THE NELLORE CO-OPERATIVE URBAN BANK Ltd is located in Nellore City, the head quarters of SPSR Nellore District. It is the only Urban Cooperative Bank functioning in Nellore District at present. Before March 1996 there were three more Urban Cooperative Banks in Kavali, Gudur & Atmakuru. But the banks in Kavali, Gudur & Atmakur have been closed in 1988, 1992 and 1996 sespectively due to heavy losses.

THE NELLORE CO-OPERATIVE URBAN BANK Ltd was originally registered as “The Nellore Cooperative Society Ltd” and started functioning from the year 1917. However, in the year 1939 it has been renamed as “The Nellore Cooperative Urban Bank Limited”.

Ever since it inception it continued to cater to the needs of the poor and middle class public, and has completed 99 years of existence by 2016. The bank which started in 1917 with an initial membership of 15 with a share capital of Rs. 2300/- had 62 members at the end of FY 1917-1918 with share capital of R. 2344/-. It has grown to the present stature with total membership of 10400 ‘A’ class, paid up share capital of Rs. 170.00 Lakhs total deposits for Rs. 8000.00 Lakhs working capital of Rs. 8175.20 Lakhs and total amount of outstanding loans of Rs. 3400.00 Lakhs as at the end of FY 2016-2017.

Area of Operations : At present the area of operation extends to entire Nellore District and it has one branch located at Grant Trunk Road, Near Vedayapalem Bus-stand and in order to provide better customer service, it has already send proposals to RBI and State Government to open one more branch in Stonehousepet area for which permission is awaited.

Organizational Set up : The organizational set up of THE NELLORE CO-OPERATIVE URBAN BANK Ltd is with the Board of Directors. The Board of Directors shall consist of not more than 12 directors including Chairman and Vice Chairman to be elected amongst the share holder members of the bank. The tenure of the Committee shall be five years from the date of election. They are responsible for overall administration and functioning of the bank. The powers and duties of the Chairman shall be to preside over the general body meetings, meetings of the Board of Directors and meetings of any other committees and to exercise general control and supervision over the officials of the bank Sri Arigela Nagendra Sai, a well known Advocate in the city is the elected Chairman of the Bank. The Secretary of the bank who is Chief Executive Officer (CEO) of the bank is the person to sue or to be sued on behalf of the bank and to take action on the resolutions and decisions taken by the general body and board of directors. He / she is further expected to play crucial role in evaluating the performance of the executive staff through the periodical review of the lending policies of the bank, deposits mobilization, progress in recovery of loans and over dues by legal action, progress made in the utilization of bank facilities etc.

Membership : The membership of THE NELLORE CO-OPERATIVE URBAN BANK Ltd consists of two types, ‘A’ class and ‘B’ class, ‘A’ class members are full-fledged members. They acquire membership by taking shares of Rs. 50/- each. These members are eligible to participate in the general body, get dividend, borrow all types of loans but not voting rights. Members who have six shares or more are entitled for voting rights.

Working Capital Structure : The working capital of the bank consists of a) Share Capital b) Reserve Fund c) Deposits from members and non members and d) Loans from NDCCB if any. The bank did not depend on the advances from NDCCB. By sound management on business lines the bank is able to win the confidence of the investing public and derived the bulk of the deposits from different sectors of the people.

Reserve Fund : The reserve fund of the bank is a statutory reserve fund created by transferring to it 25% of its net profits every year. It intended for meeting unforeseen losses and it also forms an important part of owned funds. The reserve fund of the bank as on 31.03.2017 is Rs. 145.17 Lakhs. Miscellaneous reserves of the bank includes building fund of Rs. 29.46 Lakhs dividend equalization fund of Rs. 6.24 Lakhs bad debts reserves of Rs. 32.53 Lakhs.

Owned Funds : Owned funds are the real source of improving the financial position of the bank. It consists of share capital and reserves owned funds of the bank as on 31.03.2017 is Rs. 380.95 Lakhs.

Deposits : The bank has succeeded in attracting deposits not only from members but also from non-members because of the growing public confidence in its working. Deposits are an important component of the borrowed funds. Borrowed fund consists of deposits and borrowings from other co0operative institutions like NDCCB and APCOB. The bank did not depend on borrowings from other agencies as it is able to attract an adequate deposit which is one of its main objections. Deposit Insurance and Credit Guarantee Corporation guarantee cover is available on all deposits upto One Lakh rupees. Total deposits of the bank increased constantly from time-to-time. In 2016-2017 the deposits the bank stood at Rs. 8000.00 Lakhs the growth in deposits has been continuous and overall increase was satisfactory. The bank has satisfied viability norms for deposits as prescribed by the Reserve Bank of India.

Investments : The bank has to maintain liquidity of its financial position by investing a certain portion of its resources in such assets which can be easily and quickly converted into cash without any loss of time. It generally invest its surplus funds in Government Securities and fixed and other deposits with DCCB and other financing agencies Investments which stood at Rs. 5088.96 Lakhs at the end of 2016-2017.

Interest on Deposits : The bank is offering higher interest rates than commercial banks ranging from ‘0’ percent to 08.00%. Since the deposits are more responsive to the interest rates, higher rate of interest is a strong point infamous of the Nellore Co-Operative Urban Bank Limited in the deposits mobilization. The low income groups, pensioners and senior citizens are very much attracted by the higher rates of interest. Rates of interests provided by the NCUB on different deposits are given below. Senior citizens are provided with 0.50% more interest on fixed and terms deposits.

Period of Deposit Rate of Interest
15 days to 90 days 6.%
91 days to 180 days 6.50%
181 days to 365 year 7.00%
1 above 8.00%

The bank has made steady progress during these 100 years of its existence in respect of different components of working capital and thus has satisfied the variability norms as prescribed by RBI with regard to membership, share capital, reserves, deposit and working capital.

Loans & Advances : The bank give loans to its members but it may give loans to non members also on the security of their deposits. Loans are generally given for the following purposes.

a. Advances to artisans for purchase of implements etc.

b. Advances to traders for their trade.

c. Ceremonial purposes like marriages.

d. House repairs.

e. For construction of houses.

f. For purchase of ready build house, flat etc.

g. For purchase of vehicle and house hold articles.

h. Deposit loans.

i. Loans to small scale industries.

j. Jewel Loans.

Security for Loans : The bank give preference to loans on security of deposits, gold ornaments, deposit of title deeds and mortgage of immovable property. Generally, the loans are secured by the following type of securities.

a. On the security of fixed deposit receipts upto 85% of their face value. Such loans carry 2% higher rate of interest than that allowed on fixed and term deposits.

b. Jewel Loans are also issued on the security of gold upto a certain proportion of their market value upto Rs. 10.00 Lakhs per individual.

c. Mortgage loans upto Rs. 20.00 Lakhs on the security of unencumbered immovable property wholly belonging to the member. The amount of loan does not exceed 40 to 50 percent of the market value of the hypothecated property.

d. Construction loans upto Rs. 30.00 Lakhs on the security of the land and building to be constructed. The mount of loan does not exceed 50% of the estimated value of the proposed building as estimated by the approved licensed building surveyor and on the approved building plan of the proposed construction.

e. Vehicle loans upto 25% of the purchase price of the vehicle to be hire purchased.

f. On the security of Government securities, LIC policies. The bank is charging interest at 12% P.A on all type of loans except Jewel loans for which rate of interest is 10%. Jewel loans occupied second position in total loans.

Over dues : The existence of overdues in the bank is due to lakh of proper credit appraisal. Improper assessments of borrowers repaying capacity also contribute to mounting overdues. The bank is taking necessary recovery steps to collect the loans in-time by sending registered notices, personally approaching the borrower by the collection team and intimation of legal action by attachment and sale of the security property. Principal and interest on loan installments remaining non paid for three months is treated as NPA. The bank has been making enough provision for NPA.

Profits : The net profits of the bank shall be calculated as per the provisions of the APCS Act and Rules. The General body on the recommendations of the Board of Directors may appropriate the net profits as under.

a. To carry not less than 25% to the statutory reserve fund.

b. To carry not less than 10% to bad debt reserves.

c. To carry not more than 1% to Cooperative Education Fund.

d. To carry not more than 10% to Common Good Fund and to pay to the share holder members dividend to the maximum as permitted under the APCS act.

e. To carry to the building fund, dividend equalization fund, member benefit fund and any other fund created by the bank such amounts as per the direction of the General body of the bank. The balance if any, after appropriation shall be carried over to the reserve fund.

Audit : The accounts of the bank shall be audited by the Chartered Accountant appointed by the Board and approved by the General body.

By-Laws : The working are policies of the bank mainly depending on the registered by laws of the bank. The lending policy, the management affairs etc to are based on the Cooperative Principles and the by-laws of the bank. The Reserve Bank of India is the controlling and supervising authority over the bank. The bank follows the directions and directives issued by the Reserve Bank of India from time to time. The bank has to send time reports and statements to the RBI regularly. The Reserve Bank of India performs inspection regularly as the Bank came under the purview of Banking Regulation Act 1949 during the year 1966. Since then the Bank is following the guidelines and instructions issued by the RBI from time to time to improve its performance. The bank has been doing all kinds of banking operations on par with the other Commercial Banks in the District. The bank is offering attractive rate of interests on deposits in accordance with the directives of RBI. The bank is also offering safe deposit lockers facility for the convenience of the customers. It is maintaining required standards of Cash Reserve and Liquid assets as stipulated under Banking Regulation Act 1949.

Own Building : 75 years after the existence of the bank, in the year 1990 the bank acquired a valuable and centrally located site in Gandhi Nagar, Pogathota and constructed a beautiful building to suit the same to the banking business with all modern facilities and at present, it is fully air conditioned and computerized. Now the bank in planning to acquire suitable own building for its branch office also.