CHAPTER - IV

REGIONAL RURAL BANKING SYSTEM

IN ASSAM- ITS PRE MERGER
AND POST MERGER SCENARIO

CHAPTER-IV

REGIONAL RURAL BANKING SYSTEM IN ASSAMITSPRE MERGER AND POST MERGER SCENARIO
4.1 Rural Banking System :
Rural Banking is a important part o f the structure o f Indian Banking Sys
tem. India being an agrarian economy with more than 80% of the population
dependent on agricultural sector, Rural Banking occupies a predominant place
in the Indian economy for various reasons. The prosperity o f this sector is
important not only to the local population but even to the Government. Agri
cultural progress has emerged as a potential strategy to economic progress in
most developing countries including India. Rural banking has acquired in
creasing relevance here in the recent decades.
Rural Banking will connote the banking needs of the rural populace. These
needs are for activities relating to agriculture, rural and cottage industries which
dot the rural settings. The needs of these different segments are varied and
complex. These needs were from ancient times met usually by the village
money lenders. The lending activities of the money without much of the
paraphernalia of a modem banking system. But these money lenders were
literally charging exorbitant rates o f interest and were engaged in practices not
very conducive to the interest of the rural borrowers.
The Regional Rural Banking is trying to meet the credit requirements of
backward areas where coverage by the commercial banks and co-operatives
is relatively poor. However, such areas should have growth potentialities and
should make rapid progress when once the credit requirements are met. The
[

108]

R R B s a p p e a r to

b e a ttra c tiv e o n

a c c o u n t o f th e ir p o s s ib ility

o f c o m b in in g th e

re la tiv e s o p h is tic a tio n o f c o m m e rc ia l b a n k s w ith lo c a l b ia s a n d lo w

c o s t s tru c

tu re a s s o c ia te d w ith c o -o p e ra tiv e s . O n e o f th e ta s k s e n v is a g e d fro m

th e R R B s

is to

m a in ta in

th e ir c o s t o f o p e ra tio n s

a t a

le v e l lo w e r th a n

th a t o f th e

c o m

m e rc ia l b a n k s .

T h e

R e g io n a l R u ra l B a n k s

E c o n o m ic p ro g ra m m e

(R R B s) c a m e

la u n c h e d

in

in to

b e in g

u n d e r th e

1 9 7 5 . E a rlie r, th e B a n k in g

2 0 -p o in t

C o m m is s io n ,

a p p o in te d b y th e G o v e rn m e n t,

to s tu d y th e s tru c tu re o f b a n k in g d e v e lo p m e n t

in

s e ttin g

In d ia ,

m o o te d

th e

id e a

o f

u p

R R B s

in

its

re p o rt

in

1 9 7 2 .

T h e

G o v e rn m e n t re v ie w e d th e re c o m m e n d a tio n s o f th e b a n k in g c o m m is s io n , a n d

a p p o in te d

th e

N a ra s im h a m

re p o rt in ju s t 3 0

d a y s a n d

s tu d y

g ro u p

fa v o u re d th e

T h e R R B s w e re e s ta b lis h e d

w ith a

o n

J u ly

s e ttin g

v ie w

u p

1,

1 9 7 5 .

I t

s u b m itte d

th e

o f R R B s .1

to d e v e lo p in g th e ru ra l e c o n o m y

b y p ro v id in g f o r th e p u rp o s e o f d e v e lo p m e n t o f a g ric u ltu re , tra d e , c o m m e rc e ,

in d u s try

a n d

o th e r p ro d u c tiv e

a c tiv itie s

in

th e

ru ra l

a re a s ,

c re d it a n d

o th e r

fa c ilitie s , p a rtic u la rly to th e s m a ll a n d m a r g in a l fa rm e rs , a g ric u ltu ra l la b o u re rs ,

a rtis a n s , s m a ll e n tre p re n u rs a n d f o r m a tte r s c o n n e c te d th e r e w ith a n d in c id e n ta l

th e re to .

T h e R R B s a re s o m e w h e re in b e tw e e n th e p u b lic

o p e ra tiv e

s tru c tu re . T h e y

c o m b in e

in

s e c to r b a n k s a n d th e c o

th e m s e lv e s th e

c h a ra c te ris tic s

o f b o th

th e s e in s titu tio n s a n d a re e x p e c te d to p la y a s u p p o rtin g ro le in d is tric ts w h e re

th e

u p

c re d it g a p

is v e ry

R R B s , c e rta in

la rg e

a n d

th e

n o rm s h a v e to

c o o p e ra tiv e

b e

o b s e rv e d . T h e s e

a re a s s h o u ld b e re la tiv e ly

b a c k w a rd

R R B s

a re a s

a re

to

b e

s e tu p

in

s tru c tu re

109

s e ttin g

a r e :

o r trib a l,

w h e re

a c tiv e ,

is w e a k . In

th e

c o -o p e ra tiv e

b a n k s

a re

n o t

 there should not be any commercial bank in the area and

the area should have real potentiality for a development breakthrough
with the flow o f credit.
Credit is a crucial input helping the rural poor in raising their incomes. As
most farmers are small, they tend to borrow substantial finance from different
sources to improve their agricultural output. The problem of indebtedness
worsens when the loans are not put to productive uses. Providing adequate
credit to the rural poor has become a problem because of the complex nature
o f the rural society.
The RRBs are expected to form an integral part o f the rural credit structure,
alone with co-operatives and commercial banks, under the multi-agency
approach to rural lending. They are known for their lower cost o f operations.
Till recently, establishment and operational costs of RRB branches were
relatively lower than the rural branches of commercial banks.
4.2. Historical evolution of RRBs in Assam :
The state o f Assam enjoys the presence o f 5 (five) RRBs. O f these, while
Lngpi Dehangi Rural Bank is sponsored by State Bank of India covering the
hill districts o f Karbi Anglong and N.C. Hills of Assam, the other 4 (four)
RRBs were, Pragjyotish Gaonlia Bank, Cachar Gramin Bank, Lakhimi Gaonlia
Bank and Subansiri Gaonlia Bank sponsored by United Bank of India, a
premier Nationalised Bank with massive presence in the North East. These
RRBs were rendering Yeomans service for terms o f mobilisation o f savings
and dispensation of credit.
RRBs had thus proved their mettle as meaningful institutions for trans
forming the rural economic credit scenario.

[110]

A brief introduction of 5 RRBs in Assam i.e Pragjyotish Gaonlia Bank,

Lakhimi Gaonlia Bank, Subansiri Gaonlia Bank, Cachar Gramin Bank and
Langpi Dehangi Rural Bank is given below.
Pragjyotish Gaonlia B an k :
Pragjyotish Gaonlia Bank, sponsored by United Bank o f India was
established on 6th July, 1976 under the provision of section 3 (i ) of the
Regional Rural Banks Act, 1976 with Head Office at Nalbari, District Nalbari,
Assam. The bank is a Scheduled Bank since its establishment and is authorised
to do banking business as defined in section 6 (I) of the banking Regulation
Act, 1949.
This is the first RRB in the North Eastern Region and 20 th in the country
which covered 13 Nos o f reorganised districts of Assam viz. Nalbari, Kamrap,
Kamrup (Metropolitan), Darrang, Barpeta, Dhubri, Sonitpur, Goalpara,
Kokrajhar, Bongaigaon, Chirang, Baksa andUdalguri.
The Bank was setup with the sole objective of developing the rural economy
by providing, for the purpose of development o f agriculture, trade, industry
and other productive activities, credit and other facilities particularly to the
small and marginal farmers, agricultural labourers, artisans and small entrepre
neurs etc. and also to transact business as defined in section 18 (2) of the
RRBs Act, 1976.
With the objectives in view, the bank has been playing active role in
development o f credit for development o f agriculture, allied activities, busi
ness small scale and cottage industry, self employed and professional, pur
chase of consumer durables, construction/repairing of house etc. Emphasis
has been given on micro credit through SHG Linkage Programme. The Bank
has received awards from Government of Assam consecutively for three
years in recognition of its best performance in SHG Banks Linkage programme,
in the State o f Assam for the Year 1999-2000-2000-2001 and 2001 -2002.

[HI]

Lakhimi Gaonlia B an k :
Lakhimi Gaonlia Bank, a Regional Rural Bank and joint undertaking of
Govt, of India, Govt, of Assam and United Bank of India was established on
29 th M y, 1980 with its Head office at Golaghat (Assam).
The bank has been operating in 5 districts o f Assam, viz, Sivasagar,
Jorhat, Golaghat, Nogaon and Morigaon. It has been extending all types of
banking services through its 102 nos o f branches and 4 area offices to the
people o f 2000 villages under 46 Development Blocks.
Table : 4.1

The districts-wise break up of branches

SL

District

Branches

Rural

Semi
Urban
02

Urban

No.of

No. of

Blocks
06

Villages
366

09

366

No.
01

Sivasagar

22

20

02

Jorhat

16

15

03

Golaghat

23

20

03

08

399

04

Nagaon

30

27

03

17

640

05

Morigaon

11

10

01

06

229

102

92

09

46

2000

Total

01

01

(Source: Annual Report, LGB, 2003-04)

For sm ooth functioning, effective m onitoring and administrative
convenience o f the affairs o f the branches, 4 (four) nos. of area offices of the
bank are, located at Sivasagar, Jorjhat, Nagaon and Morigaon.
The Bank has set up the women Development cell and a lady officer of
the Bank has been posted and functioning as key person as per NABARD
guidelines. The women Development cell has taken up several initiatives to
extend credit facilities to women through SHG and conducted some training
programmes. The Bank is also contemplating early setup of the Technical
Monitoring and Evaluation cell.
[ 112]

Subansiri Gaonlia Bank:

Subansiri Gaonlia Bank, a joint undertaking of Government of India, State
Government o f Assam and United Bank of India was established on 30th day
o f March 1982 under section 3 (i) o f Regional Rural Bank Act 1976. Since
then, the bank is involved in rendering banking service to the rural poor and
different Government Departments working in the area of operation of the
bank.
The Bank is operating in four districts of upper Assam, namely Lakhimpur,
Dhemaji, Dibragarh and Tinsukia. All the four districts originally belong to
erstwhile Lakhimpur district. While the Bank was established in the year 1982,
Dhemaji district was not bifurcated from Lakhimpur district and also the
Tinsukia district from Dibragarh district. O f the two districts namely Lakhimpur
and Dibragarh, the Lakhimpur district was economically backward in com
parison to Dibragarh district. To develop the districts through the service of
Regional Rural Bank, the Head office of Subansiri Gaonlia Bank had been
established at North Lakhimpur district. The Bank has 45 branches. The net
work of branches in four districts are as follows :

Table : 4.2

District-wise Branch Network

Particulars of
Branch

Lakhimpur
District

Dhemaji
District

Dibragarh
District

Tinsukia
District

Rural
Semi-Urban
Urban
Metropolitan

15
2##
Nil
Nil

9
Nil
Nil
Nil

11
2***
Nil
Nil

7
1
Nil
Nil

17

13

Total
# # (Including head office)
*** (Including area office)

(Source. Annual Report; SGB 2004-05)

[1 1 3 ]

The bank presently has no license pending for opening of new branch.
The bank has already relocated 18 (eighteen) number of loss making branches
as per package o f relief measures granted by RBI to Regional Rural Bank.
Necessary amendment o f licenses for relocated branches has been made by
Reserve Bank o f India. In terms o f Section 42 (i) of RBI Act, the Bank has
maintained cash reserve ratio @ 4.50% of the total demand and time liabili
ties. The bank has also kept its surplus fund with sponsor bank in Non SLR
short-term deposit as well as long term deposit besides minimum balance in
current dserposit in sponsor bank and other commercial bank to meet day to
day business o f the branches.
Due to implementation of Many Against One (MAO) programme and
joint recovery drive conducted by the different Districts Administration, the
bank could recover an amount of Rs.58.21 lac from non-performing assets
o f various categories, out of which Rs.53.17 lac adjusted towards book dues
during the year under report and Rs.5.04 lac has been adjusted towards na
tional interest. Details o f management of NPA during the 2004 and the year
2005 are shown below :

Table : 4.3
Detail Position of Management of NPA, during the year 2004
(Rupees in thousand)
Particulars

31-03-2004

31-03-2005

49553

52420

Reduction against NPA during the year

4593

27023

Addition of NPA during the year

7460

9030

52420

34427

19.25%

9.82%

6.33%

4.86%

NPA at the beginning of the year

NPA at the end of the year

% of gross NPA to gross Advance
% of net NPA to net Advance

(Source: Annual Report, SGB, 2004-05)

[114]

Keeping in view the objective of Regional Rural Bank and to increase the
i

income of the Bank by providing well secured high value advances under
priority sector as well as under retail banking, the bank has prepared its credit
plan for the financial year 2004-2005 with allotement of budget amounting to
Rs. 2000.00 lac, an amount o f Rs. 352.11 lac was budgeted against Agricul
ture sector and Rs.104.14 lac was allotted against Industry. Balance amount
o f Rs. 1543.75 lac was budgeted against service, business and other non
priority sector advances. Due to various steps taken by the Bank including
joint recovery drive conducted by the district administration follow up of
Bakijai Cases, recovery camp organised by the branches, follow up action
initiated by the Banks Head Office, the bank could recover an amount of Rs.
663.36 lac against total demand of Rs. 1204.27 lac on 30th June 2004. The
recovery percentage o f the bank as on 30th June, 2004 stood at 55.00%,
which is expected to be increased to 60.00% as at 3 1st March, 2005.
Cachar Gramin B a n k :
Cachar Gramin Bank, a joint undertaking of Government of India, state
Government o f Assam and United Bank of India was established on 31-031981, underthe Regional Rural Banks Act, 1976. Since inception, it is involved
in the development process o f the area with its committed service to the
weaker sections o f the society in line and as desired by the Govt, through
various schemes and production oriented credit to all categories of borrowers.
The bank also put emphasis on exploring the saving potentialities of rural
masses and encouraging the habit o f the thrift among them. The area of
operation of the bank is confined within three districts Cachar, Karimganj and
Hailakandi o f Assam.
[115]

The bank achieved good performance in deposit mobilization, growth in

advance and profitability. This was possible only for team work of the
employees and support from state Government Departments, NABARD, RBI,
Sponsor bank and above all active support by our enormous customers. The
performance o f the bank in the field o f deposit mobilisation is encouraging.
The bank could reach an aggregate deposit of Rs. 20356.85 lac as at 31st
March,2005 as against figure of Rs. 17800.18 lac as at 3 1st March, 2004 thus
registering a growth o f 14.36 % from the previous year.
Investment portfolio of the bank is managed by two ways, one-by way of
investing funds in term deposit with the sponsor bank for Non SLR purposes.
As per extent guidelines, bank is now required to maintain their entire SLR
portfolio in Government and other approved securities. Another channel lies
in investment of surplus funds in bonds and debentures o f public sector
undertakings as per guidelines prescribed by Reserve Bank of India for the
purpose.
In line with the Government guidelines, the bank initiated all action to
accelerate the credit delivery to the farmers through Kisan Credit Card and
Self Help Groups. As for SHGs the bank has made a progress and 3020 nos.
o f groups were formed involving a total 1505 nos. o f men groups and 1515
nos. of women groups. As on March, 2005 a total no. of 3020 groups have
already made their deposit linkage with the different branches o f the bank and
the credit linkage was established with 1390 nos. of SHGs amounting to Rs
261.94 lac.
As usual recovery continues to be the prime concern of the bank and to
improve the position, several steps have been initiated. Efforts were directed
to minimize NPA by way o f more efforts for recovery from NPA accounts and
also for compromise settlement o f long overdue loans besides normal cash
recovery through vigorous recovery drive including holding of recovery camps.
[

116

W ith ali these perform ances, w orking results o f the bank looked an
im proved one. F or the sixth successive year, the bank earned operating as
well as net profit. Synoptically the w orking results are pu t below along with
financial ratios.

Table : 4.4

Working Results of Cachar Gramin Rank

(A m ount in thousand)
SI. P a rticu la rs
No.

31-03-2004

31-03-2005

Income before provision

175705

183074

Income after provision

175705

183074

Income on loans and advances

42801

62144

Income on Investment

103013

109685

Total Expenditure without provision

145377

151509

Total Expenditure with provision

160097

151509

Expenditure on salary as a percentage

22.15%

22.17%

17.13%

10.22%

1809491

2237266

10 Financial return

8.53

7.95

11 Financial cost

5.51

4.79

12 Financial margin

3.02

3.16

13 Operating cost

3.34

2.30

14 Misc. Income

0.55

0.53

15 Operating profit

1.68

1.48

16 Risk cost

0.81

17 Net margin

0.87

to total expenditure
8

Cost o f management as a percentage

to total expenditure

Average working fond

(Source: Annual Report Cachar Gramin Bank, 2004-05)

117]

1.48

A ll b ra n c h e s

c o lle c tio n

o f th e

a n g p i

h a v e

b e e n

u n d e rta k in g

o f c h e q u e s , is s u a n c e s o f d e m a n d

a n d o th e r b u n k s a n d

B a n k

e h a n g i

is s u a n c e

u r a l

o f b a n k

a n k

d ra fts th ro u g h

g u a ra n te e

J a n u a ry

th e

b u s in e s s

s p o n s o r b a n k

e tc ,

G o v t, o f In d ia a n d

b y

S ta te

B a n k

o f In d ia

G o v t, o f A s s a m , w a s e s ta b lis h e d

in

o n

1 9 8 2 u n d e r th e R e g io n a l R u ra l B a n k s A c t, 1 9 7 6 w ith its H e a d

a t D ip h u , th e

p ro v id in g

d is tric t h e a d q u a rte rs

c re d it in p u ts to

h ill d is tric ts

o f A s s a m ,

T h e

o p e ra tin g

b a n k

is

th e

o f K a rb i A n g lo n g

d is tric t w ith

d e v e lo p m e n t o f ru ra l e c o n o m y

i.e . K a r b i A n g lo n g

w ith

lik e

L a n g p i D e h a n g i R u ra l B a n k , S p o n s o re d

la b o ra tio n , w ith

n o n fu n d

n e tw o rk

a n d

o f 4 3

N o rth

c o l

2 7 th

O ffic e

a v ie w

o f th e

to

o n ly tw o

C a c h a r H ill D is tric ts .

b ra n c h e s

s p re a d

o v e r th e

tw o

d is tric ts o f w h ic h o n ly 3 b ra n c h e s a re lo c a te d in s e m i u rb a n c e n tre s a n d o th e r

4 0

b ra n c h e s a re lo c a te d

in ru ra l c e n tre s .

L a n g p i D e h a n g i R u ra l B a n k h a s b e e n g iv e n a s p e c ia l th ru s t o n th e fo rm a

tio n o f S H G

m e n ta ry

c re d it

h a b its b o th

m o te d

a n d fo r th e ir c re d it lin k a g e b y th e b a n k in o rd e r to e v o lv e s u p p le

a n d

th rift a s

7 7 7

a m o u n t o f R s

T h e b a n k

o u s

fo llo w -u p

d o n o t tu rn

d u c te d

a c h ie v e

in

s tra te g y

w e ll a s

n o s .

3 6 7 .7 8

b e n e fitin g

la c

a s o n

d u e

w e re

a n d

re s u lt, 3 2 3

c re d it

lin k e d

to

in c u lc a te

n o s . o f S H G s

b y

th e

b a n k

o f 8 2 %

w e re

p ro

in v o lv in g

tim e ly

a n

o f b ra n c h e s w a s

c a m p s

a n d

in te n s iv e

re c o v e ry

o f lo a n s . C o n tin u

m a d e

th a t lo a n

s o

R e c o v e ry

D riv e s

a lm o s t a ll b r a n c h e s . A s a r e s u lt o f th e s e m e a s u r e s , th e

a re c o v e ry

b a n k in g

3 1 s t M a rc h , 2 0 0 8 .

e m p h a s is o n

s u p e rv is io n

b a d . R e c o v e ry

ru ra l p o o r

c re d it. A s

o f S H G s

h a s g iv e n

a n d

fo r

a s o n

3 0 -0 6 -0 7 .

1 1 8

a c c o u n ts

w e re

b a n k

c o n

c o u ld

In fulfilment of the social obligations, the bank continued to extend finan

cial assistance to the weaker sections of the society, particularly small and
marginal farmers, landless labourers, and small entrepreneurs. It has been
making sincere endeavour to meet the credit needs of the people both under
priority and non-priority sectors.
The credit deposit ratio of the bank as on 31-03-2008 is 69% as against
57% as on 31-03-2007. The increase in the C.D. Ratio is attributed to banks
massive disbursement of loans under various sectors.
As on 31st March, 2005 the banks total income was Rs. 1742.23 lac as
against Rs. 1500.43 lac during the previous year, thus registering a growth of
16.12% over the previous year. While interest income from loans and ad
vances increased from Rs.758.02 lac to Rs. 957.69 lac that from investment
shot up from Rs. 648.57 lac to Rs. 684.43 lac. Miscellaneous income o f the
bank increased from Rs. 91.63 lac during the previous year to Rs. 94.62 lac
during the reporting year.2
The total interest expenditure during the year (2008) amounted to Rs.
1473.03 lac as compared to Rs. 1439.82 lac over the previous year recording
an increase o f 2.31%. Out of these, interest paid on deposit was Rs. 472.74
lac as against Rs.466.64 lac during the previous year. Interest paid on bor
rowing stood at Rs.233.53 lac as against Rs.262.80 lac during the previous
year. Operating Expenses stood at Rs.582.83 lac as against Rs.556.12 lac
during the previous year.
[ 119]

The bank had entered into Memorandum o f Understanding with sponsor

bank in tune w ith NABARD guidelines for the year 2007-08. The
computerisation process of the bank is in foil swing, 14 branches have been
computerised up to 31st Dec 2008. With an objective to increase credit flow
to women, the bank has setup Women Development Cell headed by a lady
officer. During the year, (2008) 14 awareness and training proggrmmes for
women SHGs were conducted.
4.3 Pre-merger Scenario :
The Pre-merger scenario of Rural Banking System in Assam as indicated
below :
Table : 4.5

Pre-merger scenario of RRBs in Assam

SL No.

Name of the RRBs

Sponsor Bank

Cachar Gramin Bank

U.B.I

Lakhimi Gaonlia Bank

U.B.I

Langpi Dehangi Rural Bank

S.B.I

Pragjyotish Gaonlia Bank

U.B.I

Subansiri Gaonlia Bank

U.B.I

(Source : Annual Report, AGVB)

As on 3 1st March, 2004, the 5 RRBs covered 24 district in the state and
comprised 398 branches with a staff strength o f 1964. All the 5 RRBs put
together recorded profits to the tune o f Rs. 14,73 crore. All the RRBs had
accumulated losses to the tune o f Rs. 89.58 crore.
As on 3 1st March, 2004, the average CD ratio o f the RRBs in the state was
38.42 %, the recovery was 58.41 % and the gross NPA stood at 14.07 %.
[ 120]

Table : 4.6
Perform ance highlights as on 30-09-05
Pragjyotish Gaonlia Bank
The first RRBs in the North Eastern Region. The bank coult improve
recovery and reduce NPA which resulted in wiping out of total accumulated
losses as on 30-09-05.
Date of opening

06-07-1976

NO. of District covered

13

No. of Branches

163

Of which: Rural

126

Semi urban

20

Urban

17

Deposit

958.52 crore

Advances Outstanding

474.35 crore

Priority sector Advances

360.88 crore

C.D. Ratio

49

No. of SHGs credit Linked

9552

No. of KCCs issued

21053

Operating profit

7.93 crore

Recovery %

73

NPA %

15

( Source: Annual Report, 2005 Pragjyotish Gaonlia Bank

[ 121]

Table : 4.7

Performance highlights as on, 30.09.05

Subansiri Gaonlia Bank
Quantum improvement in loans disbursed during the year including
priority sector advances persistent increase in recovery growth in the share
of standard assets are the major achievement.
Date of Opening

30 - 03 -1982

No. of Districts covered

No . of Branches

49

Of which-Rural

42

Semi-urban

Urban

Deposit

Rs. 162.16 crore

Advances outstanding

40.04 crore

Priority sector advances

24.87 crore

CD Ratio

25

No. of SHG credit Linked

1410

No. of KCCs Issued

2989

Operating Profits

0.67 crores

Recovery %

55

NPA %

(Sources : Annual Report, 2005, Subansiri Gaonlia Bank)

[ 122]

Table : 4.8
Performance highlights As on 30. 09.05
Lakhimi Gaonlia Bank:
Maintenance of a very high level of recovery at 81% reduction of NPA
level from 4.47 % to 3.99 %, reduction of numbers of loss making branches
from 2 to 1 are the hallmarks.
Date of opening

29-07-1980

No. of districts covered

No. of branches

102

Of which-Rural

92

Semi-Urban

Urban

Deposit

Rs. 386.47 crore

Advances Outstanding

Rs. 159.60

Priority sector advances

Rs 109 . 49 crore

C.D. Ratio

41

No. of SHGs credit Linked

6412

No. of KCCs issued

13378

Operating Profit

Rs.2.02 crore

Recovery %

81.15

NPA %

3.99

(Source : Annual Report, 2005, Lakhimi Gaonlia Bank)

[ 123]

Table : 4.9
Performance highlights As on 30.09.05
Cachar Gramin Bank
Consistently high growth of deposit and advances, uninterrupted operat
ing profit for successive years, steady reduction of accumulated losses are
the distinctive features:

Date of Opening

31-03-1981

No. of Districts covered

No. o f Branches

44

Ofwhich-Rural

32

Semi-urban

Urban

Deposit

Rs. 226.65 crore

Advances outstanding

Rs. 84.26

Priority sector Advances

Rs. 56.18 crore

C.D. Ratio

37

No. of SHGs credit Linked

1992

No. KCCs issued

3765

Operating Profit

Rs. 1.78 crore

Recovery %

63.66

NPA%

10

(Source: Annual Report, 2005, Cachar Gramin Bank)

[124]

Table : 4.10
Performance highlights As on 30.09.05
Langpi Dehangi Rural Rank

Date of opening

27.01.82

No . of Districts covered

02

No: of Branches

43

Of which-Rural

39
4

Semi-urban
Deposit

771347 (Amt. in thousand)

Advances outstanding

456260 (Amt. in thousand as on

31.3.05)

Priority sector Advances

322148 (Amt. in thousand as on

31.3.05)

No. of SHG credit Linked

1818

No. of KCCs issued

1637 (As on 31.03.05)

Operating Profits

Recovery %

80% (As on 30.06.04)

NPA%

8%

(Source : Annual Report, 2004-2005, Langpi Dehangi Rural Bank)

[ 125]

Table : 4.11
District-wise distribution of the no. of reporting offices,
Aggregate Deposit and Gross Bank credit of Regional Rural
Banks in Assam
( A m

o u n t, in

R s . C r o r e )

As on 31 March, 2005
As on 31, March, 2004
Offices sum Deposit Credit Offices sum Deposit Credit

District
Barpeta
Bongaigaon
Cachar
Dairang
Dhemaji
Dhubri
Dibrugarh
Goalpara
Golaghat
Hailakandi
Jorhat
Kakrajhar
Kamrup(R)
Kammp(M)
KarbiAnglong
Karimganj
Lakhimpur
Marigaon
Nagaon
Nalbari
North Cachar Hills
Sibsagar
Sonitpur
Tinsukia
AllAssam
NE Region
All India

20
11
20
24
8
12
12
13
23
8
17
11
15
7
34
17
18
10
32
21
9
21
30
8
401
646
14,484

( S o u r c e : A n n u a l

98
75
89
97
29
64
40
61
79
33
51
68
96
75
63
56
42
35
92
119
15
80
115
21
15,90
26,02
558,24

20
11
20
24
8
12
12
13
23
8
16
12
15
7
34
17
18
10
32
21
9
21
31
8
402
649
14,433

49
18
30
55
5
24
7
25
27
6
18
22
50
30
30
15
11
12
30
64
3
19
54
3
610
971
261,16

R e p o r t, L o c a l a r e a b a n k

126

106
58
70
21
100
43
95
67
27
7
69
29
39
8
70
31
81
34
38
9
24
56
66
24
103
58
85
34
75
39
66
22
41
15
41
16
42
107
127
75
18
6
82
28
121
66
20
4
1,703 760
2,943 1,216
61,425 32,559

a r c h , 2 0 0 4 - 0 5 )

Table : 4.12

The aggregate deposit and gross bank credit of Regional Rural

Banks in India as on March, 2004 to March, 2005
Important Indicators

March
2004

June
2004

Sept.
2004

Dec.
2004

March
2005

a) Aggregate deposit

12.1

12.3

9.9

9.9

10.0

b) Gross Bank credit

18.2

18.3

21.2

25.9

24.7

( Source: Annual Report, Local Area Bank March, 2004-05)

Table : 4.13
The State wise viability position of RRBs as on 31 March, 2004

______________________ ________________________________(Amount m Rs. lakhs)

Profit Earning
Loss
No of Without Accumulated With Accumulated
si.
State Name
Making
Loesses
Loesses
RRBs
No.
Amount
1435.48
0.00
1473.37
52.05
1773.14
378.97
1303.74
0.00
0.00
138.14
0.00
0.00
2447.53
883.93
0.00
0.00
38.73
0.00
230.09
0.00
740.13
0.00
642.58
3016.84
0.00
1174.95

No Amount
1 336.44
1 217.83

196 106
79503.22
57
15729.67
(Source: Annual Report, NABARD as on March, 2004)

33 18364.7

1 Andhra Pradesh
Arunachal Pradesh
2
3
Assam
4
Bihar
Chhattisgarh
5
6
Gujrat
Haryana
7
8 Himachal Pradesh
Jammu & Kashmir
9
10 Jharkhand
11 Kerala
12 Karnataka
13 Madhya Pradesh
14 Maharashtra
15 Manipur
16 Meghalaya
17 Mizoram
18 Nagaland
19 Orissa
20 Punjab
21 Rajasthan
22 Tamilnadu
23 Tripura
24 Uttar Pradesh
25 Uttaranchal
26 West Bengal
Grand Total

16
1
5
16
5
9
4
2
3
6
2
13
19
10
1
1
1
1
9
5
14
3
1
36
4
9

No
13
0
0
6
0
7
3
2
1
2
2
13
5
4
0
1
0
0
2
5
5
3
0
27
3
2

Amount
10717.55
0.00
0.00
4800.05
0.00
2457.53
4433.20
916.14
1198.63
463.58
3833.12
10447.36
1138.15
752.25
0.00
221.32
0.00
0.00
1383.52
3973.01
3956.86
964.62
0.00
26509.77
744.51
592.05

127

No
2
0
5
1
5
2
1
0
0
1
0
0
9
5
0
0
1
0
3
0
7
0
1
8
0
6

8563.9

2 1084.51
3 1161.06

5 1819.35
1 170.45
1 144.26

1
4

41.03
2811.6

704.69

1 148.84
1
98.12
1 1062.58

1 6 3

c o m

p a r e d

y e a r .

3 3

r i n g

t o

l o s e s

e a r n e d

1 5 6

R R B s

c h a n g e s

a m

i n

o u n t i n g

e a r n i n g

t h e

a s

h a s

y e a r

i n g

t h e

p r e v i o u s

g r o w

t h

t h e

o f t h e

3 3

a d h y a

i r

r u n a c h a l

2 1 4 .

s .

t h e

a t

c r o r e

R s .

1 8 3 .

6 7

p a t t e r n

6 5

c r o r e

a r e

a s

d u r i n g

7 3 3 .

c r o r e

i n

t h e

9 6

a s

t h e

y e a r

c r o r e

i n

t h e

a g a i n s t 4 0

p r e v i o u s

2 0 0 3 - 2 0 0 4

y e a r .

p r e v i o u s

R R B s

i n c u r

S o m

o f t h e

u n d e r :

p r e v i o u s

i n c u r r i n g

d e c l i n e d

y e a r

l o s s e s

c o m

o f R

s .

p a r e d

a m

i n

t o

2 0 0 4

t h e

t o t a l

n e t

s .

s l i p p e d

t h e

t o

p r e v i o u s

l o s s e s

y e a r

d u r i n g

e a r n e d

t h e

p r o f i t

t o

p r e v i o u s

y e a r . P r o f i t o f

o v e r

p r e v i o u s

y e a r .

p r o f i t

i n

o f

c r o r e

s .

i n

7 6 8

c r o r e .

o u t t o

.6 8

c r o r e

p r e v i o u s

n e t p r o f i t

s .2 4 9 .3 9

o r k s

t h e

y e a r r e g i s t e r

i n

a b s o l u t e

T h e

r e t u r n

3 3 %

i n

d u r i n g

t e r m

o n

2 0 0 3 - 0 4

o v e r

c a p i t a l

c o m

p a r e d

y e a r .

i n c u i r i n g

i n

a j a s t h a n

o v e r t h e

5 1 9 .2 9

c a p i t a l d e p o s i t s ) w

y e a r

i n c r e a s e d

o u n t e d

p r e v i o u s

4 8 .0 3

y e a r

d u r i n g

d u r i n g

e a r n e d

P r a d e s h ,

u t o f t h e

b y

o f

p r o f i t s

a t R

i n

9 5 2 .3 3

r i s s a ,

a n d

P r a d e s h , M

l o s s e s

o n e

i n

d u r i n g

2 0 0 3 - 0 4 ,9

J a r k h a n d ,

e a c h

a h a r a s t r a , M

i n

t h e

e a c h

s t a t e s

a n i p u r , N

i n

J a m

o f

a g a l a n d ,

e r e

i n

a n d

n d h r a

U P , U

i h a r , 5

t t a m

in

a s h

P r a d e s h ,

c h a l

a n d

e s t B e n g a l .

J a m

i n

a n d

R s .

i n c r e a s e d

s h a r e

2 0 0 3 - 0 4

2 3 %

u t

s y s t e m

( i n c l u d i n g

R R

t h e

t o

t o

R s .

c u r r e n t y e a r .

P r o f i t o f 3 0

1 2 0

l o s s e s

p r o f i t s

1 3

a t

e a r n i n g

p r o f i t a b i l i t y

c u r r e n t y e a r

d u r i n g

R R B s

i n c u r r e d

t h e

p r o f i t

I n d i a

t h e

3 3

a n d

b a n k ,

a n d

2 8

l o s s

a k i n g

b y

a s h m

U .P .

i r B

R R B s ,

a n k

o f

a n k , S t a te

1 2

e r e

a r o d a

a n k

s p o n s o r e d

a n d

o f B

e a c h

i k a n e r a n d

b y

b y

S B I ,

1 0

a n k

J a i p u r , U

b y

o f

C B I ,

I n d i a ,

n i t e d

a n k

S C B .

s p o n s o r

b a n k s ,

o n l y

b a n k s

128

e r e

s p o n s o r i n g

R R B s

h a v i n g

losses. O f the 26 states where RRBs were operating, 12 states did not
have loss making RRBs as on March 2004.

4.4 Post Merger scenario :

Specific provisions have been made under section 23 A of the Regional
Rural Banks Act 1976 (21) of 1976 for the central government to effect amal
gamation of Regional Rural Banks. Accordingly, the central government after
consultation with the National Bank for Agriculture and Rural Development
(NABARD), Government o f Assam and the United Bank o f India being the
Sponsor Bank, o f Cachar Gramin Bank, Lakhimi Gaonlia Bank, Pragjyotish
Gaonlia Bank and Subansiri Gaonlia Bank was of the opinion that it is neces
sary in the public interest, and in the interest o f the development of the area
served by the aforesaid RRBs.3 The constitution, property, powers, rights
and liabilities o f the transferee RRB shall all be as specified hereunder.

The Cachar Gramin Bank, Lakhimi Gaonlia Bank, Pragjyotish Gaonlia

Bank and Subansiri Gaonlia Bank (hereinafter referred to as the transfer
ror Regional Rural Banks) sponsored by the United Bank of India, the
State o f Assam are hereby amalgamated into a single Regional Rural
Bank which, shall be called as Assam Gramin Vikash Bank (hereinafter
referred to as the transferree Regional Rural Bank) with its head office
atGuwahati.

The authorised capital o f the transferee RRBs shall be Rupees five crore
divided into five lakh number of fully paid shares o f Rupees one hundred
each. The subscribed share capital o f the transferee RRB shall be equal to
the subscribed share capital of the transferor RRBs and therefore and
entire subscribed share capital of the transferor RRBs shall be deemed to
have transferred to and shall be deemed as subscribed share capital of
[129]

th e tra n s fe re e

R R B . T h e

th e tra n s fe re e R R B

e n tire

s h a re

c a p ita l a n d

s h a re

s h a ll b e a s u n d e r :

a ) C e n tra l G o v e rn m e n t

R u p e e s tw o

b )

S ta te

R u p e e s s ix ty la k h ;

c )

S p o n s o r B a n k

R u p e e s o n e

d )

S h a re

R u p e e s

G o v e rn m e n t

c a p ita l D e p o s it

la k h

F ro m

c a p ita l d e p o s it o f

h u n d re d

la k h ;

h u n d re d a n d fo rty

s e v e n ty

th re e

c ro re

a n d tw e n ty

s e v e n

la k h ; a n d

tw e n ty

o n e

th o u s a n d .

th e e ffe c tiv e d a te o f a m a lg a m a tio n , th e tr a n s fe r o r R R B s v iz . C a c h a r

G ra m in

B a n k ,

L a k h im i

G a o n lia

B a n k ,

P ra g jy o tis h

G a o n lia

B a n k

a n d

S u b a n s iri G a o n lia B a n k s h a ll c e a s e to c a rry o n th e b u s in e s s in c lu d in g th a t

o f m a k in g

a n y

o b lig a tio n

to

p a y m e n t to

th e

im p le m e n ta tio n

c re d ito rs

o f th e

a n y

d e p o s ito rs

e x c e p t to

p ro v is io n s

th e

o r

d is c h a rg e

e x te n d

o f th e

a s

a n y

lia b ility

m a y

b e

n e c e s s a ry

a m a lg a m a tio n

a s

p e r th e

o r

fo r

G o v t,

n o tific a tio n .

I n

re s p e c t o f e v e ry

d e p o s it

p o s it,

a c c o u n t

d e p o s it

s a v in g s b a n k

in c lu d in g

p a y a b le

a t

a c c o u n t o r c u rre n t a c c o u n t o r a n y

fix e d

c a ll

d e p o s it,

o r

s h o rt

c a s h

c e rtific a te ,

n o tic e

o r

a n y

o th e r

m o n th ly

o th e r

d e

d e p o s it

b y

w h a te v e r n a m e c a lle d w ith th e tra n s fe ro r R e g io n a l R u ra l B n a k , th e tra n s

fe re e R R B

s h a ll o p e n

c o rre s p o n d in g

(s ) th e re

a n d

w ith

its e lf o n

th e

s im ila r a c c o u n t in

o f c re d itin g

th e re to

e ffe c tiv e

th e

n a m e

d a te

o f a m a lg a m a tio n

o f th e

fu ll a m o u n t in c lu d in g

re s p e c tiv e

in te re s t to

th e

h o ld e r

e x te n t

p a y a b le .

P ro v id e d th a t w h e re th e

re a s o n a b le

d o u b t a b o u t th e

tic u la r a c c o u n t, it m a y

th e

c re d it to

m o n th

T h e

b e

fro m , th e

fe re e b a n k

tra n s fe re e R e g io n a l

m a d e

w ith

in

e ffe c tiv e

o f a ll

th e

th e

o f th e

d a te

e n trie s

a p p ro v a l o f th e

th a t a c c o u n t fo r

s h a ll a s c e rta in th e

s e rv ic e

c o rre c tn e s s

R u ra l B a n k

c o rre c t b a la n c e

e m p lo y e e s o f th e

130

in

in

s p o n s o r B a n k

p e rio d

o f a m a lg a m a tio n

m a d e

e n te rta in s

n o t

w ith in

s u c h

a n y

p a r

w ith h o ld

e x c e e d in g

w h ic h

th e

th re e

tra n s

a c c o u n t

tra n s fe ro r R e g io n a l R u ra l B a n k

(excepting such of them as not being workmen within the meaning of

Industrial Dispute Act, 1947) shall continue in the transferee Regional
Rural Bank at the same remuneration and on the same terms and condi
tions o f service, which they were getting of, as the case may be, by
which they were governed immediately before the effective date of
amalgamation. The inter-seniority of officers and employees directly re
cruited and /or promoted, to be decided by the committee representing
the sponsor bank and the National Bank for Agriculture and Rural Devel
opm ent

The transferee Regional Rural Bank shall have the power to post the
employees in the interest of the bank and the public as a whole anywhere
in the entire area o f operation of the transferee Regional Rural Bank.

The area o f operation o f the transferee Regional Rural Bank shall be the
combined area o f operation of the transferor Regional Rural Bank viz.
Chachar Gramin Bank, Lakhimi Gaonlia Bank, Pragjyotish Gaonlia Bank
and Subansiri Gaonlia Bank in Nalbari, Kamrup (R), Kamrup (Metropoli
tan), D arrang, Barpeta, Sonitpur, Dhubri, Goalpara, Kokrajhar,
Bongaigaon, Chirang, Baska, Udalguri, Sibsagar, Jorhat, Golaghat,
Nagaon, Morigaon, Lakhimpur, Dhemaji, Dibrugarh, Tinsukia, Cachar,
Hailakandi and Karimganj Districts o f the State o f Assam.

If any difficulty arises in giving effect to the provision as per Govt, notifi
cation, the central Government may make such order, not inconsistent
with the provisions o f the Act, as may appear to it, to be necessary for the
purpose o f remaining such difficulty.
Assam Gramin Vikash Bank, the only amalgamated Regional Rural Bank

of the N.E. Region has emerged as the largest bank in the state of Assam in

[ 131]

term s o f branch netw ork. Further, in term s o f no. o f districts covered,

A ssam G ram in V ikash B ank tops the list o f RRBs in the entire country.

Table: 4.14

Population Group-wise breakup of different district

SI. No.

D istric t

R ural

Semi-Urban

Urban

Total

Nalbari

14

15

Baksa

11

11

Barpeta

12

16

Kamrup(M)

__

Kamrup(R)

11

14

Darrang

11

12

Udalauri

11

Sonitour

25

30

Goalpara

11

12

10

Dhubri

11

Kokrajhar

12

Chirang

13

Bongaigaon

14

Sivasagar

20

22

15

Jorhat

15

16

Golaghat

20

23

17

Nagaon

27

30

18

Morigaon

10

11

19

Cachar

15

19

20

Hailakandi

21

Karimganj

12

17

22

Lakhimpur

15

16

23

Dhemaii

09

24

Dibrugarh

11

12

25

Tinsukia

294

49

Total

13

12

(Source: 4th Annual Report, 2008-09, AGVB)

[132]

16

355

A post merger scenario of Assam Gramin Vikash Bank in various func

tional areas are presented below.
Opening/Shifting of Branches :
No new branch has been opened during the period 2008-09. However,
one license has been received from Reserve Bank o f India for opening of a
new branch at Besimari under Darrang district. The opening o f the branch
was delayed due to enforcement o f Model code o f conduct for Lok Sabha
Election. The branch has been opened on 25-05-2009.
Dubapara branch under Goalpara district and Garukhuti branch under
Darrang district which were functioning as satellite branches of Goalpara and
Bordaulguri respectively have been converted to full fledged branches.
Inclusion of the Bank in the second schedule to the RBI Act, 1934 ;
Assam Gramin Vikash Bank has now been included in the second
scheduled to the RBI Act, 1934 vide Reserve Bank o f India Notification No.
RPCD. CO. RRB. NO. 7430/03.05.100 / 2008 -09 dated 27-01-2009.4 This
bank has become a scheduled bank with effect from the date of the aforesaid
notification. The names of erstwhile four constituent units of Assam Gramin
Vikash Bank namely, Pragjyotish Gaonlia Bank, Lakhimi Gaonlia Bank, Cachar
Gramin Bank and Subansiri Gaonlia Bank have been deleted from the schedule.

[ 133]

Table : 4.15

The detailed break up of share capital account of the bank

as on 31-03-2009
( Amount in Rs. thousand)
Details of share capital Account
Share Holders

Issued /Called up

Paid-up

Calls Unpaid

Govt, o f India

20,000

20,000

Nil

Govt, o f Assam

6,000

6,000

Ml

United Bank of India

14,000

14,000

Nil

Total

40,000

40,000

Nil

(Source: 4th Annual Report, AGVB, 2008 -09)

Under the restructuring programme, share capital deposit amounting to
Rs. 856325 thousand have been sanctioned as well as released to the bank by
the Govt, o f India, Govt o f assam and United Bank of India in the proportion
o f 50 % : 15 % : 35 % respectively, till 31 -3-2007. No additional share capital
deposit has been received by the bank after 31-03-2007. The position of
outstanding share capital deposit account o f the bank as on 31-03-2009 is
furnished below.
Table : 4.16

Details of Sanction and Release of share capital Deposit

(Amount in Rs. thousand)
Details of Sanction and Release of share capital Deposit
Particulars

Govt, of India Sponsor Bank Govt, of Assam

Share Capital
Deposit Sanctioned
Share capital Deposit
Released

Total

428163

299713

128449

856325

428163

299713

128449

856325

(Source: 4th Annual Report, AGVB-2008-09)

[134]

D eposit:
During the period 2008-09, the bank could mobilize additional deposit
amounting to Rs. 5146043 thousand from its existing as well as new custom
ers. The bank recorded the deposit growth o f 21.74 % as against 20.47 %
during the previous year. Further, emphasis continued for increasing the share
o f demand deposit so as to reduce the cost of deposits and to increase
spread. The share o f demand deposit increased to 68 % during the year from
67% in 2007-08.
Table : 4.17

The comparative position of category wise deposit for the fiscal

2007-2008 and 2008-2009
(Amount, in Rs. thousand)
As on 31-03-2008

Category

As on 31-03-2009

Accounts Amount Growth% Accounts

1. CurrentAccount

2172611

77

1789713 13697599

Demand Deposit (1+2) 1971668 15870210

2. Savings Bank

3. Term Deposit
Total

181955

592556

2092313

(-)3.69

23

2272868 17516224

27.88

28

2452821 19608537

23.56

7799022

2564224 23669232

20

179953

Amount Growth%

567383

9206738

18.05

3020204 28815275

21.74

(Source: 4th Annual Report, AGVB, 2008-09)

The credit deposit (CD) ratio o f the bank stands at 48. 55 % as on 3103-2009 as against 51.72 % as on 31- 03 -2008. Inspite of banks consistent
effort to improve the CD Ratio, the same shown a negative growth mainly due
to implementation o f the Agricultural Debt waiver and Debt Relief Scheme,
2008 (Waiver and Relief o f Loans and Advances amounting to Rs. 801024
thousand).

[ 135]

Investment:
As on 31.03.2009, the outstanding amount o f investment made by the
bank in Govt, and approved securities stands at Rs.15038136 thousand as
against Rs. 11359706 thousand as on 31.03.2008. Investment to Deposit (ID)
Ratio stands as at 52.19%

Table. 4.18

Break up of the SL R and Non SLR investment Position

(Amount, in Rs. thousand)

Investments

As on 31-03-2008

As on 31-03-2009

SLR

5705686

7622586

Non-SLR

5654020

7415550

Total

11359706

15038136

Ofwhich, Non-PerformingInvestment

15663

13663

Provision againstNon-Performing
Investment

15663

13663

During the period under report, the average yield on investment has mar
ginally increased to 7.70 % as against 7.51 % during the previous year.
(Source: 4th Annual Report, AGVB-2008-09)

Loans and Advances :

At the end o f the financial year 2008 -09, the gross outstanding position
o f loans and advances stands at Rs. 13990552 thousand as against RS.
12241469 thousand during the previous year.
The percentage o f priority sector Advances Comprises 73.73 % of total
loans and advances outstanding as on 31-3-2009.
[

136]

Table : 4.19

Category wise Break up of loans and Advances and com

parative position as on 31.03.2008
(Amount, in Rs. thousand)
Category advance

Amount

% to total loans

Amount % to total loans

Priority Sector
Kisan credit card
(KCC/ST crop loan)

926367

7.57

875912

6.26

M.T. Agril. &Allied

1834713

14.99

2351868

16.81

SSI

960615

7.85

1198679

8.56

Services and others

3108031

25.39

3448436

24.65

Housingloan

1948060

15.91

2440829

17.45

Total priority sector

8777786

71.71

10315724

73.73

Non-priority sector

3463683

28.29

3674828

26.27

Total advances

12241469

100.00

13990552

100.00

Out oftotal advances,

weaker sections
Per branch advance

3178003

26

4810927

34

34483

XXX

39410

XXX

Per employee advance

7052

XXX

8139

XXX

(S ou rce: 4th Annual Report, AGVB, 2008-09)

During the period (2008-2009) the bank disbursed a total sum o f Rs.
4051595 thousand (80433 accounts) as against Rs. 3760216 thousand during
the previous financial year. Banks disbursement under priority sector (79.56%)
exceeded the benchmark o f minimum priority sector lending by RRBs i.e. 60
%. In the Agriculture and A llied Activity Sector (including KCC), in further
ance o f the Finance M inisters mission for doubling the agricultural credit,
Bank could disburse a sum o f Rs. 1203860 thousand during the year as
[

137]

against the amount o f Rs. 997150 thousand during the previous year i.e 20072008. The year-over-year growth was as high as 20.73 %. All the branches
organized credit disbursement camps almost every month to expand the credit
portfolio.
4.5 Financial Inclusion :
It is worth recalling that the RRBs were established to provide credit
and related services for developing the rural economy that includes agricul
ture, trade, commerce, industry and other productive activities in rural areas.
The focus is on small and marginal farmers, agricultural labourers, artisans
and small entreprenurs. Unlike other commercial services every individual
or every family needs financial services. Therefore, the objective of financial
inclusion in rural areas is very relevant. Financial inclusion is not just
opening a savings account, though it is the crucial first step. It would mean
providing total financial services at per with what is available to the urban
ites, though there could be some variations.
The Committee on fianacial Inclusion, headed by Dr. C. Rangarajan,
was set up by Government o f India to look into the issues involved and
suggest measures for bringing the excluded population into the ambit of the
financial system.
Measures suggested by the committee are expected to provide access
to comprehensive financial services to at least 50 percent (55.8 m illion) of
the excluded rural households by 2012 and the remaining by 2015.5 The
committee broadly defines financial inclusion as the process of ensuring
access to financial services and timely/adequate credit, wherever needed at
an affordable cost to the weaker sections and low income groups.
[ 138]

Based on the committees recommendations, Government of India

entrusted NABARD with setting-up o f two funds, viz, Financial Inclusion
Funds (FIF) and Financial Inclusion Technology Funds (FITF). The FIF
aims to support developmental and promotional activities to secure greater
financial inclusion particularly among weaker sections/low income groups
and in backward regions/hitherto unbanked areas.
The FITF will focus on enhancing investment in information and com
munication Technology (ICT) aimed at promoting financial inclusion, stimu
late transfer o f research and technology, increase technology absorption
capacity o f financial service providers/users and encourage an environment
o f innovation and co-operation among stakeholders. Both funds have been
setup with corpus of Rs. 500 crore each. During the year, four and five
projects were sanctioned under FIF and FITF, respectively.
Table : 4.20

Funding Sources for FIF and FITF

(As on 31 March, 2009)
(Rs. crore)
Particulars

Contribution
(%)

Initial Corpus
Received
FIF
FITF

GOI

FIF
40

FITF
40

RBI

40

40

_ *

_ *

NABARD

20

20

Total

100

100

15

15

10

10

Matching contribution of 40% to be received with disbursements.

(Source : Annual Report, 2008-2009, NABARD)
[ 139]

Under the Financial Inclusion scheme launched by the Government of

India and implementation of which is being monitored by the Committee on
Financial Sector Plan (CFSP) for N.E. Region, Banks performance during
the period under report, under various parameters are furnished here-in-below.

Table : 4.21
Various parameters performance, during 2008-09
(Amount, in Rs. thousand)
Parameters

Performance during
the year 2008-09

No.of persons covered under financial inclusion

629786

No, of overdraft issued against No-Frill Accounts

4427

No. of General Credit cards (GCC) issued

8979

No. of new deposit accounts opened

464511

Average no.of new a/c opened by per branch/month

109

* BSB (No-Frill A/c) 256928+SB & CD 207583

+ Members of SHGs Deposit Linked 165275 (15025x11)
= 629786
(Source : AGVB, 4th Annual Report, 2008-09)
All the branches of Assam Gramin Vikash Bank have actively participated
in opening o f No Frill (BSB) accounts of the under privileged house holds.
During the period under report, 256928 No-Frill Accounts have been opened
by the branches of the bank while another 372858 persons6including members
o f SHGs, have been covered under Financial inclusion by opening SB and CD
accounts.
[ 140]

Financial Inclusion : Projects Sanctioned during 2008-09

Projects Under F I F :

Trainerstraining programme on financial literacy in Kolkata.

Pilot Project to establish farmers service, village knowledge, mobile credit

counselling centres, promote financial literacy and farmer education through
mass media in South Malabar district o f Kerala through South Malabar
Gramm Bank.

Pilot project for capacity building of 25 FC o f west Tripura, South Tripura

and North Tripura districts to function as business facilitators, generating
new accounts and business for Tripura Gramin Bank.

R & D project for ICT solution in 15 select RRB with support from world
Bank and Technology provider.

Projects under FITF :

Smart Card based pilot project in Tirunclveli district o f Tamil Nadu, cov
ering 500 SHG (6,000 customers) to help Pandyan Grama Bank and NGO
in registering, lending and micro-financing SHG.

Project on Smart Cards in Medak Mahbubnagar and Warangal districts

o f Andhra Pradesh to facilitate payments to the beneficiaries o f NREGS
and social security pensioners, opening o f No Frill Accounts of other
rural households by Andhra Pradesh Grameen Vikash Bank (APGVB).
Services are being extended through business correspondent Model with
the help of a biometric card and mobile device. This will cover 13 lakh
beneficiaries in 1,115 villages.7

Pilot for installing four ATMs, one in each district of Tripura by the Tripura
Gramin Bank for technology upgradation to reach out to the excluded
population.
[141]

Impact study o f 100% achievements under Financial Inclusion in

Kanyakumari district.
Two Advisory Boards, one for each Fund, was constituted by GOI for
guiding and tendering policy advice on various aspects. A sub-committee
o f Advisory Board for FITF has also been constituted to look into the ICT
based interventions for extending the financial services. Each of the
Advisory Boards met thrice during the year and based on their directives,
following actions were initiated,

State level seminar and district level workshops for sensitising the various
stakeholders were conducted by NABARD and other organizations.

NABARD designed and conducted a five-day training module for capacity

building of its field level officers.

RBI appointed a special working Group on deepening of financial inclusion

in Goa under the chairmanship o f OIC, NABARD, Regional office, Goa.

Farmers Clubs :
The bank plays a vital role in formation of Farmers club in the state. The
idea o f Farmers Club was mooted with the principal of Development
through credit and for propagating this principle among the rural farmers.
Farmers Club are considered to be the most acceptable and effective
intermediary agency for smooth flow of agricultural credit to potential
borrowers. With this aim in view, the programme was launced in this bank
and a good number of farmer clubs were opened in phases and are being
managed with the active support of the respective branches. The services of
the farmers club have been utilized for creating better relationship between
farmers and the Bank. These Farmers Club have conducted a number of
programmes concerning agricultural activities, micro finance etc. Some of the
Clubs are promoting SHGs also.
[142]

As on 31-03-2009 as many as 407 nos. of farmer clubs are functioning in

the area of operation o f the Bank and have been able to establish themselves
as the extended wings of the bank.
Organisation of Awareness Camps :
In order to create awareness among the targeted group of clientele like
SHGs, JLGs, etc. awareness and motivation camps are considered to be a
primary requirement.
NABARD has also suggested various designs o f such awareness
programmes and extends financial support for organising such camps. During
the year under report 725 nos. o f Awareness camps/customer Meets were
organized by the branches/offices of the bank. While many such awareness
camps helped the bank in initiating formation o f SHGs, SHG-Bank Linkage
camps organised by the bank has enabled the bank to bring in many SHGs in
to the fold o f bank credit. The bank has also organised a good number of
borrowers education programmes for the KCC borrowers in association with
Farmer clubs.
Agricultural debt waiver and debt relief schemes, 2008 :
During the period under review the bank has successfully implemented
the Agricultural Debt Waiver and Debt Relief Schemes, 2008 of Government
o f India and Submitted claim of Rs.7847.20 lacs against 63017 accounts
under Debt waiver and Rs.163.03 lacs against 1666 accounts under Debt
Relief. The bank has so far received an amount of Rs. 3877.15 lac in three
installments from Government of India and the same have been adjusted against
Debt Waiver. A large number o f farmers covered under the schemes have
been provided with fresh credit.
[ 143]

Rural development and self employment training institute

(RIIDSETI) :
The unemployment situation in the North-Eastern Region is alarming
and there is urgent need to motivate the young generation to take up productive
activities through skill and Know-how employment. Since the scope of
employment in Government and Semi-Government sector is fast shrinking,
the setting up a specialized training institution needs to be hardly over
emphasized particularly keeping in view the growing prospects of the micro
enterprises in this region.
In this backdrop, bank has planned to set up RUDSETIs (Rural
Development and Self Employment Training Institute) for empowering the
skill and know-how o f the youths to enable them to take up various economic
activities.

4.6 Financial literacy :

At a very basic level, financial education is about disseminating knowledge
and information about the products and services offered by banks and other
institutions. The objective is to make people aware of the risks and rewards
so that they can make an informed choice. Financial literacy, in that sense,
enables an individual to improve the management of ones finances and avoid
distress. As the Reserve Bank o f India Governor D. Subbarao8said recently,
financial eduction should begin at a very early age and be built into the
curriculum o f schools and colleges. Obviously, answers to questions such as
when to save, what to save, and how to save, will determine the level and
quality of savings. The country naturally benefits through higher savings and
[ 144]

investm ents, realising the im peratives as w ell as the advantages, bodies to

spread financial literacy, supplem enting the w ork done by regulators, financial
institutions non governm ental organisations and other less formal agencies.
India has no nationw ide structured financial ed u catio n program m e, but
significant w ork is being done by the RBI, SEBI, Indian Banks. A ssociations,
various self-regulatory organisations and the B anking code and standards
B oard o f India.
In India, financial literacy and aw areness should go hand in hand, if the
very im portant socio-econom ic objective o f financial inclusion is to be
achieved. T he task is challenging because the m ajority o f th e population is
still beyond the pale o f the banking system. A lternative financial delivery
channels involving the use o f m odem technology are being tried out but these
will succeed only i f financial literacy deepens. It is heartening that a few banks
have set up dedicated centres to prom ote financial literacy and, eventually,
inclusion. The other banks w ill do well to follow this lead, for they will all
benefit from the feed back received. They can better understand their relatively
new m arkets and offer region-specific products. Several related benefits also
w ill flow from a concerted program m e o f sp read in g financial literacy.
C onsum ers w ho are better-inform ed w ill dem and accountability and seek
redressal o f grivences. That in turn would enhance the effectiveness and integrity
o f financial m arkets. A s financial education em pow ers the com m on person, it
reduces the governm ents burden in the m atter o f protecting him or her from
the elem ents o f m arket failure arising from inform ation asymmetries.
In the next chapter, A ssam G ram in V ikash B ank-F unctional Policies and
w orkings has been undertaken.

[ 145]

REFERENCES:

1. RRB Guide Book-2000, R -l

2. Annual Report, 2008 LDRB
3. Govt, notification No-F. No.l (25)/2005-RRB, New Delhi dated 12th
January, 2006
4. 4*h Annual Report, AGVB, 2008-2009, Page-05
5. Annual Report, 2008-2009, NABARD, Page-39
6. 4th Annual Report, AGVB, 2008-2009, Page-13
7. Annual Report, NABARD-2008-2009, Page-39
8. The Hindu, 27* March, 2010, Page-08

[ 146]