14_chapter 5.pdf

CHAPTER 5

“Operational Result of Co-Operative Banks in Pravara Area” 5.1

Introduction P ravaranagar is well known fo r the co-o-operatlve movement, which started way back in 1911 with the establishm ent of first PACS in Ashivi Kd. Later on many PACS on sim ilar lines were also established, w hich have contributed for the developm ent of agriculture.

In 1950, Padmashri Vitthalrao Vikhe

Patil

augm ented this movement by establishing of the first co-operative sugar factory in Asia. This has further encouraged co-operative m ovem ent in this area by the co-operative banks, which started giving loans to farm ers through PACS. All these co-operative institutions are by and large responsible for w hatever the developm ent in agriculture agro based industries, education and other allied activities developed in Pravara area. The co-operative m ovem ent along with irrigation facilities has been a boon to the farm ers in this area and this area has set an exam ple fo r the successful co-operative m ovement in the country aimed at rural developm ent with social justice. Though Pravaranagar is a small rural area, there are 73 financial institutions functioning on co-operative basis, in and around of which there are 16 branches of ADCC bank, 10 branches of UCB, 3 sub-branches of district LDB and 44 PACS. The branches of ADCC bank provided finance to farm ers through 44 PACS, w hile the sub branches of LDB branch Ahm ednagar extends term finance to farm ers directly. The branches of UCB provide financial support for non

agricultural

purposes

such

as trading,

business,

S.S.l.

unit,

cottage

industries, self employment, transport, construction, education, consum ption purposes etc.

169

5.2

Perform ance of ADCC bank Ltd. In Pravara area.

In and around Pravara area there are 16 branches of ADCC bank located in Loni Bk., Kolhar Bk., Kolhar Kd., Bhableswher, Dahd Bk., ASHVI Bk., Ashvi Kd., Ftyabad, Pathre, Nimgaonjali, Zerekati, Chengaon, Chinchpur, Songaon and P ravaranagar suger factory. These branches provide short-term and medium term financial support through 44 PACS for Agriculture and allied activities. These branches do not have any members, share capital, and reserve funds and borrow ings funds, but are meant only for collection of deposits and loan disbursem ent. The branches of ADCC bank are governed and regulated by the head

office

of Ahm ednagar

district

central

co-operative

bank

located

in

A hm ednagar city. Head office pools working capital, reserves and deposits of all the branches together and transfer cash to those branches, w hich need additional funds fo r lending to their customers. The ADCC m obilisation savings through accepting cash deposits form urban people and transfer the money to their branches which find them selves in financial inadequacy in advancing loans to farm ers thorough PACS

5.2.1 Deposit mobilisation and loan disbursem ent ADCC bank mobilized deposits through its 16 branches in Pravara area and this am ount is disbursed as a loan for the purpose of A griculture and allied activities. The following table gives an account of perform ance of branches of ADCC

bank

in

Pravara

area,

with

regard

to

deposit

m obilization,

loan

disbursem ent, C/D ratio from the pehod 1989-90 to 1998-99. This data has been depicted in the form of a diagram (Chart 5.1)

170

Table No. 5.1

Deposit mobilisation and loan disbursement in Pravara area (Rs. In Lakhs)

62

D eposit in Pravara area as % of district total 4.08

Advances in Pravara area as % of district total 2.12

63

3.92

2.04

64

4.05

1.89

66

3.76

1.94

67

3.71

2.09

-6 3 .7

8.0

-9 .1

-1 .5

70

3.52

1.84

57

3.71

1.70

53

3.45

1.86

53

3.48

1.85

3182.93 (21.1)

1026.85 (22.9) 1031.68 (0.5) 1157.49 (12.2) 1388.20 (15.6) 1726.55 (2 9 .^

54

3.74

2.07

118.1

68,1

-2 .3

6.2

12.5

16209.88

9565.52

58.7

37.48

19.44

288.0

238.2

-1 3

- 8 .4

-2 .4

Year

Deposit

1989-90

820.25 (5.8) 875.30 (6.7) 1002.38 (14.5) 1050.09 (4.7) 1240.28 (18.1)

510.40 (7.4) 557.62 (9.2) 637.95 (14.3) 693.19 (8.8) 835.59 (20.5)

51.2

1994-95

1458.87 (17.6)

1995-96

1779.82 (21.9) 2171.19 (22.0) 2628.77 (21.1)

1990-91 1991-92 1992-93 1993-94

F.Y.G.R.%

1996-97 1997-98 1998-99

F.Y.G.R. % Total T.G.R. %

Loan disbursem ent

C/D Ratio

Note : Bracketed figures indicate growth rate over previous year. Source : A ccount section, branches of A.D.D.C. bank in Pravara area.

In 1989-90, the branches of ADCC bank in Pravara area mobilized deposits of about Rs. 820.25 lakhs, this has gone up to Rs. 3182.93 lakhs in 1998-99. There has been a significant increase in deposit m obilisation. In the first five-year period under review, growth rate of deposits was 51.2 percent, but in

171

Chart 5.1

Deposit and Loan Disbursments by ADCC Bank in Pravara Area (Rs, in lakhs) 3500 . □ Deposits ■ Loan DsbursmBnt

3000 -

(A 2500 +---------(C c

20 00 -

c

3 O 1500 E

<

S Year

C/D Ratio of ADCC Bank in Pravara Area.

2 0 -----

-

10

-

-

0

-

-

vO'

c§=>

9r \ Year

the next five-year period it increased to 118.1 percent. The growth rate over previous year also increased from 5.8 percent to 21.1 percent during 10-year period. The highest growth rate over previous year was 22.0 percent in 1996-97, and lowest growth rate was shown at 4.7 percent in 1992-93. The total growth rate dunng 10-year penod was 288.0 percent. This gives up average annual growth rate of 28.8 percent over the period under consideration.

On an average the branches of ADCC bank in Pravara area collected deposits o f 3.7 percent o f total deposit, collected during study penod. The highest percent o f deposit, collection when com pare to district was 4.1 percent in 198990, but the lowest percent of 3.5 was in 1996-97. The am ount of loan disbursem ent was Rs.510.40 lakhs in 1989-90. The first five year growth rate in loan disbursem ent was 63.7 percent, which indicates a small increase but reached up to 68.1 percent in the next five year period. The growth rate over previous year in loan disbursem ent was 7.4 percent in 1989-90, it was trem endous increase to 29.0 percent in 1998-99. The highest growth rate over previous year was 29.0 percent in 1998-99, and lowest growth rate was 0.5 percent in 1995-96. The aggregate total loan disbursem ent was Rs,9565.52 Lakhs. The percentage of loan disbursem ent which com pare to district was highest at 2.1 percent in 1989-90 and lowest was 1.7 percent in 1995-96. Total growth in loans disbursed in 10 years under review was 238.2% , which gives us annual growth of 23.8 percent. The C/D ratio was 62 percent in 1989-90 with year to year fluctuations, finally dropped to 54 percent in 1998-99. The highest C/D Ratio was 70 percent in 1994-95 and the lowest 53 percent in 1997-98. The average C/D Ratio for 10 years period was 59 percent. It was found that the

172

collection o f deposit was more than the disbursem ent because of attractive rate of interest with com pare to other banks,

5.2.2 Purpose w ise loan disbursem ent The branches of ADCC bank in Pravara area give loan to the farm ers for crop production, digging of wells, purchase of electric motors, tractor, modern agricultural impliments, laying pipelines, sprinkler, and drip irrigation systems, horticulture, dairy and poultry developm ent. The bank also gives loans to other activities such as transport, m arketing purpose, SSI units, housing, gobergas plants, village industnes and handicraft. The table 5.2 indicates purpose wise loan disbursem ent by branches of ADCC bank in Pravara area. The data also depicted in the from of chart (Chart 5.2) Table 5.2 shows that a total of Rs. 510.40 lakhs was disbursed for all these activities in 1989-90, it increased up to Rs. 1726,55 lakhs in 1998-99. The growth rate in percentage terms over 10 years was 238.2. In first five year penod percentage of growth was 63.7 and next five year growth rate was 68.1 percent. In the first five-year penod the crop loan grov^h rate was 82.3 percent, which has come down to 66.9 percent in next five -year penods. The grov^h rate in first five year period of w ells and electhc motor was 28.3, pipeline 11.6, tractor and agricultural impliment 55.6, Dairy and poultry 76.4, Horticulture 11.4 and others 60.8 percent. The growth rate in next five-year period fo r w ells and Elect. Motors was 33.2, pipeline 39.7, Tractor and agricultural im plim ents 116.2, Dairy and poultry 115.6, Horticulture minus 10.6, and other 38.6 percent. Except for horticulture and other purposes growth rate has increased in second five-year penod. The total growth rate has indicated good progress in dairy and poultry, because of availability of sufficient funds in bank and dem and from farm er also increased. 173

Table 5.2

Purpose - w ise loan disbursem ent by ADCC bank Ltd. In Pravara area. (Rs. In lakhs) Year

Crop loan

W ell + Elect. motor

Pipeline + sprinkle r Drip

Tractor + Agri. Implime nts

Dairy + Poultry

Horticu Iture

Others

Total

1989-90

237.18

52.35

63.80

70.32

40.85

15.41

30.49

510,40

(46.5)

(10.3)

(12 .6 )

(13.8)

(8.0)

(3.0)

(5.8)

( 100 )

252.80

60.82

67.13

74.30

44.61

18.42

39.54

557.62

(45.3)

(10.9)

( 12 .0 )

(13.4)

(8.0)

(3.3)

(7.1)

(100)

318.32

62.64

76.31

80.19

51.09

26.68

22.72

637,95

(49.9)

(9.8)

( 12.0)

( 12 .6 )

(8.0)

(4.2)

(3.5)

( 100 )

340.14

56.70

68.84

96.32

60.21

31.04

39,94

693,19

(49.1)

(8.2)

(9.9)

(13.9)

(8,7)

(4.5)

(5.7)

( 100 )

432.44

67.20

71,26

109.43

72.08

34.14

49.04

835.59

(51.8)

(8.0)

(8.5)

(13.1)

(8.6)

(4.1)

(5.9)

( 100 )

F.Y.G.R.%

(82.3)

(28.3)

( 11 .6 )

(55.6)

(76.4)

121.4

60.8

(63.7)

1994-95

549.06

77.36)

76.10

132.74

87.41

39.41

64.77

1026.85

(53.5)

(7.5)

(7.4)

(12.9)

(8.6)

(3.8)

(6.3)

( 100)

567.29

74.44

82.07

129.68

98.55

34.06

45.59

1031.68

(55.0)

(7.3)

(8.0)

(12.5)

(9.5)

(3.3)

(4.4)

(100)

630.36

66.26

93.19

154.04

138.63

26.91

48.10

1157.49

(54,5)

(5.7)

(8.1)

(13.3)

(12.0)

(2.3)

(4.1)

(100)

718.71

74.32

104.06

262.74

130.11

28.90

69.36

1388,20

(51.8)

(5.5)

(7.5)

(18.9)

(9.3)

(2.1)

(5,0)

(100)

916,43

103,11

106,34

35,27

89,83

1726.55

(53,1)

(6.0)

(6.2)

(2,0)

(5,2)

(100)

F.Y.G.R. %

(66,9)

(33,2)

(39,7)

Total

4962,73

695.20

9565.52

(51.9)

(7.3)

( 100)

(286,3)

(96,9)

1990-91 1991-92 1992-93 1993-94

1995-96 1996-97 1997-98 1998-99

T.G.R. %

(66.6)

(308.2)

(361.3)

(128.8)

(194.6)

Note: - Bracketed figures indicate percentages to total amount. Source: - Loan section, branches of ADCC bank Ltd, From Pravara area 1989-90 to 1998-99,

174

(238,2)

c0) o> O)I 00 o>

o o> I o>

04 in

a £ •= S' 0) < w « i i O UJ I s 1 1 S o 5 Q. a

I

(0

£ <

(0 (0 >

(0 1Q .

c

•M B

CN ui ^ 6

c (0 n c
E J2 3

n w

c (0 0) (/>

0) (0 0 Q

1

6^

lO

Out of total loan, maximum loan of 51.9 percent was given to the crops and minimum to horticulture i.e. 3 percent because low dem and from farmer. The loan disbursem ent dunng span of 10 years averaged 7.3% to well and elect motors, 8.4% to pipeline, tractor and Agn-im plim ents 14.6%, dairy and poultry 6.1% and others 5.2 percent. Out of total disbursement, maximum percentage of loan (55%) was given in 1995-96 to crops as com pared to other years. The total growth rate of crop loan over a period of 10 years was 286.3% on an overage the crop loan given per year is Rs. 496.27 lakhs. A total of 695.20 lakhs of rupees was given fo r digging w ells and purchase of electric motors, which 7.3 percent of the total. Loan disbursem ent fo r laying pipelines and installation of sprinklers and drip system ADCC branch advanced Rs. 809.10 lakhs, which w ork out to be 8.4 percent of total. Highest proportion of money i.e. 12.6 percent was given fo r this purpose in 1989-90. So a total of 15.7 percent of loan was disbursed fo r irrigation facilities. For the purchase of tractor and agriculture implim ents the branches have provided financial support of Rs. 1336.85 lakhs or 14.6 percentage o f total loan disbursem ent. The growth rate of loan for this purpose during first five years under review was 56.6. which accelerated further up to 116.2% during next five years. The average growth rate fo r this purpose in 10 years was 308.2 percent. Maximum loan of 18.9 percent was given to tractor and Agri-im plim ents in 199798. For the developm ents of dairy and poultry business the banks have provided Rs. 912.02 lakhs, w hich is 9.6% of total loan. The total growth rate in 10 years was 361.3 percent which is highest in all categories maximum percentage of loan i.e. 12.0 percent was given in 1996-97 and lowest was 8.0 percent in first three years under of consideration.

175

The loan disbursem ent to horticultural purposes was 3 percent of total loan (i.e.;290.22 lakhs) but the growth rate was more in first five-year period, w hich was fa r less 10.6 in the next five-year period. For others, the banks have provided Rs. 499.38 lakhs, which 5.2 percent of total loan. The growth rate for this purpose was 60.8 percent in first five-year period and in second five-year period i.e. 38.6 percent only. The total growth rate was 194.6 percent during 10 years period. The maximum am ount was disbursed in 1990-91 i.e. 7.1 percent of total loan amount. It is found that, the ADCC bank was not providing sufficient finance for agro-based industry, self -em ploym ent and horticulture during period under review. Because scale of finance was very less com pare to required project cost.

5.1.4. Recovery and over dues. Recovery is as im portant as advance for any financing institution In Planning the loaning system. If the loan installm ent becomes overdue, the entire loaning structure

becomes

weak.

So

it

is

necessary

to

have

arrangem ents

for

supervision which should be an adequate and effective recovery system. The table 5.3 shows a picture of the perform ance of the Demand, Recovery and Overdues with percentage from 1989-90 to 1998-99. Table 5.3 shows that the am ount of demand loan was Rs, 560 lakhs in 1989-90. The amount of dem and shows year to year variation during the 10-year penod under review, The highest am ount of loan demand was at Rs. 1241.04 in 1998-99. In the first five year period growth rate in dem and was 32,7 percent but it decreased in next five year period i,e, 17,0 percent between 1994-95 to 199899. The total growth of dem and during 10 years period was 121.4 percent therefore the annual average demand was 12.1 percent.

176

Table No. 5.3

Demand, Recovery and overdues of ADCC bank in Pravara area Demand Rs.

Recovery Rs.

% of Recovery

Over dues Rs.

% of Over dues.

1989-90

560.32

416.31

74.3

144.01

25.7

1990-91

613.45

482.17

78.6

131,28

21.4

1991-92

524.41

376.61

70.2

147.80

29.8

1992-93

870.55

696.44

80.0

174.11

20.0

1993-94

743.64

554.75

74.6

188.89

25.4

F.Y.G.R.%

(32.7)

(33.3)

—

(31.1)

—

1994-95

1060.09

831.11

78.4

228.98

21.6

1995-96

1024.53

783.76

76.5

240.77

23.5

1996-97

872.97

588.38

67.4

284.59

32.6

1997-98

1052.24

741.82

70.5

310.42

29.5

1998-99

1241.04

930.28

75.4

310.76

24.6

(17.0)

(11.9)

—

35.4

—

8563.24

6401.63

74.7

2161.61

25.3

(121,4)

(123,5)

—

(115,41)

—

Year

ry .G .R . % Total T.G.R. % =r,.

'

iL'ji-v. zz

Note: - bracketed figures indicate Growth Rate Source: - A ccount section, branches of ADCC bank ltd. from Pravara area.

The highest recovery percentage was 80.0 percent in 1992-93 because of repaym ent by state governm ent to bank for farm er’s loan up to Rs. 10000 of each farmer. The lowest recovery was 67.4 percent in 1996-97, because 14 villages in Pravara area were declared under famine, and no recovery was received from farm ers of these villages. In the first five year period growth in recovery was 33.3 percent but it decreased in next five year period i.e. 11.9

177

percent The total growth rate of recovery was 123.5 percent, therefore the annual average growth rate was shown 12.3 percent in 10 years period.

The am ount of over dues has continuously increased from Rs. 144.01 lakhs in 1989-90 to Rs. 310.76 lakhs in 1998-99. The over dues percentage shown during 10 year period is between 20% to 33%. It is com paratively low with rest o f branches o f ADCC bank ltd. In first five year grov^h in overdues was 31.1 percent, but it is a small increase in the next five -year periods. The total grovi4h rate in over dues was 115.4% and annual average growth rate was 11.5% dunng 10 years period under review.

The total amount of demand w as Rs. 8563.24 lakhs, out of w hich recovery am ount was Rs. 6401.63 lakhs (74.7% ) and the over dues am ount was Rs. 2101.61 n lakhs (25.3%). Percentage o f over dues averaged to 25.2 fo r the entire period o f 10 years. The aggregate recovery was satisfactory in Pravara area, because Pravara co-operative sugar factory helps to recover the loans from farm er sugarcane payments.

5.2.4 Operational results of ADCC bank In Pravara area.

In Pravara area there are 16 branches of ADCC bank operating its activities under the guidance of head office. These branches providing finance to the farm er through village PACS. The following table shows in inform ation about profit and loss of these 16 branches during the period under review.

178

Table No. 5.4

Operational results, of ADCC bank In Pravara area. (Rs. in Lakhs.) Net effect Rs. (3-5) 6

Loss Rs.

3

No. of branches in loss 4

10

10.48

06

5.40

+ 5.08

1990-91

09

12.29

07

6.62

+ 5.67

1991-92

11

15.32

05

6.92

+ 8,40

1992-93

12

19.19

04

5.14

+ 14.05

1993-94

10

23.53

06

7.46

+ 16.07

F.Y.G.R.%

—

(124.5)

—

(38.11)

(216.3)

1994-95

09

21.48

07

7.84

+ 13.64

1995-96

09

20.62

07

8.72

+ 11.90

1996-97

10

23.70

06

10.31

+ 13.39

1997-98

09

25.23

07

13.08

+ 12.15

1998-99

08

27.51

08

15.22

+ 12.29

—

(28.0)

—

(94.1)

(-1 0 .1 )

Total

97

199.35

63

86.71

112.64

A verage

9.7

19.3

6.3

8.67

11.24

T.G.R. %

—

162.5

—

181.8

141.9

Year

No, of branches in Profit 2

Profit Rs.

1989-90

1

f;;Y.G.R. %

5

Source; - Account sections, from branches of ADCC bank in Pravara area. Note:

- Bracketed figures indicate growth rate.

Duhng the penod 1989-90, 10 branches of ADCC bank showed a profit of about Rs. 10.48 lakhs. This trend continued during 10-year period except 199596. How ever the num ber of branches have shown uneven num ber during 10179

year period of study review. The total profit during period w as Rs. 199.35 lakhs, w hile average profit per year was Rs. 19.93. The grov^rth rate in first five-year was 124.5% but it decreased in next five -year and reached upto 28.0%. The total growth rate in profit was 162.5% dunng the period from 1989-90 to 1998-99. The loss of Rs. 5.40 lakhs was in 1989-90 it increased during 10-year period and reached up to Rs. 15.22 lakhs in 1998-99. The total loss o f Rs. 86.71 lakhs in 10 year period, it is an average of 8.67 per year. In first five -year pehods the growth rate in loss was 38.1% but it increased in next five-year period i.e. 94.1%. The total growth rate in 10 years period was 181.8% due to low disbursem ent com pare to deposit. The net effect of profit and loss of 16 branches was satisfactory during 10 years period under review. The net effect of profit was Rs. 5.08 lakhs in 1989-90; it increased to Rs. 12.29 lakhs in 1998-99. The grovi^h rate in first five-year period was 216.3% but it decreased more in next five -y e a r period i.e. - 10.1 percent. The total growth rate in net effect was 141.9 percent. The total profit of all branches of ADCC bank in Pravara area during 10 years period was Rs. 112.64 lakhs; it is an average per years 11.26 lakhs due to satisfactory recovery perform ance,

5.3

W orking of LDB in Pravara area. Land developm ent bank, with its state level head office at Mumbai has a branch in each district. Sub branches in each tahsil. Pravaranagar com prising of 44 villages comes under three talukas i.e. Shrirampur, Sangam ner and Rahuri. The LDB sub branches of each taluka provides long term finance fo r a period of 5 to years fo r its catchm ent villages. The LDB sub branches providing credit for the purpose of land purchases, land leveling, im provem ent or reclam ation of land, irhgation, agricultural equipment, agricultural allied activities, agro based 180

industries and non farm sector in rural area. Therefore 3 LDB Sub branches are providing credit to farm ers in Pravara area Functioning of the sub branches includes only loan disbursem ent, deposit m obilisation and recovery of loan. These sub - branches have no share capital, reserve fund and borrowing because it is an Interm ediary agency between LDB branch and farmer.

5.3.1 (a) Loans and advances The LDB sub branches provide long-term finance to the farm ers in Pravara area for the purpose of pum psets digging of wells, leveling of land, purchase of tractor, electric pumpsets, pipeline, bore wells, horticulture, housing, purchase of cows and buffaloes, poultry and construction of godowns. The follow ing table shows the tendency of loans disbursem ent during the period from 1989-90 to 1998-99.

Table No. 5.5. Loan disbursem ent by LDB sub branches in Pravara area.

Y ear

Loan disbursem ent

35.70 44.24 29.83 32.10 46.26 35.97

(10.4) (12.8)

(15.9) (9.4) (6.9)

1998-99

54.63 32.13 23.84 09.60

Total

344.30

1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98

Increase ( + ) Decrease ( - ) + 7.15 + 8.54 -14.11 + 2.27 + 14.16 -1 0 .2 9

% of growth over previous year 25.0 23.9

(Rs. In lakhs) % of district LDB branch

51.8

(2.8)

+ 18.66 -2 2 .5 0 -8 .2 9 - 14.24

7.00 6.78 6.66 5.47 5.78 4.87 4.34

(-)41.2 (-)25.9 ( - ) 59.8

3.64 4.48 4.57

i1 0 0 l

- 18.64

(-) 39.4

53.59

(8.6) (9.3) (13.4) (10.5)

( - ) 32.6 7.6 44.1 32.3

Note: - Bracketed figures indicate percentage to total. Source: - Loan section, LDB sub branches of Rahuri, Shriram pur & Sangamner. 181

Table 5.5 show that, the total am ount of loan disbursem ent by LDB sub branches of Rahuri, Shriram pur and Sangam ner in Pravara area was Rs. 344.30 lakhs during span of 10 year. The loan disbursem ent in 1989-90 was 10.4 percent (35.70 lakhs), it decreased to 2.8 percent (9.60 lakhs) in 1998-99. During that period, loan disbursem ent was not uniform. The highest percentage of loan (15.9% ) was disbursed in 1995-96 and lowest in 1998-99. The maximum am ounts increase (Rs. 18.66 lakhs) over previous year and the maximum decrease over pervious year during - 21.49 lakhs in 1996-97. The net increase /decrease 10 year period was (-) 17.64 lakhs. In Pravara area LDB sub branches disbursed loan was 7.0% in 1989-90, as com pared with district LDB total loan disbursem ent in the same year. It is the highest percentage during 10 years study period. The lowest percentage (3.64%) was

disbursed

in

1996-97,

The

annual

average

of percentage

of

loan

disbursem ent with district was 5.35% during span of 10-year period.

The total am ount disbursed in Pravara area during 10 year period was 344.30 lakhs, so the annual average of loan disbursed in 34.43 lakhs per year from 1995-96 loan disbursem ent highly decreased up to 1998-99 from Rs. 54.63 lakhs to mere Rs. 9.60 lakhs. Main cause of decrease in loan disbursem ent appears to be purely political. Shivsena B.J.P alliance Govt, in M ahaashtra refused to guarantee NABARD Loan to Apex LDB because it was governed by congress led leadership of the state LDB. Such political game has ruined the rural credit structure for a period of recent two years 1997-98 and 1998-99.

182

5.3.2 Purpose w ise loan disbursem ent The LDB sub-branches of Rahuri, Shnram pur and Sangam ner provide the long-term finance to farm ers in Pravara area for different purposes. This finance distribution for six major purposes are w ell plus elect pump set, pipeline plus drip and

sprinkler,

dairy and

poultry,

tractors

& other agriculture

implements,

horticulture and others purposes. The table 5.6 shows purpose wise finance during the period from 1989-90 to 1998-99. The purpose w ise finance has been depicted in the from a diagram (C hart 5.3) Table 5.6 Shows purpose wise financing by sub-branches of LDB in Pravara area. In 1989-90 the total loan disbursem ent by the sub-branches of LDB was Rs. 35.70 lakhs of w hich 95.5% finance was given to the five major purposes. During the 10 year period total finance provided w as Rs. 344.30 lakhs, out of w hich 91.3% finance was allocated to agriculture and allied activities rem aining 8.7% was delivered to others purposes. The other purposes included gobergas plant, Godawouns, housing, artisans, etc. In total loan disbursem ent major share goes to tractor and agriculture im plim ent i.e. 32.8%, followed by pipeline, drip sprinkler 20.2%, dairy and poultry at 17.7%, well & elect motor at 14,0% and lowest share to horticulture. During the ten-year period, under review m axim um am ount w as disbursed to w ells and elect, motors i.e. 17.4% in 1992-93, other irrigation purposes at 28.1% in 1990-91. Tractor and agriculture impliments at 42.2% in 1989-90, dairy and poultry were at 22.7% in 1997-98, horticulture 7.9% and other activity was 16.3% in 1998-90. The loan disbursem ent was very less in 1998-99, as com pared with other under review.

183

Table No. 5.6

Purpose wise loan disbursement by l d b Sub branches In Pravara area. From 1989-90 to 1998-99. Well + Be. motor pump set 3.76 (10.5) 4.74 (10.7) 4.06 (13.6) 5.60 (17.4) 7.51 (16.2)

Pipeline Tractor + Drip + Agriand' Implime Sprinkler nts 9.52 (26,7) 12.41 (28.1) 7.19 (24,1) 7,46 (23.3) 8.37 (18,1)

F.Y.G.R.%

(99.7)

1994-95

Year

1989-90 1990-91 1991-92 1992-93 1993-94

1995-96 1996-97 1997-98 1998-99

(Rs. In lakhs) Member Total of Borrower

Dairy + poultry

Horticul ture

Others

15.08 (42.2) 17.04 (38.5) 10.32 (34,6) 9,49 (29.6) 12,56 (27,2)

4.34 (12.1) 5.77 (13.0) 3.69 (12.4) 4.82 (15.0) 9.34 (20.2)

1.59 (4,5) 2,39 (5,4) 2.93 (9.8) 3.34 (10.4) 4.19 (9.0)

35.70 (100) 44.24 (100) 29.83 (100) 32,10 (100) 46.26 (100)

(-1 2 ,1 )

(-1 6 .8 )

(115.2)

1,41 (3.9) 1.89 (4.3) 1.64 (5.5) 1.39 (4.3) 4.29 (9.3) (204.2)

(163.2)

(29.5)

(34.5)

5.47 (15.2)

5,14 (14.3)

3.07 (8.5)

4,14 (7.6) 3,49 (10.9) 1,76 (7.4)

5.30 (9.7) 3.32 (10.3)

Nil

2,19 (9.2) 1.56 (16,3)

35.97 (100) 54,63 (100) 32,13 (100) 23,84 (100) 9,60 (100)

196

9,12 (16.7) 5,07 (15,8) 4,32 (18.1) 1.04 (10,8)

7.59 (21,1) 10,71 (19.6) 7,26 (22,6) 5,42 (22,7) 2,08 (21,7)

2,84 (7.9)

9,10 (16.6) 3.67 (11.4) 2.98 (12,5) 1.22 (12,7)

11.86 (33.0) 16.26 (29.8) 9.32 (29.0) 7.17 (30,1) 3.70 (38,5)

( - 79,8)

( -6 8 .9 )

(- 72.6)

(- 38.1)

(-4 9 .2 )

(-7 3 .4 )

(-7 2 .5 )

F.Y.G.R.% (-7 7 ,7 )

188 241 168 171 253

273 161 127 54

Total

48,11 (14,0)

69,64 (20.2)

112,80 (32.8J^

61.02 (17.7)

22.85 (6.6)

29.88

344.30 (100)

1832

T.G.R. %

(-6 7 ,6 )

(-8 9 ,1 )

(-7 5 .5 )

(-5 2 .1 )

(- 24.8)

(-1.9)

(-7 3 .2 )

(-7 1 .3 )

Note: Bracketed figures indicate as percentage to total are compiled. Source: Loan section LDB Sub branches from Rahuri, Shrirampur, Sangamner, from 1989-90 to 1998-99.

184

Chart 5.3 Yearwise Loan Disbursm ent bv LDB Branch in Pravara Area (Rs. in lakhs)

iV'

<S' Year

P u rp o s e w is e Loan D is b u rs m e n t bv L .D .B . B ra n c h in P ra v a ra A rea fro m 1 9 8 9 -9 0 to 1 9 9 8 -9 9 (In Percentage)

20%

18%

32%

□ W e l l + E le c t r ic M o t o r ■ P ip e lin e □ T r a c t o r + A g r i. Im p le m e n t s ■ D a ir y + P o u lt r y ■ H o r t ic u lt u r e □ O th e rs

In first five-year period growth rate was 99.7% in well and elect motor, (-) 12.1% in pipeline, (-) 16.8% in tractor and agriculture impliments, 115.2% in dairy and poultry, 204.2% in horticulture and other was 163.5%. The total growth rate in first five-year was 29.5%, in next five year was 73.4%. The grov\/th rate in the last five- year period was (-) 77.7% in well & elect Motor, (-) 79.8% in pipeline, (-) 66.9% in tractor, (-) 27.6% in dairy and poultry, (-) 38.1% in Horticulture and (-) 49.2% in other purposes because in last year disbursem ent was very less. So the total growth rate during 10 year period was also in m inus in all categories. In the last three-year period loan disbursem ent was down because funds for distribution w ere not available.

5.3.3 Recovery and over dues The recovery perform ance is an im portant factor in sound banking business. Larger the proportion of recovery, greater the efficiency of bank and vice-versa. How- ever, table 5.7 shows that perform ance of LDB sub-branches in Pravara area. The information also illustrated in the from of chart (Chart 5.4)

The table 5.7 revels that, in 1989-90, the dem and o f loan was Rs. 52.20 lakhs, out of which, recovery was Rs. 31.32 lakhs (60%) and the over dues am ount Rs. 20.88 lakhs (40%). The highest recovery percentage was 67 in 199697 and in the same year the percentage of overdues was lowest i.e. 33. The recovery and overdues status of the sub branches was not satisfactory. The annual average of recovery was 60 percent and overdues was 40 percent during period under study. The main reasons are of low recovery w as crop failures, high cost of production and falls in prices of agricultural produce ect. 185

Table 5.7

Demand, Recovery and over dues by LDB sub-branches ( Rs. in Lakhs) Year

Demand

Recovery

% of Recovery

Over-dues

%of over-dues

1989-90

52.20

31.32

60

20.88

40

1990-91

58.70

35.22

60

23.48

40

1991-92

64.34

37.31

58

27.03

42

1992-93

68.50

41.78

61

26.72

39

1993-94

65.92

37.57

57

28.35

43

F.Y.G.R.%

26.2

19.9

—

35.7

—

1994-95

74.28

49.76

67

24.52

33

1995-96

70.06

46.23

66

23.83

34

1996-97

68.56

43.19

63

25.37

37

1997-98

76.44

42.80

56

33.64

44

1998-99

82.32

44.45

54

37.87

46

10.8

-1 0 .7

—

54.4

—

681.32

409.63

60

271.69

40

57.7

41.9

—

81.3

—

F.Y.G.R.% Total T.G.R. %

Note; - Percentage of Recovery and over dues are evaluated w ith respect to demand. Source: - LDB Sub branches of Rahuh, Shriram pur and Sangam ner Recovery section.

During the period under consideration the total dem and fo r loan amount was Rs. 681.32 lakhs and the total recovery amount was Rs. 409.63 lakhs (60 percent) and the total overdues am ount was Rs. 271.69 (40 percent). It clearly shows that the total recovery percentage in Pravara area not satisfactory when com pared to other banks. 185

%

(0 E < 2 (0 > 15 Q. c

■S'

\

o c iS m

\

(xi■ Q■ U> o

ix: w O

O

3

■D L_ o > O ■O c <0

\

0) >

\

o

o

s.

\

m

•a

c <0

E0)

<5\

G

\

o

CD

O

00

O

<%> o CD

o LO

o

sq>iB| U| s y

o

CO

o CM

The first five-year period rate of growth in dem and was 26.2, but it decreased in next five-year period i.e. 10.8. In same period growth rate in recovery and over-dues was 19.9 and 35.7, but high decrease in recovery and increase in overdues i.e. minus 10.7 and 54.4 in second five year period. The total growth rate was 57.7 in demand, 41.9 in recovery and 81.3 in overdues. Dem and and overdues had high increased as compare to recovery during study period.

5.4

Urban co-operative banks in Pravara area. The Urban co-operative bank plays an im portant role in Pravara area. There are two urban banks w orking in Pravara area i.e. Pravara co-operative bank ltd. Loni and Nagar Urban co-operative bank Ltd. Ahm ednagar. These banks collect deposits from rural people and provide finance for small scale industries, self em ploym ent schemas, consum ption purposes, finance for small traders and Housing finance etc. Pravara co-operative bank extends its activity through its six branches and Nagar Urban co-operative bank through its two branches in Pravara area. Pravara co-operative bank was established in 1975 with a m eager share capital of Rs, 2 lakhs and 400 members. The basic purpose of the bank is to provide financial assistance to the rural people for meeting their needs in the field of agriculture and develop self-employm ent. This leads to am eliorate their living conditions through their own earnest efforts. This is new experim ent to have urban banking system in rural area. W hich has resulted in a success by opening six branches

and five-extension

counter

in the

periphery

of 25

k.m.

of

Pravaranagar, The branches of Pravara co-operative bank are at Loni BK., 187

Songaon, Ashvi Bk., Kolhar Bk., Dadh Bk. and Pravaranagar sugar factory. The extension counters of Pravara bank are at Padmashri Vikhe Patil College of Arts, Science and Com m erce Loni Kd,, Polytechnic College Loni Bk., Pravara Medical college Loni Bk., Bhablewhwar and New English School Ashvi Kd. Pravara co-operative bank is also working out-side of Pravara area. The branches other than Pravara area are at Ahm ednagar, Shriram pur, Rahata and Shirdi, of which Shrirampur, Rahata and Shirdi branches started from the year 1998-99. The Pravara C o-operative bank has send a proposal to Reserve bank of India for permission of started three new branches at Pune, Nasik and Aurangabad. Nagar urban co-operative bank was established in 1910 at Ahm ednagar in the form of urban co-operative societies. That is the first urban co-operative society in Ahm ednagar district. This co-operative society converted into bank in 1927. The basic purpose of the bank is to provide financial assistance to the urban people in Ahm ednagar city. This bank provides finance for small traders, shopkeepers,

self-em ploym ent and

consum ption

purpose for

middle

class

people. The area of operation for the bank is extending its services through 30 branches spread over in A hm ednagar district, in Pravara area, only two branches of Nagar urban co-operative are located at Ashvi Kd and Kolhar Kd from 1971 and 1996. But these branches do not provide finance for agnculture agro base industry and agriculture allied activities. So it is not considered fo r the study, because the study is related for co-operative credit and its im pact on agriculture and rural developm ent and employment. The basic objective of the Pravara co-operative bank is to help rural people, am eliorate their living conditions through their own earnest efforts. Pravara bank extends financial assistance to farmers, rural artisans, small 188

traders and educational institutions. The financial assistance to farm ers for consum ption purposes, m arriages of doughtier, children’s education, medical bills etc. The bank also provides finance for agro-base industry and agriculture allied activities. Such as Padmashri Vikhe Patil co-operative sugar factory, co­ operative Paper mill, co-operative milks dairy and co-operative truck society etc.

5.4.1 Objects and functions of Pravara co-operative bank (PCB) The main objects and functions of the Pravara C o-operative banks are.

1) To attract local deposits and provide other banking facilities, like remittance of funds, collection of cheques and safe custody of valuables. 2)

To develop and extend banking facilities in the rural areas and develop banking habit am ongst the rural people.

3)

To provide finance to the m em bers and other people within the area operations. The Pravara bank is consistently giving preference w hile reshaping financ

assistance for the following items. i)

Financial assistance for children’s education, m edical treatment, marriai of doughtier purposes.

ii)

Finance for housing, SSI Units and self-employment.

iii)

Finance to promote rural developm ent and co-operation through Prava education complex.

iv)

Finance to promote village industries with more em phasis on villai artisans.

v)

To promote technically qualified young persons to set-up their own units the Pravara area.

189

vi)

To promote dairy developm ent activity.

vii)

Financial assistance for agro-base industry and agricultural allied activities in Pravara area.

5.4.2 W orking capital perform ance of Pravara co-op-bank. Pravara co-operative bank was established in 1975. T he Aim of this bank w as to provide finance to needy people for the purpose o f upgrading the living standards of its members. Table 5.7 shows the perform ance of share capital, reserves, deposits and borrowing of Pravara co-operative bank during the period from 1989-90 to 1998-99. These has been depicted in from of a diagram (Chart 5.5)

Table 5.?> shown that, the num ber of m em bership was 7227 in 1989-90, but it decreased continuously because of death of old m em ber and no addition of new member. In 1997-98 only two m em bers were included. The am ount of share capital was increased from Rs. 20.62 lakhs in 1989-90 to Rs. 24.79 lakhs in 1998-99. The am ount of reserve fund was Rs. 104.32 lakhs in 1989-90; it was highly increased during 10-year period and reached up to 730.14 lakhs in 199899. The am ount of deposit was Rs. 1367.98 lakhs in 1989-90; it was fast growing in 10-year period and reached up to 7344.33 lakhs. During the 10 year period, Pravara bank could not make borrowing from others duhng the period under study. The share of borrowing am ount was shown at very low percentage in working capital. The am ount of w orking capital was Rs. 1492.92 lakhs in 198990; it increased and reached at 8321.17 lakhs in 1998-99.

Table No. 5.8

W orking capital perform ance of Pravara co-operative bank. (Rs in Lakhs) Year

1989-90

1990-91

1991-92

1992-93

1993-94 F.Y.G.R.% 1994-95

1995-96

1996-97

1997-98

1998-99 F.Y.G.R.% Total T.G.R. %

M em ber

Share capital

Reserves

Deposits

Borrowings

W orking capital

7227

20.62

104.32

1367.98

—

1492.92

(1.38)

(6.98)

(91.64)

21.92

133.30

1795.17

(1.12)

(6.83)

(92.05)

23.04

174.08

1893.16

438.77

2529.05

(0.91)

(6.88)

(74.85)

(17.35)

(100)

23.12

226.55

2031.87

526.24

2807.78

(0.82)

(8.06)

(72.37)

(18.75)

(100)

24.92

289.13

2315.41

435.22

3064.68

(0.81)

(9.48)

(75.55)

(14.21)

(100)

(-0 ,7 )

(20.8)

(177.1)

(69.2)

7175

24.90

331.52

2653.94

255.19

3265.55

(0.76)

(10.15)

(81.27)

(7.82)

(100)

24.76

417.32

3769.60

52.03

4263.71

(0.58)

(9.78)

(88.41)

(1.23)

(100)

24.75

559.52

4566.30

0.03

5150.60

(0.48)

(10.86)

(88.65)

(0.01)

(100)

24.80

730.74

5173.02

323.38

6251.94

(0.39)

(11.69)

(82.74)

(5.18)

(100)

24.79

903.05

7394.33

—

8321.17

(0.29)

(10.84)

(88.87)

(-0 .2 )

(-0 .5 )

(172.0)

(178.6)

(26.7)

(154.8)

71825

237.62

3868.53

32960.78

2030.86

39097.79

(0.60)

(9.89)

(84.30)

(5.21)

(100)

20.2

764.6

440.5

-2 6 .3

457.3

7193

7191

7189

7181

7168

7166

7168

7167

-0.9

(100) —

1950.39 (100)

-0.9 ^

(105.22)

(100)

Note: - Bracketed figures indicate percentage to total. Source; -Annual Reports of Pravara Co-operative bank Loni form 1989-90, The proportion of share capital in working capital v\/as between 1.38 percent to 0.29 percent during ten-year period. The share of reserve fund in w orking capital was shown between 6.88% to 11.69% in ten year period, but the 191

Chart 5.5

Progress in Woridnq Capital of Pravara Co-operative Bank

Lid. (PRs. in iJkhs)

9000 □ Working Capital

8000 (A

7000

re

6000 I

C

5000 j -

C

4000 1

1

3000

0

I

2000 i

1000 i

Year

ScuxB/^ymraCBd^ ofPCBftan19BM0to196Bg9 (In F ^ T H t^ ^ □ 9h b C ^ s ■ Ffesves □ C^pcEits ■ anoAin^

&

P

A

share' of deposit in w orking capital was 72.37% to 92.05% in the same period. The highest portion of share capital in working capital was in 1989-90 i.e.;. 1.38%, the highest percentage of reserves fund in working capital was 11.69% in 1997-98 and highest share of deposit was at 92.05 percent 1990-91. During the ten year penod aggregate total of working capital was 39097.97 lakhs out of w hich 0.60% of share capital, 9.89% of reserve fund, 84.30% of deposit and only 5.21% of borrowing. In the first five year period the growth rate was 20.8% in share capital but it decreased in the next five year penod i.e. - 0.5 percent, in case o f reserve fund the first five-year grov^h rate was 177.1%, it also shown a small decreased in next five-year period and reached upto 172.0%. But in deposits the first five year growth rate was given 69.2%, it increased highly in the next five year penod and reached upto 178.6 percent. The total rate of growth in ten -year periods, was 22.2% in share capitals, 764.6%, in reserve funds and 440.5% in deposits. The annual average grov»/th rate was 2.02%, in share capitals, 76.46% in reserve fund and 44.05% in deposit during 1989-90 to 1998-99. W e observed that the Pravara co-operative bank puts in more efforts for collection of deposit in second five -year period,

so the dependence on

borrow ings were reduced.

5.4.3 Deposits and Advances of Pravara bank:Deposit is an im portant source of working capital in banking transactions. W hen bank collects more am ount of deposit, they can fulfill the dem and fo r loan to m embers in time fo r their purposes. Collection of deposit of bank can create confidence

among

the

people.

The

Pravara

co-operative

bank

creates

confidence among the people in Pravara area, so they can collect maximum 192

am ount of deposit and disburse to needy people. The follow ing table shows the inform ation of deposit and advances of Pravara co-op-bank from 1989-90 to 1998-99.

Table No. 5.9 Deposits and Advances with C/D Ratio of Pravara bank (Rs. In lakhs) Year

Deposit

Advances

C/D Ratio %

1989-90

1367.98

(15.4)

983.24

(20.4)

72

1990-91

1795.17

(31.2)

1471.22

(49.6)

82

1991-92

1893.16

(5.4)

1994.06

(35.5)

105

1992-93

2031.87

(7.3)

2159.05

(8.2)

106

1993-94

2315.41

(13.9)

2267.57

(5.0)

98

1994-95

2653.94

(14.6)

2369.23

(4.5)

89

1995-96

3769.60

(42.0)

2973.62

(25.5)

79

1996-97

4566.30

( 21 . 1 )

3510.66

(18.0)

77

1997-98

5173.02

(13.2)

4265.34

(21.5)

82

1998-99

7394.33

(42.9)

5029.36

(17.9)

68

32960.78

(207.0)

27023.35

(206.1)

858

3296.07

(20.7)

2702.33

( 20 .6 )

86

Total Average

Note: Bracketed figures indicate Growth rate over pervious year. Source: - Annual Reports, Pravara Co-operative bank Ltd. Loni. The

Pravara

co-operative

bank

indicates

increasing

trend

in

deposit

m obilisation from Rs. 1367.98 lakhs to Rs. 7394.33 lakhs in a time span of ten years. The percentage of deposit mobilisation was highest 42.9% over previous year in 1998-99 because of rescheduling of deposit rate. The average aggregate deposits in the span of ten year were Rs. 3296.07. lakhs. The average growth rate in same period was shown at 20.7 percent. The Pravara bank has also increased the loan lending from Rs. 983.24 lakhs to Rs. 5029.36 lakhs under the penod for consideration. Dunng 10-year 193

period, the percentage of loan disbursem ent was highest 49.6% over pervious year,

during

1990-91

and

lowest

was

4.5%

in

1994-95.

The

average

disbursem ent in 10 year was Rs. 2702.33 lakhs. The growth rate over pervious year has shown an increase trend but it was an uneven percentage i.e. between 4.5% to 49.6% during span of 10 years penod. The C/D ratio was 72% in 1989-90; it increased and reached at 106% in 1992-93, but there after decreased during rest of the period and reached 68% in 1998-99, The average C/D ratio during 10 years period was 85.9%.

5.4.4 Purpose-wise loan disbursem ents by Pravara co-op. bank. Pravara Co-operative bank provides finance fo r different purposes and activities such as small -scale industries, self -em ploym ent transport, trading, business, agro-base industries, agricultural allied activities, education housing etc. The bank also provides credit fo r consumption, m edical help daughter m arnages on personal guarantee or against gold. Such type of loan was given under the heading of other purposes. The perform ance of purposes loan disbursem ent by Pravara bank shows in the following table from the period 198990 to 1998-99. In 1989-90, the total loan disbursem ent by the bank in Pravara area was Rs.983.24 lakhs. Out of the total 9.0% to SSI unit, 3.3% to self employm ent 14.3% to transport, 12% to trading and business 18.5% to agro base and allied activities, 1.3% to education, 13.5% to housing and 28.0% to others purpose was disbursed.

At the end of 10 year period all the above purposes of loan

decreased except fo r agro based and allied activities such as 7.5% to SSI unit, 2.4% to self employment, 8.6% to transport, 6.9% to Trading, 0.4% to education 8.6% to housing and 20.8% to others.

194

c/3 tr

V)

ro

ro

o h-

CN o T—

CM 00 oo CD

o O ^

^ r—

00 C\J

^ o

CD

lO

CO

CN

CN — '

CD O s_

S C1 D CD

CO

LO O

^

T8 ^

s CO CN

° V--

— CN

LO CD

^ LO

LO

LO CN ^

LO O CD

LO CN ^

O 00

^

LO CD

^ UO

od

T-

§

S

OO CD

^ LO

T-

O

od

o

CN CN

CN

S'

° ^

CO co 0)

O)

O

C re m 0)

>

O)

N-

c CO 3 o X

c»

CN 00

^ LO 00 T-

C) h00

00 TLO CN

CO

CN

CO

CD O LO

LO CN ^

od CN CD

CD CN ^

— . CD

CD ^

P

^

oT

CD CO

^

2°

od CD

O CD

2

^

CO CO

^

T-

£

0) Q. 01

o

O T 1-O
>

ro vn d

z

>*

X} ■4J c a>

E (/) L-

o

3 n

.52 '•B c ro o

0) w

c g

LO h-

o 3 TO LU

Q) C/5 ff. •«^ CO J = "2 -2^ CO — ■> CD A =5 ■c' 2 "O C o Q ) _ C CO CO

^ CO

CN CD

-^1-

^

C-

Ci CN

T^

h-

^ m

CD

00

N.

LO T-

CN N00

CO T-

O)

°°

z z.

CN CN

^ CD £

•<-<-

£

CD CN

^ LO

LO O

^ CD

o T-

^ OO

■rT— 00

'I—

C) CD 00

LO T-

00

od T-

<

LO Gi

E ’^ 1 ^

■C O Q. CO

ID

1

CD CD

^ T-

LO O

^ 00

CN CD

^ h~

CD 1^

^ O

O 00

LO

CD CD

od

CN

C\i O CM

00 T^

T— 00 CN

T— t-

CD

C3

CN

^

CD CD CN

TT^

CN

CD

CD

OO 00

CO

NCO

^ CD

CN

’ iCO CO

CN CN ^

od CN

C» O LO

00 CN

LO OO

tCN

CD

^

■<-

00 O

^ LO

LO 00

^ T-

00

CN

CO

TCD

00

LO LO

cvi ^

CD CD

CO

CN LO

CN

00 ^

CN O 00 CN

UfT TT^

^ LO

CD CD

— O

OO CN

CD CD CN

c\i T^

CD CD 00

<

CO CO 0 c

NN-

^ 00

o

1 1 i _ DQ

(D

(/)

LO

T-

p 2i

CD CD

LO

t-

r^

0)

O Q. 3

CD

00 "

Q.

q

.

E

CD

^ 00

CN CO

00 ^

CD

CO

^ O

CD CB

o ^jLO

LU

■s ^

«

C/5

CN

| | C 0

LO

CX)

CD

CO

^

00

m S,

CO

O) ~

t— CO CD >-

o CD

{

-

CD

00

CD

03 I O CXi CD

CN CD 1 T— CD CD

OO CD

s

LO CD

CN CD CD

CD CD

CD CD

i

I 00 T—

I

LO LO

CN o CJ^ CNJ

CO Ncn

CO

cn XCN

00

^ Toi

in co

CD

^

Ci LO CD

ai

$ O

s o

lo CO

^

CO CJ)

^ CO

CO CO

o

s CN

° ^

OO ^

CD

o

CJ3

o

s LO

^

00 CN o

in'

CD CD

LO T—

CXi CD ---' C N

CN 00

^ CD

o

0

_

^

CO

^

d

1

-

^

CD

^ CO

so

^ CO

CO CN

^

CD CN

^

CD ^

CN

^

TCN

CD

^

00 CD

p

CD

cn TlO

Jo

^

1

O O ri

m T—

CN

00

^ CN

d

in CD

o oq

CO

CSJ — '

in CN

^

£o

T^

CT) TCO

LO

CD

Ci

OO CN

^

00

CJ)

in CN CN

CNJ

CN CD CD

S' r-i °

lb CD

o'

CO

O

a

OO IT) CN

S-

^

in

8 h-

S

o

OO

CD

cn

lO

lO ^

og rsj

CD

^

o

cri O lO

Tf T^

^ o T-

CD

T-

” CO

^ (J)

O)

^ LO

NO

^ CN

CJ)

iri T-

CT)

CO ■<^

CD CO

CD T-

P

CN

CX3 O c\i

CD

CO s

CO CNJ

T— CO CO

in ^ &

^

S'

^

ei

O O

^ LO

^

p

CD

^

^

CJ) CO

c\j ^

§

52.

?

CN

TT-

o

^

CD

IT)

lO O

TT-

CO

O)

CN

00

^

CD

00 og

®

o'

CN

^ OO

s C-

o

CD O)

h~

OO

^

§

p

T

LO"

S CO

c:.

fe 00

CO

^ 00 CN

CN

ro o 0) O) ro c 0) o v_

S' ei

CN 00 CD CN

^ ID

CD

°

CN 00


c cu

CQ

2 (D Q. 0

1

O

o

2

03 ro

> CD


tl

o XJ c 2? 13 O)

(/) O Q. 0)

CC ■O I d D 0) C C

0

r-. -

1 LO Oi C35

cn

s

2 oa

CJ) § 1 N-

<J) cn

T—

O)1

00 O)

O)

ro

1 d

o

o

Z

0)

u _

o

CO

During the first five year period rate of growth was 319.5% in SSI, it has decreased in next five-year period i.e. 2.7%. The rate of grov;4h in first five year period w as 113.5% in self em ploym ent, 244.6% in transport, 119.7% in trading, 97.9%, in agro base and allied activities, 43.7 percent in housing and others was 107.7 percent but in case of education growth rate was

- 6.8% in the same

period. In second five-year period the growth rate slowly increased in self em ploym ent i.e. 126.2% but decreased in transport and trading i.e. 5.6% and 61.3% . In agricultural allied activity and agro base industries growth rate was increased 4 tim es during the five -year penod of 1994-95 to 1998-99. The grov^h rate increased for education and housing i.e. 142.1% and 51.6% but decreased fo r other activities i.e. 72.8%. The growth rate of total loan disbursem ent in first five-year period was 130.6% but it was decreased in next five-year period up to

112 . 2 %

The total disbursem ent duhng the 10 year was Rs. 27023.54 lakhs, out of which 10.5% fo r SSI unit, 3.0% for self employment, 16.0% fo r transport, 10.4% fo r trading, 26.0% for agro base and allied, 0.6% for education, 9.1% fo r housing and 24.4% for other. That means the highest percentage o f disbursem ent was to agricultural allied (26%) and agro base industries and lowest 0.6% fo r education during penod from 1989-90 to 1998-99.

During ten year penod the total growth rate was 324.6% in S.S.l, 268.2% in self employment, 207.2% in transport, 193.5% in trading, 1303.6% in agro base and allied, 65.4% in education, 225.3 in housing and 280.2% in other. The total growth rate in total am ount of loan disbursem ent during 10-year period was 197

411.5 percent. W e observe that the perform ance of Pravara co-operative bank was more satisfactory than other banks in Pravara area are because of professional management.

5.4.5 W orking results of Pravara co-operative banl<. The Pravara co-operative bank v^'orking its activity in Pravara area. The board of director residing in Pravara area, it is a local managem ent. The m anagement had taken more efforts for recovery of loan. The follow ing table shows the am ount of dem and loan, recovery and over dues. The table also showing the profit and loss, rate of dividend, information about audit from the period 1989-90 to 1998-99. Table show that, the am ount of demand loan has continuously increased from Rs. 983.43 lakhs in 1989-90 to Rs. 5033.38 lakhs upto 1998-99. The total am ount of dem and loan of Pravara co-operative bank was Rs. 27026.50 lakhs duhng the period under consideration. The average percentage of recovery and over dues to demand was 87.1% and 12.1%. The highest recovery percentage was 93.28% in 1991-92 and lowest percentage of recovery was 82.16% in 199394. The recovery percentage was between 82.16% to 93.28% during the period 1989-90 to 1998-99.

The Pravara co-operative bank has obtained profit every year during the span of 10-year pehod. The am ount of profit was Rs. 14.88 lakhs in 1989-90; it has continuously increased and reached to 51.88 lakhs in 1998-99. In first fi year period, the rate of growth in profit was 54.9% but increased in last five-y( pehod i.e. 124.3%.

198

c/)

V)

TO

w

o

2

in lO ID CD

CD CD

N-

CD CD

a>

CO N.

CD

I- 0)

ID

LO

CJ) CD

CD

ai

CO

(/) w

or ro O o> o>

I

00

Z3 <

o >

O)

o

O -g fO ro ■>

CO

LO

in

IT) in in in in in in

m

CNJ

o>

■

o > 00 o > T-

E

2

CO CO

o L_

CO CD'

CL

o

CJ) CD

CM

CO

CO CM

in CO

CO CM

d

CO

00 N-

c\i

CM

CO

oq

w Q)

m

d 2

(0

_Q)

a> Q. 0 1

o o

(C CO >

q

CD iS

CO

CO

CD CO CM

CO

s.O ^

(1) >

CJ)

CD CM

CM

cri

CD

CM

in

CO

in CD

in

o

in

o

o CD

CO CM CM

CD

CD

CN

I

c\i

CD

oo CD

o

c E O


CM

t—

CD C7)

Q) >

o

CD 00

CD

cn od

CO

o in

m

CM CM

o

m 00

1^

r--

o o od in m CO m

CD CO

CJ)

in in d

o

o d

od

HO ^ 3 (/> d> L-

0) > O 0)

CD r—

d

CJ)

CO

N-

d

CJ)

CO

CD

CM

in

00

in

CJ)

in CM

CO CO

od

CJ)

CM

in

cd CD

CJ)

CO

in

CO

CO

CO

CO

CO

c o

in

TO O CM CO CO

cr:

o q

o q

1^

t^

00

c DQ CD 0) >

00

CO

I 0

1

U) c

00 CD CD

c (0

0) >

CM

CD

H-

lO

CM

Q) > O o
■D C CD

E 0 Q

CD CD CD

00 00

00

00

o in

CO CO

O) O)

in CO

r^

00

o

CO

CM

cvj

00

CJ)

CD

00

CM CM

o

o

CD

od CJ) CM

cd

CJ) m

CD

CJ) CD

CM

CM

CO CNJ

CD

00

CJ)

CJ)

00

rxj

CD

CO

CM CM

CM

od

CM CM CM

m

rsj

00

m

CJ) h-

CM

CM

h-

in in in in in

CJ) CJ)

§

00

CO

in

CD CM

00

CM CD

00

00

CO

in CM

o

CD

in CM CD

oo

CD

d

o

o

CO 1— CD >

CD

CM


CO

00

o in in CD

od

CD CM

CM

o

q

r^ CM

CM

Id

CO

o in

o

CO

o. (P :

rj c c

<

o CD (U >

O) I

CJ)

00 CJ)

o

O) CD

CM CJ) 1 O) CD

CO

CJ)

O)

CM CJ) CJ)

CO CD CD

t

I

m

r^

00

CD

CD

CD

I

O) CD

I

m

CD

CD

CD CD

CJ)

I

CD CD

CD CD I

00 CD CD

CD o

o O)

Q)

IE 0> > <

1

d

e 3 O C /)

CD

CD T-

In the first five year period, the growth rate in dem and was 130.5%, it decreased in next five year period i.e. 112.4%, the growth rate in recovery was 110.0% in five year period, it indicate small increase in next five year period. The growth rate in overdues indicate high percentage (318.0% ) in first five year period, but it decreased in next five year period (70.1%). During 10 year period the grov^h rate was in demand 411.8%, in recovery was 400.0% and in overdues was 513.7%.

The Pravara co-operative bank declared and distributes a dividend at the rate of 13% in first two year, in the third year rate of dividend was 14% and in rem aining year the rate of dividend was 15% continuously. The Pravara Co­ operative bank obtained always 'A ’ A udit class during spans of 10-year period. The num ber of em ployed works in Pravara bank was 155 in 1989-90, it increased and reached upto 169 at the end of 1998-99. The total perform ance of Pravara co-operative

bank has

more

satisfactory,

when

com pared

to ADCC

and

com m ercial banks in Pravara area, because of professional m anagement, good recovery perform ance and limited num ber of workers.

5.5

Primary Agricultural co-operative societies (PACS) in Pravara area. The first primary agricultural co-operative society was established in 1911 at Ashvi Kd. in Pravara area. At present 44 PACS are functioning as every village in this area. The PACS functions as interm ediary agent between farm ers and ADCC bank in providing short and medium term loans to the farmers. They involved in m aking recovenes, supervision and guidance. PACS also supply of seeds, fertilizers, and insecticides at reasonable rate to farmers.

200

5.5.1 M em b ership M em bership of a PACS is open to all person residing within its area of operation irrespective of race, creed, colour, or sex.

The principle of

universal m em bership has since been enshrined in the co-operative societies Acts of all the states. To become m em ber a person should have attained the age of 18 years and must be com petent to contact as per existing laws. The growth of m em bers from 1989-90 of 44 PACS from Pravara area was given in the following table. Table No. 5.12

G ro w th o f m e m b e rs h ip o f 4 4 P A C S in P ra v a ra area fro m 1989-90 Year

No. of m embers

Growth rate over previous year

A verage member per society.

1989-90

22460

2.5

510

1990-91

23045

2.6

524

1991-92

23534

2.1

535

1992-93

24313

3.3

552

1993-94

24826

2.1

564

1994-95

25188

1.4

572

1995-96

25401

0.8

577

1996-97

25757

1.4

585

1997-98

25842

0.3

587

1998-99

25998

0.6

591

Total

246364

17.1

5597

Average

24636

1.7

560

Source: - Annual Reports & Annual statements, 44 PACS from Pravara area.

201

The m em bership of the societies has increased substantially from 22460 in 1989-90 to 25998 in 1998-99. The average m em bership of per society was only 510 in 1989-90, has gone up to 572 in 1994-95 and 591 in 1998-99 respectively. The annual growth rate over pervious year was 2.5 in 1989-90, which increased every year in small percentage during the 10-year period under consideration. The highest growth was at 3.3 percent in 1997-98. At the end of the

10 years

period,

average

m em bership

was

24636

and

per

society

m em bership was 560.3. The average growth rate over previous year was 1.7 percent.

5.4.2 Sources of funds The main sources of funds of a PACS are 1) Share capital 2) Reserves 3)

I)

Deposits and 4) Borrowing

Share capital and Reserves Each individual who is adm itted to the m em bership of a PACS is required to purchase at least one share. The borrowing members are required to purchase share in a fixed proportion to their borrowing from the society. Thus there is a linking of share holdings w ith the borrow ings of an individual member. This proportion is higher in case o f big farm ers and sm aller in case of small and marginal farmers, rural artisans and other m em bers belonging to the w eaker section of the society. The total share capital held by a society is in its turn a determ inant of its borrowing power from the district central co-operative bank. The DCCB however, also takes into account the am ount of reserves held by a society in deciding the maximum borrowing limit of a society. Thus higher the paid-up capital and

202

reserves, higher the borrowing capacity of a PACS from DCCB.

The

share capital and reserve taken together constitute the owned funds of a society. The following table shows the growth of owned funds of PACS since 1990-91.

Table No. 5.13 Share capital and Reserve funds of PACS in Pravara area (Rs. In lakhs) Per PACS

Year

Share capital

Reserves

1989-90

248.60

65.52

Owned funds. 314.12

1990-91

289.57

74.39

363.96

8.27

1991-92

318.38

78.79

397.17

9.02

1992-93

367.88

86.77

454.65

10.33

1993-94

409.08

96.21

505.29

11.48

F.F.Y.G.R.%

(64.5)

(46.8)

(60.8)

(61.0)

1994-95

459.40

105.87

565.27

12,84

1995-96

494.30

124.30

618.60

14.05

1996-97

505.01

156.63

661.64

15.03

1997-98

581.83

168.47

750.30

17.05

1998-99

605.88

183.63

789.51

17.94

S.F.Y.G.R.%

(31.8)

(73.4)

(39.6)

(39.7)

Total

4279.93

1140.58

5420.51

123.19

T.G.R. %

143.7

180.2

151.3

151.6

7.13

Source .- Field surveys, 44 PACS from Pravara area. It may be seen from above table that the paid- up capital of the PACS which was only Rs. 248.60 lakhs in 1989-90 w ent up to Rs. 459.40 Lakhs in 1994-95 and Rs. 605.88 lakhs in 1998-99 respectively. The reserve of the PACS had also gone up from Rs. 65.52 lakhs in 1989-90 to

203

Rs. 105.87 lakhs in 1994-95 and Rs. 183.63 lakhs in 1998-99. Similarly, the owned funds of the societies which were only Rs. 314.12 lakhs in 1989-90, had gone-up to Rs. 565.27 lakhs in 1994-95 and Rs. 781.51 in 1998-99. The average capital per societies was Rs. 5.65 lakhs in 1989-90 went up to Rs. 13.73 lakhs in 1998-99. The portion of share capital in total owned fund was 78.95% and reserve was 21.05% during 10 years pehod from 1989-90 to 1998-99. During the first five -year periods, growth rate was 64.5% in share capital, but it decreased in next five- year period i.e. 31.8%. The reserve showed 46.8% growth rate in first five year period, it increased in next five year period up to 73.4%, but the growth rate in owned fund was shown at 60.8% in first five year period, it also decreased in next five year period i.e. 39.6%. During 10 years period, the total growth rate was 143.7% in share capital, 180.2% in reserves and 151.3% in own funds. So the annual average growth rate was 14.3 % in share capital, 18.0% in reserve and 15.1% in own funds. In 10 years period PACS transfer maximum amount in reserve fund, it is useful for strengthening sources of own funds.

5.5.3 Deposits At, present, the PACS m erely act as agencies for disbursem ent of loans and distribution of farm inputs. They are ill equipped to accept deposits and provide other banking services. As a first step, therefore, sehous efforts should be made to strengthen the PACS financially and make them organizationally com petent to undertake various

banking facilities

including

m obilization of

deposits. A strong deposit base will enable the PACS to undertake m ulti-purpose 204

loaning to the rural sector and even to protect politically m otivated interference in the recovery of loans. The deposit strength will further help the PACS to keep the level of over dues in member loans relatively low. Further as a sizeable portion of the deposits may be cheaper than even borrow ings from higher financing agencies, the deposits have im m ense potential in augm enting the viability prospects o f the pnmaries. The PACS do not collects any deposits from rural people in Pravara and also in Ahm ednagar area though they have facility and authority to collect the deposits because no efforts were taken by m anagem ent and secretary in this regard.

5.5.4 Borrowings and working capitals The PACS borrow funds from Government, DCCB and other sources to enable it self to lend to the ultimate borrowers. The borrow ings of the PACS since 1989-90 from different source are given in the table 5.14.

It may be seen in the table 5.14, that the total borrow ings of the PACS which stood at Rs. 674.42 lakhs in 1989-90 went up to Rs. 1121.93 lakhs in 1994-95 and Rs. 1485.87 lakhs in 1998-99 respectively.

The working capital of the PACS, which was only Rs. 988.54 lakhs in 1989-90, w ent up to Rs. 1687.20 lakhs in 1994-95 and Rs. 2275.38 lakhs in 1998-99. The major com ponent of the working capital was in the form of borrow ing which constituted more than 60 percent of the total working capital dunng the period 1989-90 to 1998-99.

205

Table No. 5.14

Borrowings and working capitals of 44 PACS in Pravara area (Rs. In lakhs.) Year

Owned funds

Borrowings

W orking capital (2+3)

1

2

3

4

1989-90

314.12

(31.7)

674.42

(68.3)

988.54

(100)

1990-91

363.96

(33.4)

722.90

(66.6)

1086.86

(100)

1991-92

397.17

(33.4)

790.23

(66.6)

1187.40

(100)

1992-93

454.65

(34.6)

858.61

(65.4)

1313.26

(100)

1993-94

505.29

(32.1)

1066.80

(67.9)

1572.09

(100)

F.Y.G.R.%

(60.8)

—

(58.1)

—

(59.0)

—

1994-95

565.27

(33.5)

1121.93

(66.5)

1687.20

(100)

1995-96

618.60

(36.8)

1060.03

(63.2)

1678.63

(100)

1996-97

661.64

(36.5)

1148.26

(63.5)

1809.90

(100)

1997-98

750.30

(38.0)

1221.67

(62.0)

1971.97

(100)

1998-99

789.51

(34.7)

1485.87

(65.3)

2275.38

(100)

F.Y.G.R.%

39,6

—

32.4

—

34.8

—

Total

5420.51

(34.8)

10150.72

(65.2)

15571.23

(100)

T.G.R. %

151.3

120.3

~

130.1

—

Note: - Bracketed figures indicate percentage to working capital. Source: - Annual Reports, and statem ents 44 PACS from Pravara area. During the ten -year periods the highest share of borrowing in working capital was 68.3% in 1989-90 and lowest was at 62.0% in 1997-98. The share of borrowing in total of working capital was 65.2% during the span of ten-years. Such borrowing was not in a good sign in case of PAS therefore it always depends on borrowing am ount for loan disbursem ent purposes. 206

The growth rate in first five-year period was 58.1

percent in borrowing it

decreased in next five-year period i.e. 32.4%. The total growth of borrowing was 120.3% during 10-year period from 1989-90 to 1998-99. So the annual average growth rate was shown 12.03%. The Growth of working capital was 59.0% in first year period; it decreased in next five-year period i.e. 34.8%. The total growth rate in working capital was 130.1% during span of 10 years period.

5.5 .5 L o a n s an d A d v a n c e s The PACS provides short -term as well as medium term credit to its members. Short term loans are given for periods generally not exceeding one year for seasonal agricultural operations such as purchase of seeds, insecticides, pesticides etc. and are recoverable from the proceeds of the harvest. These societies provide short -term credit on the basis of the crop loan system under w hich appropriate scales of finance per acre per crop are fixed fo r two com ponents 'A ’ and 'B ’. Com ponent 'A ’ is fixed at one third of the gross value of produce per acre per crop plus the additional expenses on labor engaged in application o f fertilizers, insecticides etc. and is disbursed in cash. Com ponent ‘B’, covers the expenses on fertilizers and other inputs and is disbursed in kind. The eligibility of the individual farm er fo r credit is a function of two variables, viz., the scale of finance per acre, per crop composed of the two com ponents and the area under cultivation under each crop. The scales of finance fo r the different crops will be different as the outlay on the inputs varies from crop to crop.

In the production ohented system of crop loans, short term credit is needed to meet the cash outlays on paym ents of wages, rent, taxes etc. or the outlays on purchasing inputs like seed fertilizers etc.

207

It follows therefore, credit

should be provided during the period that outlays have to be made.

Further, the

farm er is expected to repay the short-term loans out of the crops growth. There has to been therefore some seasonally in the disbursem ent and recovery of the credit needed for carrying on seasonal aghcultural operations. The eligibility of a crop loan is determ ined not v^/ith reference to the value of land cultivated or other tangible security but on the basis of the out lay on cultivation and the repaying capacity from out of agricultural production. As the small farm ers who have very little land to offer as security and do not have any other tangible security to offer, if the loans are determ ined on the value of land only. The loans advanced may not be adequate to meet the needs of such farmers. In the interest of agriculture production as well as social justice, therefore, it is necessary to place the purpose above security in the grant of short-term credit facility to the farmers. Medium term loans are given fo r penod ranging from 3 to 5 years for purposes such as, installation of pum ping sets, purchase o f tractors, agricultural impliments, milch animals, repairs of wells, construction of bunds, and so on. The loan operation of the primary agricultural credit societies in the Pravara area since 1989-90 may be seen in table 5.15. The data has been depicted in the from of graph (Chart 5.6) It may be seen from the table 5.15 that the loans and advances of the PACS w hich stood at Rs. 602.70 lakhs in 1989-90, it increased upto Rs. 1660.55 lakhs in 1998-99. The total loan advances was Rs. 9640.93 lakhs during study period, out of which about 48 percent to agricultural allied activities for purposes on medium term basis, and 52 percent for crop loan for production purposes on short-term penod. Crop loan advances was highest (53.7 percent) in 1991-92 and lowest 49.9 percent in 1996-97. Loan disbursem ent for agricultural allied

208

activities was highest i.e. 50% in 1996-97 and lowest was 46.3 percent in 199192.

Table No. 5.15 Loan operations of PACS in Pravara area from 1989-90 to 1998-99.

Year

Crop loan Advances

Agricultural allied actives advances

Total loan Advances

Loan memb er

(Rs. n lakhs) Grov^/th % of loan Rate in memb Total er to advanc es over total memb previou s year er

1989-90

322.28

(53.5)

280.42

(46.5)

602.70

(100)

7636

34

6.5

1990-91

337.36

(52.6)

304.16

(47.4)

641.52

(100)

8065

35

6.4

1991-92

390.11

(53.7)

336.49

(46.3)

726.60

(100)

8707

37

13.2

1992-93

396.39

(53.0)

351.78

(47.0)

748.17

(100)

8266

34

2.9

1993-94

443.91

(50.7)

432.08

(49.3)

875.99

(100)

9682

39

17.0

1994-95

480.70

(51.2)

459.83

(48.8)

940.53

(100)

9319

37

7.3

1995-96

540.12

(52.3)

494.30

(47.7)

1034.42

(100)

10160

40

9.9

1996-97

550.95

(49.9)

553.27

(50,1)

1104.22

(100)

9014

35

6.7

1997-98

665.12

(51.0)

641.11

(49.0)

1306.23

(100)

9820

38

18.2

884.33

(53.3)

776.22

(46.7)

1660.55

(100)

9359

36

27.1

5011.27

(51.98) 4629,6

(48.2)

9640.93

(100)

900.28

36.5

~

1998-99

Total

Note; - Bracketed figures indicate percentage to total loan advances. Source: - Annual reports and statem ents of PACS from Pravara area. The growth rate over pervious year in total advances was 6.5 percent in 1989-90; it increased and reached up to 27.1 percent in 1998-99. The highest growth rate was at 27.1 percent in 1998-99 and lowest was 2.9 percent in 199293 over pervious year.

209

There was a constant increased in the m em ber of PACS it appeared as uneven trend during study period. As a matter o f fact the percentage of borrowing m em bership has increased from 34 percent to 40 percent dunng the span of 10 year. The average borrower membership was 36.5 percent of the total m em bers during study period. It is noticed that some m em bers of PACS do not take loan and fo r some, loan facilities was not available because.

1)

All the m em bers of a fam ily are eligible fo r borrowing loan but only one of them was borrowing.

2)

Several affluent members did not resort to borrowing.

3)

The loan was inadequate and its disbursem ent untimely.

4)

Some m em bers took loan from com m ercial banks and moneylenders.

5)

Defaulters are not eligible for loan.

6)

C onsum ption credit was not available in adequate.

Besides, the reasons stated above, the defective loaning pollicies and procedures and ever-increasing num ber of defaulting m em bers inhibited the growth of borrowing m em bership. Further under the multi agency approach according to w hich agriculture, credit was available from other institutional agencies like com m ercial bank, many of then m em bers of PACS have borrowed from the form er agencies.

210

5.5.6 Recovery and over dues:One of the most distressing features of the co-operative banking system at the base level is ever increasing incidence of over dues due to non-repaym ent of loans by the borrowers in time. Following table recovery and over-dues of PACS in Pravara Area. The data also shown in the from of graph (C hart 5.6) Table No. 5.16

P o s itio n o f R ecovet 7 and o v e r d u e s o f P A C S in P ra v a ra area. (Rs. In lakhs) Y ear

Demand

Recovery

% 0f Recovery

Over dues

% of over dues

1989-90

559.64

404.61

72.3

155.03

27.7

1990-91

596.99

452.52

75.8

144.47

24.2

1991-92

597.25

441.96

74.0

155.29

26.0

1992-93

831.39

638.51

76.8

192.88

23.2

1993-94

805.52

589.64

73.2

215.88

26.8

F.Y.G.R.%

(43.9)

(45.7)

—

(39.2)

—

1994-95

945.84

774.11

75.5

171.73

24.5

1995-96

1009.76

742.17

73.5

267.59

26.5

1996-97

1040.96

728.67

70.0

312.29

30.0

1997-98

1181.73

875.66

74.1

306.07

25.9

1998-99

1368.06

991.84

72.5

376.22

27.5

F.Y.G.R.%

(44.6)

(28.1)

(119.6)

—

Total

8937.14

6639.69

2297.45

26.3

T.G.R. %

144.4

145.1

142.6

—

—

73.3 —

Source: - Annual reports and accounts statements of PACS from Pravara area.

211

(Q

£ <

5 (0 >

SS

0. c

CO

o < Q.

(/) O

(O

I

I

- a ■O c ns o >

oo o

(0 0> o c CO

> ■o <

sM>|e| uj

The loans disbursed by the PACS have been increasing In absolute terms from year to year; their capacity to recycle their funds and accelerate the flow of credit to the ultimate borrowers has been seriously retarded due to their poor recovery performance. W hich has adversely affected their profitability and viability. The PACS due to heavy overdues find it difficult to borrow from the DCCB on account of their failure to honour their com m itm ents in time which in turn affects the smooth working o f the DCCB whose funds rem ain locked up in overdues. The overdues not only affect the credit-absorbing capacity of the PACS but also makes it ineligible fo r refinance facilities from higher financing agencies. The members also in turn become ineligible to borrow on account of their defaults to the society. The over-dues of the PACS have shown an increasing trend from the year 1990-91. The overdues of the PACS, which were only Rs. 155.03 lakhs in 198990, went up to Rs. 37.22 lakhs in 1998-99. The percentage of over dues to dem and which a real index of recovery performance was only 27.7 percent in 1989-90. It has since gone up to 30.0 percent in 1996-97 and reduced in 1997-98 and 1998-99 i.e. 25.9 percent and 27.5 percent. The position o f overdues was alarm ing and has practically choked the credit pipeline in many PACS.

In the first five -year periods, the growth rate in am ount of demand was shown of 43.9% but in next five- year period growth rate was a small increase and reached to 46.6%. The am ount of recovery indicated fo r first five-year growth was 45.7% it, decreased in next five -year periods up to 28.1%. it is a good sign in perform ance of recovery programme. In the first five -year penod growth rates in overdue was given 39.2% but it was high increase in next five-year period i.e. 1196.6%.

212

During the ten year period percentage of recovery was 73.7% to the total am ount of demand. In the same period overdues was shown 26.3% to demand. The total growth rate during span o f 10 year in am ount o f dem and was 144.6%, recovery was 145.1% and over due was shown at 152.6%.

'k,

. ; .

A w ide range of factors external and internal influenced the level of and the trend in recovery perform ance of the PACS. The external factors included natural calam ities like floods, fam ines and drought, defective legal frame work and

lack

of governm ent assistance

in effecting

recoveries

through

legal

measures, socio political environm ent in which the PACS and other credit institutions are required to function etc. The absence of infrastructure facilities, linkages fo r ensuring Inputs supplies and extension services on the one hand and processing, storage m arketing and other services on the other w ere serious lacunae of imparting the productive and effective use of credit resulting in realization of low level of income and consequential defaults. The low recovery of loans was also largely due to a vitiated recovery clim ate m aking the borrowers, with hold repaym ents in the anticipation of write off. Internal factors of the credit system directly affecting recoveries are the poor quality of lending, defective loan policies and procedures. Unsatisfactory and ineffective supervision regarding the utility of credit, delay in sanction and disbursem ent of loans, fixation of unrealistic or shorter repaym ent schedules, failure to provide working capital to borrowers of term loans, over em phasis on targeted and directed credit etc.

5.5.7 P ro fit and L o ss in fo rm a tio n o f P A C S in P ra v a ra area. In Pravara area 44 PACS started working from many years to this date. PACS were working its activity under the local management. They follow rules and 213

regulations as per Act. and ADCC bank guidelines. PACS provide short and m edium term finance to farm ers and also supplying seeds, fertilizer, and insecticides in reasonable rate. The perform ance of profit and loss o f 44 PACS in Pravara area shown under follow ing table.

Table No. 5.17

P ro fit and loss o f P A C S in P ra va ra are a fro m 1 9 8 9 -9 0 to 1 998-99. Y ear

Profits

Loss

(Rs. In lakhs) Net Result

No. of societies

Am ount Rs.

No. of societies

Loss Rs.

1989-90

23

24.42

21

22.79

1.63

1990-91

25

27.26

19

20.42

6.84

1991-92

28

31.24

16

23.92

7.32

1992-93

28

34.54

16

24.70

9.84

1993-94

26

35.77

18

27.75

8.02

F.Y.G.R.%

—

(46.4)

—

(21.7)

(392.0)

1994-95

25

37.08

19

29.46

7.62

1995-96

29

40.17

15

30.61

9.56

1996-97

26

41.33

18

32.54

8.79

1997-98

27

43.50

17

35.15

8.35

1998-99

25

45.56

19

39.40

6.16

F.Y.G.R.%

—

(23.0)

—

(33.7)

-(1 9 .8 )

Total

262

360.87

178

286.74

74.13

Average

26

36.08

17.8

28.67 ■

Source: - Annual report and A ccount statem ent of 44 PACS. 214

7.41 , =^=

During 1989-90, 23 PACS showed a profit of about Rs. 24.42 lakhs, while rem aining 21 showed a loss of Rs. 22.71 lakhs. This trend continued fo r a period of 10 years still 1998-99. There w as significant progress in profit of PACS. On an average 26 PACS were showed in profit and 17 were in loss in same period. The average profit amount of Rs. 36.08 lakhs and loss am ount w as Rs. 28.67 lakhs per year. Net result in profit and loss of 44 PACS in Pravara area shows a profit of Rs. 1.63 lakhs in 1989-90; it increased to Rs. 6.16 lakhs in 1998-99. The highest profit was Rs. 9.84 lakhs in 1992-93, and lowest was Rs. 1.63 lakhs in 1989-90. The total net result in profit of 44 PACS during 10 years penod was Rs. 74.13 lakhs, and per year average was Rs. 7.41 lakhs. During first five year the rate of growth in profit was 46.4 percent, it decreased in next five year up to 23.0 percent, The total grov^h rate o f ten-year period in profit was 86.5%. The grov\4h rate in first five -year periods was 21.7% in loss, which it increased, in next five-year pehod up to 33.7 percent. The total growth rate in loss dunng 10-year period was 72.8 percent. In the first five year period the growth rate in net result was 392.0 percent, it was highly decreased in next five year period to (-) 19.3 percent. The total growth rate in net result of profit was 277.9% during period from 1989-90 to 1998-99. W e observed that the reasons behind the loss in PACS w ere low recovery from

farm er,

political

interference,

heavy

m anagem ent

and

adm inistrative

expenses and lack of professional out look.

5.6

P e rfo rm a n c e o f c o m m e rc ia l b an ks in P ra v a ra area. There are five branches of com m ercial banks, located in Pravara area, of which S.B.I. in Loni and Songaon village, central bank of India at Ashvi BK and Kolhar BK village and Union bank of India at Pravaranagar sugar factory. These banks 215

provide financial support to trader, businessman, SSI units, cottage industry, transport,

self-em ploym ent

and

agriculture.

The

follow ing

table

shows

the

perform ance of deposit and advances of com m ercial banks in Pravara during from 1989-90 to 1998-99. These data also depicted in the from a diagram (Chart 5.7) Table No. 5.18

D e p o s its and A d v a n c e s o f c o m m e rc ia l b an ks in P ra v a ra area (Rs. In crore) Y ear

Deposit

Advances

C/D Ratio.

1989-90

9.72

5.20

53

1990-91

10.15

5.41

53

1991-92

11.03

6.17

56

1992-93

12.73

6.48

51

1993-94

14.10

7.62

54

F.Y.G.R.%

(45.0)

(46.5)

(1.08)

1994-95

15.21

8.81

58

1995-96

16.78

10.32

61

1996-97

18.82

11.06

59

1997-98

19.46

12.86

66

1998-99

20.21

13.05

64

F.Y.G.R.%

(32.8)

(48.1)

(10.3)

Total

148.21

86.98

59

T.G.R.%

(107.9)

(150.9)

(20.7)

Source: Loan section from com m ercial banks 1989-90 to 1998-99. Com m ercial banks provided finance of Rs. 5.20 crore in 1989-90 and reached up to Rs. 13.05 crore in 1998-99. During ten year period com m ercial bank also m obilizing deposit am ounted to Rs. 9.72 crore in 1989-90 and increased over time 216

Chart 5.7

Deposits and Advances of Conrmereial Banks in Pravara Area (Rs. in Cnore)

25 — i - z —z::r: ~

□D epcsits 2Q

iA ck /an ces

sr

n>r

rST

K Year

C /D R a tio o f C o m m e r c ia l B a n k s in P r a v a r a A re a .

O) 3

C

4 0 --------------

0) 0 1

3 0 ---------------

c

10 -------------------------0 -------

K<# Year

up to Rs. 20.21 crore in 1998-99. The people, who w ere engaged in trading and business activities, the invested more am ount as deposits in com m ercial bank. On an average branches of com m ercial banks collected am ount of deposit was Rs. 14.7 crore during the period under review. The C/D ratio of branches of commercial banks in Pravara area was between 51 to 66 during period under study. The highest C/D ratio was 66 in 199798 and lowest was 51 in 1991-92. The average C/D ratio was 59 during 10-year period. The growth rate of deposit in first five-year period was 45.0% and it decreased in next five-year period i.e. 32.8%. The total growth rate of deposit in ten-year period was 107.9%. The growth rate in first five-year period was 46.5%; it increased m arginally in next five-year penod i.e. 48%. The total grov\/th rate in advances was 150.9% during ten -year period of study. W e observed that branches of commercial banks were disbursed low am ount fo r agriculture and allied activities compared to collection of deposits. At the same time balance surplus am ount was transferred in urban area because of secured recovery.

5.6.1 P u rp o s e w is e Loan d is b u rs e m e n t by c o m m e rc ia l b an k Com m ercial banks providing finance to the farm ers directly on the basis of short, medium and long-term basis.

Finance are given for the purpose for

agriculture-allied activities, trade, business, small scale industry, transport and housing purposes. The com m ercial bank also providing finance for self em ploym ent, artisans, gobergas plant education and private loan against gold. The follow ing table shows purpose wise loan disbursem ent of com m ercial bank during the period from 1989-90 to 1998-99.

217

w

Q)

o o

O

c

in

CNJ

CN

IT)

CO

O CO

CD

CO

;T '

S 8 S c

O)

d in

(/)

cr (0 a> 1<

E

i ’ i!

V) D

o

CO

0 ^

CO

1^

CN

CN

d

CN CO

LO G)

(0 >

re i_ Q . c

O) c

CO

CO

(0 c

a 0 1

CN

O CO

d

d

CO 00 LO

irl

in

CO

1^

CN

ra CQ

ro o i_ o O)

uS

d

2

E

o Q.

CD

LO

CO

c

cd in CO

03

£

o u

0)

£1

<4-1

K

C 0)

re

r

E

(f)

tl CD

w CO W

o

LO c;^

CO

d

(U 0

CD

■o5^§ c il;

<

CD

cc

0)

3

n y>

'S

^ 00

CO

w

W

Q) ^ ■D . E

CO

CO

^

ro w 1“ m

^

CN

o

IT)

CN

o

CN^

^

CN

0 O)

(T3

c

RJ O O

tn

c 0 o

I

0 Q.

CO

0 CD


(0

g

I’

ID c

o

Q . V.

U)

0)

I.

0

3

CD 3 o

OJ

CD

00

I— D O)

CO "O

O) <

0 0

>

CD Q_

E o I—

<*—

c

CD m

ro 0

E E 0 O 1 >>

0 >

=3

V) 2

0

o CO

TO CD >-

cn I c\i CD O)

t CO

cn cn

un C31^ cn O)

CO

L_

TO O H

a: d

cn d> O

d> o 13 O

V)

00 CN

Table 5.19 shows classification of loan disbursem ent of seven purposes. The purposes are agriculture; agriculture allied activity, trade and business, S.S. I units, transport, construction and other purposes. Agriculture includes crop-Loan, irrigation, agriculture impliments, tractor, electnc motor etc., agricultural allied activities include horticulture dairy and poultry and other purposes include self em ploym ent, artisans, education, private loan etc. The total amount of loan disbursem ent was 86.98 crore in span of 10 years, of which, 18.7% for agnculture, 21% fo r agriculture allied activity, 25% for construction and 8.2% for other purposes during the period from 1989-90 for 1998-99.

On an average 40% am ount was disbursed for agriculture and

agriculture allied activity. Pravara is a rural area so com m ercial bank have no more choice fo r providing finance in high percentage to reaming purposes.

5.6.2 Com parison of deposits and advances between com m ercial banks and co-operative banks. In Pravara area branches of ADCC bank sub branches of LDB, Pravara co­ operative bank and branches of com m ercial banks w ere m obilizing deposits. All the branches of above banks were also disbursing loan for various purposes. The follow ing table shows the com parison of deposits and loan disbursem ents of co-operative banks, Pravara bank and commercial banks from period 1989-90 to 1998-99. The follow ing table reveals that co-operative banks include ADCC bank and LDB branch, showing figure of deposit and disbursem ent together. The total am ount of deposits was Rs. 31.60 crore during 1989-90, of w hich 31% (9.72 crore) of com m ercial bank, 26% (8.20 crore) of co-operative banks and 93 percent (13.68 crore) of Pravara bank. At the end of 10 year period amount was gone up to Rs. 126.93 crore of which 16% of (20.21 crore) of com m ercial banks, 219

Q. C (/) JsC c

d

c\i

C O

CN

c 2

tfl

13 0 i Q-“ OO

H

CO

O)

^

C Din C O[O C M

CD ! £ CM ^

CD o

o 0) I .

E E

CD

MC S e i in C D

E o

O o w

1

8 g

o o

C O

re

IT) CO

C D CO

CD

C M^ C D^ CM ^ C Do C OC Nm CM E CD C O r- C NOO CM ro CD ^

CO ^ ■ 8 CD ^ CO ^

C D8

° 8 CD

in

C D

O O

^ 8 CM

h- —

CO ^

CD

CO ^ CO

o

CO C 3

0)

C

e

3

E E o

CO CD CO

u

CO

in O, rsj LO _ C C D CO <J> r^ C O r-CO n; c6 o

C M

k«-

o

c (0 > ■ a

lo

D o M c C C M C Mn r" < C D 1 0>

CD o ^ 8 C DC 3 OO ^

o 1.

a> o

to

^

0) a

(/>

Q .

^

r -

o o

5

CO

c 13 O o o < D^ C C M^ C D^ m ^ 00 D C O O O) 00 cn O C DC D■ DC c M CM n CO T CD C CO s § d C 00 to •c 0 C i. 0 tr

ro

o> >

c CQ

O I o o ■ D c < E

C J5 ^ CO C D^ C MC MCM d MC Dd in CD C C O in ^ CM

m^ C D Din 00 c\j 00 O OC OC C N JC M^ Md C Md C M O OC -—

5 §

ro

re

^

o

CD d ? ih in T" OO '

cz

■ D c

£1

00

CD C Dc n T - in DCM O )C D-C C N J CM

C O^

CO

<0

0

S | OO ^ in w.

d in

CD

ro ro S g -c> > o) S

° O

> "D

m c

Q )

LO CO

CD

8c

CO

o CM U )

O O

CO

L .

2

C N J

00

00

w Q ) o o re _c o Lw to q: E (C >

CM

o

o O)

5 > CD CM

.

N ;C M in

CO

C O D tv. f<5 CD 0 0 C m CO ^n m CO

o CO

lo o

CO

O

QJ 0 o


O ) CO c CD 0 Q.

Q > in C M 00 C N o o lo in ^ C D in M00 pJ M Tt C 00-^ d c^J d c^f C

2

Q ) CL 01 o o

ro TJ

C CO

D C O C C DC DC MC O M C MC M C O J C M


1

CA

CO

o

v>

o

0

Q. O

E E

Q

C N m00 C Od cxi

CO O 00 T - CM

CO

CN CD

CO CD

CM r -

in

o O o

ro CD >

CD I CD CO

(J)

CD I

I

CD

5 CD

o

C D

I

CM CD CD

CM C D C DC N C D C OOO CN C DC M00 CsJ C D d c S § C M

00

h- O ) C M

in CD I

CO CD CD

C D » CD

C D

) in C D C D

hC D C D C D C D

O O C D N C D C D

C D C D O O C D C D

TD C. (/) CD

D C J) ■ D B 0) Ji: o CO

(Q

o

00

o o

26% of (32.78 crores) o f co-operative bank 58% (73.94 crore) of Pravara bank. The highest deposit m obilisation of com m ercial bank was 31% (9.72 crore) in 1989-90, co-operative banks was 28% (27.29 crore) in 1997-98 and Pravara bank was 58% (73.94 crore) in 1998-99. Total am ount of deposit mobilisation w as 643,33 crore of which 23% (147.81 crore) of com m ercial banks, 26% (165.52 crore) of co-operative banks operative bank and 51% (329.60 crore) of Pravara bank. The total disbursem ent of loan was Rs. 20.48 crores in 1989-90, of which 25% (5.20 crore) of com m ercial banks 27% (5.45 crore) of co-operative banks operative bank and 48% (9.83 crore) of Pravara bank. At the end of 10 year period loan disbursem ent was Rs. 80,70 crore in 1998-99, of which 16% (13.05 crore) of com m ercial bank, 22% (17.36 crore) of co-operative banks and 62% (50.20 crore) of Pravara banks. The highest percentage of loan disbursem ent was 25% (5.20 crore) by com m ercial banks in 1989-90, 27% (5.43) of co­ operative banks in 1989-90 and 62% (50.29 crore) of Pravara bank in 1998-99. Total am ount of loan disbursem ent was Rs. 455.73 crore, of w hich 19% (86.98 crore) of com m ercial banks 22% (98,92 crore) of co-operative banks and 59% (270.83 crore) of Pravara bank during 1989-90 to 1998-99.

5.7

Relative share of co-operative and commercial banks in Pravara area.

It will be interesting to study the relative share of each category of banks in financing agriculture and activities allied to agriculture. These two activities are closely related to rural development. Table 5.20 depicts those co-operative banks and institutions take away a lion’s share in rural finance followed by Pravara urban co-operative bank, which m ainly finances for activities allied, to agriculture.

221

The

contributions

developm ent.

form

com m ercial

banks

were

very

m eager

in

rural

Table 5.21 presents the com parison between co-operative and

com m ercial banks disbursing loan for Agriculture and its allied activities.

Table No. 5.21 Loan disbursem ent fo r agriculture and allied purposes by co-operative and com m ercial banks in Pravara area during period from 1989-90 to 1998-99 (Rs. in crore) Year

Co-operative banks (ADCC + LDB)

Urban bank (Pravara bank)

C om m ercial banks.

Total

1989-90

5.45 (57.1)

1990-91

6.01 (56.9) 6.67 (50.8) 7.25 (58.0)

2.28 (23.9) 2.30 (21.8) 2.74 (20.9) 2.12 (23.1) 2.69 (22.1)

9.55 (100) 10.56 (100) 13.14 (100)

1993-94

8.81 (58.3)

1.82 (19.0) 2.25 (21.3) 3.73 (28.3) 3.11 (24.9) 3.60 (23.8)

F.Y.G.R.%

61.6

97.8

17.9

58.1

1994-95

10.61 (57.9) 10.85 (47.1) 11.89 (54.8) 13.62 (51.5) 17.36 (54.9)

4.34 (23.7)

3.36 (18.4) 3.97 (23.3)

18.31 (100) 23.01 (100) 21.68 (100) 26.43 (100)

63.6

96.3

70.8

72.6

98.52 154.2J_

48.93 (26.9)

34.43 (18.9)

181.88 (100)

218.5

368.1

151.7

231.1

1991-92 1992-93

1995-96 1996-97 1997-98 1998-99 F.Y.G.R.% Total T.G.R.%

8.19 (35.6) 5.97 (27.5) 7.40 (28,0) 8.52 (26.9)

3.82 (17.7) 5.41 (20.5) 5.74 (18.2)

12.48 (100) 15.10 (100)

31.62 (100)

Note: - Bracketed figures indicate percent to total. Source: -Annual reports and account statem ent from branches of ADCC, LDB, Pravara and com m ercial banks.

222

In Pravara area, the co-operative bank such as ADCC bank and LDB sub branches have always given m axim um percentage of loan to agriculture as com pared to Pravara co-operative bank and com m ercial banks betv^een 1989-90 and 1998-99. At the beginning co-operative banks (ADCC and LDB) allotted 57% loans (Rs. 5.45 crore) and minimum was given by Pravara co-operative bank about 19% (Rs. 1.82 crore) of the total Rs. 9.55 crore. The branches of com m ercial banks disbursed a loan of 23.9% (Rs. 2.28 crore) only, but at the end of lO year period the percentage of loan disbursed by co-operative bank (ADCC and LDB) was 54.9% where as the Pravara co-operative bank increased to 26.9% but com m ercial bank decreased upto 18.2 percent. During the period of 10 years the co-operative banks have disbursed a loans of about 54.2% (Rs. 98.52 crore) w here as 26.9% (Rs. 48.93 crore) by Pravara co-operative bank and com m ercial bank 18.9% (Rs. 34.43 crore). There fore, the maxim um loan disbursed was 58.3% in 1993-94 by co-operative banks, w here as Pravara bank was disburse was 35.6% in 1995-96 and commercial bank was disburse 23.9% in 1989-90.

W e observe that in Pravara area the ADCC, LDB and Pravara bank have disbursed maximum loan of about 81% as com pared to com m ercial bank of about 19%. As we assumed in the hypothesis it is proved that the co-operative banks were

providing

maximum

loan for agncultural

com pared to com m ercial and other financial institutions.

223

and

allied

activities