corporate institutions, other banks and governments of entire nations. Banking is a service industry, means that they don't produce physical things but provide services to their clients. The deal with all types of money transactions, borrowing it, lending it, and many other related activities that are explained in this tutorial.

definition
A banking company is the one which transacts the business of banking which means accepting, for the purpose of lending and investment of deposits of money from the public, repayable on demand or otherwise and withdrawals by cheques, draft, order or otherwise. The definition of a bank varies from country to country. Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as: conducting current accounts for his customers, paying cheques drawn on him, and collecting cheques for his customers. In India the banking company is defined as the one which transacts the business of banking which means accepting, for the purpose of lending and investment of deposits of money from the public, repayable on demand or otherwise and withdrawals by cheques, draft, order or otherwise. In simple terms, a bank accepts money on deposits, repayable on demand and also earns a margin of profit by lending money. A bank stimulates economic activity in the market by dealing in money. It mobilizes the savings of people and makes funds available to business financing their capital and revenue expenditure. It also deals in financial instruments and provides financial services for a price i.e., interest, discount, commission, etc.

Bank is an institution that accepts deposits, makes loans, pays checks, and provides financial services. A primary role of banks is connecting those with funds, such as investors and depositors, to those seeking funds, such as individuals or businesses needing loans.

overview
Banking Defined: A bank is a financial institution that provides banking and other financial services to their customers. A bank is generally understood as an institution which provides fundamental banking services such as accepting deposits and providing loans. There are also non- banking institutions that provide certain banking services without meeting the legal definition of a bank. Banks are a subset of the financial services industry. Need for Banking: Banks are large and complex organizations. Their clients range from individuals and institutions, all the way up to the governments and central banks of entire countries. The Banking sector offers several facilities to their customers including safeguarding their money and valuables and providing them with various types of credit loans to meet their various needs like home loans, consumer loans, personal loans etc. Banks also provide additional services like credit, and payment services, such as checking accounts, money orders, and cashier's cheques. The banks also offer investment and insurance products. As a variety of models for cooperation and integration among finance industries have emerged, some of the traditional distinctions between banks, insurance companies, and securities firms are fast diminishing. In spite of all these developments, banks continue to maintain and perform their primary roleaccepting deposits and lending funds from these deposits. Banking is an important undertaking. The movement of capital handled by banks allows economies to grow and prosper. Businesses and governments need money to operate, and banks act as intermediaries between the suppliers of funds and users of funds. Functions of the Bank:

Bank provides various services and offer many products. The following discussion explains various functions of the bank: Provide security to the savings of customers by safeguarding it and offering interest on the deposits kept with it. Control the supply of money and credit and arrange funds to the parties who need them by borrowing from parties who have surplus. Encourage public confidence in the working of the financial system Increase savings speedily and efficiently. Avoid focus of financial powers in the hands of a few individuals and institutions. Set equal norms and conditions to all types of customers

Banking Regulations:

Banks operating in most of the countries are exposed to various stringent regulations. Most governments enforce rules and procedures to govern their operations and service offerings, and the manner in which they grow and expand their facilities to better serve the public. A banker works within the financial system to provide loans, accept deposits, and provide other services to their customers. They must do so within a climate of extensive regulation, designed primarily to protect the public interests. The main reasons why the banks are heavily regulated are as follows:

To protect the safety of the public's savings. To control the supply of money and credit in order to achieve a nation's broad economic goal. To ensure equal opportunity and fairness in the public's access to credit and other vital financial services. To promote public confidence in the financial system, so that savings are made speedily and efficiently. To avoid concentrations of financial power in the hands of a few individuals and institutions. Provide the Government with credit, tax revenues and other services. To help sectors of the economy that they have special credit needs for example Housing, small business and agricultural loans etc.

Law of banking: Banking law is based on a contractual agreement between the bank and customer. The customer is any entity for which the bank agrees to conduct an account or business. The law implies rights and obligations into this relationship as follows:

The bank account balance is the financial position between the bank and the customer: when the account is in credit, the bank owes the balance to the customer; when the account is overdrawn, the customer owes the balance to the bank. The bank agrees to pay the customer's cheques up to the amount standing to the credit of the customer's account, plus any agreed overdraft limit. The bank may not pay from the customer's account without a mandate from the customer, example cheques drawn by the customer. The bank agrees to promptly collect the cheques deposited to the customer's account as the customer's agent, and to credit the proceeds to the customer's account. The bank has a right to combine the customer's accounts, since each account is just an aspect of the same credit relationship. The bank has a lien on cheques deposited to the customer's account, to the extent that the customer is indebted to the bank. The bank must not disclose details of transactions through the customer's account unless the customer consents, there is a public duty to disclose, the bank's interests require it, or the law demands it. The bank must not close a customer's account without reasonable notice, since cheques are outstanding in the ordinary course of business for several days.

These implied contractual terms may be modified by express agreement between the customer and the bank. The statutes and regulations in force within a particular jurisdiction may also modify the above terms and/or create new rights, obligations or limitations relevant to the bankcustomer relationship.

(http://www.technofunc.com/index.php/domain-knowledge/banking-domain/item/banking-segments)

Co-operative Banks in India

Posted on August 26, 2012 by admin in Banking. Co-operative Banks are government supported financial agency in India, which are organized and managed with the dictum of co-operation, self-help and mutual help. It functions with the no profit and no loss model. As other banks in the country, Co-operative banks perform all the basic banking functions like borrowing and lending of credits. In India, Co-operative Banks are working for nearly hundred years. Co-operative Banks are considered as one of the important financial institutions in the country. The major contributions of these banks are mostly in rural areas where they play the most vital role in rural financing and micro financing. The major strengths of co-operative banks are their easy local reach, transparent interaction with the customers and their efficient services to common people.

Objectives of Co-Operative Banks

Engage in rural financing and micro financing Main objective is to remove the dominance of common man by the middle man and money lenders. Ensure credit services to farmers at low rate of interest providing socio-economic condition to the people. Provide financial support for the needy people and farmers in the rural areas Provides personal finance services for those engaged in small-scale industries and selfemployment driven activities for peoples in rural areas as well as in urban areas

Categories of Co-operative Banks The need of Co-operative banks in India is much important to support the financial requirements of the people. To provide a much established support to every person in the country and for the development of the nation, Co-operative banks are categorized at various dimensions and at various levels. The Co-operative Banks can be divided into two categories based on their functions. They are,

Long Term Co-operative Credit Institutions Short Term Co-operative Credit Institutions

Long Term Co-operative Credit Institutions functions and provide services at three levels:

State Level District Level Village Level

Short Term Co-operative Credit Institutions are further divided into three sub-categories:

State Co-operative Banks District Co-operative Banks Primary Agricultural Co-operative Societies

Apart from these classifications, the co-operative banking structure in India is further divided into five main groups:

Primary Urban Co-operative Banks Primary Agricultural Credit Societies District Central Co-operative Banks State Co-operative Banks Land Development Banks

Functions of Co-operative Banks

The Cooperative Banks functions with the objective of fulfilling the credit requirements and needs of people living in the rural and urban areas. Perform multiple activities and functions at large extent to carry out developments and regulation in the society that strengthen the co-operative movements.

Primary Urban Co-operative Banks (PUCBs): The Urban Co-operative Banks are those that function in urban and semi-urban areas. Generally it is referred as Primary Co-operative Banks. The functions of PUCBs are:

Lending money to small borrowers and businesses Provide working capital loans and term loans Provide advances against shares and debentures

Primary Agricultural Credit Societies (PACS) These institutions act as a core of Indian Co-operative movement. The main objectives of PACS are:

Raising the capital of the bank to provide loans and support for customers Motivating the habit of savings amongst customers and collecting deposits To provide services and inputs to people for their welfare and development To support and motivate various income augmenting activities

District Central Co-operative Banks (DCCBs) The Primary Agricultural Credit societies are affiliated to the DCCBs. The functions of DCCBs are:

Act as a support centre for district central financing agencies Arranging credit to primaries Managing banking business Approve, supervise and control implementation of policies

State Co-operative Banks (SCBs) The District Central Co-operative Banks are in turn affiliated to SCBs. The functions of SCBs are:

Serve as balancing centre in the States Organise provision of credit for credit worthy farmers Carry out banking business Leader of the Co-operatives in the States

Land Development Banks (LDBs)

The LDBs are used to meet the needs of agricultural sector through long term credits. The LDBs functions at two levels. One is the Central LDBs operating at the state level and the other is Primary LDBs operating at district level or taluka level. The functions of LDBs are:

Provide services to meet the requirements for developing areas Providing loans on the security of mortgages Raising their resources by floating debentures in the market

Although, Co-operative banks mainly do business in the agriculture and rural areas, some groups like PUCBs, DCCBs and SCBs operate in semi-urban, urban and metropolitan areas also. Products and Services The Products offered by the Co-operative banks includes: Deposits

Savings Bank Account Current Account Recurring Deposit Fixed Deposit Cash Certificate

Loans

Loans to Salaried Employees Home Need Loans Loans to Pensioners Loans under Women Entrepreneur Development Scheme Building Mortgage Loan Education Loan Housing Loan Loan to Physically Challenged Persons

The Services offered by the Co-operative banks includes:

Clearing Safe Deposit Locker Automated Teller Machine (ATM) Demand Draft / Pay Order

Regulation Co-operative Banks in India are registered under the Co-operative Societies Act and are regulated by Reserve Bank of India.

(http://crackmba.com/co-operative-banks-in-india/) HISTORY OF BHAVNAGAR CO-OPERATIVE BANK The bank was established on 08-02-1955, Regn.No.1149, with the blessings of its profounder: Late Shri Bhogilal Maganlal Shah,Late Shri Venilal Maganlal Parekh (Veni Kaka) Who laid down the strongest foundation of the bank and its goodwill and all the board of directors till the date who have nourished and cared it at their level best with their utmost direction, all time sincere contribution in the rapid growth and sound financial position. Today the bank has expanded it's network of business in 8 fully computerized branches, located at different locations covering prime areas of the Bhavnagar city, providing prompt, dedicated, personalized services by humble, sincere, efficient staff. The bank also provides its latest customer terminal facilities at two branches: Bank started with the name of SHREE BHAVNAGAR VIBHAGIY SAHKARI BANK LIMITED. but now it changes with the name of SHREE BHAVNAGAR NAGRIK SAHAKARI BANK LTD The first member of the bank was shree Bhogilal shah who gives their work for the bank continuoes at 18 years. After him at 30 years contines give work by shree jethalal sankarlal desai who was the first MD of this bank and his nickname is desai saheb After the death of bhogilal shah shree venikaka come for the chief member sheet,and given work continuesly for 30 year.shree venikaka is BOD (board of director) of the bank now.shree venikaka is MD and Niranjanbhai Dave who is chairman of the bank give their work for bank now.

http://www.theratnakarbank.com/pdfs/bp/Recovery%20Policy%20-%202012.pdf

Necessity of recovey of loan amounts We are familiar about the working of Urban Co-op. Banks. The Urban Co-op. Banks mobilise deposits from the members of the public. The banks have introduced various deposits schemes which induce the common man to save more money. The Urban Co-op. Banks accept deposits for the purpose of lending. One of the most important functions of the banks is to create credit. Except in a few cases like interest on savings bank deposits and interest on export credit and interest on small loans upto Rs2 lakh which are administered ( under the control of the RBI), most of the interest rates on deposits as well as loans & advances can now be freely set by the banks themselves. It is the primary duty and function of the Urban Co-op. Banks to safeguard the interest of depositors. Whenever deposits are accepted, the bank agrees and undertakes to repay the amount of deposits with interest to the depositor on maturity. The ownership of the deposit amount vests with the customer and the custody of the deposit amount is with the Banker. So whenever Advances and Loans are sanctioned to shareholders / members of the Bank, the Banker has to take utmost care to see that the Borrower repays the amount of loan with interest so as to enable the Banker to repay the amount of deposit with interest to the customer. It is with background, it will be clear that the banker must be vigilant about the utilization of the amount of advances and loans made to be shareholders/nominal member. If the Banker is reluctant and negligent towards recovery of loan amounts and advances, it will be very difficult for the bank to repay the amount of "DEPOSIT AMOUNTS" to the customers on maturity. What is meant by overdues The Urban Co-op. Banks should exercise caution, necessary checks and adopt detailed scrutiny measures to process loan applications, received from the different shareholders. This is necessary to ensure that every borrower has a proper repaying capacity for repayment of the amount of loans and advances that would be sanctioned. Securities are also taken to ensure that in case the borrower fails to repay the amount of loan, the securities can be attached and sold out and the debts can be liquidated. Even with this background, though there is a detailed scrutiny of loan application, it is observed that there are very few cases, where the judgment of the bankers fail. In such 'Fail Cases' the borrowers are not ready and willing to repay the amount of loan, the securities can be attached and sold out and the debts can be liquidated. We have also studied that whenever loans and advances are sanctioned, the borrowing shareholders nominal members and sureties etc.are required to execute Demand Promissory Note and other allied Loan Agreements such as Deed of Hypothecation, Deed of Mortgage and immovable properties, Deed of pledge etc.

On careful reading the Loan agreements, we observe the following points are stipulated in each Agreement/Bond.

a) Date of sanction of loan b) Amount of loan sanctioned. c) Rate of Interest that would be charged. d) Last date of repayment of loan. e) Period for which loan is granted. f) The mode of repayment of loan, i.e on monthly basis / on quarterly basis etc. g) Rate of penal interest in case there are defaults committed by the borrower in respect of repayment of loan amount. h) Details regarding securities offered.

Normal measures to be adopted by bank officials for recovery of dues Whenever, a borrower commits breach of agreement in respect of repayment of schedule of the amount of loans with interest etc., we safely say that there are 'OVERDUES ' in the Loan Account. Once the Loan A/c is an overdue A/c i.e. the borrower has committed default in repayment of loan amount as per the dates specified in the Agreement, then the Banker has necessarily to adopt measures which will result into recovery of overdue amounts. We now proceed to suggest certain measures to be adopted by Urban Co-op. Banks for effecting recovery of overdue amounts. Whenever the borrower commits default in repayment of loan amount, immediately the bank should serve ' Preliminary Notices' on the principal borrower and the sureties advising them to repay the amount of overdues with interest etc. Such Preliminary Notices should invariably mention information which is of factual nature relating to (i) amount of loan sanctioned (ii) date of sanction of loan (iii) Names of the sureties (iv)amount of the loan sanctioned (v) amount of over dues with interest etc. on a particular date. In addition to the above it must also be communicated the bank shall proceed to take further action against the principal borrower and sureties in case of failure to repay the amount of loan/over dues. It has been often said 'A' stitch in time saves nine'. Thus, the banker must be vigilant, right from the disbursement of loan amount till the recovery of the entire loan amount. There should be effective supervision over the amount of loan sanctioned. Recovery through salary / wages After issue of such preliminary notices, there may be a positive response from the principal borrower and he may repay the amount of defaulted loan installment, or the principal borrower and the surety may approach the authorities of the bank and may explain their genuine difficulties regarding repayment of loan amount or there may offer to repay the dues partially. There may be cases where there is no response from the borrower / sureties.

With this background, the bank should proceed further to devise such steps which will result in recovery of dues. Under various State Cooperative Acts (e.g. Section 49 of M.C.S. Act 1960) it has been provided that if a member of a society./Bank authorises his Employer to make deduction from his salary/wages, in order to satisfy the claims of the society/Bank, then on receipt of requisition letter from the concerned Bank, the Employer shall proceed to make deduction from the salary/wages from the concerned employee/member to meet the claims of the Bank. The Employer must remit the amount so deducted immediately to the Bank concerned. Non-compliance of these provisions under the State Cooperative Act shall be constructed as 'offence' and further Civil and Criminal action can be instituted against such Erring Employer. In addition to the above, there are provisions under the Indian Payment of Wages Act 1936 (vide Section 7(2) and Section 7(2)(j) which stipulates that the Employer shall make deduction from the salary/wages of an Employee to satisfy the claims of the Cooperative Society / Banks. Settlement of Disputes Based on the noting of the Management, the Board of Directors may pass a Resolution authorizing the Manager/or such other officer to file "Dispute Application in the Co-op.Court against the defaulting principal borrower and his sureties. Section 91 of the MCS Act empowers the co-operative courts to decide on Disputes and Section 95 further empowers the court to direct attachment of property before announcement of the award which is called Attachment before award or order and interlocutory order if it is satisfied that the parties to the dispute are likely to remove/ dispose off whole or part of his property. Section 95 similarly empowers the Registrar / Officer authorised by him to take the above measures in case of disputes referred to him. Under Section 96 of the MCS Act, the Co-operative courts after giving reasonable opportunity to the parties to the dispute may make an award on the dispute. The related procedures and documents needed have been detailed below: The Dispute Application shall consist of following papers/documents etc. A. A copy of the plaint- the plaint should mention the date of Loan Application

The date of Promissory Note & other loan agreements, bonds executed in favour of the Bank. Description of the securities offered. Details regarding sanction of loan. Details regarding recovery effected. Details of the loan amounts outstanding together with interest, penal interest etc., Date of issue of notice requesting the borrowings & sureties to repay the entire amount of loan with interest.

In the concluding para of the plaint we have to mention about the 'Prayer Clause' requesting the Hon. Court to grant an Award/Decree in favour of the Bank. The prayer clause normally consists of following important points

The opponents may be held responsible to repay the entire amount of loan with interest. If the opponents fail to pay the amount of loan, the disputant may be entitled to attach the movable and immovable property of the opponents. The disputant may be entitled to sell the attached property and recover the amount due from the opponents. Any other orders to meet the ends of justice.

Along with the copy of the plaint, the Bank is required to enclose 'Certified True Copies' of the following documents i.e.
o o o o o o o o o o o o o

o o o

Copy of the Resolution passed by the Board of Directors for filing the dispute in the Co-op. Court. Copy of the notices issued to the principal borrower and the sureties. Acknowledgement receipts received from the postal authorities regarding service of notices. Copies of the promissory note and loan agreement /Bond etc. A copy of Deed of Mortgage, if any. Statement of loan account. Any other papers relevant to the dispute. A copy of the Treasury challan indicating the amount deposited to meet the Arbitration cost. On receipt of "Dispute Application" the Court shall issue summons to all the opponents mentioned in the application. After serving the summons, the opponents are directed to file their ' Written Statement' or 'Say' or ' Reply ' to the ' Dispute Application'. After carefully reading the plaint and ' Written statement' filed by the opponents the court shall proceed to frame issues ' involved in the dispute'. The courts shall direct the disputant and the opponents to produce documentary evidences in support of their say or claims etc. After this, the authorized officer of the Disputant shall stand in the 'Witness Box' and explain the circumstances which led to filing of dispute against the opponents. The advocates for the opponents are at liberty to do 'Cross-Examination' of the Bank officials. The opponents are subsequently required to stand in the 'Witness Box' and explain their stand to Hon. Court. The Bank official or the Advocate is also at liberty to do a cross examination of the opponent.

o o o

After this, the Advocate for the disputant and Advocate for the opponent are to make 'Arguments' before the court in support of their claims. After hearing both sides, the court shall deliver a judgment in the open court. On the basis of the judgment, a final award / decree shall be passed.

Under section 97 of the MCS Act, an appeal against the decision under Section 96 or order under Section 95 can be made by the aggrieved party to the Co-operative Appellate Court within 2 months from the date of the decision or order. It is observed that there has been often delay in the Co-op. Court for getting an Award and the leading Cooperators & representatives of Urban Coop. Banks vehemently pressed the State Government to carry out certain amendments for early disposal of cases of Urban Co-op. Banks. In Maharashtra State, the State Government has amended the provisions of section 101 of the Maharashtra State Co-op. Societies Act, 1960. Power of the Registrar to issue Recovery Certificate: Under the provisions of Section 101 of M.C.S. Act 1960, the Registrar of Co-op. Societies is competent to make an enquiry on the merits of the application made to him by an Urban Co-op. Bank for grant of 'Recovery Certificate' against the borrowers and sureties. As provided under section 101 of the M.C.S. Act 1960 the Urban Co-op. Bank is required to file an application for grant of 'Recovery Certificate' against the borrower in the office of Registrar of Co-op. Society. The Registrar of Co-op. Societies shall serve summons to the opponents requesting them to appear before him and explain to him why 'Certificate of Recovery' should not be granted against them. The Registrar shall apply 'The Principles of summery procedure' for disposal of such cases/applications. Before issue of 'Certificate of Recovery' the Registrar has to satisfy about following important aspects

I) The opponents are members/Nominal Members of the Society / Bank. II) That the opponents have borrowed money from the Society / Bank. III) That the opponents have committed defaults in repayment of loan amounts and that they are in 'ARREARS' IV) The Registrar, shall grant a Certificate that the opponents are in arrears and are responsible to pay the amount to the society with interest, cost of recovery etc.

Once, 'The Certificate of Recovery' is issued it becomes 'Final'. The word 'Final' denotes that it is not appealable in any Court of Law.

Thus, in short the application under Section 101 is similar to that of 'dispute application'. We are required to enclose all the papers relevant to documents etc., alongwith the application under Section 101. The Urban Co-op. Banks, after obtaining awards are required to execute the same so as to recover the decreetal amount from the opponents. In Maharashtra, there are special provisions under the Maharashtra Co-op. Societies Act, 1960. Under Section 156 of the M.C.S. Act 1960 the Registrar or a person empowered by the Registrar, is Competent to execute the awards against the opponents. There are following broad methods / measures by which an award can be executed.

By issue of Demand Notice to opponents directing them to repay the entire amount as mentioned in the award. By attachment of movable property. By sale of movable property. By attachment of immovable property. Without attachment, in case of Mortgage Decree, immovable property can be sold out.

The Registrar of Co-op. Societies in Maharashtra State, has also empowered the officials, not below the rank of Branch Manager of Urban Co-op. Banks, to exercise the powers under Section 156 of M.C.S. Act 1960 read with Rule 107 of M.C.S. Rules 1961. Debt Recovery Tribunal The Debts Recovery Tribunals were established by the Government of India under an Act of Parliament (Act 51 of 1993) for expeditious adjudication and recovery of debts due to banks and financial institutions. Accordingly the DRTs were set up in different parts of the country as per the Recovery of Debts due to banks and Financial Institutions Act, 1993 and Debts Recovery Tribunal (Procedure) Rules, 1993. As per the provisions ( Section 19) of the DRT Act , banks and financial Institutions could apply to the Tribunal for recovery of debts of Rs 10 Lakh or more by making an application called Original application to it. The Tribunal has powers to pass an interim order preventing the borrower from selling/ disposing off / tampering with the property and can pass orders for attaching the properties of the borrower in case it is satisfied that the latter may sell/ dispose off whole or part of the property. Further the Tribunal has powers to appoint a receiver for taking care of the property. Issue of Decree under section 19(20) of the Act- The Tribunal, after giving opportunities to both the parties, issues an order directing the borrower to pay a specific amount to the bank. Based on the order, the Tribunal then issues a certificate of recovery to the Recovery Officer. The RO can then proceed to recover the amount by attachment & sale of property or by appointment of receiver for management of the property in terms of section 25 of the Act. As per Section 20 of the Act, the aggrieved party can file an appeal against the order of the DRT before the Appellate Tribunal within 45 days.

Recent Judgement of a three member bench of the Supreme Court: The Supreme Court held that Cooperative banks can recover outstanding loans only through the mechanism provided in State cooperative laws and need not approach the Debts Recovery Tribunal. The Bench pointed out that the reason for excluding cooperative banks from the purview of the RDB Act seemed to be that they had comprehensive, self-contained and less expensive remedies available under the State Co-operative Societies Acts, while commercial banks and financial institutions had to file suits in civil courts. The RDB Act was, therefore, designed to deal with other banks and financial institutions, which had to have recourse to the time-consuming process of civil courts. The bench held that If cooperative disputes also went to the tribunals, they would be overburdened and the whole object of speedy recovery of debts due to banks and financial institutions would be defeated. In conclusion, unless this decision of the bench is revised, the co-operative banks can not recover their loans through the DRTs. SARFAESI Act, 2002 There are 3 objectives of the Act viz., to regulate:
o o o

Securitization and Reconstruction of financial assets and Enforcement of security interest.

From the point of view of the UCBs, the Enforcement of security interest is of particular importance and use for recovery of their bad loans. The specialty of the Act is that the security interest can be enforced without intervention of the courts subject to procedures being followed as per provisions of the Act and the related Rules. Procedure to be followed:
o o

Under Section 13(2) of the Act, a 60 days notice has to be served by the bank on the borrower with a request to discharge the loan liability The notice must contain details of : amount payable by the borrower; ecurity interest intended to be enforced. on receipt of notice, if the borrower makes a representation or raises an objection, the secured creditor must consider such representation or objection. if the secured creditor comes to the conclusion that the said representation or objection is not acceptable or tenable, he must communicate the reasons for non-acceptance of representation or objection within one week of receipt of the above. MODES OF RECOVERY AVAILABLE (S.13(4))

If borrower fails to discharge the liability, secured creditor has the following options

Take possession of secured asset

Take over the management of the business of the borrower including The right to transfer by way of lease, sale, assignment, etc. The said rights must be exercised only where substantial part of business of borrower is held as security for the debt. Appoint a manager to manage the security asset taken over. Issue notice to persons who acquired the secured asset from the borrower or from whom money is due. The CMM( chief metropolitan magistrate)or DM

(district magistrate)is empowered even to use force necessary for taking steps towards securing compliance Non-application under the Act- Section 31 -The exemptions under this Act i.e. properties which can not be attached have been detailed in the schedule to the Act. Some of the important ones relevant for the UCBs are:

Any security interest securing repayment of any financial assistance not exceeding Rs.1 lakh. Security interest not registered under this Act. Any security interest created in agricultural land. A lien on any goods, money or security given under the Indian Contract Act, 1872 A pledge of movables u/s 172 of the Indian Contract Act Any conditional sale or hire-purchase or lease or any other contract in which no security interest has been created. Rights of unpaid seller u/s 47 of Sale of Goods Act. Properties not liable to attachment under s.60 of cpc 1908 excluding properties specifically charged for raising the loan. The amount due is less than 20 per cent of the principal and interest

RIGHT TO APPEAL: Under the Act, the borrower can appeal before DRT by paying the fee within 45 days (S.17). The appeal can be entertained only when the borrower deposits fifty per cent of the amounts claimed in the notice. DRT can consider the legality of action taken by the bank. If it finds it wrongful, it can restore the business or management to the borrower. If , however, the DRT finds that the action taken by the bank is as per the provisions of the law , then the bank/ secured creditor can proceed to take action under Section 13(4) of the Act. The application has to be disposed of by the DRT within 60 days and if its pending for four months, either the bank or the borrower can appeal to the Appellate Tribunal for expeditious Tribunal. An application for recovery of balance amount, if any, by secured creditor can be presented to the debt recovery tribunal by the authorised officer (AO)of the bank or can be sent by registered post addressed to the registrar of debt recovery tribunal. Appeal to the APPELLATE TRIBUNAL under Section 18:

Persons aggrieved by the order of DRT to prefer an application before the appellate tribunal within 30 days. The appellate tribunal is vested with power to reduce the deposit amount to not less than 25 percent.

Miscellaneous aspects: No civil court has any jurisdiction under this Act. The Indian Limitation Act, 1963 is applicable to this Act. The SARFAESI Rules specify as to who should be the AO of a bank, the place of serving of the Demand Notice , the mode of its delivery, measures to be taken if the amount mentioned in the notice is not paid- the manner of takeover of possession of property, steps to be taken thereafter, custody of property, manner in which the property could be sold, the manner of valuation of assets, serving of notice before sale & the contents of the sale notice, sale of assets & issuance of certificate of sale, appointment of Manager, procedure for recovery of shortfall of amount due to the bank. A judicious of the available measures will greatly facilitate recovery of loans in banks. http://www.cab.org.in/Lists/Knowledge%20Bank/DispForm.aspx?ID=31 14th june 8:20pm

How do you reduce the non performing assets?

http://wiki.answers.com/Q/How_do_you_reduce_the_non_performing_assets Answer: By adoptin proper credit evaluation process. There is no one method for reducing the NPA. Multiple strategies should be adopted from the beginning. The first stage is proper credit evaluation process. It should be based on objective evaluation and the project should be economically viable and technically feasible. Only such projects which can generate income and which RBI has permitted should be financed. Once the loan is sanctioned the post followup should be meticulously followed. Regular monitoring of delinquent loans is essential.

If the delinquencies are due to reasons beyond the control of borrower, for example, as in the case of excess of rains, flood, famine, etc the banker should suitably restructure the loans taking into consideration of the genuine difficulty of the borrowers. Recovery, it should be remembered, should always be at the cost of borrower's prosperity. The recovery process is an ongoing process and it should be professionally handled. My own experience is that if we are honest and keep the interest of the borrower and if the borrower is made to feel whatever steps we are taking

is in his own interest he will positively respond. In addition to our honesty and promptness, the language we use while communicating to the borrower also matters very much. The language should be healthy, positive and should NOT blame the borrower directly for delinquency of the loans. That attitude of the banker also matters. M.J. SUBRAMANYAM, BANGALORE http://wiki.answers.com/Q/How_do_you_reduce_the_non_performing_assets