Financial Viability of an Apex Cooperative Credit Institution A Case Study of the HARCO Bank

Ramesh Chander1 and Jai Kishan Chandel2

1University School of Management, Kurukshetra University, Kurukshetra - 136119, Haryana, India

1Institute of Management Studies, Kurukshetra University, Kurukshetra - 136119, Haryana, India

Department of Commerce, Delhi College of Arts and Commerce, (University of Delhi) Netaji Nagar, New Delhi 110023, India



Cooperative Credit Institutions have played a vital role in the financing of diverse activities in rural India. In recent times, these institutions have seen a very challenging environment to question their business model and perennially raise doubts at their sustained viability. The present study was conceptualized to examine the financial viability of the apex level cooperative credit institution based on the case study methodology. On balance sheet data, the study diagnosed financial health of this premiere cooperative credit institution for eight financial years, Y2K -2007 in terms of Altman (1968) multivariate Z-score analysis and CAMEL framework. The HARCO Bank, a conglomerate of 19 DCCBs and 336 branches, operates throughout the length and breadth of the State, Haryana. It has many past accolades and been rated as the best performing cooperative bank in the country by NABARD for three years in a row, 2001-04. However, the analytical presentations in this study has highlighted its poor performance on various parameters. Its asset quality has been good and the recovery position been very comfortable, but the financial position in terms of capital adequacy, liquidity, earning quality and the management efficiency parameters was very lackadaisical necessitating immediate intervention. CAMEL Model has further endorsed and validated study findings drawn from Z-score analysis.

Keywords: Co-operative Credit Institutions, Financial Viability, Capital Adequacy, Padmanabhan Committee (1995), CAMEL Model, Altman Z-score Analysis