Unit 2: Accounting of ZSBs

Accounting of Zila Sahakari Banks (ZSBs)

(Also called District Central Cooperative Banks – DCCBs)

Zila Sahakari Banks operate between PACS at village level and State Cooperative Banks at state level. Accounting ensures financial transparency, loan monitoring, and regulatory compliance.

Accounting Rules & Procedures for Zila Sahakari Bank Ltd

A. Accounting System

ZSBs follow:

Double Entry System
Accrual Accounting
Core Banking System (CBS)
RBI/NABARD uniform accounting standards
Cooperative Societies Act rules

B. Key Books of Accounts

General Ledger
Subsidiary Ledgers (Loan, Deposits, Investment, Cash, Branch)
Cash Book / Day Book
Journal / Voucher Register
Interest Accrual Register
Branch-wise Trial Balance
Investment Register
Fixed Asset Register

Head Office Accounting of Zila Sahakari Bank

Head Office (HO) maintains and controls:

A. Consolidated Accounts

HO prepares:

Consolidated Trial Balance
Consolidated Profit & Loss Account
Consolidated Balance Sheet

B. Inter-Branch & HO-Branch Transactions

These transactions are major:

Example: Funds sent from HO to Branch

Branch A/C — Dr
To Head Office A/C

When branch acknowledges receipt

Head Office A/C — Dr
To Branch A/C

(HO & branch must reconcile weekly/monthly.)

C. Interest Accounting by HO

HO calculates and allocates:

Interest on savings
Interest on term deposits
Interest on loans
Interest on borrowings

Posting is often automatically done by CBS.

D. Provisioning & Statutory Requirements

HO is responsible for:

Provision for NPAs
Income recognition norms
Depreciation
Reserve creation (Statutory Reserve, Bad Debt Reserve)
CRR/SLR maintenance

Rules & Procedures for DCCB Branch Accounting

Each branch keeps detailed records of:

A. Deposits

Savings
RD/FD/MIS
Current Accounts
Cooperative society accounts

Entry example (deposit):


Cash/Bank A/c — Dr
      To Customer Deposit A/c

B. Loans & Advances

Branches execute:

Kisan Credit Card (KCC)
Crop loans
Cash Credit
Term loans

Entry example (loan disbursement):


Loans & Advances A/c — Dr
      To Cash/Bank A/c

C. Interest Recording

Interest is recorded daily under CBS.

D. Branch Closing & Reporting

Every branch prepares:

Cash Scroll
Branch Trial Balance
Branch Income/Expense Reports
NPA report
Asset-Liability report

Reconciliation Procedures

Reconciliation ensures that HO account = Branch account and no mismatch exists.

A. Types of Reconciliation

HO–Branch Reconciliation
Inter-Branch Reconciliation (IBR)
Bank Reconciliation (BRS)
Reconciliation with PACS
Reconciliation with State Cooperative Bank

B. Reconciliation Process (Simple Steps)

Step 1: Collect statements from branch and HO

Step 2: List differences:

Delayed posting
Duplicate entries
Reversed entries
Missing transactions

Step 3: Match & adjust

Example: Branch shows deposit, HO does not

HO Entry:


HO Adjustment A/c — Dr
      To Branch A/c

Step 4: Prepare Reconciliation Statement

Shows:

Outstanding items
Errors
Adjustments

Step 5: Close matched entries monthly

Common Errors Found

Delay in entry posting
Wrong account mapping
Misclassification of loans
Unreconciled inter-branch transfers
Chargeback from clearing house

Accounting of Land Development Banks (LDBs)

(Also called Primary Land Development Banks – PLDBs and State LDBs)

LDBs provide long-term loans for:

Land improvement
Tractor purchase
Wells, irrigation systems
Farm mechanization

A. Key Features of LDB Accounting

Long-term loan cycle (10–20 years)
Recovery in half-yearly/annual installments
Large volume of mortgage-based loans
Refinance from NABARD
Bonds/Debentures issued for raising funds

B. Important Books Maintained

Loan Mortgage Register
Debenture Register (LDBs issue debentures to raise funds)
Interest Due Register
Installment Register
Default Register
General Ledger
Cash Book

C. Accounting Entries in LDBs

1. Loan Disbursement


Loans to Members A/c — Dr
      To Bank/Cash A/c

2. Interest Accrued


Interest Receivable A/c — Dr
      To Interest on Loans A/c

3. Receipt of Installment


Cash/Bank A/c — Dr
      To Loans to Members A/c (Principal)
      To Interest on Loans A/c

4. Issue of Debentures


Bank A/c — Dr
      To Debenture A/c

5. Depreciation


Depreciation A/c — Dr
      To Asset A/c

D. Special Features in LDB Accounting

1. Long-term interest accrual

Interest accrues annually but may be collected yearly/half-yearly.

2. NPA Classification

Loans overdue beyond limits are classified as NPAs.

3. Government Subsidy/Refinance Entries


Bank A/c — Dr
      To Subsidy/Refinance A/c

Summary Table

Topic	Key Points
ZSB Accounting	Double-entry, CBS, HO control, loan/deposit accounting
HO Accounting	Consolidation, inter-branch accounts, provisioning
DCCB Branch Rules	Loan, deposit, interest, reporting
Reconciliation	HO–Branch, Inter-branch, BRS, PACS reconciliation
LDB Accounting	Long-term loans, debentures, NABARD refinance

Accounting of ZSBs and LDBs (U.P. Bhumi Vikas Bank Ltd)

Accounting of Zila Sahakari Bank Ltd (ZSBs)

Zila Sahakari Banks (District Cooperative Banks – DCCBs) follow specific accounting rules to ensure transparency, accuracy, and compliance with cooperative banking laws.

A. Accounting Rules & Procedures for Zila Sahakari Bank Ltd

1. Uniform Chart of Accounts

ZSBs follow a standard chart of accounts prescribed by NABARD & State Cooperative Dept.

Accounts are divided into:

Assets (Loans, Cash, Investments)
Liabilities (Deposits, Borrowings, Reserves)
Income (Interest earned, commission)
Expenses (Interest paid, salaries)

2. Double-Entry System

Every transaction has two entries—Debit & Credit.
Ensures accuracy & reduces fraud.

3. Daily Books Maintained

Cash Book
General Ledger
Subsidiary Ledgers (Loan Ledger, Deposit Ledger, Sundry Ledger)
Journal Register
Bank Reconciliation Register
Pay-order & Cheque Issue Register

B. Head Office Accounting of ZSB

1. Consolidation of All Branches

HO prepares consolidated statements:

Trial Balance
Balance Sheet
Profit & Loss
Cash Flow Statement

2. Inter-Branch Accounts

All branches maintain Inter-Branch Adjustment Accounts (IBA).
Helps track amount receivable or payable between HO and branches.

3. Statutory Reporting

HO prepares reports for:

NABARD
Registrar Cooperative Societies
RBI (indirect compliance)
State Government

C. Accounting Rules & Procedures for DCCB Branches

1. Branch-Level Books

Branches must record:

Cash receipts/payments
Loans issued & recovered
Deposits collected
Interest calculations
NPA & provisioning entries
Payroll and administrative expenses

2. Loan Accounting

Debit: Loan A/c
Credit: Cash/Bank
Interest applied at month-end or quarter-end.
Provisioning for NPAs per NABARD norms.

3. Deposit Accounting

Credit: Deposit A/c
Debit: Cash/Bank
Interest payable on Savings/Term Deposits recorded periodically.

D. Reconciliation Procedures

1. Bank Reconciliation

Daily/Monthly reconciliation between:

Cash book vs. Bank Passbook
Branch accounts vs. HO accounts

2. Inter-Branch Reconciliation

HO verifies whether inter-branch transactions match.
Unreconciled items cross-checked and corrected.

3. Suspense & Sundry Clearing

Pending items cleared on priority
Age-wise analysis prepared monthly

Accounting of LDBs (Land Development Banks)

Uttar Pradesh Bhumi Vikas Bank is part of the Long-Term Cooperative Credit Structure (LTCCS).

A. Accounting Rules & Procedures for U.P. Bhumi Vikas Bank Ltd

1. Long-Term Loan Accounting

LDBs give long-term agricultural loans, typically against land mortgage.

Loans recorded as:

Principal Outstanding
Interest Accrued
Overdue Interest

2. Special Books for Mortgage Loans

Mortgage Deed Register
Loan Proposal Register
Recovery Register
Bond Issue Register (LDBs raise funds through bonds)

B. Head Office Accounting of UPBVB

1. Consolidation of District Offices

HO compiles district-level financials.

Maintains master accounts for:

Borrowings (from NABARD)
Bonds issued
Reserves, provisions
State government subsidies

2. Funds Management

Long-term funds are allocated to branches.

HO records:

Disbursement
Repayment
Interest subsidies
Refinancing from NABARD

C. Branch Accounting in LDBs

Branches maintain:

Loan Disbursement Register
Loan Recovery Register
Interest Accrual Register
Cash/Bank Book
Deposit Register (if any)
Branch-level P&L

D. Reconciliation Procedures in LDBs

1. HO ↔ Branch Reconciliation

Daily/monthly matching of:

Loans disbursed
Recoveries
Overdues
Subsidies received
NABARD refinance claims

2. Bond Reconciliation

Since LDBs issue debentures or bonds, reconciliation includes:

Bond principal
Interest payable
Interest paid
Redemption schedules

Summary Table (Easy Revision)

Topic	ZSB (DCCB)	LDB (UPBVB)
Purpose	Short-term & medium-term credit	Long-term agricultural credit
Key Operations	Deposits, loans, payments	Mortgage loans, bond financing
Main Books	Cash book, GL, loan ledger	Mortgage register, bond register
HO Role	Consolidation, reporting	Fund management, refinancing
Branch Role	Daily transactions, deposits/loans	Loan disbursement & recovery
Reconciliation	Bank, inter-branch	HO-branch, bond accounts
Fund Sources	Deposits, NABARD	Bonds, NABARD refinance