CHAPTER II

REVIEW OF LITERATURE

REVIEW OF LITERATURE
Views and Reviews of different scholars and critics help the
researcher to obtain broad awareness and acquire comprehensive
understanding of the subject under study. Hence a survey of literature
has been carried out here of which a few reviews are presented in this
chapter. Besides, the objectives and methodology of the study are also
presented.

2.1 Objectives and Methodology:

2.1.1 Objectives of the Study:
The specific objectives of the study are
1. to examine the trends in the financial status, growth and
overall performance of DCCBs in India and Andhra Pradesh.
2. to analyze the profile and operational trends of the Guntur
District Central Co-operative Bank (GDCCB), the selected
Bank;
3. to appraise the financial performance of the Guntur District
Central Co-operative Bank (GDCCB) with the help of CAMEL
Analysis.
4. to examine the position of the credit risk and NPAs
management in the Guntur District Central Co-operative
Bank (GDCC Bank); and
5. to suggest measures, ways and means for the healthy growth
of DCCBs in India as well as the selected GDCCB.

2.1.2 Sources of Data:

The data were collected both from primary and secondary
sources. Primary data were collected from sample bank officials
through a structural survey schedule. Information was gathered

34

personally and through interaction with the officials of the GDCCB for
the period

2000-01 to 2008-09. The secondary data were collected

from various books, journals, the annual audit reports of the

GDCCB

during the same period.

2.1.3 Scope of the Study:

This study covers a time period of nine years ranging between
2000-01 and 2008-09, to study the trends in the DCCB of Guntur
district, the study Bank. However, a time period of only five years was
considered for an appraisal of the DCCBs at the All India and Andhra
Pradesh level.

This study has a major focus only on the financial performance

of the GDCCB. Other functional and operational transactions like
deposit mobilization and credit expansion were not considered for
analysis purpose.

2.1.4 Analytical Tools Used:

The data was interpreted with correlation matrix from the ratios
of selected variables during the same period in GDCC Bank. The data
was tested with simple regression model to analyze the impact of gross
NPAs on different financial variables (Net Profit, Investments and
Spread) during the same period.

Regression analysis is used when two or more variables are

thought to be systematically connected by a linear relationship. In
simple regression, the variables are designated as X and Y and they
are related by an expression of the form

35

y = b0 + b1 x + e. It leaves aside for a moment the nature of the

variable e and focus on the x - y relationship. y = b0 + b1 x is the
equation of a straight line; b0 is the intercept (or constant) and b1 is
the x coefficient, which represents the slope of the straight line as the
equation describes.

2.1.5 Limitations of the Study:

1. This study basically is secondary data based. Broadly the
statistics and information supplied by the GDCCB through its
Annual

Reports

were

considered

for

analysis.

Qualitative

information for cross checking of the results, however, was not

collected from the executives.
2. Information pertaining to provisioning norms being adopted by
the GDCCB was not sufficiently and properly maintained by the
study bank. Hence the analysis was undertaken with the
available data only.
3. Pertaining to the time period for analysis, data were collected for
two different periods for the national level and the level of
GDCCB, based on the availability of such data.
4. Regression analysis technique is prominently adopted for the
purpose of analysis, though there is a scope for adopting other
advanced models, due to non availability of assistance.

2.2

Review of Literature:
Reviews always reflect the previous facts theoretically which

reinforce the intellect of the scholars and broaden the thinking to

obtain comprehensive and perceptive understanding of the study
which help a new researcher. To a researcher who desires to organize
the study systematically and to expose the existing effects of an issue,

36

related reviews worked out by researchers previously, help the

researcher to find a way to design his study perpetually, giving broadly
comprehensive presentation.

For a convenient presentation, all the reviews discussed in this

chapter, are divided into two categories under two sections. The
Section-I deals with the performance of the Co-operative Credit
Institutions in India and Section-II deals the distinguished reviews on
performance of the DCCBs in India.
SECTION-I
2.2.1 Studies on Performance of Co-operative Credit Institutions in
India:
Kulwant Pathania and Sabina Batra (2009) 1 examined the NPA
management in co-operative banks. It was observed that the main
factor responsible for NPAs was willful default i.e. able, but not willing
to pay followed by inadequacy of loans, ineffective management and
supervision, utilization of loans for unproductive purposes, political
support, redemption of post debts, inadequate infrastructure facilities
and field staff for recoveries and poor socio economic conditions. They
have concluded that the poor recovery position of the banks concerned
has adversely affected the image of the bank among other banks and
also in the public.

Jayalakshmi,G and Sumathy,M (2009)

in their study on NPAs

Management in Co-operative Banks in India, viewed that a good

management of NPAs requires pro-active actions to be taken by banks
at the time of taking decisions for granting advances by making proper
assessment of risk involved and strict adherence to the prudential
1

Kulwant Pathania and Sabina Batra, NPA Management in Co-operative Banks: Perception of Bank
Officials, Indian Co-operative Review, Vol.46, No.3, Jan, 2009, PP.161-175.
2
Jayalakshmi,G and Sumathy,M, NPA Management in Co-operative Banks in India, Tamilnadu Journal of
Cooperation, Vol.9, No.12, Oct, 2009, PP.41-44.

37

norms. They concluded that following prudential norms for NPAs

management is compulsory for survival of co-operative banks along
with the confidence of the customer.

Richa Verma Bajaj (2009)

in his article entitled Capital

Adequacy Regime in Scheduled Commercial Banks: A Case Study,

attempted CAMEL Analysis. In 1998 Narasimham Committee report
made

several

internationally

important
accepted

recommendations
prudential

norms

like

introduction

relating

to

of

income

recognition, asset classification, provisioning and capital adequacy.

According, a framework of the evaluation of current strength of the
system and of the operations and performance of banks has been
provided by reserve bank measuring through CAMELS.

Deepak Shah (2008)

analyzes the impact of financial sector

reforms in case of co-operative credit institutions in India. He has

observed that credit flows through the co-operatives in rural India and
their sustainability, viability and operational efficiency have become
major focus of attention of various policymakers in the era of financial
sector reforms. He concludes that financial sector reforms have
accorded greater flexibility to the co-operatives to invest in non-target
avenues like shares and debentures of corporate, units of mutual
funds, bonds of public sector undertakings, etc.

Mandira Sarma and Rajiv Kumar (2008)

carried out primary

studies on the rural short-term co-operative credit structure. They

observed that the Non-Performing Assets (NPAs) level in the Rural
3

Richa Verma Bajaj, Capital Adequacy Regime in Scheduled Commercial Banks: A Case of India,
The Asian Economic Review, Vol.51, No.2, Aug, 2009, PP.353-371.
4
Deepak Shah, Banking Sector Reforms and Co-operative Credit Institutions in India, http://mpra.ub.unimuenchen.de/7149/1/MPRA-paper_7149.pdf, Feb, 2008, PP.1-19.
5
Mandira Sarma and Rajiv Kumar, Rural Short-Term Co-operative Credit Structure, Economic & Political
Weekly, Vol.XLIII, No.9, March 1-7, 2008, PP.13-18.

38

Short-term Co-operative Credit Structure (RSTCCS) was very high

compared to that in the commercial banking system in India. They
concluded that in spite of significant development in Indias financial
sector over the last decade, a large number of poor, particularly large
and marginal communities remained financially excluded even
today.
Mayilsamy,R (2007)

examines the Non-Performing Assets

(NPAs) in short term co-operative credit structure. He observed that

the banks have to evolve recovery strategies and plan for recovery
management. He concluded that if they fail to improve the recovery,
the huge burden of NPAs is really breaking the backbone of the short
term co-operative credit structure in India.
Vinayagamoorthy, A and Vijay Pithadia (2007)

in their work

entitled Globalization and Co-operative Sector in India, have

observed that considering the low living standard of common man,
incomplete

and

imperfect

markets

and

other

socio

political

considerations, it is the primary duty of the government to ensure that

its citizens have easy access to co-operative credit. They have
concluded that the future vision of co-operative movement will have to
be based on efficiency parameters relating to promotion of excellence,
improvement of operational efficiency and strengthening of financial
resource base.
Deepak Shah (2007)

in his work entitled, The Adequacy of

Institutional Credit through Co-operatives in Maharashtra, observes

that in order to rejuvenate rural credit delivery system through
6

Mayilsamy,R, Non-Performing Assets in Short Term Co-operative Credit Structure An Overview,

Tamilnadu Journal of Co-operation, Vol.7, No.12, Oct, 2007, PP.62-66.
7
Vinayagamoorthy,A and Vijay Pithadia, Globalization and Co-operative Sector in India,
http://www.indiamba.com/Faculty_Column/FC585/Fc585.html, May, 2007, PP.1-6.
8
Deepak Shah, Adequacy of Institutional Credit through Co-operatives in Maharashtra-A Region Wise
Analysis, The Indian Journal of Agricultural Economics, Vol.62, No.3, July-Sep, 2007, PP.328-339.

39

co-operatives, the major problems facing the system were, high

transaction cost, poor repayment performance, mounting NPAs,
distribution

aspects

of

credit,

coverage

of

Scheduled

Castes

(SCs)/Scheduled Tribes (STs) members, etc. He concludes that as far

as the rural credit delivery system is concerned, the focus should be
on

strategies

that

are

required

sustainability

and

viability,

performance,

small

farmer

for

tackling

operational
coverage

and

issues

efficiency,
balanced

such

as

recovery
sectoral

development.

Mani,K.P (2007)

has examined the trend and concerns of

investment in agriculture since the launching of reforms. He observed

that medium term and long-term credit is not getting the required
priority, which is one of the problems of the agricultural credit delivery
mechanism. He concludes that it is high time to revamp the
institutional credit for agriculture particularly the investment credit so
as to meet the global and domestic challenges.

Banishree Das, Nirod Kumar Palai and Kumar Das (2006)

10

in

their study on the problems and prospects of the co-operative

movement in India under the globalization regime. They have observed
that the co-operative system in India has the capacity and potentiality
to neutralize the adverse effects emerging from the process of
globalization. They have concluded that co-operatives have immense
potential to deliver goods and services in areas where both the state
and the private sectors have failed.

Mani,K.P, Institutional Credit for Agriculture-Reflections Since Reforms, Financing Agriculture,

Vol.39,No.3, May-June, 2007, PP.33-37.
10
Banishree Das, Nirod Kumar Palai and Kumar Das, Problems and Prospects of the Co-operative Movement
in India Under the Globalization Regime, http://www.helsiniki.fi/iehc2006/papers2/Das72.pdf, 2006, PP.1-14.

40

Hanumantha Rao,K and Jayasree,K (2006)

11

examined the

banking sector reforms and credit flow to agriculture. They found that
about 12 per cent of the farmers debt was from traders at the all-India
level and in states like Jammu & Kashmir (J&K) it was very high (88%)
due to lack of Scheduled Commercial Banks (SCBs) and co-operative
banking network. They concluded that the debt and investment
surveys had shown that the farmers access had gone up considerably
across states as a result of the banking and agricultural sector
reforms.

Avinash V.Raikar (2006)

12

has analyzed the issues, problems

and prospects of co-operative credit institutions (CCIs) in India. He

has found that the major problems of the CCIs are dual control, high
overdues and low resource base. He concludes that the future survival
of

these

institutions

would

be

determined

by

its

ability

to

technologically modernize themselves, innovation of new products and

its reach among the urban and rural population.

Gagan Bihari Sahu and Rajasekhar,D (2005)

13

found that the

credit in both nominal and real terms had grown at a much faster rate
during the period 1981-91 as compared to the reform period of
1992-2000. They concluded that credit flow to agriculture was
negatively associated with investment in government securities,
Credit Subsidy (CS) and proportion of credit provided by the
co-operatives.

But

credit

supply

to

agriculture

was

positively

associated with the incidence of rural bank branches.

11

Hanumantha Rao,K and Jayasree,K, Banking Sector Reforms and Credit Flow to Agriculture,
IASSI Quarterly, Vol.25, No.2, Oct-Dec, 2006, PP.33-50.
12
Avinash.V Raikar, Co-operative Credit Institutions in India:An Overview, Indian Co-operative Review,
Vol.44, No.1, July, 2006, PP.1-20.
13
Gangan Bihari Sahu and Rajasekhar,D, Banking Sector Reforms and Credit Flow to Indian Agriculture,
Economic & Political Weekly, Vol.XL, No.53, Dec31 2005- Jan6 2006, PP.5550-5559.

41

Bhole,L.M

(2005)

14

in

his

work

entitled

The

Role

of

Co-operatives in Socio-Economic Development in India, has observed

that the co-operatives are often riddled with a host of problems such
as concentration, state-dependence, top-to-bottom approach, lack of
spontaneity, commercialization, power politics, corruption, etc. He
concludes that the institutionalization of the principle of cooperation
has perhaps tended to result into the ideology of co-operativism.
Jain,N.K (2005) 15 observes that the new disciplines are imposed
on co-operatives for the first time as they are required to be followed
by all banking institutions. He concludes that the co-operatives will
have to take conscious view of their own functioning to survive in the
present context of competition by ensuring efficiency.
Samwel K.Lopoyetum (2004)

16

examines the problems and

prospects of co-operative banking. He observes that globalization has

unquestionably opened up new challenges, prospects, opportunities
and potentialities in the economic system. He concludes that the
co-operative banking system must respond and strengthen its
infrastructural facilities to compete in the globalized financial system.
Joel Edvinraj,D (2004)

17

examined the challenges before Indian

co-operatives. He has observed that co-operatives have to face

competition from private and multinational sectors on the one side
and on the other side they have to rectify their losses. He has
suggested that governments help and support should be continued

14

Bhole,L.M, The Role of Co-operatives in Socio-Economic Development in India-A Review,

IASSI Quarterly, Vol.23, No.3, Jan-Mar, 2005, PP.107-126.
15
Jain, N.K, Co-operatives at Cross Roads, Indian Co-operative Review,Vol.42,No.3,Jan,2005,PP.272-279.
16
Samwel.K Lopoyetum, Problems and Prospects of Co-operative Banking, Kurukshetra, Vol.52, No.12,
Oct, 2004, PP.25-31.
17
Joel Edwinraj,D, Challenges Before Indian Co-operatives, Kisan World, Vol.31, No.10, Oct, 2004,
PP.21-22.

42

until co-operatives can meet challenges and stand and survive by

themselves.
Amrit Patel (2004) 18 examines the achievements and challenges
of

co-operative

banking.

He

observes

that

during

the

post-independence era rural co-operatives have indeed contributed

quite significantly in achieving self sufficiency in agriculture and
making it rather export oriented. He has concluded that co-operative
institutions have been facing serious problems constraining their
smooth operations in rural areas. They need to be reorganized,
restructured and revitalized so as to make them effective instruments
of rural banking for rural development.
Ansari,A.A and Amir Ullah Khan (2004)

19

have examined the

agricultural sector reforms and role of co-operatives. They have

observed that the economic reforms, which have been introduced
since 1991, have given new dimensions to precepts and practices of
economic development. They have concluded that the co-operatives
have not been able to take the fullest advantage of the economic
reforms, as they have been bypassed in the reform process.
Ashok Bandyopadhyay (2004)
Hundred

Years

of

Co-operative

20

in his work entitled The

Movement,

has

stated

that

co-operative movement with its tremendous strength and age-old

weaknesses are in the crossroads now in the present area of
liberalization, privatization and globalization in a market oriented
economy. He has concluded that all stake holders of the movement,
including cooperators, RBI, NABARD, central and state governments,
18

Amrit Patel, Co-operative Banking-Achievements and Challenges, Kurukshetra, Vol.52, No.12, Oct,
2004, PP.18-24.
19
Ansari,A.A and Amir Ullah Khan, Agricultural Sector Reforms and the Role of Co-operatives,
Indian Co-operative Review, Vol.42, No.2, Oct, 2004, PP.143-169.
20
Ashok Bandyopadhyay, Hundred Years of Co-operative Movement-Vision and Mission 2020,
Indian Co-operative Review, Vol.42, No.1, July, 2004, PP.1-25.

43

co-operative organizations, etc. shall have to play their respective roles

to strengthen the co-operative movement.
Ramesha,K (2003)

21

in his work entitled Co-operative Banking

and Financial Sector Reforms in India, has found that with regard to
the extension of reforms to co-operative banking segment, it has not
yet cleared as to whether the same would ensure soundness and
stability in the co-operative banking segment. He has concluded that
in the long run, if co-operative character of credit co-operatives is to be
preserved,

the

prudent

practices,

system

of

governance

and

supervision and regulation all should emanate from the guiding

principles of co-operatives.
Katar Singh (2003)

22

observes that the co-operatives frantically

looking for new direction for their survival in the changing economic
scenario which would find new strategies for their rejuvenation in
policy. He has concluded that the new policy to be implemented
faithfully and its commitment to action translate into reality.
Subburaj,B, Samwel Kakuko Lopoyetum and Selvam,K.G (2003) 23
have observed that in spite of significant contribution made by the
primary level co-operatives in servicing various sectors of the national
economy, they are the weakest link in its organizational structure.
They have concluded that the growth and development of co-operative
institutions would be reflected in the better socio-economic planning
and its positive changes, better standard of living and community at
large.
21

Ramesha,K, Co-operative Banking and Financial Sector Reforms in India Agenda for Future Reserarch,
http://web.uvic.ca/bcics/pdf/mapconf/ramesha.pdf, May, 2003, PP.1-12.
22
Katar Singh, The National Policy on Co-operatives- A Critical Appraisal, Kurukshetra, Vol.51, No.6,
April, 2003, PP.4-9.
23
Subburaj,B, Samwel Kakuko Lopoyetum and Selam,K.G, An Insight of the Major Operational and Technical
Problems Impinging on Gowth of Primary Agricultural Co-operative Banks(PACBs)- An Application of TWOS
Matrix Analysis to Formulate Strategies, Indian Co-operative Review, Vol.40, No.3, Jan, 2003, PP.203-215.

44

Agro-Economic Research Centre (2002)

24

examined the role of

co-operative credit in the development of different size groups of

farmers in Gujarat and found that out of total loan amount, over 21
per cent was borrowed from private traders who charged exorbitant
rates of interest might be because they were the ultimate source of
credit and that too at door step. They concluded that increase in
current prices of agricultural goods, there was no parallel increase in
loan limits.

Nainta,R.P (2001)

25

has viewed that the deregulation of interest

rate may affect the financial viability of co-operative banks. He opines

that the government must prepare a new national policy on
co-operatives with the help of academicians and thinkers.

Katar Singh (2000)

26

examined the performance of credit

co-operatives in India. He opines that to enable credit co-operatives to

survive and prosper in the years to come, several organizational and
management reforms are needed. He concludes that the credit
co-operatives must be free to carry on their operations purely on
commercial lines and matters such as fixation of interest rates,
determination of unit costs and scales of finance, modus operandi of
recoveries, hiring and firing employees and so on should be completely
left to them.

24

Agro-Economic Research Centre, The Role of Co-operative Credit in the Development of Different Size
Groups of Farmers in Gujarat, Agricultural Situation in India, Vol.LVIII, No.II, Feb, 2002, PP.531-534.
25
Nainta,R.P, Co-operatives in the New Millennium Challenges & Opportunities, Kurukshetra, Vol.49,
No.10, July, 2001, PP.8-11.
26
Katar Singh, Reforms in Credit Co-opeatives, Kurukshetra, Vol.49, No.1, Oct, 2000, PP.16-22.

45

Verma,S.K (1999)

27

examined the rural development through

co-operatives. He has observed that the co-operative institutions have

been

tremendously

contributing

in

accelerating

the

economic

development of rural and urban areas of the country specially the

economically weak people. He has concluded that it is the best
instrument to promote social justice and prevention of exploitation at
the gross root level.
Ramachandra Reddy (1998)

28

examined the management of

overdues of co-operative sector in Andhra Pradesh. He observes that

Andhra Pradesh government has proposed a new co-operative
structure called the single window system. Under this new system
the farmers get the credit facilities and other non-credit services
through a single window. He concludes that the main reason for this
is the mounting overdues which are clogging the process of credit
recycling.
Satyasai,K.J.S and Viswanathan,K.U (1998)

29

examined the

impact of integration in the light of the experience of the state of

Andhra Pradesh and observed the ratio between short-term and
long-term

loans

which

averaged

at

1.3

per

cent

during

the

pre-integration period and increased to 1.77 per cent during the

post-integration period. They have concluded that co-operative system
in the country needed to be restructuring in view of the changing
demand pattern for rural credit, higher expectations from the
co-operatives which are expected to provide quick and quality service
and to enable them to be viable and vibrant.
27

Verma,S.K, Rural Development through Co-operatives, Kurukshetra, Vol.47, No.8, May, 1999,
PP.29-32 & 38.
28
Ramachandra Reddy,B, Management of Overdues of Co-operative Sector in Andhra Pradesh,
The Indian Journal of Commerce, Vol.51, No.4, Oct-Dec, 1998.
29
Satyasai,K.J.S and Viswanathan, K.U, Restructuring the Co-operative Credit System through Integraion of
Short Term and Long Term Structures, Indian Journal of Agricultural Economics, Vol.53, No.3, July-Sep,
1998, PP.478-487.

46

Joseph,M and Tamilmani,B (1998)

30

in their work entitled The

State and Co-operation, have stated that the retrospective scenario of

co-operative movement has proved that without the active and able
support of government, an orderly growth and development cannot be
expected. They have concluded that it will take some more time for the
co-operative movement in India to function as an autonomous
movement.

Kumari

Pushpa

(1997)31 examines

the

retrospective

and

prospective analysis into the co-operative credit institutions since

independence. She observes that co-operative credit institutions have
achieved a lot quantitatively over the period of about forty five years
since independence. She concluded that the demand of time and
circumstances also desire that these co-operative credit institutions
may stand by the race of change.

SECTION II
2.2.2 Studies on Performance of District Central Co-operative
Banks in India:
Mayil Murugan,A (2009) 32 made an empirical analysis on capital
adequacy ratio in central co-operative banks. He observed that capital
adequacy has reduced the likelihood of failure and increases liquidity
of the bank. He has concluded that fulfilling the capital adequacy
norm is not at all the problem for the bank for ever.

30

Joseph,M and Tamilmani,B, The State of Cooperation:

A Retrospective Scenario,
Indian Co-operative Review, Vol.XXXV, No.3, Jan,1998, PP.211-216.
31
Kumari Pushpa, Co-operative Credit Institutions Since Independence: Retrospect and Prospect,
Indian Co-operative Review, Vol.XXXV, No.2, Oct, 1997, PP.151-162.
32
Mayil Murugan,A, An Empirial Analysis of Capital Adequacy Ratio in Central Co-operative Banks,
Tamilnadu Journal of Cooperation, Vol.9, No.10, Aug, 2009, PP.57-62.

47

Mayilsamy,R and Revathi Bala,M (2009)

33

in their work entitled

Management of Non Performing Assets (NPAs) in District Central

Co-operative Banks (DCCBs) in India, felt that the Narasimham
Committee Report-1998, rightly pointed out that NPAs constitute a
real economic cause to the nation in that they reflected the application
of scarce capital and credit funds to unproductive uses. They have
concluded that high NPAs in the banks have devastating efforts not
only on the banks but also on the economy as a whole. They have
suggested that the formation of the good policy will be no use unless it
is implemented in true spirit.

Mohan,S (2008)

34

has examined the factors determining the

profitability of central co-operative bank. He observes that profitability

ratios invite the serious attention of the management to put an
integrated effort to correct the financial performance. He suggests that
the bank should expand its banking operations in such a way that the
non-interest income increases substantially in the near future.

Darling Selvi,V (2008)

Kanyakumari

District

35

examines the lending performance of

Central

Co-operative

Bank

(KDCCB).

He

observed that the overall growth rate of loan disbursement on short

term credit shows a positive growth of 25%. The credit facilities
extended by KDCCB are high for services, medium for industries and
low for agriculture. He concludes that the overall performance of the
KDCCB is good. If the benefits are properly toiled and utilized there
will be a bright future for both to the community and to the nation.

33

Mayilsamy, R and Revathi Bala, M, Management of Non Performing Assets in District Central Co-operative
Banks in India, Indian Co-operative Review, Vol.46, No.3, Jan, 2009, PP.198-204.
34
Mohan,S, Factors Determining the Profitability of Central Co-operative Bank, Tamilnadu Journal of
Cooperation, Vol.8, No.4, Feb, 2008, PP.63-69.
35
Darling Selvi,V, Lending Performance of Kanyakumari District Central Co-operatives,
Indian Co-operative Review, Vol.45, No.3, Jan, 2008, PP.176-187.

48

Mayilsamy,R (2008)

36

examined the loan operations in district

central co-operative banks in India. He has observed that any financial

institutions including DCCBs carries on business out of funds, which
are collected as deposits or borrowings from higher financial agencies.
He concluded that the efficiency of banking institutions as a financial
intermediary depends to a great extent on timely recovery of loans.

Jadhav,K.L, Yadav,D.B and Shendage,P.N (2007)

37

examined

credit disbursement of District Central Co-operative Banks (DCCBs) in

Maharashtra. The gross cropped area, average rainfall and deposits
with the DCCBs were observed to be the most important factors
influencing the regional inequality in the disbursement of per hectare
short term credit in all the regions as well as the state as a whole.
They have suggested that due to importance given to borrower
members, which will lead to increase in loan disbursement.

Lakshmanan,C and Dharmendran,A (2007) 38 studied the impact

of Non Performing Assets (NPAs) on performance variables in Chennai
Central Co-operative Bank. They examined performance variables
namely, net profit, investment, legal expenses and spread. They
observed that the results of NPAs on all the above performance
variables were negative and insignificant at 5 percent level in all the
equation. They concluded that the effective management of NPAs is
essential to strengthen the financial position of the bank.

36

Mayilsamy,R, Loan Operations in District Central Co-operative Banks in India, Tamilnadu Journal of
Cooperation, Vol.8, No.3, Jan, 2008, PP.61-65.
37
Jadhav,K.L, Yadav,D.B and Shendage,P.N, Rural Finance and Inequality in Credit Flow through DCCBs in
Maharashtra, Indian Journal of Agricultural Economics, Vol.62, No.3, July-Sep, 2007, P.357.
38
Lakshmanan,C and Dharmendran,A, Impact of NPAs on the Performance variables in Chennai Central
Co-operative Bank, Indian Co-operative Review, Vol.44, No.4, April, 2007, PP.291-297.

49

Namasivayam,N (2006) 39 has observed the working performance

of the Madurai District Central Co-operative Bank Ltd., and states
that it has been impressive in terms of deposit mobilization and credit
deployment. He has concluded that the success of the co-operative
bank depends on effective manpower planning and management.

Fulbag Singh and Balwinder Singh (2006) 40 examined the funds

management in the Central Co-operative Banks in Punjab. They
observed that higher proportion of own funds in the working funds of
the bank and the concerned shown by the bank in the timely recovery
of loans resulted in an increased financial margin of the central
co-operative banks in Punjab. They concluded that less dependence
on the new outside resources helped these banks in increasing their
financial margin.

Ramachandran,T and Seilan,A (2006)

Kanyakumari

District

Central

41

Co-operative

examined the role of

Bank

(KDCCB)

in

promoting Self-Help Groups(SHGs). They have observed that the

DCCB makes PACSs to play the role of NGOs in the promotion and
financing SHGs and PACSs have also realized the advantages in SHGs
promotion and linkage. They have concluded that the KDCCB is
playing an important and pivotal role in social transformation, welfare
activities and has served the cause of woman empowerment and
socio-economic betterment of the poor.

39

Namasivayam,N, A Study on Employees Opinion on the Performance of MDCC Bank.Ltd., Madurai,

Indian Co-operative Review, Vol.44, No.2, Oct, 2006, PP.87-92.
40
Fulbag Singh and Balwinder Singh, Funds Management in the Central Co-operative Banks of Punjab-An
Analysis of Financial Margin, The ICFAI Journal of Bank Management, Vol.V, No.3, Aug, 2006, PP.74-80.
41
Ramachandran,T and Seilan,A, Role of Kanyakumari District Central Co-operative Bank in Promoting SelfHelp Groups, Indian Co-operative Review, Vol.44, No.1, July, 2006, PP.36-40.

50

Yadav,B.S and Kaynat Tabassum (2006)

42

examined deposit

mobilization by central co-operative banks in Haryana state. The

sources of total assets or working capital of central co-operative banks
consist of the paid-up share capital, reserves and other funds,
deposits

from

co-operative

societies,

individuals

and

others,

borrowings from State Co-operative Bank (SCB) and Reserve Bank of

India (RBI)/NABARD through State Co-operative Bank and grants
from government. But of all this total assets, it was found that the
total deposit mobilization in all the central co-operative banks was not
much satisfactory during the period under study because the deposits
registered a less increasing trend in comparison to owned funds and
total assets.

Fulbag Singh and Balwinder Singh (2006)

43

examined the

profitability of the central co-operative banks in Punjab. They have

observed that the implementation of prudential norms from 1996-97
on wards, have helped to generate an awareness for adverse effects of
overdues/non performing assets in these banks. They have concluded
that the co-operative banks in Punjab have responded to the ongoing
financial reforms in a positive manner.

Sudipta Ghosh (2006)

44

observed that DCCBs were not

successful in restricting the level of Non Performing Assets (NPAs) and

the alarming factor was that the quantum of doubtful assets of the
banks increased continuously during the study period. She has
suggested that banks have to manage their NPAs more efficiently and

42

Yadav,B.S and Kaynat Tabassum, Deposit Mobilization by Central Co-operative Banks in Haryana State,
Indian Co-operative Review, Vol.44, No.1, July, 2006, PP.80-86.
43
Fulbag Singh and Balwinder Singh, Profitability of the Central Co-operative Banks in Punjab A
Decomposition Analysis, Indian Co-operative Review, Vol.44, No.I, July, 2006, PP.41-55.
44
Sudipta Ghosh, NPA Management in District Central Co-operative Banks-A Comparative Study of MCCBL
and TGCCBL, The Management Account, Vol.41, No.2, Feb, 2006, PP.154-158.

51

effectively

so

that

they

can

change

their

character

from

non performing assets to performing assets.

Thanikodi,R

(2005)

45

carried

out

study

on

Central

Co-operative Banks in India: Problems and Remedies. He observes

that the CCBs act as a depository and balancing centres between
surplus and deficit societies. He concludes that to have strong CCB,
the internal and external defects of the CCBs should be removed with
a collective effort from the government, management, employees and
public.

Jadhav,K.L and Kasar.D.V (2005)

46

examined the performance

of District Central Co-operative Banks in Maharashtra. They have

found that there is need to pay attention to the borrower members,
which will lead to increase in the share capital and loan disbursement
of agricultural purposes. They have suggested that efforts should be
made to enhance deposit mobilization and investment of funds in
government securities and fixed deposits for transparency in financial
management.

Oliver Bright,A (2005)

47

has analyzed the role of Kanyakumari

District Central Co-operative Bank (KDCCB) in Tsunami Credit. He

has observed that DCCBs grant loans and advances to the rural
dwellers both for agricultural and non agricultural purposes. But the
infrastructure aids are totally neglected by them. He has suggested
that the DCCBs must identify the investment portfolios for credit
plans.
45

Thanikodi,R, Central Co-operative Banks in India: Problems and Remedies, Coop.Banking, Vol.42, No.12,
June, 2005, PP.521-524.
46
Jadhav,K.L and Kasar, D.V, Performance of District Central Co-operative Banks in Maharashtra: A Model
of Quantitative Analysis, Indian Journal of Agricultural Economics, Vol.60, No.3, July-Sep, 2005, P.411.
47
Oliver Bright,A, Role of Kanyakumari District Central Co-operative Bank(KDCCB) in Tsunami Credit,
Kisan World, Vol.32, No.9, Sep, 2005, PP.33-34.

52

Hulas Pathak (2005)

48

in his work entitled that Agricultural

Credit Financing in District Central Co-operative Bank (DCCB),

Raipur, Chattisgarh, observed that the DCCB (Raipur) played an
important role in financing agricultural credit needs of the farmers of
Chattisgarh, in particular Raipur district by way of short term,
medium-term and long-term loans for a variety of credit purposes
including crop husbandry, purchase of milch and draught animals,
agri-inputs, farm machinery and equipment, wells and tube wells,
housing and consumption expenditure. He concluded that efforts
should also be made to step up deposit mobilization especially in the
rural sector by introducing innovative schemes and incentives based
on specific credit needs of the people.

Vaikunthe,L.D (2005)

49

in his work entitled that Institutional

Credit to Agriculture in Shimoga District Central Co-operative Bank

(SDCCB), Karnataka, takes four talukas namely, Shimoga, Sagar,
Thirthahalli and Hosanagar in Shimoga district for observation. He
has found that the average utilization of crop loan is higher in the
non-irrigated areas in Sagar, Hosanagar and Thirthahalli talukas
compared to the utilization of loan in the other categories of
cultivation for farm operations. He finds that the incremental income
of the crop loan beneficiaries in the four talukas has been positive in
the post-investment period as compared to pre-investment period.

48

Hulas Pathak, Agricultural Credit Financing: A Case Study of District Co-operative Central Bank, Raipur,
Chattisgarh, Indian Journal of Agricultural Economics, Vol.60, No.3, July-Sep, 2005, P.389.
49
Vaikunthe,L.D, Institutional Credit to Agriculture: A Case Study of District Central Co-operative Bank in
Shimoga District in Karnataka, Indian Journal of Agricultural Economics, Vol.60, No.3, July-Sep, 2005,
P.405.

53

Raja,S (2005) 50 carried out a study on Madurai District Central

Co-operative Bank (MDCC Bank) Ltd. He viewed as far as banks are
concerned; there are several factors that determine the operating
efficiency and profitability. They are: Level of deposits, level of
advances, number of branches operating, level of capital and reserves,
level of customer service and the like. He concluded that the burden
rate should be reduced and spread rate be increased so that
profitability can be at higher rate.

Ramesh,D (2004) 51 has analyzed the economic viability of DCCB

in Mahabubnagar district of Andhra Pradesh. He has come to a
conclusion that the mounting overdues can jeopardize the countrys
agricultural credit structure designed to accelerate agricultural
development. He has further stated that co-operatives cant survive in
the present commercial and economic war front, if it fails to make full
use of mass media.

Rais Ahmad and Nasrullah Bhat (2004) 52 examined the recovery

performance of District Co-operative Banks in Jammu and Kashmir.
They found that during all the years under study i.e. from 1994-95 to
2000-01; overdues were greater than the owned funds of central
co-operative banks. They have observed that the main reason for the
accumulation of overdues is the defective lending policies and
procedures, unrealistic scales of finance and untimely due date for
repayment of loans, poor supervision over societies, absence of a
proper climate for recovery including excessive and growing patronage
of defaulters by the management authorities.
50

Raja,S, Performance Evaluation of MDCC Bank Ltd-An Applicaion of Structural and Growth Analysis,
Indian Co-operative Review, Vol.42, No.3, Jan, 2005, PP.237-244.
51
Ramesh,D , An Analysis of Economic Viability of DCCB in Mahabubnagar District of Andhra Pradesh,
The Indian Journal of Commerce, Vol.57, No.3, July-Sep, 2004, PP.120-121.
52
Rais Ahmad and Nasurllah Bhat, Recovery Performance of District Co-operative Banks in J&K State,
Monthly Public Opinion Survey, Vol.XLIX, No.11, Aug, 2004, PP.10-14.

54

Dinabandu

Mahal

(2002)

53

highlighted

the

impact

of

Development Action Plan (DAP) study of the Pune District Central

Co-operative Bank (PDCCB). He observed that DAPs impact on the
growth rate of share capital, reserve fund and the owned fund of the
bank were found to be more in all the years during the post DAP
period than the pre-DAP period. He has found that the affiliated
societies are not well aware of the DAP and so proper efforts have to be
made in this direction to make the DAP a more successful one.

Adinew
Achoth (2002)

Abate,
54

Keshava

Reddy,T.R,

Mahesh,N

and

Lalit

examined the magnitude and growth of institutional

credit flow to agricultural sector in Karnataka. They observed that

recovery performance of agricultural advances especially in the
post-reform period had significantly improved in commercial banks,
RRBs and DCCBs lending. Only the recovery performance of PCARDBs
continued to decline. They suggested that the government and lending
institutions should take strict measures on willful and deliberate
defaulters and then only the problem could be solved.

Namboodiri,N.V (2001)

55

examined the economies of scale and

scope of District Central Co-operative Banks(DCCBs). He has observed

that DCCBs at present are not trap in scale of diseconomy because of
relatively cheap funds made available by the national, apex and
commercial banks. He has concluded that the concentration on loan
portfolio and tapping the other sources of borrowings are two
strategies open to DCCBs to reduce their costs.
53

Dinabandu Mahal, Impact of Development Action Plan, Indian Co-operative Review, Vol.40, No.I, July,
2002, PP.42-51.
54
Adinew Abate, Keshava Reddy,T.R, Mahesh,N and Lalith Achoth, Magnitude and Growth of Institutional
Credit Flow to Agriculture in Karnataka, Indian Co-operative Review, Vol.XXXIX, No.3, Jan, 2002,
PP.194-212.
55
Namboodiri,N.V, Economies of Scale and Scope of District Central Co-operative Banks, Indian Journal of
Agricultural Economics, Vol.56, No.2, April-June, 2001, PP.198-210.

55

Ravi Varma,S and Bhagavan Reddy,B (1997)

performance

of

Single

Window

Co-operative

56

examined the

Credit

Delivery

System(SWCCDS) in Andhra Pradesh. They have observed that the

inception of SWCCDS, the efficiency of DCCBs (District Central
Co-operative Banks) in relation to share capital, reserve fund,
deposits,

borrowings

and

outstanding

advances

has

become

noteworthy. They have found that there is remarkable improvement in

performance of PACSs (Primary Agricultural Credit Societies) and
DCCBs after the inception of SWCCDS as compared to earlier one.

Puyalvannan,P (1997)

57

examined the cost of management,

productivity and profitability of Central Co-operative Banks (CCBs) in

Tamilnadu. He has observed that all CCBs are functioning effectively
by keeping the cost of management lower. He has concluded that the
cost of management per employee at all CCBs in Tamilnadu shows
progressively increasing trend.

Sambari Kokuriah (1995)

58

in his work entitled Co-operative

banking for rural development in Karimnagar District Central

Co-operative Bank (KDCCB), Andhra Pradesh, had observed that the
economic position of the respondents improved after availing loan from
co-operative bank. He found that the majority of respondents revealed
that, they had to make unauthorized payments for getting the loans
sanctioned.

56

Ravi Varma,S and Bhagavan Reddy,B, An Evaluation of Single Window Co-operative Credit Delivery
System in Andhra Pradesh, Indian Co-operative Review, Vol.XXXV, No.I, July, 1997, PP.1-19.
57
Puyalvannan,P, A Study on Cost of Management, Productivity and Profitability of Central Co-operative
Banks in Tamilnadu, Indian Co-operative Review, Vol.XXXIV, No.3, Jan, 1997, PP.235-240.
58
Sambari Kokuriah, Co-operative Banking for Rural Development- A Case Study of Karimnagar District
Central Co-operative Bank, Finance India, Vol.IX, No.1, Mar, 1995, PP.127-131.

56

Suhag.K.S, Goyal.S.K and Groer,R.K (1998)

59

observed the

performance of co-operative credit institutions in Haryana. They

observed that amongst, three-tier co-operative credit institutions,
Central

Co-operative

Banks

(CCBs)

had

made

the

greatest

contributions in deposit mobilization but at gross root level the

societies had yet to make dent. They have concluded that for designing
the appropriate financial policies and/or revitalizing the existing
organizational structure, it is extremely essential to assess the past
performance of co-operative credit structure in the state.

Gayithri,K (1993)

60

studied the

credit delivery in rural

Karnataka. She has found that the societies which are not faring well
in recovery and where there are charges of corruption against the
secretaries do not get any refinance benefits from the District Central
Co-operative Bank (DCCB). She has concluded that refinance from
NABARD for agriculture schemes is mainly based on the recovery
performance of the banks.

2.3 Conclusion:
The progress, performance and the problems of the co-operative
banks were reviewed by various scholars and researchers in various
states at various periods of time. However, an apparent research gap
exists as far as the appraisal of the financial position and performance
of the co-operative banks is concerned. The present study thus
undertakes to appraise the financial performance of the DCCB of
Guntur (A.P.), as a case study.

59

Suhag,K.S, Goyal.S.K and Groer,R.K, The Performance of Co-operative Credit Institutions in Haryana,
Indian Co-operative Review, Vol.XXXV, No.4, April, 1998.
60
Gayithri,K, Credit Delivery in Rural Karnataka: A Case Study of Chikmagalur District, Journal of Rural
Development, Vol.12, No.3, May, 1993, PP.301-317.

57