In a banking institution, the most important function is the management of the funds. The efficiency with which the funds are managed is reflected through the financial margin of the bank, which, in turn, is influenced by many factors. The ratio of own funds to working funds, the ratio of low cost deposits to total deposits, the ratio of overdues to total loans, the ratio of recovery to demand, the ratio of agriculture loan to total loan and the credit to deposit ratio are some of the factors which are identified for the present study. This paper attempts to estimate the impact of the identified variables on the financial margin of the Central Cooperative Banks in Punjab with the help of correlation and multiple stepwise regression approach. The ratio of own funds to working funds and the ratio of recovery to demand are observed to be having significant influence on financial margin, whereas the ratio of overdues to total loans is having a negative one. A high use of own funds and timely recovery of previous loans, as a source for funding further loans by the bank, help the financial margin in a positive way.

The success of any organization lies in the efficient use of its resources. When we particularly talk about using the money resources, we call it funds management. In the banking industry, where we are dealing mainly with funds, it becomes necessary to be serious in handling this lifeline of the organization. When it comes to dealing with funds, it makes no difference whether we are a commercial organization or a socially oriented one. As the banking institutions deal with public money, it becomes more important for them to best manage the funds entrusted to them by the general public and shareholders.

For a banking institution, management of funds has two broad objectives, namely, raising the resources at a minimum possible cost, i.e., cost of funds and to deploy these resources optimally and prudently so as to get maximum returns, i.e., yield on assets. The financial marginthe difference between the weighted average yield on assets and the weighted average cost of fundsis the parameter that shows the efficiency in managing the funds.

Funds Management in the Central Cooperative Banks of Punjab An Analysis of Financial Margin, banking institution, financial margin, agriculture loan, Central Cooperative Banks, funds management, commercial organization, banking institutions, shareholders.