Indore Urban Cooperative Bank Ltd.: Financial Challenges and Cooperative Movement
"Explore the case of Indore Urban Cooperative Bank Ltd., a 30-year-old institution facing financial challenges. Learn about the background, Mr. Anil Joshi's concerns as CEO, and the cooperative movement in India. Discover the bank's offerings and the grading system used by regulatory authorities. Gain insights into the unique challenges and opportunities in cooperative banking in India."
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CHRISTIAN EMINENT COLLEGE, INDORE (Academy of Management, Professional Education and Research) An Autonomous Institution Accredited with A Grade by NAAC E-Content on Indore Urban Cooperative Bank Ltd Indore Urban Cooperative Bank Ltd 03rd October 2022 Prepared By: Dr. Manish Khargonkar Department of Commerce & Management
Abstract of the case Indore Urban Cooperative Bank Ltd. was a 30 years old urban Indore.(M.P.) It was providing all types of banking services to its customers It belonged to the non scheduled urban cooperative bank category Since last few years the financial performance of the bank was not satisfactory cooperative bank in
Introduction Mr. Anil Joshi was a CEO of the bank He joined the bank 20 years ago as a passing officer Later promoted as Branch Manager and then CEO He was worried about financial performance of the bank
Cooperative Movement in India The origin of the cooperative banking in India can be traced to the end of 19 th century Mainly inspired from the cooperative movement in England and Germany Small cooperative societies later became banks Before 1966 only state government was the authority for the cooperative banks From 1st March 1966 Reserve Bank of India also became the regulatory authority for them. The cooperative department and RBI both conduct the audit of these cooperative banks every year.
Cooperative Movement in India The cooperative department awards grades from A to D to these banks as per their financial performance. A- Excellent performance B- Good performance C- Satisfactory but attention is required D- Unsatisfactory performance The RBI also conducts the audit of the UCBs The banks have to send the compliance report to RBI
Indore Urban Cooperative Bank The bank is 30 years old It had total 45 employees, no new appointment since last 8 years The bank provided Savings ,Fixed , and Recurring Deposits to customers and members It also gives advances like CC,OD, consumer loans, term loans It also gave membership loans to members only from Rs 25000 to 100000.
Indore Urban Cooperative Bank Mr. Joshi was thinking about starting new banking facilities like NEFT and RTGS and more trading in Government securities The management was not in favour to appoint new young and technically qualified employees The ATM within the city was also proposed by the CEO The management asked to prepare a detailed financial data statement for last five years
The Financial Performance of IUCBL The bank reported loss in 2016 and 2017 of Rs.20 and 35 lakhs It started earning profit from 2018 onwards, earned Rs 15.78 lakhs in 2018 The total cost reduced in 2018 and 2019 The interest income was low before 2018 The NPA was successfully managed after 2017 was reduced to 11.37 lakhs in 2018 The liquidity was down in 2017 and 2018 but again increased in 2019 upto 795.50 lakhs
About the Financial Data of IUCBL The bank declared 8% dividend to the shareholders in 2018 and 2019 The Board of Directors were thinking about improving the financial performance of IUCBL. They asked Mr. Joshi to present the five years analysis report in the AGM of the bank Mr.Anil Joshi is looking for a person who will be able to analyse the financial performance of the bank and suggest for improvement.
Questions 1 Do a SWOT analysis of IUCBL 2 Evaluate and comment on the financial performance of IUCBL with the help of CAMELS model as an expert 3 Suggest how the bank can further improve their financial performance ?
Target audience The target audience of this case is the students and faculties and bank officials studying the financial performance of the bank. This case can be discussed when a faculty teaches subjects like Bank Management and Risk Analysis in banking sector.
