Growth of the Bank

INTRODUCTION

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THE TAMIL NADU STATE APEX CO-OPERATIVE BANK LTD.CHENNAI

Hundred Years of Dedicated Service to the people of Tamil Nadu
The Cooperative Banks functioning in Tamil Nadu are fulfilling the credit requirements of the farmers, weavers, rural artisans, consumers of urban area. These institutions are known as Cooperative Credit Institutions. The Coop. institutions are functioning under two category. They are: long-term coop. credit institutions, short-term coop. credit institutions. The coop. credit institutions functioning under short-term credit structure are of three-tier in nature. At the grass root level, the Primary Agricultural Coop. Banks (PACBs) are functioning at village level. At the district level, the Central Coop. Banks (CCBs) are functioning with the headquarters at district capital and their branches in various places of the districts concerned. At the apex level, the Tamil Nadu State Apex Coop. Bank Ltd.,(TNSC Bank) is functioning at Chennai which co-ordinates the entire short- term coop. credit structure. The Tamil Nadu State Apex Co-operative Bank Ltd., commenced its business during November 1905 as an Urban Coop. Bank. It was subsequently changed into a District Central Coop. Bank during July 1920. At present, the Bank is functioning at Chennai with 44 branches, an Extension Counter and H.O. TNSC Bank is guiding the Dist. Central Coop. Banks / Primary Agricultural Coop. Banks in their functioning and it is playing a major role in the coop. movement of Tamil Nadu. TNSC Bank was formed in the year in which the coop. movement of Tamil Nadu was formed. As such, the Bank has been serving the people of Tamil Nadu for a centenary for their economic development. As far as Indian coop. movement is concerned, the Bank has commenced its business from the very next year of the formation of coop. movement in India. TNSC Bank is the first ever State Coop. Bank having the credit of celebrating the centenary year. TNSC Bank has got the licence of Reserve Bank of India to carry on the banking business. TNSC Bank is a Scheduled Coop. Bank and has been listed under the Second Schedule of RBI Act. TNSC Bank is a member of the Deposit Insurance and Credit Guarantee Corporation (DICGC) and is an insured coop. bank as per DICGC Act. TNSC Bank has got the privilege of having its share capital by the Government of Tamil Nadu. TNSC Bank has been under close supervision and monitoring of the higher financing agencies, viz., RBI, NABARD. Periodical inspection and supervision are done by NABARD as per RBI guidelines. Government of Tamil Nadu is reviewing the performance of the Bank periodically. Eminent Co-operators have contributed for the growth and development of the TNSC Bank. The financial growth of the Bank is in a commendable position. They are as follows.

SHARE CAPTIAL

a) Authorised Share Capital Rs.100.00 crores
b) Share capital held by DCCBs Rs.53.22 crores
c) By State Government Rs. 0.26 crores
Total Rs.53.48 crores

RESERVES

The Bank has total reserves of Rs.467.58 crores as on 31.3.2006. The statutory reserve constitutes Rs151.32 crores.The growth of reserves is given in the following table:
As on Amount (Rs. in crores)
30.06.1980 17.58
30.06.1990 49.90
31.03.1995 102.26
31.03.2005 439.14
31.03.2006 467.58

DEPOSITS

On deposit mobilisation front, the Bank has achieved much.The Apex Bank has mobilised a sum of Rs.3126.78 crores as on 31.03.2006. The growth of deposits is shown in the following table:
As on Amount (Rs. in crores)
30.06.1980 130.30
30.06.1990 387.24
31.03.1995 760.29
31.03.2005 3062.58
31.03.2006 3126.78
The Bank has been extending the facility of NRO/NRE accounts at 7 of its branches.

BORROWINGS

The Apex Bank is getting refinance assistance by way of borrowings from National Bank for Agriculture and Rural Development (NABARD) for extending credit facilities to the farmers for short-term agricultural operations, and medium-term loans through DCCBs, weavers finance through the DCCBs / Co-optex, from Small Industries Development Bank of India (SIDBI) for extending credit facilities for small scale industries, National Coop. Development Corporation (NCDC) and from National Handicapped Finance Development Corporation (NHFDC) for financing for the development of physically challenged persons through DCCBs. The total borrowings of the Bank as on 31.3.2006 was Rs.1206.76 crores.

INVESTMENTS

The Bank has to make investments in Government approved securities for the statutory liquidity ratio (SLR) purposes. The Bank has been investing its funds in the Central Government / State Government’s approved securities. As on 31.3.2006, the Bank has total investments of Rs.1105.36 crores. The Bank has a separate Treasury Section to deal with treasury operations on its behalf as well as its affiliates, viz. , DCCBs and Urban Co-op. Banks.

ADVANCES

Through DCCBs, TNSC Bank has been extending credit facilities to the PACBs for short- term / medium-term agricultural purposes. Depending upon the needs of the farmers the Bank has been extending advances upto Rs.1000 crores per year. Further, the Bank has been extending credit facilities through the above channel for the allied activities of farmers like purchasing milch animals, sheep rearing, poultry farming, bullock carts, sericulture at lesser interest rates. The Bank has been extending credit facility to the DCCBs for extending loans directly by them to small industries and Urban Coop. Banks from the refinance facility availed from SIDBI. The Bank has been extending cash credit limits for financing Coop. Sugar Mills, Coop. Spinning Mills, Coop. Wholesale Stores, and other coop. institutions. The availment of jewel loans at rural and urban areas has been increasing year after year. In order to meet this credit needs, the Bank has been extending refinance facility to the DCCBs for issuing jewel loans directly by them and also through PACBs. The Apex Coop. Institutions functioning at Chennai are getting credit facilities from the Bank . Out of the refinance availed by the Bank from NHFDC, the Bank has been extending finance to the DCCBs for issuing loans to physically challenged persons. The Bank has been extending various loans to individuals directly through the Branches and H.O. at Chennai. Further, the Bank has been extending jewel loan facility at lower interest rate to the middle-income group people. The Bank has also been extending Computer Loan, Education Loan, Building Mortgage Loan, Housing Loan, Rain Water Harvesting Loans, Home Needs Loan, Loans against Securities, through the Branches and H.O. As on 31.3.2006, the total loans and advances of the Bank stood at Rs.3040.71 crores.

WORKING FUNDS

The working funds of the Bank has been increasing year after year. As on 31.3.2006, the working funds of the Bank was Rs.5068.43 crores. The growth of working funds of the Bank can be seen from the following table:
As on Amount (Rs. in crores)
30.06.1980 194.51
30.06.1990 789.33
31.03.1995 1726.33
31.03.2005 4788.75
31.03.2006 5068.43

AFFILIATES DEVELOPMENT PROGRAMME

The Apex Bank, having in mind the leadership role to be played in relation to the DCCBs and PACBs, is making grants every year from out of its profits for creation of various infrastructure facilities at the DCCB level. A programme called “Affiliates Development Programme” started in the year 1990-91 is being implemented by providing computers, plain paper copier machines, fax machines, vehicles (jeeps) to the DCCBs in order to improve their working performance. The Apex Bank is also extending such facilities to the PACBs in the State by providing financial assistance for purchase of jewel safe boxes,putting up modern counters, etc.A Deposit Guarantee Scheme is being implemented by the Apex Bank. The premium for this Scheme has been shared by the Apex Bank, Dist. Central Coop. Banks and PACBs. This Scheme has been implemented every year and the affiliates are getting benefit out of it.

PRIMARY COOPERATIVES DEVELOPMENT FUND (PCDF

In addition to the grant of financial assistance to the DCCBs and PACBs from out of the profit every year, the Bank is also contributing 5% of the net profit every year to the Primary Coop. Development Fund (PCDF) created in our state. The DCCBs who are making profits are also making contributions at the same rate every year. From out of the above Fund, the PACBs are being helped to purchase jewel safe boxes, putting up modern counters and construction of bank buildings. “Cooperation among Cooperatives” and “Cooperative Education” are two important principles of Cooperation. In order to uphold these principles, every coop. institution has been contributing 5% of its net profits to the “Coop. Research and Development Fund” and “Cooperative Education Fund” maintained by Tamil Nadu Cooperative Union. For these Funds, the TNSC Bank has been contributing 5% of its net profit every year.

AWARDS TO DCCBs / PACBs

In order to create a healthy competition among the CCBs, the Bank has been implementing Best Performance Award Scheme from the year 1990-91 based on their performances. A Committee under the Chairmanship of the Secretary to the Government, Cooperation Department of Government of Tamil Nadu, will select the Best Performing Bank. Under the Scheme of Development Action Plan implemented under the aegis of NABARD, one PACB from each DCCB’s jurisdiction will be selected based on the performance and will be awarded every year. The Scheme was introduced during the year 1994-95.

AGRICULTURAL COOPERATIVE STAFF TRAINING INSTITUTE (ACSTI)

The Apex Bank has established a Training Institute at Madhavaram, Chennai, with a financial assistance extended by National Co-op. Development Corporation (NCDC). The ACSTI, manned by Faculties from the Apex Bank, is providing training to employees of Apex Bank, DCCBs, PACBs and Urban Co-op. Banks on all banking related subjects. The ACSTI trained 27,649 persons of SCB, DCCBs, PACBs, Urban Co-op. Banks upto 31.03.2006.

PROFIT

The Bank has been making profit continuously since its inception and for the year 2005-2006 the Bank has earned a profit of Rs.28.02 crores. This is 10.40% higher than the profit reported for 2004-2005.

AWARDS FROM NABARD / NAFSCOB

The Bank has been bagging the awards of NAFSCOB and NABARD every year on account of its exemplary performance among the State Coop. Banks in the country. The details are as follows:

NAFSCOB Awards

Year Performance prize
1985-86 Overall Best Performance Third
1986-87 Overall Best Performance Second
1987-88 Overall Best Performance Third
1988-89 Overall Best Performance Second
1989-90 Social Goals Development Special Award
1990-91 Overall Best Performance Second
1991-92 Overall Best Performance First
1992-93 Social Goals Development Special Award
1993-94 Operational Effiecency Special Award
1995-96 Overall Best Performance First
1996-97 Overall Best Performance First
1997-98 All India Mutual Arrangement Scheme First
1999-2000 All India Mutual Arrangement Scheme First
2000-2001 Overall Best Performance First
2001-2002 Overall Best Performance Second
2001-2002 All India Mutual Arrangement Scheme Special
2003-2004 All India Mutual Arrangement Scheme Best Performance

NABARD Awards

Year Performance prize
1995-96 Overall Best Performance Second
1998-99 Overall Best Performance Second
2000-2001 Overall Best Performance First

BIRTH OF TNSC Bank

TNSC BANK

Old in Tradition and Young in Outlook:
TNSC Bank, the Apex Co-operative Bank and the main purveyor of agricultural credit in Tamil Nadu, has completed 99 years of useful and purposeful existence. TNSC Bank is old in tradition but young and dynamic in outlook and action.
Ambition:
The ambition of the TNSC Bank is to feed the people and the Nation with prosperity, by extending its areas of operation and activities to cover all facets of economic spheres and integrated rural development.
Leader of Co-operative Credit Movement:
TNSC Bank is the Leader of the Co-operative Credit Movement in Tamil Nadu for over a century.
First State Coop Bank to Celebrate Centenary Year:
TNSC Bank was the 18th Co-operative Society to be registered in the erstwhile Madras Presidency as “The Madras Central Urban Bank” and this Bank was the first “Central Co-operative Bank” to be established in India.
Commencement of Bussiness:
It was Sir V.C. Desikachariar, Kt. who gave shape to the proposals formulated by Sir P. Rajagopalachariar, the first Registrar of Co-operative Societies. Sir V.C. Desikachariar, Kt. along with 17 eminent personalities sent up to the Registrar of Co-operative Credit Societies an application for the registration of the Bank under the Co-operative Societies Act. The Government, in G.O.Ms. No.1022, Revenue, dated 19.10.1905 accorded the necessary sanction and the Registrar of Co-operative Credit Societies registered the Bank on 23.11.1905. The Bank commenced its business on 26.11.1905.
Initial Authorized Share Capital:
The initial authorized Share Capital was Rs.25000/- divided into 50 shares of Rs.500/- each. The 17 pioneers held one share each, 10 other new members held 11 more shares. The first call of Rs.50/- per share, was made on 26.11.1905. With the addition of 2 more such calls, the paid-up Share Capital @ Rs.150/- per share, aggregated Rs.4200/- as on 31.3.1906.
First Loan:
The first loan was disbursed to No.21 Big Kancheepuram Urban Weavers’ Union on 14.2.1906. The first fixed deposit was received on 14.3.1906. The Bank’s first accounting year ended on 31.3.1906 with a net profit of Rs.20-9-0.
Ten Stages of Growth:
The history of the Tamil Nadu State Apex Co-operative Bank may be divided into ten stages broadly, according to its Constitutional Development. hese ten stages broadly reflect the development of the co-operative Credit Structure at the Apex Level in Tamil Nadu, finally emerging in the three-tier system of agricultural credit, with the primaries at the base or village level, Central Coop. Banks as intermediaries at the Districts level and the State Coop. Bank at the State or Apex level.

FIRST STAGE – 1905 TO 1917

The Shareholding in the Bank was confined entirely to individuals. All the 50 shares originally floated were fully subscribed prior to 30.6.1908. 50 new shares were floated in 1908-09 which again was fully subscribed in no time. Towards the close of December 1911, the Bank had become well established and its foundation well laid. The working capital of the Bank then stood at Rs.16 lakhs. Loans aggregating over Rs. 29 lakhs were disbursed to Primary Societies since inception of the Bank.
Department For Current Account:
On 1.7.1911, a department for current accounts was opened. Until then, only fixed deposits were accepted by the Bank.
Raising of Share Capital:
In March 1910, the authorized Share Capital of the Bank was raised to Rs.1.00 Lakh, comprising of 1000 ordinary shares of Rs.100/- each. Again in October 1911, 1000 further shares of Rs.100/- each were floated at a premium of 10%. The shares were over subscribed by six times. In the year 1912, the Bank doubled its Paid-up Share Capital to Rs.2.00 Lakhs the maximum amount allowed under the bylaws. In 1916, the Working Capital was 2.5 times what it was in 1911.
Dividend and Bonus:
The Bank declared a dividend of 10% plus bonus of 2% per share out of its profits for the year ended 30.6.1911.
Formation of District Urban Banks:
Some developments in Co-operative Organisations of outstanding nature took place in 1909-1910. Co-operative Supervising Union at Uttaramellur was registered on 5.8.1910, Salem District Urban Bank on 25.1.1909, Tiruchirapalli District Urban Bank on 25.3.1909 and Coimbatore District Urban Bank on 16.9.1910. The membership of these Banks was also confined to individuals only. The District Central Coop. Banks were financed by this Bank from 1912-1913 along with the Primary Societies directly. Sir V.C. Desikachariar, the Founder-Secretary of the Bank relinquished his post in December 1911.

SECOND STAGE – 1917 TO 1920

Admission of Cooperative Societies:
Pursuant to the report by Maclogan Committee on Cooperation, the General Body of the Bank decided on 31.3.1917 to admit Cooperative Societies as shareholders of the Bank. Between April, 1917 and June, 1920, 60 primary Societies and 24 Central Coop. Banks took shares in TNSC Bank. Out of fresh share capital of about Rs.1.50 lakhs exclusively allotted to Coop. Societies in this period, they contributed only a sum of Rs.14620/-. The response from Primary Societies was thus discouraging and therefore, the idea of bringing them into this Bank was abandoned.
Savings Deposit:
Prudential and Savings Deposits were accepted by the Bank for the first time since 1917.
Own Plot:
A plot in 12 grounds in Luz Church Road, Mylapore, Chennai, was purchased by the Bank from out of its Building fund during 1918-1919 and the construction of the Bank’s own building had begun with an advance of Rs.25000/- from the General Funds of the Bank, to be recouped in 10 annual installments from out of the net profits of the Bank.
Conditions for admission of cooperative societies:
  • The existing shares (all of which were then held by individuals) be converted into Preference Shares, carry6ing a preferential right to dividend at 9 per cent and to the capital in the event of liquidation.
  • Surplus profits, if any, after providing for contributions to Reserve Fund, Dividend and Building Fund, may be utilized with the sanction of the Registrar of Coop. Societies in the extinction of individuals’ shares by paying off Rs.160 per share as against the face value of Rs.100 per share.
  • The sum of Rs.25000/- then standing to the credit of the Dividend Equalisation Fund should be reserved for the exclusive benefit of the preference shareholders to be drawn upon, should the annual profits be insufficient to pay in full dividend at 9 percent.
  • New ordinary share capital be created; such capital to be issued at par to coop. Societies only. The maximum of the ordinary share capital then created was fixed at Rs.4.00 lakhs. The preferential share capital held by individuals on that date stood at Rs.2.00 lakhs.
  • The “Advance” rate should not be reduced without the sanction of the Government who will not sanction such reduction, if it is likely to affect prejudicially the preference shareholders, and
  • Three out of the nine seats on the Board would be reserved to Coop. Societies. The relative bylaws were suitably amended and on 1.4.1917, the new constitution came into effect.

THIRD STAGE – 1920 TO 1930

New membership of the Bank was confined to the Central Coop. Banks only. The Primary Cooperative Societies were completely eliminated from the membership of the Bank and a few individuals were left with only one preference share each.
Federation of Central Cooperative Banks:
During this period, the Madras Central Urban Bank emerged as a real Federation of Central Coop. Banks, styled as the “Madras Provincial Co-operative Bank Ltd.” The response from the Primary Coop. Societies to avail themselves of the offer of admission to the membership of the Bank was not adequate. Hence, from 1st July, 1920, Central Coop. Banks alone were admitted, as the shareholders of the Bank.
Audit:
The audit of the accounts of the Bank was done by private auditor appointed by the General Body of the Bank since June, 1918.
Recovery of Agricultural Loans:
The practice of recovery of agricultural loans advanced by co-operatives as arrears of land revenue, came into vogue in 1919-1920 by passing of an Act by the Legislative Council.
Board of Management:
In 1920-1921 with the increase in the number of Central Coop. Banks, direct lending by Apex Bank to Primary Societies was reduced and also the indebtedness of Primary Societies to the Apex Bank was also considerably reduced. From 1.7.1920, the Bank having been transformed into a Provincial Coop. Bank, the Board of Management had to be reconstituted on an entirely new basis. Every shareholding Central Bank was allotted a representative to the Board of Management and the Preference Shareholders elected from among themselves 12 members to represent them on the Board, thus the Board of Management consisted of representatives of Central Coop. Banks and individual shareholders, the former preponderating in number.
Constitutional Change
Due to lack of adequate response from the Primary Coop. Societies to avail themselves of the offer of admission to the membership of the Bank, Mr. Hemingway who was the Registrar in 1919, outlined a new scheme – a constitutional change in the set up of our Bank of a far reaching character – for federating the Central Banks into a higher central organization of their own; in other words, to convert the Madras Central Urban Bank into a real Provincial Apex Bank. From 1st July, 1920, Central Coop. Banks alone were admitted as the shareholders of the Bank. Consistent with the policy of placing the Bank on the footing of a true financing agency and balancing center for the Central Banks and affording the latter decisive voice in its management, the redemption of the Preference Shares was started in 1923 and continued until each individual shareholder had only on preference share of the face value of Rs.100 and redemption value of Rs.160/- in the Bank. In order to secure an absolutely predominant voice to the Central Banks, votes at the General Body were taken on the basis of the number of shares held by the members. The Bank thus became practically a federation of Central Coop. Banks, owned by them.
Executive Committee:
The larger size of the new Board necessarily lead to the creation of a smaller body to carry on the day-to-day administration of the Bank. The new Board, therefore, elected at Executive Committee consisting of 9 members, 6 of whom including the President and Vice President were to be residents of Madras – recruited practically though not necessarily from individual shareholders and the remaining three could be non-residents elected from the representatives of Central Coop. Banks. They have office for 3 years. In 1925. By an amendment of the bylaws, the representation to individual shareholders on the Board Of Management was reduced to 5 from 12 and it was also provided that the majority of members in the Executive Committee should be representatives of Central Co-op. Banks. Both in the Board and the Executive Committee, the rule of one man one vote was adopted. Full scope was thus provided for the due pursuit of co-operative principles in the conduct of the affairs of the Bank. While the Executive Committee was carrying on the business of the Bank, the Board of Management decided all questions of policy.
Own Building:
The Bank moved into its own premises constructed in December, 1920 at Luz Church Road, Mylapore, Chennai, on 1.2.1921 and the Bank’s first branch was opened on 17.2.1921 at Armenian Street in George Town.
Surplus Funds:
During 1921-1922, the Government authorized the investment in this Bank of Local Bodies and Municipal Funds, Railway Cess Funds, Local and Municipal Provident Funds, security deposits of municipal officials, jail and Akbari and other municipal renters and contractors, Government servants of every class were permitted to invest or place deposits with this Bank, in terms of G.O.Ms.No.423 Public, dated 21.6.1909. Owing to large influx of money from the above agencies into the District Central Coop. Banks in 1923-1924, the Bank faced the problem of surplus funds and had to invest large amounts in Coop. Banks in Bengal and Burma. This position had continued even upto 1926-1927, when the Bank had to reduce the rates of interest on deposits and to stimulate the demands from Central Coop. Banks for loans, a bonus of 0.5% on the amount of loan applied for within 30.6.1927 was offered under certain conditions to Central Coop. Banks and propaganda in favour of this scheme was carried on by the members of the Executive Committee which yielded handsome results. At the Coop. Bankers’ Conference held on 8.5.1926 presided over by Dr. Pattabhi Sitaramayya, certain important decisions relating to the loaning Operations of Coop. Banks were taken.
Loaning Operations:
Central Coop. Banks could lend money drawn from the Madras Central Urban bank, only for periods not exceeding those for which loans were availed of from Madras Central Urban Bank. There should be no reloaning of recoveries by primary societies, a general information register was prescribed for maintenance by Central Coop. Banks. The need to adopt uniform deposit interest rates by Central Banks, opening of branches by Central Banks, remittance business and opening of current accounts by Central Banks were stressed. At the Bankers’ Conference held on 22.4.1928, it was defined that loans repayable in whole out of the next harvest would be classified as short-term loans. Seasonality discipline of the crop loan system was in vogue even then. The duties and responsibilities of the Administrative Staff in Central Banks were specified to have an effective control over the indebted primary societies.
Debentures:
In 1927-1928, to secure long term money, the Bank floated debentures carrying interest at 5% p.a. and redeemable after 29 years, viz., in 1947, with issue price at 95 percent, and a sum of Rs.214000/- was raised thereby.
Changes In Loaning Policy:
In November, 1920, special permission of the Government was obtained to grant loans to nonmembers against their deposits and in January, 1931, also on the pledge of G.P. Notes. From the early years upto 1920, the bulk of loans granted by the Bank to Primary Societies and Central Banks were of long-term nature ranging from 7 to 10 years. In 1921 and 1922 however, owing to financial stringency, only short term loans ranging from1 to 2 years were granted to the Central Coop. Banks. Since 1927, the Bank’s loaning policy underwent a change and Central Banks were granted loans for periods ranging from 1 to 3 years and in special cases upto 5 years. During 1928-1929, the Bank advanced long-term loans to Land Development Banks upto Rs.75000/- by subscribing to the debentures floated by them.
Grants to Cooperative Education And Propaganda:
The Bank had been making grants to the provincial co-operative union from 1928-1929 for co-operative education and propaganda to the extent of Rs.14000/- per annum (of which Rs.9000/- was earmarked for rural reconstruction work)

FOURTH STAGE – 1930 TO 1956

During this stage, far reaching structural changes in the constitution of the Bank took place.
The Madras Provincial Co-operative Bank Ltd:
The Silver Jubilee of the Bank was celebrated with all grandeur on 20.6.1931. By a resolution passed at the General Body Meeting of the Bank held on 18.6.1931, the name of the Bank was changed as “The Madras Provincial Co-operative Bank Ltd.”
Scheme For Rectification And Consolidation Of Primary Societies:
During 1930-1931, the Bank embarked on a scheme for rectification and consolidation of Primary Societies through the Central Coop. Banks, in view of the heavy overdues in the societies and the deterioration in the working of many of them. As per the scheme, Central Coop. Banks were subsidized for carrying on the overhaul work to the extent of Rs.28,787.50. To review the progress of work done by the Central Banks and to co-ordinate their activities, an administrative section was set up by the Bank under the special charge of the Vice-President of the Bank to prepare brief reviews on the progress reports from Central Banks for the benefit of the Executive Committee of the Bank.
Benefit to Agriculture And Agriculturists:
During the first 25 years of working, this Bank had lent to primary societies and Central Coop. Banks a sum over Rs.5.50 crores. But for the Coop. Organization, this vast sum of money would not have found its way into rural parts to the benefit of agriculture and agriculturists. In 1930-1931, in agricultural credit societies the working capital deployed was to the tune of Rs.6.50 crores, of which the involvement of the Apex and the Central Coop. Banks was as much as Rs.5.00 crores.
Slash Downing Interest Rates on Deposits:
A peculiar position arose in 1932-1933 when, with an increase of Rs.40 lakhs in the working capital of the Bank, there was practically no scope for deployment of the resources of the Bank adequately and the Bank had to slash down deposit interest rates and also suspend acceptance of fresh deposits.
Purchase of College House (Head Office):
During 1936-1937, the Bank purchased “College House” in the then China Bazaar Road, in George Town at a cost of Rs.1.76 lakhs. This is exactly the site where the Head Office of the Bank is presently functioning. On 1.10.1937, the Head Office of the Bank moved into this building and the Town Branch was merged with the Head Office. The old Head Office of the Bank at Mylapore was converted into a Branch.
New Branches:
During the period 1937-1940, the Bank had opened in all 3 Branches in Mylapore, Egmore and Triplicane, the prominent localities in Madras City.
Redemption Of Debentures:
On 1.12.1940, the Bank redeemed the 5% debentures of the Bank of the face value of Rs.2.15 lakhs, due for redemption in 1947, by giving 6 months notice to the debenture holders as per the terms of issue.
Industrial Advance:
During the year 1940-1941, an industrial advance was made to the Vuyyure Coop. Agricultural, Industrial and Credit Society for purchase and crushing of sugarcane upto 1.14 lakhs tons and the society was able to realize good prices for sugar manufactured.
Scheme of Inspection:
A Scheme of Inspection by the Bank of the working of Sales Societies affiliated to the Central Coop. Banks was introduced in 1942-1943. The scope of inspection by the Bank was enlarged in 1948-1949 when the Inspectors were advised to verify the stocks in Central Coop. Stores, as the stocks were held as security for procurement advances, to Coop. Network through the Central Coop. Banks, the demand for such advances (which were introduced in 1946-1947) was so heavy that the Bank had to pledge its entire holdings in Government promissory notes with Imperial Bank of India, besides borrowing Rs.2.00 crores from the State Government. To provide for all these borrowings, the maximum borrowing power of the Bank was raised to 15 times of its owned funds.
Grants:
The Bank disbursed grants for Rs.9000/- in all to the Central Coop. Banks for development of cottage industries during 1946-1947.
Rediscount Facilities:
The Bank was enabled to secure, for the first time, rediscount facilities with Reserve Bank of India, of short-term agricultural hundies drawn by Central Coop. Banks and this helped the Bank to raise funds to the tune of Rs.60 lakhs and lend money cheaply to the agriculturists for seasonal agricultural operations and for the marketing of crops.
Extension of Credit facilities:
The Bank added yet another chapter in its advances portfolio in 1949-1950 by extending credit for the purchase and distribution of chemical fertilizers and the Weavers Coop. Societies for the production and marketing of handloom cloth, through the Central Coop. Banks. In the year 1951-1952, the facility of rediscounting of short-term agricultural bills extended to the Bank by Reserve Bank of India, was replaced by them, by revolving short-term credit limits to Central Coop. Banks for Seasonal Agricultural Operations and the Marketing of Crops. The slump in textiles and consequent accumulation of handloom goods with the Weavers’ Coop. Societies resulted in the State Government introducing the Weavers’ Relief Scheme, for providing employment to weavers who were supplied yarn from special funds provided for the purpose and the Government agreed to bear losses, if any, incurred in these transactions. During 1952-1953, Reserve Bank of India extended credit facilities to the Bank against commercial bills drawn by the Apex Weavers’ Coop. Society for the purchase and distribution of handloom yarn under Sec.17(4)(c) of the Reserve Bank of India Act and the Apex Bank availed of this limit initially to the extent of Rs.31.90 lakhs.

FIFTH STAGE- 1956 to 1970

The Tamil Nadu State Co-operative Bank Ltd.
The Government of Tamil Nadu became a shareholder of the Bank on 27.3.1957 and were represented on the Board of Management of the Bank, pursuant to the recommendations of the All India Rural Credit Survey Committee of the Reserve Bank of India. Consequent on the renaming of our State as Tamil Nadu in the year 1970, the name of our Bank was also changed as “The Tamil Nadu State Co-operative Bank Ltd.”
State Government Representatives on Board:
Pursuant to the recommendations of the All India Rural Credit Survey Committee and to achieve the target of Rs.15.00 crores for issue of Coop. rural credit, State participation in the working capital of Coop. Societies was considered necessary. The Government of Tamil Nadu became a shareholder of the Bank on 27.3.1957 and nominated three representatives of the Government on the Board of Management of the Bank.
Integrated Scheme of Rural Credit:
An integrated scheme of rural credit was drawn up by the Registrar of Coop. Societies which contemplated that 21% of the credit needs of the cultivators must be met by Co-operatives by the end of the second five year plan. To meet the anticipated demand from the Central Coop. Banks, the share capital of the Bank was raised to Rs.1.00 crore in 1956-1957 and the maximum shareholdings per Central Coop. Bank was also raised to Rs.2.00 lakhs under the integrated credit scheme, provision was also made for building up “Agricultural Credit Stabilisation Fund” and the statutory dividend on Government share capital in excess of certain agreed rates, would be carried to this Fund.
Funds and Credit Limit from RBI :
From 1.4.1957, advances from the Cess Fund ceased and Reserve Bank of India provided funds to Primary Weaver’s Coop. Societies for production and marketing activities through the State and the Central Coop. Banks under Section 17(2)(bb) of the Reserve Bank of India Act. During 1957-1958, for the first time, the Apex Bank was sanctioned by the RBI a credit limit of Rs.1.00 crore at concessional rate of interest against pledge of its own G.P. Notes for financing SAO and marketing of crops on short-term basis under Sec.17(4)(a) of the RBI Act.
Redemption of Preference Shares:
During the same year, a new bylaw was introduced enabling the Bank to gradually buy up the Preference Shares held by individuals at a premium of Rs.160/- per share of the face value of Rs.100/- and eventually extinguish the preference shares of the Bank. The redemption value of preference share of the Bank was raised to Rs.200/-.
Audit by Co-op Department:
For the first time, the audit of the accounts of the Bank was entrusted to the audit wing of the Coop. Department of the Government of Tamil Nadu, from 1.7.1959, until then, the audit was done by the Chartered Accountants, approved by the RCS. The share holding by Central Coop. Banks in the Apex Bank was increased to 1/25th of their borrowings, subject to a maximum ceiling of Rs.25.00 lakhs per CCB.
Cash Credit Limits:
In 1960-1961, on the recommendation of the 31st Central Coop. Banks’ Conference (held in August, 1960), cash credit limits were sanctioned to CCBs for dispensation of rural credit for SAOs. The drawals from the Cash Credit Accounts would be replenished by time loans (against RBI credit limits) in due course.
Major Industrial Finance:
After bifurcation in 1953, the Tamil Nadu State Coop. Bank entered the arena of major industrial finance in 1960-1961 when 3 Coop. Spinning Mills and 3 Coop. Sugar Mills were financed by the Bank by way of working capital loans, term loans, etc. Industrial Co-operatives were financed by this Bank through the Tamil Nadu Industrial Coop. Bank Ltd., during the period. The year 1961-1962 coincided with the first year of the III Five Year Plan. About 73% of the rural population was brought within the Coop. fold and the quantum of agricultural credit provided by the CCBs was of the order of Rs.35.00 crores. With a view to help the Coop. Banks in mopping up their resources sizeably, the State Government, in December 1961, extended their guarantee for the repayment of term deposits of 36 months and over and carrying interest at 5% p.a. and payment of interest thereon, held by the State Coop. Bank upto a ceiling of Rs.125.00 lakhs and by CCBs upto Rs.30.00 lakhs each. In conformity with its status and standing, the Apex Bank did not apply for renewal of the Guarantee from Government, subsequently. In 1961-1962, the Bank extended credit to the Tamil Nadu State Coop. Marketing Federation for undertaking the distribution of essential commodities through fair price shops. In 1961-1962, direct advances from the Cess Fund were granted by the Government for financing Silk Weavers’ Coop. Societies also. During this period, the RBI stipulated the condition of maintenance of adequate non-overdue cover for the borrowings of the Apex Coop. Bank, both short-term and medium-term from the RBI, on behalf of CCBs. The Reserve Bank also revised their medium-term loan policy by stipulating that the medium-term credit limits could be operated upon only as reimbursement of the advances already made by the State and the CCBs, to the extend not exceeding 75% of fresh issue of medium-term loans made by them over and above the level of medium-term loans given out of their own resources comprising of share capital, reserves and deposits, and outstanding as on 30.6.1972. The Bank has been extending its financial assistance for Coop. education and propaganda through the Tamil Nadu Coop. Union and the Regional Coop. Training Institutes. The Bank contributed to an endowment of Rs.1.25 lakhs in the University of Madras for a “Lecturer’s Chair in Co-operation” on behalf of the Co-operatives of Tamil Nadu – the Bank had instituted since 1968 the award of a gold medal to the best trainee for each of the Banking courses conducted at the Coop. Training College, Madras. The Bank sponsored jointly with certain other Apex Coop. Institutions and CCBs of Tamil Nadu the construction of the State Co-operators’ Guest House at Ooty which was declared open by the Chief Minister of Madras on 9.5.1964. This Guest House is situated in a central locality and has 20 suites fully furnished. The Banking Regulation Act, 1949 (as applicable to Coop. Societies) became effective from 1.3.1996 and this Bank came under the statutory control of the RBI. It was included in the Second Schedule to the RBI Act, 1934 with effect from 16.7.1966. In order to strengthen the Agricultural Credit Stabilisation Fund of the Bank, the Government disbursed a grant of Rs.7.50 lakhs and sanctioned a loan of Rs.2.50 lakhs, repayable in 25 years in 15 equated annual instalments of principal and interest commencing from the 11th anniversary of the date of the loan. For the first time, the Bank granted conversion of short-term loans into medium-term loans to the Coimbatore Dist Central Coop. Bank Ltd., to the extent of Rs.51.00 lakhs, out of the Agricultural Credit Stabilisation Fund, in May 1968, due to failure of crops in that District. Further, similar grant and loan of Rs.75.00 lakhs , Rs.25.00 lakhs were received from Government in 1968-1969 for strengthening the ACSF and medium-term conversion loans aggregating Rs.184.93 lakhs were granted to 7 CCBs during this year. Having fully exhausted the balance in the ACSF with the Bank, the Bank availed of conversion facilities from the National Agricultural Credit Stabilisation Fund with the RBI upto about Rs.25.00 lakhs. As a step towards coordinating the working of the Primary Land Mortgage Banks and the CCBs, the Apex Bank sanctioned in February 1968 an interim Cash Credit Limit of Rs.50.00 lakhs to the Coop State. Land Development Bank to enable them to issue loans, build up mortgages and later on float debentures in the market with the proceeds of which the outstanding in the interim cash credit account would be cleared. The Apex Bank also implemented from 1.1.1968, the All India Mutual Arrangement Scheme sponsored by the National Federation of State Coop. Banks, covering Apex and the Central Coop. Banks in India, under which the Bank can to issue drafts and collect bills on all india basis at concessional rates for the benefit of constituents. Thanks to the untiring efforts of the Secretary of the Bank, Thiru. D. Varthamanan, the Bank achieved phenomenal success in regard to Income-tax assessment, on its appeal to the Central Board of Direct Taxes and obtained substantial refunds from them which provided the nucleus for the Bank’s new multi-storeyed building. By this, the method of assessment of Income Tax payable by the Bank was thoroughly overhauled.
SOCIAL LENDINGS
In the wake of social control over the commercial banks and their entry into the field of agricultural credit, a Seminar of Chief Executives of CCBs was organized in February 1969 for the purpose of highlighting the need for the Coop. Banks to improve qualitatively their loaning opening and the efficiency of their service to the customers, thereby enabling them to face the challenge posed to them by the commercial banks in the matter of dispensation of agricultural credit and mobilising the savings of the community. It was stressed that the entry of commercial banks in the field of agricultural credit would be complementary and not competitive. Pursuant to the decision of the National-level Consultative Committee constituted by the Agricultural Finance Corporation Ltd., a State-level Co-ordination Committee, with the Apex Bank as the Convener, was constituted on 25.1.1969. The objectives of this Committee were to create goodwill between the commercial banks and the Coop. Banks, discuss problems of local interest and co-ordinate the activities between the Coop. Banks and the commercial banks in regard to extension of agriculture credit, by mutual exchange of information, knowledge and experience on the basis of the guidelines of the National-level Consultative Committee. The Committee comprised of the Chairman of the Apex Coop. Banks, State Marketing Federation and the representatives of the nationalized and commercial banks at Madras. The Officers of RBI, Agricultural Refinance and Development Corporation and the Officers of the State Government (from the Departments of Co-operation, Agriculture, etc.) also usually participated in the deliberations of the Committee by invitation. The Committee met once in a month and later at quarterly intervals. The Secretariat of the Committee functioned at the office of the State Coop. Bank. The representatives of both the Nationalized and Commercial Banks, RBI and the State Government evinced keen interest in the deliberations of the Committee. This Committee did outstanding and laudable work and constituted considerably in achieving the objectives of the Committee. Among others, the following achievements of the Committee are noteworthy: (i) the drafting of Farm Credit Book; (ii) Framing of uniform scales of finance; (iii) Arrangements for inter-institutional co-ordination; (iv) Energizing of pumpsets, etc. This Committee was, however, wound up in 1975 on the State Government setting up a separate State Level Co-ordination Committee. Consequent on the renaming of the State of Madras as Tamil Nadu, during the year 1969-70, the name of the Bank was altered as “The Tamil Nadu State Coop. Bank Ltd.”

SIXTH STAGE – 1970 TO 1976

Appointment of Managing Director:
As per the Tamil Nadu Co-operative Societies’ Act and with effect from 17th October 1970, the Board of Management of the Bank was broad based, providing for representation to the weaker sections of the community, women, backward community, small farmers, etc. The Co-operative Societies’ Act was further amended in July 1973, providing for the appointment of a Managing Director for the Bank, by the State Government of Tamil Nadu, who will be the Chief Executive of the Bank and also be a member of the Board of Management. Representation to preference shareholders of the Bank on the Board of Management of the Bank was withdrawn. The Managing Director appointed shall be an Officer on deputation drawn from the RBI in the rank of the not less than an Assistant Chief Officer of the Agricultural Credit Department or an Officer from the Indian Administrative Service or an Officer not below the rank of a Joint Registrar of Coop. Societies in the Coop. Department of the State Government. The post of Secretary of the Bank was abolished from 1.7.1973.
Incentives for opening new branches:
The Bank introduced the scheme of incentives of Rs.41,250/- to the CCBs for opening new branches.
Amendment to Tamil Nadu Coop. Societies Act:
Towards the end of 1970, the State Government revised the administrative set-up of the State and the CCBs, with the object of providing credit facilities to small farmers and make the Managements broad based, providing for representations to the weaker sections, women, backward community, small farmers, etc., with the amendments to the relevant sections of the Tamil Nadu Coop. Societies Act.
RECONSTITUTION OF BOARD OF MANAGEMENT
The Board of Management of the Bank was reconstituted with the following persons as members:
  • Chairmen of 16 Central Coop. Banks;
  • Chairman of the Tamil Nadu Coop. State Land Development Bank Ltd.;
  • 3 Members from the Chairmen of Apex Coop. Societies elected from among themselves;
  • 3 Members nominated by the Registrar of Coop. Societies from among members of registered Societies not affiliated to any Apex Society; and
  • The Additional Registrar of Coop. Societies (Credit) – Ex – Officio.
First sanction of cash credit limit:
During 1971-1972, for the first time, the Bank sanctioned cash credit limit of Rs.25.00 lakhs to the Tamil Nadu Coop. Consumers’ Federation under the centrally sponsored scheme to deal in consumer goods and a medium-term loan of Rs.5.00 lakhs to the Tamil Nadu State Oil and Allied Products Coop. Federation for setting up three oil extraction plants and extended Bank guarantee for purchase of machinery under deferred payment terms of Rs.48.72 lakhs.
Inauguration of Bank’s New Building:
The foundation stone of the Bank was laid on 7-12-1970 and the new building was inaugurated on 25-10-1974. The Head Office of the Bank started functioning in the new building from 11.11.1974.
Cash Certificate Scheme:
As an additional tool for mobilization of deposits, Cash Certificate Scheme was introduced by the Bank in 1975-76.
Discounting of cheque facility:
The facility of discounting of cheques was also extended to longstanding, valued constituents of the Bank.
Appointment of Special Officer:
In terms of the Tamil Nadu Coop. Societies (Appointment of Special Officers) Act, 1976, the Government of Tamil Nadu appointed Thiru. M. Ahmed, I.A.S., as the Special Officer of the Bank, with power to exercise all or any of the functions of the Board of Management or of any Officer of the Bank. The Special Officer assumed charge on the forenoon of 10th June 1976, on which day the term of office of the members of the Board of Management superceded.
Jewel Loan:
With a view to helping the weaker sections of the community in Madras City, the Bank took upon itself the task of providing jewel loans through its branches. The scheme which was started in December 1976 in 3 branches, thereafter extended to 16 more Branches.
Reimbursement facilities to CCBs:
The Bank has also been providing reimbursement facilities to CCBs, in respect of their advances against the security of gold ornaments through their branches as well as loans issued through Primary Credit Societies and Urban Banks.
SELF-EMPLOYMENT LOANS
In keeping with the social aspirations of the nation and to help the weaker sections of the community, the Bank has been issuing loans up to Rs.2000/- for acquisition of capital assets like cycle-rickshaws, sewing machines, wet grinders, mobile ironing units, etc., as self-employment loans. These loans are repayable in monthly instalments within 24 months from the date of availing of the loan.
Loans to salaried employees
In March 1979, the Bank introduced a scheme for issue of loans to salaried employees, who are working in various organizations in the city of Madras and who are not members of the Employees’ Coop. Societies, if any, functioning in their own organizations. Loans are given up to Rs.2000 or two months’ gross salary, whichever is less and have to be repaid in 12 to 24 monthly installments.
Extension of State Drafts Scheme to Urban Banks:
The State Coop. Bank, has for the first time, extended the State Drafts Scheme to Urban Banks, in March 1979.

SEVENTH STAGE – 1976 TO 1980

Special Officer and Managing Director:
In January 1977, the Special Officer of the Bank who was all along discharging the duties of the Board of Management and Chairman of the Bank, was also assigned the duties of the Managing Director of the Bank and was designated as Special Officer and Managing Director of the Bank.
Refinance limits to the Central Coop. Banks:
In 1976-1977, to met the ever increasing demand for loans against gold ornaments, especially from the weaker sections of the community, the Apex Bank sanctioned refinance limits to the Central Coop. Banks for lending direct or through agricultural credit societies/Urban Banks, etc. The Apex Bank itself, for the first time, introduced jewel loan business in a few of its branches.
Loans to self-employed persons and artisans:
The Bank’s programme of issuing loans to self-employed persons and artisans through its branches, was inaugurated by His Excellency the Governor of Tamil Nadu at a colorful function on 30.12.1976.
Crop Verification:
During 1977-1978, the Bank introduced Crop Verification Register at the Society-level to ensure proper utilization of short-term agricultural loans issued to farmers during the year. With a view to make the inspection of CCBs and their affiliated Societies more purposeful and efficient and also to directly involve itself in crop verification to the possible extent, the Apex Bank opened two Regional Offices at Madras and Madurai and in March 1980, added one more Regional Office at Salem.

EIGHTH STAGE – 1980 TO 1987

Consumer Loans
The scheme was introduced in March 1980 for purchase of consumer durables like T.V. sets, radio, refrigerators, etc., and this satisfied the long felt needs of the depositors and helped in a long way in meeting the competition from commercial banks in the matter of deposit mobilization.
Financing to National Consumers’ Coop. Federation Ltd.
For the first time, since November 1980, the Tamil Nadu State Coop. Bank has started financing National Consumers’ Coop. Federation, a national level organization. This finance is intended to help the operations of the Southern Regional Office of NCCF in maintaining the public distribution system active. The assistance has been given in the form of “Bill purchase facility” to the extend of Rs.30.00 lakhs and “Cash credit facility” to the extent of Rs.170.00 lakhs.
Salary Loan
As the profit of the Bank was a low decline, it has been decided to give a boost for Salary Loan. The Salary Loans were issued to various organizations.

NINTH STAGE – 1987 TO 1998

Training College
At the instance of NCDC, TNSC Bank has opened a Training Institute in a rental building at Adyar during the year 1989. Subsequently, during the year 1992, the Training College was shifted to the Bank’s own building at Madhavaram Milk Colony, Chennai. We have organized Trainers Training Meet at our Training College in a grand manner during 1996.
Settlement
During the year, the Management of the Bank have entered into Bilateral Settlement on 29.5.1991, 9.5.1996, 24.10.1996 and 8.12.1996 on wages and other service conditions.
NAFSCOB Conference
During this period, we have hosted a Conference of NAFSCOB.
Regional Office
It has been decided to strengthen the Inspection Department of the Bank and to close down the Regional Office of the Bank.

TENTH STAGE – 1999 ONWARDS

Elected Board
After a long time, elections to Co-operatives were held and duly elected representatives took charge as the Management of the Bank.
Foreign Travel
The Board of Management and the Executive of the Bank have undertaken foreign travel and also undergone training on foreign soil.
Surplus Funds
For the second time in the annals of our Bank’s history, we were faced with a situation of surplus funds without any avenue for lending.
Creation of New Sections
a) Urban Banks b) Human Resources Development c) Organisation & Methods d) Women Entrepreneur Development Section e) Development Action Plan f) Computer g) Treasury
Computerisation
The Bank has taken strong note of the need for computerization of the Bank and serious efforts were taken.
Deposit Manual
We have brought out a Deposit Manual during the year 1997.
90th Year Celebration
To commemorate the 90th year of our Bank, a beautiful wrist watch was presented to each and every staff of the Bank working in our Bank as well as for the retired staff members of the Bank.
National Seminar
In collaboration with the University of Madras, a Seminar was organized. The Seminar was an historic one.
Contribution for social cause
TNSC Bank has contributed for various social causes from time to time from Common Good Fund.
Branches
The Bank has 45 branches in various part of Chennai City. Since the branches are located in the residential areas, they work in two shifts in the morning and the evening to suit the convenience of the members of the public except on Saturdays, when the Branches work in the morning session only. However, subsequently working hours of the Branches have been changed and at present Branches are working in single shift.
Training
The Bank gives intensive training to the newly recruited Assistants for about two months before assigning them regular work. The training covers both theory and practice. Refresher courses are also arranged for the benefit of the Managers to acquaint them with the modern trends and on subjects connected with banking. It is proposed to extend this to the benefit of Asst. Managers also. The Bank also deputes its Officers to various training courses offered by the Bankers’ Training College, Bombay, College of Agricultural Banking, Pune, Bankers Institute of Rural Development (BIRD), Lucknow, VAMNICOM, Pune, RTC, NABARD, Mangalore, RBI Staff College, Madras, etc. In addition, the Bank’s Officers participate in various Seminars, etc., arranged in the City on subjects connected with Banking, Finance, etc.
Publicity
To give publicity to its various deposit schemes, the Bank has been advertising through the media of newspapers, periodicals, hoardings, wall paintings, cinema slides, leaflets, handouts, radio and television. The deposit schemes are also displayed in show cases at the Head Office and posters at the Branches. The Bank also opens temporary branches at Trade Fairs and Exhibitions. The Bank has provided Traffic Indicators (with the name and emblem of the Bank painted thereon) at select junctions in Chennai City.