A. PERFORMANCE AWARDS TO
STATE COOPERATIVE BANKS
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The National Federation of State Cooperative Banks Ltd. (NAFSCOB)
introduced a scheme of Performance Awards to its member banks in 1982-83. The
performance awards were intended to promote a meaningful and healthy competition
among the member State Cooperative Banks (SCBs) and provide an impetus to their
functioning. In order to operate the scheme of performance awards, the
Board of Directors of NAFSCOB, constituted an independent Jury from time to time
to evaluate and recommend award of performance.
The members of the Jury are drawn from National Bank for Agriculture
& Rural Development (NABARD), Department of Agriculture & Cooperation,
Ministry of Agriculture, Government of India (GOI), Reserve Bank of India (RBI)
and National Institute of Bank Management (NIBM). NAFSCOB so far have
awarded performance awards
on annual basis since 1982-83 upto 1998-99 as per the recommendations of the
The terms of reference for the Jury are as follows :
decide the parameters for collection of data from SCBs.
To design the
format, for acquiring the data from SCBs, through NAFSCOB.
spell out the concepts and definitions of each of
To formulate a detailed technical framework/criteria for analysis of the
data and analyse the performance of SCBs based on such criteria.
To finalise the recommendation for presentation of the Awards to SCBs.
The Jury has developed a Technical Criteria, Framework & Application
for identification of the parameters for collection of data from SCBs and spelt
out the concepts and definitions. The total analysis of the data is based on the
The Jury designed a detailed format/questionnaire on the identified
parameters for collection of data from SCBs.
The SCBs are advised to send the duly filled in questionnaire, keeping
into consideration the spelt out concepts and definitions. Further, both the
questionnaire and a note on concepts and definitions are made available to all
SCBs by NAFSCOB.
The information/data received from the SCBs are analysed. The gaps if any, are bridged by depending upon the other
authentic sources such as NABARD and NAFSCOB.
The above exercise is carried out by NAFSCOB under the guidance of the
WORK AND APPLICATION
PERFORMANCE EVALUATION OF STATE COOPERATIVE BANKS
selection of a State Cooperative Bank for the best performance award
pre-supposes the ranking of all State Cooperative Banks in terms of their
performance. It becomes, necessary to define : What is performance ? Thereafter
all the banks can be evaluated in terms of such defined performance.
should constitute the performance of the State Cooperative Banks can be
evaluated in terms of multiple indicators of performance as against a single
indicator. Here, the question arises how to develop the composite index for all
selected parameters to facilitate a meaningful ranking of the banks. Accordingly a ?u>Scoring Model - A Performance Evaluation
Technique (PET)?can be developed and the salient features of the PET and
its application may be described as follows :
ranking of the State Cooperative Banks could be based on a careful
of the inter-relationships
of different variables (factors) that have a direct bearing on the economic and
operational performance of the bank. This can be done by adopting a Scoring
Model. The construction of the model involves the process of identifying
different variables, selecting specific parameters, converting them in the form
of ratios of any two variables at a time, assigning numerical values in terms of
points of marks to each such parameter depending upon its relative impact on the
total performance of the bank, and finally arriving at the composite score of
the total performance of each bank. This model further aims systematically,
factually and objectively determining the relative impact of the selected
parameters on the overall performance of the bank. It is systematic
because it is based on a uniform and scientific criterion developed after
careful examination of relative importance of the parameters. It is factual
because it is based on facts and figures secured from the authentic sources. It
is objective because it involves the assessment of the performance of the
banks in quantitative terms as against arbitrary ranking based on
performance of State Cooperative Banks is multifaceted and cannot meaningfully
be decided upon by a single indicator. In order to facilitate a quantitative
comparison of the overall performance of a bank, numerical weightage are
assigned to different parameters. The higher the importance of the impact of the
parameter on the overall performance, the higher the weightage (in the form of
marks) that is assigned to that parameter. The score of marks on each parameter
is further distributed on a 5 degree scale with equal intervals between the
degrees. The magnitude of the ratio suggests the degree in which it falls and
accordingly the marks are assigned. The
composite score depicting the total performance of the bank is arrived at by
adding scores of the different parameters.
The various steps involved in
developing the suggested scoring model is given below:
that would reflect the
performance of the bank vis-?vis the objectives/goals.
Identify the variables relating to the above selected parameters.
Define the variable and establish their data sources.
Tabulate the data of the variables and work out the magnitudes of
parameters in the form of ratios.
Assign a score of marks to each parameter depending upon its relative
importance on the total performance and further distribute the marks on a five
degree scale ranging between the minimum and maximum magnitudes arrived at for
all banks in question.
Apply the relative marks of the degree in which the magnitude of the
parameters of the bank falls.
Make the total of scores so assigned to different parameters of each
Arrange the banks in the descending order of the composite score obtained
by each bank.
various parameters can be selected on the criteria that they should reflect the
Tabulation of Data and Compilation of Ratios :
The supporting data for the different variables can
be tabulated as per the definitions.
Assignment of Marks
In a scoring model the practice is that some
parameters are assigned higher score of marks depending upon the relative
importance it is judged to assume. It is suggested to allot a total of 100 marks
among the 25 parameters classified into six broad groups.
can further be subdivided among different parameters in each group.
The score of marks assigned to each parameter in each group can further
be subdivided into 5 degrees ranging between the highest and lowest magnitudes
of the ratios of all banks taken together in each group separately to facilitate
the recognition of the marginal variations in the performance of the different
banks. The allotment of the actual score of the marks to the first degree
depends upon whether the highest magnitude to the parameter represents the best
or the worst performance.
Tabulation of Scores and Ranking
The next step is to determine the degree in which the
magnitude of each parameter falls and assign corresponding marks to that
parameter and then sum up to arrive at the composite score of the bank as a
whole. The banks can be ranked on the basis of the composite scores obtained by
each one of them. Higher the composite score, higher the rank.
The list of the winning State Cooperative Banks, since its inception, is
given as Annexure-I.