CHAPTER 5

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

5.1 Introduction

P ravaranagar is well known fo r the co-o-operatlve movement, which

started way back in 1911 with the establishm ent of first PACS in Ashivi Kd. Later

on many PACS on sim ilar lines were also established, w hich have contributed for

the developm ent of agriculture. In 1950, Padmashri Vitthalrao Vikhe Patil

augm ented this movement by establishing of the first co-operative sugar factory

in Asia. This has further encouraged co-operative m ovem ent in this area by the

co-operative banks, which started giving loans to farm ers through PACS. All

these co-operative institutions are by and large responsible for w hatever the

developm ent in agriculture agro based industries, education and other allied

activities developed in Pravara area. The co-operative m ovem ent along with

irrigation facilities has been a boon to the farm ers in this area and this area has

set an exam ple fo r the successful co-operative m ovement in the country aimed at

rural developm ent with social justice.

Though Pravaranagar is a small rural area, there are 73 financial

institutions functioning on co-operative basis, in and around of which there are 16

branches of ADCC bank, 10 branches of UCB, 3 sub-branches of district LDB

and 44 PACS. The branches of ADCC bank provided finance to farm ers through

44 PACS, w hile the sub branches of LDB branch Ahm ednagar extends term

finance to farm ers directly. The branches of UCB provide financial support for

non agricultural purposes such as trading, business, S.S.l. unit, cottage

industries, self employment, transport, construction, education, consum ption

purposes etc.

169
5.2 Perform ance of ADCC bank Ltd. In Pravara area.

In and around Pravara area there are 16 branches of ADCC bank located

in Loni Bk., Kolhar Bk., Kolhar Kd., Bhableswher, Dahd Bk., ASHVI Bk., Ashvi

Kd., Ftyabad, Pathre, Nimgaonjali, Zerekati, Chengaon, Chinchpur, Songaon and

P ravaranagar suger factory. These branches provide short-term and medium

term financial support through 44 PACS for Agriculture and allied activities.

These branches do not have any members, share capital, and reserve funds and

borrow ings funds, but are meant only for collection of deposits and loan

disbursem ent. The branches of ADCC bank are governed and regulated by the

head office of Ahm ednagar district central co-operative bank located in

A hm ednagar city.

Head office pools working capital, reserves and deposits of all the

branches together and transfer cash to those branches, w hich need additional

funds fo r lending to their customers. The ADCC m obilisation savings through

accepting cash deposits form urban people and transfer the money to their

branches which find them selves in financial inadequacy in advancing loans to

farm ers thorough PACS

5.2.1 Deposit mobilisation and loan disbursem ent

ADCC bank mobilized deposits through its 16 branches in Pravara area

and this am ount is disbursed as a loan for the purpose of A griculture and allied

activities. The following table gives an account of perform ance of branches of

ADCC bank in Pravara area, with regard to deposit m obilization, loan

disbursem ent, C/D ratio from the pehod 1989-90 to 1998-99. This data has been

depicted in the form of a diagram (Chart 5.1)

170
 Table No. 5.1

Deposit mobilisation and loan disbursement in Pravara area

(Rs. In Lakhs)

Year Deposit Loan C/D Ratio D eposit in Advances

disbursem Pravara in Pravara
ent area as % area as %
of district of district
total total
1989-90 820.25 510.40 62 4.08 2.12
(5.8) (7.4)
1990-91 875.30 557.62 63 3.92 2.04
(6.7) (9.2)
1991-92 1002.38 637.95 64 4.05 1.89
(14.5) (14.3)
1992-93 1050.09 693.19 66 3.76 1.94
(4.7) (8.8)
1993-94 1240.28 835.59 67 3.71 2.09
(18.1) (20.5)
F.Y.G.R.% 51.2 -6 3 .7 8.0 -9 .1 -1 .5
1994-95 1458.87 1026.85 70 3.52 1.84
(17.6) (22.9)
1995-96 1779.82 1031.68 57 3.71 1.70
(21.9) (0.5)
1996-97 2171.19 1157.49 53 3.45 1.86
(22.0) (12.2)
1997-98 2628.77 1388.20 53 3.48 1.85
(21.1) (15.6)
1998-99 3182.93 1726.55 54 3.74 2.07
(21.1) (2 9 .^
F.Y.G.R. % 118.1 68,1 -2 .3 6.2 12.5
Total 16209.88 9565.52 58.7 37.48 19.44
T.G.R. % 288.0 238.2 -1 3 - 8 .4 -2 .4

Note : Bracketed figures indicate growth rate over previous year.

Source : A ccount section, branches of A.D.D.C. bank in Pravara area.

In 1989-90, the branches of ADCC bank in Pravara area mobilized

deposits of about Rs. 820.25 lakhs, this has gone up to Rs. 3182.93 lakhs in

1998-99. There has been a significant increase in deposit m obilisation. In the first

five-year period under review, growth rate of deposits was 51.2 percent, but in

171
 Chart 5.1

Deposit and Loan Disbursments by ADCC Bank in Pravara Area

(Rs, in lakhs)
3500 .
□ Deposits

3000 - ■ Loan DsbursmBnt

(A 2500 +----------
(C
c 20 00 -

c
3
O 1500 -
E
<

Year

C/D Ratio of ADCC Bank in Pravara Area.

2 0 ----- -

10 - -

0 - -

9r c§=>
vO'
\
Year
the next five-year period it increased to 118.1 percent. The growth rate over

previous year also increased from 5.8 percent to 21.1 percent during 10-year

period. The highest growth rate over previous year was 22.0 percent in 1996-97,

and lowest growth rate was shown at 4.7 percent in 1992-93. The total growth

rate dunng 10-year penod was 288.0 percent. This gives up average annual

growth rate of 28.8 percent over the period under consideration.

On an average the branches of ADCC bank in Pravara area collected

deposits o f 3.7 percent o f total deposit, collected during study penod. The highest

percent o f deposit, collection when com pare to district was 4.1 percent in 1989-

90, but the lowest percent of 3.5 was in 1996-97.

The am ount of loan disbursem ent was Rs.510.40 lakhs in 1989-90. The

first five year growth rate in loan disbursem ent was 63.7 percent, which indicates

a small increase but reached up to 68.1 percent in the next five year period. The

growth rate over previous year in loan disbursem ent was 7.4 percent in 1989-90,

it was trem endous increase to 29.0 percent in 1998-99. The highest growth rate

over previous year was 29.0 percent in 1998-99, and lowest growth rate was 0.5

percent in 1995-96. The aggregate total loan disbursem ent was Rs,9565.52

Lakhs. The percentage of loan disbursem ent which com pare to district was

highest at 2.1 percent in 1989-90 and lowest was 1.7 percent in 1995-96. Total

growth in loans disbursed in 10 years under review was 238.2% , which gives us

annual growth of 23.8 percent. The C/D ratio was 62 percent in 1989-90 with

year to year fluctuations, finally dropped to 54 percent in 1998-99. The highest

C/D Ratio was 70 percent in 1994-95 and the lowest 53 percent in 1997-98. The

average C/D Ratio for 10 years period was 59 percent. It was found that the

172
 collection o f deposit was more than the disbursem ent because of attractive rate

of interest with com pare to other banks,

5.2.2 Purpose w ise loan disbursem ent

The branches of ADCC bank in Pravara area give loan to the farm ers for

crop production, digging of wells, purchase of electric motors, tractor, modern

agricultural impliments, laying pipelines, sprinkler, and drip irrigation systems,

horticulture, dairy and poultry developm ent. The bank also gives loans to other

activities such as transport, m arketing purpose, SSI units, housing, gobergas

plants, village industnes and handicraft. The table 5.2 indicates purpose wise

loan disbursem ent by branches of ADCC bank in Pravara area. The data also

depicted in the from of chart (Chart 5.2)

Table 5.2 shows that a total of Rs. 510.40 lakhs was disbursed for all

these activities in 1989-90, it increased up to Rs. 1726,55 lakhs in 1998-99. The

growth rate in percentage terms over 10 years was 238.2. In first five year penod

percentage of growth was 63.7 and next five year growth rate was 68.1 percent.

In the first five-year penod the crop loan grov^h rate was 82.3 percent,

which has come down to 66.9 percent in next five -year penods. The grov^h rate

in first five year period of w ells and electhc motor was 28.3, pipeline 11.6, tractor

and agricultural impliment 55.6, Dairy and poultry 76.4, Horticulture 11.4 and

others 60.8 percent. The growth rate in next five-year period fo r w ells and Elect.

Motors was 33.2, pipeline 39.7, Tractor and agricultural im plim ents 116.2, Dairy

and poultry 115.6, Horticulture minus 10.6, and other 38.6 percent. Except for

horticulture and other purposes growth rate has increased in second five-year

penod. The total growth rate has indicated good progress in dairy and poultry,

because of availability of sufficient funds in bank and dem and from farm er also

increased.

173
 Table 5.2
Purpose - w ise loan disbursem ent by ADCC bank Ltd.
In Pravara area.

(Rs. In lakhs)
Year Crop W ell + Pipeline Tractor Dairy + Horticu Others Total
loan Elect. + + Agri. Poultry Iture
motor sprinkle Implime
r Drip nts
237.18 52.35 63.80 70.32 40.85 15.41 30.49 510,40
1989-90
(46.5) (10.3) (12 .6 ) (13.8) (8.0) (3.0) (5.8) ( 100 )

1990-91 252.80 60.82 67.13 74.30 44.61 18.42 39.54 557.62

(45.3) (10.9) ( 12 .0 ) (13.4) (8.0) (3.3) (7.1) (100)

1991-92 318.32 62.64 76.31 80.19 51.09 26.68 22.72 637,95

(49.9) (9.8) ( 12.0) ( 12 .6 ) (8.0) (4.2) (3.5) ( 100 )

1992-93 340.14 56.70 68.84 96.32 60.21 31.04 39,94 693,19

(49.1) (8.2) (9.9) (13.9) (8,7) (4.5) (5.7) ( 100 )
432.44 67.20 71,26 109.43 72.08 34.14 49.04 835.59
1993-94
(51.8) (8.0) (8.5) (13.1) (8.6) (4.1) (5.9) ( 100 )

F.Y.G.R.% (82.3) (28.3) ( 11 .6 ) (55.6) (76.4) 121.4 60.8 (63.7)

1994-95 549.06 77.36) 76.10 132.74 87.41 39.41 64.77 1026.85

(53.5) (7.5) (7.4) (12.9) (8.6) (3.8) (6.3) ( 100)

1995-96 567.29 74.44 82.07 129.68 98.55 34.06 45.59 1031.68

(55.0) (7.3) (8.0) (12.5) (9.5) (3.3) (4.4) (100)

1996-97 630.36 66.26 93.19 154.04 138.63 26.91 48.10 1157.49

(54,5) (5.7) (8.1) (13.3) (12.0) (2.3) (4.1) (100)

1997-98 718.71 74.32 104.06 262.74 130.11 28.90 69.36 1388,20

(51.8) (5.5) (7.5) (18.9) (9.3) (2.1) (5,0) (100)

1998-99 916,43 103,11 106,34 35,27 89,83 1726.55

(53,1) (6.0) (6.2) (2,0) (5,2) (100)
F.Y.G.R. % (66,9) (33,2) (39,7)

Total 4962,73 695.20 9565.52

(51.9) (7.3) ( 100)

T.G.R. % (286,3) (96,9) (66.6) (308.2) (361.3) (128.8) (194.6) (238,2)

Note: - Bracketed figures indicate percentages to total amount.

Source: - Loan section, branches of ADCC bank Ltd, From Pravara area
1989-90 to 1998-99,

174
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 Out of total loan, maximum loan of 51.9 percent was given to the crops

and minimum to horticulture i.e. 3 percent because low dem and from farmer.

The loan disbursem ent dunng span of 10 years averaged 7.3% to well and elect

motors, 8.4% to pipeline, tractor and Agn-im plim ents 14.6%, dairy and poultry

6.1% and others 5.2 percent. Out of total disbursement, maximum percentage of

loan (55%) was given in 1995-96 to crops as com pared to other years. The total

growth rate of crop loan over a period of 10 years was 286.3% on an overage the

crop loan given per year is Rs. 496.27 lakhs.

A total of 695.20 lakhs of rupees was given fo r digging w ells and purchase

of electric motors, which 7.3 percent of the total. Loan disbursem ent fo r laying

pipelines and installation of sprinklers and drip system ADCC branch advanced

Rs. 809.10 lakhs, which w ork out to be 8.4 percent of total. Highest proportion of

money i.e. 12.6 percent was given fo r this purpose in 1989-90. So a total of 15.7

percent of loan was disbursed fo r irrigation facilities.

For the purchase of tractor and agriculture implim ents the branches have

provided financial support of Rs. 1336.85 lakhs or 14.6 percentage o f total loan

disbursem ent. The growth rate of loan for this purpose during first five years

under review was 56.6. which accelerated further up to 116.2% during next five

years. The average growth rate fo r this purpose in 10 years was 308.2 percent.

Maximum loan of 18.9 percent was given to tractor and Agri-im plim ents in 1997-

98. For the developm ents of dairy and poultry business the banks have provided

Rs. 912.02 lakhs, w hich is 9.6% of total loan. The total growth rate in 10 years

was 361.3 percent which is highest in all categories maximum percentage of loan

i.e. 12.0 percent was given in 1996-97 and lowest was 8.0 percent in first three

years under of consideration.

175
 The loan disbursem ent to horticultural purposes was 3 percent of total

loan (i.e.;290.22 lakhs) but the growth rate was more in first five-year period,

w hich was fa r less 10.6 in the next five-year period. For others, the banks have

provided Rs. 499.38 lakhs, which 5.2 percent of total loan. The growth rate for

this purpose was 60.8 percent in first five-year period and in second five-year

period i.e. 38.6 percent only. The total growth rate was 194.6 percent during 10

years period. The maximum am ount was disbursed in 1990-91 i.e. 7.1 percent of

total loan amount. It is found that, the ADCC bank was not providing sufficient

finance for agro-based industry, self -em ploym ent and horticulture during period

under review. Because scale of finance was very less com pare to required

project cost.

5.1.4. Recovery and over dues.

Recovery is as im portant as advance for any financing institution In Planning

the loaning system. If the loan installm ent becomes overdue, the entire loaning

structure becomes weak. So it is necessary to have arrangem ents for

supervision which should be an adequate and effective recovery system. The

table 5.3 shows a picture of the perform ance of the Demand, Recovery and

Overdues with percentage from 1989-90 to 1998-99.

Table 5.3 shows that the am ount of demand loan was Rs, 560 lakhs in

1989-90. The amount of dem and shows year to year variation during the 10-year

penod under review, The highest am ount of loan demand was at Rs. 1241.04 in

1998-99. In the first five year period growth rate in dem and was 32,7 percent but

it decreased in next five year period i,e, 17,0 percent between 1994-95 to 1998-

99. The total growth of dem and during 10 years period was 121.4 percent

therefore the annual average demand was 12.1 percent.

176
 Table No. 5.3

Demand, Recovery and overdues of ADCC bank in Pravara area

Year Demand Recovery % of Over dues % of Over

Rs. Rs. Recovery Rs. dues.
1989-90 560.32 416.31 74.3 144.01 25.7

1990-91 613.45 482.17 78.6 131,28 21.4

1991-92 524.41 376.61 70.2 147.80 29.8

1992-93 870.55 696.44 80.0 174.11 20.0

1993-94 743.64 554.75 74.6 188.89 25.4

F.Y.G.R.% (32.7) (33.3) — (31.1) —

1994-95 1060.09 831.11 78.4 228.98 21.6

1995-96 1024.53 783.76 76.5 240.77 23.5

1996-97 872.97 588.38 67.4 284.59 32.6

1997-98 1052.24 741.82 70.5 310.42 29.5

1998-99 1241.04 930.28 75.4 310.76 24.6

ry .G .R . % (17.0) (11.9) — 35.4 —

Total 8563.24 6401.63 74.7 2161.61 25.3

T.G.R. % (121,4) (123,5) — (115,41) —

=r,. ' iL'ji-v. zz

Note: - bracketed figures indicate Growth Rate

Source: - A ccount section, branches of ADCC bank ltd. from Pravara area.

The highest recovery percentage was 80.0 percent in 1992-93 because of

repaym ent by state governm ent to bank for farm er’s loan up to Rs. 10000 of

each farmer. The lowest recovery was 67.4 percent in 1996-97, because 14

villages in Pravara area were declared under famine, and no recovery was

received from farm ers of these villages. In the first five year period growth in

recovery was 33.3 percent but it decreased in next five year period i.e. 11.9

177
 percent The total growth rate of recovery was 123.5 percent, therefore the annual

average growth rate was shown 12.3 percent in 10 years period.

The am ount of over dues has continuously increased from Rs. 144.01

lakhs in 1989-90 to Rs. 310.76 lakhs in 1998-99. The over dues percentage

shown during 10 year period is between 20% to 33%. It is com paratively low with

rest o f branches o f ADCC bank ltd. In first five year grov^h in overdues was 31.1

percent, but it is a small increase in the next five -year periods. The total grovi4h

rate in over dues was 115.4% and annual average growth rate was 11.5% dunng

10 years period under review.

The total amount of demand w as Rs. 8563.24 lakhs, out of w hich recovery

am ount was Rs. 6401.63 lakhs (74.7% ) and the over dues am ount was Rs.

2101.61 n lakhs (25.3%). Percentage o f over dues averaged to 25.2 fo r the entire

period o f 10 years. The aggregate recovery was satisfactory in Pravara area,

because Pravara co-operative sugar factory helps to recover the loans from

farm er sugarcane payments.

5.2.4 Operational results of ADCC bank In Pravara area.

In Pravara area there are 16 branches of ADCC bank operating its activities

under the guidance of head office. These branches providing finance to the

farm er through village PACS. The following table shows in inform ation about

profit and loss of these 16 branches during the period under review.

178
 Table No. 5.4

Operational results, of ADCC bank In Pravara area.

(Rs. in Lakhs.)
Year No, of Profit No. of Loss Net effect
branches Rs. branches Rs. Rs.
in Profit in loss (3-5)
1 2 3 4 5 6
1989-90 10 10.48 06 5.40 + 5.08

1990-91 09 12.29 07 6.62 + 5.67

1991-92 11 15.32 05 6.92 + 8,40

1992-93 12 19.19 04 5.14 + 14.05

1993-94 10 23.53 06 7.46 + 16.07

F.Y.G.R.% — (124.5) — (38.11) (216.3)

1994-95 09 21.48 07 7.84 + 13.64

1995-96 09 20.62 07 8.72 + 11.90

1996-97 10 23.70 06 10.31 + 13.39

1997-98 09 25.23 07 13.08 + 12.15

1998-99 08 27.51 08 15.22 + 12.29

f;;Y.G.R. % — (28.0) — (94.1) (-1 0 .1 )

Total 97 199.35 63 86.71 112.64

A verage 9.7 19.3 6.3 8.67 11.24

T.G.R. % — 162.5 — 181.8 141.9

Source; - Account sections, from branches of ADCC bank

in Pravara area.

Note: - Bracketed figures indicate growth rate.

Duhng the penod 1989-90, 10 branches of ADCC bank showed a profit of

about Rs. 10.48 lakhs. This trend continued during 10-year period except 1995-

96. How ever the num ber of branches have shown uneven num ber during 10-

179
 year period of study review. The total profit during period w as Rs. 199.35 lakhs,

w hile average profit per year was Rs. 19.93. The grov^rth rate in first five-year was

124.5% but it decreased in next five -year and reached upto 28.0%. The total

growth rate in profit was 162.5% dunng the period from 1989-90 to 1998-99.

The loss of Rs. 5.40 lakhs was in 1989-90 it increased during 10-year

period and reached up to Rs. 15.22 lakhs in 1998-99. The total loss o f Rs. 86.71

lakhs in 10 year period, it is an average of 8.67 per year. In first five -year pehods

the growth rate in loss was 38.1% but it increased in next five-year period i.e.

94.1%. The total growth rate in 10 years period was 181.8% due to low

disbursem ent com pare to deposit.

The net effect of profit and loss of 16 branches was satisfactory during 10

years period under review. The net effect of profit was Rs. 5.08 lakhs in 1989-90;

it increased to Rs. 12.29 lakhs in 1998-99. The grovi^h rate in first five-year

period was 216.3% but it decreased more in next five -y e a r period i.e. - 10.1

percent. The total growth rate in net effect was 141.9 percent. The total profit of

all branches of ADCC bank in Pravara area during 10 years period was Rs.

112.64 lakhs; it is an average per years 11.26 lakhs due to satisfactory recovery

perform ance,

5.3 W orking of LDB in Pravara area.

Land developm ent bank, with its state level head office at Mumbai has a

branch in each district. Sub branches in each tahsil. Pravaranagar com prising of

44 villages comes under three talukas i.e. Shrirampur, Sangam ner and Rahuri.

The LDB sub branches of each taluka provides long term finance fo r a period of

5 to years fo r its catchm ent villages. The LDB sub branches providing credit for

the purpose of land purchases, land leveling, im provem ent or reclam ation of

land, irhgation, agricultural equipment, agricultural allied activities, agro based

180
 industries and non farm sector in rural area. Therefore 3 LDB Sub branches are

providing credit to farm ers in Pravara area

Functioning of the sub branches includes only loan disbursem ent, deposit

m obilisation and recovery of loan. These sub - branches have no share capital,

reserve fund and borrowing because it is an Interm ediary agency between LDB

branch and farmer.

5.3.1 (a) Loans and advances

The LDB sub branches provide long-term finance to the farm ers in Pravara

area for the purpose of pum psets digging of wells, leveling of land, purchase of

tractor, electric pumpsets, pipeline, bore wells, horticulture, housing, purchase of

cows and buffaloes, poultry and construction of godowns. The follow ing table

shows the tendency of loans disbursem ent during the period from 1989-90 to

1998-99.

Table No. 5.5.

Loan disbursem ent by LDB sub branches in Pravara area.

(Rs. In lakhs)
Y ear Loan disbursem ent Increase ( + ) % of growth % of district
Decrease ( - ) over previous LDB branch
year
1989-90 35.70 (10.4) + 7.15 25.0 7.00
1990-91 44.24 (12.8) + 8.54 23.9 6.78
1991-92 29.83 (8.6) -14.11 ( - ) 32.6 6.66
1992-93 32.10 (9.3) + 2.27 7.6 5.47
1993-94 46.26 (13.4) + 14.16 44.1 5.78
1994-95 35.97 (10.5) -1 0 .2 9 32.3 4.87
1995-96 54.63 (15.9) + 18.66 51.8 4.34
1996-97 32.13 (9.4) -2 2 .5 0 (-)41.2 3.64
1997-98 23.84 (6.9) -8 .2 9 (-)25.9 4.48
1998-99 09.60 (2.8) - 14.24 ( - ) 59.8 4.57
Total 344.30 i1 0 0 l - 18.64 (-) 39.4 53.59

Note: - Bracketed figures indicate percentage to total.

Source: - Loan section, LDB sub branches of Rahuri, Shriram pur & Sangamner.

181
 Table 5.5 show that, the total am ount of loan disbursem ent by LDB sub

branches of Rahuri, Shriram pur and Sangam ner in Pravara area was Rs. 344.30

lakhs during span of 10 year. The loan disbursem ent in 1989-90 was 10.4

percent (35.70 lakhs), it decreased to 2.8 percent (9.60 lakhs) in 1998-99. During

that period, loan disbursem ent was not uniform. The highest percentage of loan

(15.9% ) was disbursed in 1995-96 and lowest in 1998-99. The maximum

am ounts increase (Rs. 18.66 lakhs) over previous year and the maximum

decrease over pervious year during - 21.49 lakhs in 1996-97. The net increase

/decrease 10 year period was (-) 17.64 lakhs.

In Pravara area LDB sub branches disbursed loan was 7.0% in 1989-90,

as com pared with district LDB total loan disbursem ent in the same year. It is the

highest percentage during 10 years study period. The lowest percentage (3.64%)

was disbursed in 1996-97, The annual average of percentage of loan

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

The total am ount disbursed in Pravara area during 10 year period was

344.30 lakhs, so the annual average of loan disbursed in 34.43 lakhs per year

from 1995-96 loan disbursem ent highly decreased up to 1998-99 from Rs. 54.63

lakhs to mere Rs. 9.60 lakhs. Main cause of decrease in loan disbursem ent

appears to be purely political. Shivsena B.J.P alliance Govt, in M ahaashtra

refused to guarantee NABARD Loan to Apex LDB because it was governed by

congress led leadership of the state LDB. Such political game has ruined the

rural credit structure for a period of recent two years 1997-98 and 1998-99.

182
5.3.2 Purpose w ise loan disbursem ent

The LDB sub-branches of Rahuri, Shnram pur and Sangam ner provide the

long-term finance to farm ers in Pravara area for different purposes. This finance

distribution for six major purposes are w ell plus elect pump set, pipeline plus drip

and sprinkler, dairy and poultry, tractors & other agriculture implements,

horticulture and others purposes. The table 5.6 shows purpose wise finance

during the period from 1989-90 to 1998-99. The purpose w ise finance has been

depicted in the from a diagram (C hart 5.3)

Table 5.6 Shows purpose wise financing by sub-branches of LDB in

Pravara area. In 1989-90 the total loan disbursem ent by the sub-branches of

LDB was Rs. 35.70 lakhs of w hich 95.5% finance was given to the five major

purposes. During the 10 year period total finance provided w as Rs. 344.30 lakhs,

out of w hich 91.3% finance was allocated to agriculture and allied activities

rem aining 8.7% was delivered to others purposes. The other purposes included

gobergas plant, Godawouns, housing, artisans, etc. In total loan disbursem ent

major share goes to tractor and agriculture im plim ent i.e. 32.8%, followed by

pipeline, drip sprinkler 20.2%, dairy and poultry at 17.7%, well & elect motor at

14,0% and lowest share to horticulture.

During the ten-year period, under review m axim um am ount w as disbursed

to w ells and elect, motors i.e. 17.4% in 1992-93, other irrigation purposes at

28.1% in 1990-91. Tractor and agriculture impliments at 42.2% in 1989-90, dairy

and poultry were at 22.7% in 1997-98, horticulture 7.9% and other activity was

16.3% in 1998-90. The loan disbursem ent was very less in 1998-99, as

com pared with other under review.

183
 Table No. 5.6

Purpose wise loan disbursement by l d b Sub branches In

Pravara area. From 1989-90 to 1998-99.
(Rs. In lakhs)
Year Well + Pipeline Tractor Dairy + Horticul Others Total Member
Be. + Drip + Agri- poultry ture of
motor and' Implime Borrower
pump Sprinkler nts
set
3.76 9.52 15.08 4.34 1,41 1.59 35.70 188
1989-90
(10.5) (26,7) (42.2) (12.1) (3.9) (4,5) (100)
4.74 12.41 17.04 5.77 1.89 2,39 44.24 241
1990-91
(10.7) (28.1) (38.5) (13.0) (4.3) (5,4) (100)
4.06 7.19 10.32 3.69 1.64 2.93 29.83 168
1991-92
(13.6) (24,1) (34,6) (12.4) (5.5) (9.8) (100)
1992-93 5.60 7,46 9,49 4.82 1.39 3.34 32,10 171
(17.4) (23.3) (29.6) (15.0) (4.3) (10.4) (100)
1993-94 7.51 8.37 12,56 9.34 4.29 4.19 46.26 253
(16.2) (18,1) (27,2) (20.2) (9.3) (9.0) (100)
F.Y.G.R.% (99.7) (-1 2 ,1 ) (-1 6 .8 ) (115.2) (204.2) (163.2) (29.5) (34.5)

1994-95 5.47 5,14 11.86 7.59 2,84 3.07 35.97 196

(15.2) (14.3) (33.0) (21,1) (7.9) (8.5) (100)
9,10 9,12 16.26 10,71 4,14 5.30 54,63 273
1995-96
(16.6) (16.7) (29.8) (19.6) (7.6) (9.7) (100)
3.67 5,07 9.32 7,26 3,49 3.32 32,13 161
1996-97
(11.4) (15,8) (29.0) (22,6) (10.9) (10.3) (100)
1997-98 2.98 4,32 7.17 5,42 1,76 2,19 23,84 127
(12,5) (18.1) (30,1) (22,7) (7.4) (9.2) (100)
1998-99 1.22 1.04 3.70 2,08 1.56 9,60 54
(12,7) (10,8) (38,5) (21,7) Nil (16,3) (100)
( - 79,8) ( -6 8 .9 )
F.Y.G.R.% (-7 7 ,7 ) (- 72.6) (- 38.1) (-4 9 .2 ) (-7 3 .4 ) (-7 2 .5 )

Total 48,11 69,64 112,80 61.02 22.85 29.88 344.30 1832

(14,0) (20.2) (32.8J^ (17.7) (6.6) (100)

T.G.R. % (-6 7 ,6 ) (-8 9 ,1 ) (-7 5 .5 ) (-5 2 .1 ) (- 24.8) (-1.9) (-7 3 .2 ) (-7 1 .3 )

Note: Bracketed figures indicate as percentage to total are compiled.

Source: Loan section LDB Sub branches from Rahuri, Shrirampur,

Sangamner, from 1989-90 to 1998-99.

184
 Chart 5.3

Yearwise Loan Disbursm ent bv LDB Branch in Pravara Area

(Rs. in lakhs)

iV' <S'
Year

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

18% 20%

32% □ W e l l + E le c t r ic M o t o r

■ P ip e lin e

□ T r a c t o r + A g r i. Im p le m e n t s
■ D a ir y + P o u lt r y

■ H o r t ic u lt u r e

□ O th e rs
 In first five-year period growth rate was 99.7% in well and elect motor, (-)

12.1% in pipeline, (-) 16.8% in tractor and agriculture impliments, 115.2% in dairy

and poultry, 204.2% in horticulture and other was 163.5%. The total growth rate

in first five-year was 29.5%, in next five year was 73.4%. The grov\/th rate in the

last five- year period was (-) 77.7% in well & elect Motor, (-) 79.8% in pipeline, (-)

66.9% in tractor, (-) 27.6% in dairy and poultry, (-) 38.1% in Horticulture and (-)

49.2% in other purposes because in last year disbursem ent was very less. So

the total growth rate during 10 year period was also in m inus in all categories. In

the last three-year period loan disbursem ent was down because funds for

distribution w ere not available.

5.3.3 Recovery and over dues

The recovery perform ance is an im portant factor in sound banking

business. Larger the proportion of recovery, greater the efficiency of bank and

vice-versa. How- ever, table 5.7 shows that perform ance of LDB sub-branches in

Pravara area. The information also illustrated in the from of chart (Chart 5.4)

The table 5.7 revels that, in 1989-90, the dem and o f loan was Rs. 52.20

lakhs, out of which, recovery was Rs. 31.32 lakhs (60%) and the over dues

am ount Rs. 20.88 lakhs (40%). The highest recovery percentage was 67 in 1996-

97 and in the same year the percentage of overdues was lowest i.e. 33. The

recovery and overdues status of the sub branches was not satisfactory. The

annual average of recovery was 60 percent and overdues was 40 percent during

period under study. The main reasons are of low recovery w as crop failures,

high cost of production and falls in prices of agricultural produce ect.

185
 Table 5.7

Demand, Recovery and over dues by LDB sub-branches

( Rs. in Lakhs)

Year Demand Recovery % of Over-dues %of

Recovery
over-dues

1989-90 52.20 31.32 60 20.88 40

1990-91 58.70 35.22 60 23.48 40

1991-92 64.34 37.31 58 27.03 42

1992-93 68.50 41.78 61 26.72 39

1993-94 65.92 37.57 57 28.35 43

F.Y.G.R.% 26.2 19.9 — 35.7 —

1994-95 74.28 49.76 67 24.52 33

1995-96 70.06 46.23 66 23.83 34

1996-97 68.56 43.19 63 25.37 37

1997-98 76.44 42.80 56 33.64 44

1998-99 82.32 44.45 54 37.87 46

F.Y.G.R.% 10.8 -1 0 .7 — 54.4 —

Total 681.32 409.63 60 271.69 40

T.G.R. % 57.7 41.9 — 81.3 —

Note; - Percentage of Recovery and over dues are evaluated w ith respect to

demand.
Source: - LDB Sub branches of Rahuh, Shriram pur and Sangam ner
Recovery section.

During the period under consideration the total dem and fo r loan amount

was Rs. 681.32 lakhs and the total recovery amount was Rs. 409.63 lakhs (60

percent) and the total overdues am ount was Rs. 271.69 (40 percent). It clearly

shows that the total recovery percentage in Pravara area not satisfactory when

com pared to other banks.

185
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 The first five-year period rate of growth in dem and was 26.2, but it

decreased in next five-year period i.e. 10.8. In same period growth rate in

recovery and over-dues was 19.9 and 35.7, but high decrease in recovery and

increase in overdues i.e. minus 10.7 and 54.4 in second five year period. The

total growth rate was 57.7 in demand, 41.9 in recovery and 81.3 in overdues.

Dem and and overdues had high increased as compare to recovery during study

period.

5.4 Urban co-operative banks in Pravara area.

The Urban co-operative bank plays an im portant role in Pravara area.

There are two urban banks w orking in Pravara area i.e. Pravara co-operative

bank ltd. Loni and Nagar Urban co-operative bank Ltd. Ahm ednagar. These

banks collect deposits from rural people and provide finance for small scale

industries, self em ploym ent schemas, consum ption purposes, finance for small

traders and Housing finance etc. Pravara co-operative bank extends its activity

through its six branches and Nagar Urban co-operative bank through its two

branches in Pravara area.

Pravara co-operative bank was established in 1975 with a m eager share

capital of Rs, 2 lakhs and 400 members. The basic purpose of the bank is to

provide financial assistance to the rural people for meeting their needs in the field

of agriculture and develop self-employm ent. This leads to am eliorate their living

conditions through their own earnest efforts. This is new experim ent to have

urban banking system in rural area. W hich has resulted in a success by opening

six branches and five-extension counter in the periphery of 25 k.m. of

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

187
Songaon, Ashvi Bk., Kolhar Bk., Dadh Bk. and Pravaranagar sugar factory. The

extension counters of Pravara bank are at Padmashri Vikhe Patil College of Arts,

Science and Com m erce Loni Kd,, Polytechnic College Loni Bk., Pravara Medical

college Loni Bk., Bhablewhwar and New English School Ashvi Kd.

Pravara co-operative bank is also working out-side of Pravara area. The

branches other than Pravara area are at Ahm ednagar, Shriram pur, Rahata and

Shirdi, of which Shrirampur, Rahata and Shirdi branches started from the year

1998-99. The Pravara C o-operative bank has send a proposal to Reserve bank

of India for permission of started three new branches at Pune, Nasik and

Aurangabad.

Nagar urban co-operative bank was established in 1910 at Ahm ednagar in

the form of urban co-operative societies. That is the first urban co-operative

society in Ahm ednagar district. This co-operative society converted into bank in

1927. The basic purpose of the bank is to provide financial assistance to the

urban people in Ahm ednagar city. This bank provides finance for small traders,

shopkeepers, self-em ploym ent and consum ption purpose for middle class

people. The area of operation for the bank is extending its services through 30

branches spread over in A hm ednagar district, in Pravara area, only two branches

of Nagar urban co-operative are located at Ashvi Kd and Kolhar Kd from 1971

and 1996. But these branches do not provide finance for agnculture agro base

industry and agriculture allied activities. So it is not considered fo r the study,

because the study is related for co-operative credit and its im pact on agriculture

and rural developm ent and employment.

The basic objective of the Pravara co-operative bank is to help rural

people, am eliorate their living conditions through their own earnest efforts.

Pravara bank extends financial assistance to farmers, rural artisans, small

188
 traders and educational institutions. The financial assistance to farm ers for

consum ption purposes, m arriages of doughtier, children’s education, medical

bills etc. The bank also provides finance for agro-base industry and agriculture

allied activities. Such as Padmashri Vikhe Patil co-operative sugar factory, co­

operative Paper mill, co-operative milks dairy and co-operative truck society etc.

5.4.1 Objects and functions of Pravara co-operative bank (PCB)

The main objects and functions of the Pravara C o-operative banks are.

1) To attract local deposits and provide other banking facilities, like remittance

of funds, collection of cheques and safe custody of valuables.

2) To develop and extend banking facilities in the rural areas and develop

banking habit am ongst the rural people.

3) To provide finance to the m em bers and other people within the area

operations.

The Pravara bank is consistently giving preference w hile reshaping financ

assistance for the following items.

i) Financial assistance for children’s education, m edical treatment, marriai

of doughtier purposes.

ii) Finance for housing, SSI Units and self-employment.

iii) Finance to promote rural developm ent and co-operation through Prava

education complex.

iv) Finance to promote village industries with more em phasis on villai

artisans.

v) To promote technically qualified young persons to set-up their own units

the Pravara area.

189
 vi) To promote dairy developm ent activity.

vii) Financial assistance for agro-base industry and agricultural allied activities

in Pravara area.

5.4.2 W orking capital perform ance of Pravara co-op-bank.

Pravara co-operative bank was established in 1975. T he Aim of this bank

w as to provide finance to needy people for the purpose o f upgrading the living

standards of its members. Table 5.7 shows the perform ance of share capital,

reserves, deposits and borrowing of Pravara co-operative bank during the period

from 1989-90 to 1998-99. These has been depicted in from of a diagram (Chart

5.5)

Table 5.?> shown that, the num ber of m em bership was 7227 in 1989-90,

but it decreased continuously because of death of old m em ber and no addition of

new member. In 1997-98 only two m em bers were included. The am ount of share

capital was increased from Rs. 20.62 lakhs in 1989-90 to Rs. 24.79 lakhs in

1998-99. The am ount of reserve fund was Rs. 104.32 lakhs in 1989-90; it was

highly increased during 10-year period and reached up to 730.14 lakhs in 1998-

99. The am ount of deposit was Rs. 1367.98 lakhs in 1989-90; it was fast growing

in 10-year period and reached up to 7344.33 lakhs. During the 10 year period,

Pravara bank could not make borrowing from others duhng the period under

study. The share of borrowing am ount was shown at very low percentage in

working capital. The am ount of w orking capital was Rs. 1492.92 lakhs in 1989-

90; it increased and reached at 8321.17 lakhs in 1998-99.

 Table No. 5.8

W orking capital perform ance of Pravara co-operative bank.

(Rs in Lakhs)

Year M em ber Share Reserves Deposits Borrowings W orking

capital capital

1989-90 7227 20.62 104.32 1367.98 — 1492.92

(1.38) (6.98) (91.64) (100)

1990-91 7193 21.92 133.30 1795.17 — 1950.39

(1.12) (6.83) (92.05) (100)

1991-92 7191 23.04 174.08 1893.16 438.77 2529.05

(0.91) (6.88) (74.85) (17.35) (100)
7189 23.12 226.55 2031.87 526.24 2807.78
1992-93
(0.82) (8.06) (72.37) (18.75) (100)
7181 24.92 289.13 2315.41 435.22 3064.68
1993-94
(0.81) (9.48) (75.55) (14.21) (100)
F.Y.G.R.% (-0 ,7 ) (20.8) (177.1) (69.2) -0.9 ^ (105.22)
7175 24.90 331.52 2653.94 255.19 3265.55
1994-95
(0.76) (10.15) (81.27) (7.82) (100)
7168 24.76 417.32 3769.60 52.03 4263.71
1995-96
(0.58) (9.78) (88.41) (1.23) (100)
7166 24.75 559.52 4566.30 0.03 5150.60
1996-97
(0.48) (10.86) (88.65) (0.01) (100)
7168 24.80 730.74 5173.02 323.38 6251.94
1997-98
(0.39) (11.69) (82.74) (5.18) (100)
7167 24.79 903.05 7394.33 — 8321.17
1998-99
(0.29) (10.84) (88.87) (100)
F.Y.G.R.% (-0 .2 ) (-0 .5 ) (172.0) (178.6) (26.7) (154.8)
71825 237.62 3868.53 32960.78 2030.86 39097.79
Total
(0.60) (9.89) (84.30) (5.21) (100)
T.G.R. % -0.9 20.2 764.6 440.5 -2 6 .3 457.3

Note: - Bracketed figures indicate percentage to total.

Source; -Annual Reports of Pravara Co-operative bank Loni form 1989-90,

The proportion of share capital in working capital v\/as between 1.38

percent to 0.29 percent during ten-year period. The share of reserve fund in

w orking capital was shown between 6.88% to 11.69% in ten year period, but the
191
 Chart 5.5

Progress in Woridnq Capital of Pravara Co-operative Bank

Lid. (PRs. in iJkhs)
9000
□ Working Capital
8000

(A 7000

re 6000 I

C 5000 j -

C 4000 1
0
1 3000 I
2000 i

1000 i

Year

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

& P A
 share' of deposit in w orking capital was 72.37% to 92.05% in the same period.

The highest portion of share capital in working capital was in 1989-90 i.e.;.

1.38%, the highest percentage of reserves fund in working capital was 11.69% in

1997-98 and highest share of deposit was at 92.05 percent 1990-91. During the

ten year penod aggregate total of working capital was 39097.97 lakhs out of

w hich 0.60% of share capital, 9.89% of reserve fund, 84.30% of deposit and only

5.21% of borrowing.

In the first five year period the growth rate was 20.8% in share capital but

it decreased in the next five year penod i.e. - 0.5 percent, in case o f reserve fund

the first five-year grov^h rate was 177.1%, it also shown a small decreased in

next five-year period and reached upto 172.0%. But in deposits the first five year

growth rate was given 69.2%, it increased highly in the next five year penod and

reached upto 178.6 percent.

The total rate of growth in ten -year periods, was 22.2% in share capitals,

764.6%, in reserve funds and 440.5% in deposits. The annual average grov»/th

rate was 2.02%, in share capitals, 76.46% in reserve fund and 44.05% in deposit

during 1989-90 to 1998-99.

W e observed that the Pravara co-operative bank puts in more efforts for

collection of deposit in second five -year period, so the dependence on

borrow ings were reduced.

5.4.3 Deposits and Advances of Pravara bank:-

Deposit is an im portant source of working capital in banking transactions.

W hen bank collects more am ount of deposit, they can fulfill the dem and fo r loan

to m embers in time fo r their purposes. Collection of deposit of bank can create

confidence among the people. The Pravara co-operative bank creates

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

192
am ount of deposit and disburse to needy people. The follow ing table shows the

inform ation of deposit and advances of Pravara co-op-bank from 1989-90 to

1998-99.

Table No. 5.9

Deposits and Advances with C/D Ratio of Pravara bank

(Rs. In lakhs)

Year Deposit Advances C/D Ratio %

1989-90 1367.98 (15.4) 983.24 (20.4) 72

1990-91 1795.17 (31.2) 1471.22 (49.6) 82

1991-92 1893.16 (5.4) 1994.06 (35.5) 105

1992-93 2031.87 (7.3) 2159.05 (8.2) 106

1993-94 2315.41 (13.9) 2267.57 (5.0) 98

1994-95 2653.94 (14.6) 2369.23 (4.5) 89

1995-96 3769.60 (42.0) 2973.62 (25.5) 79

1996-97 4566.30 ( 21 . 1 ) 3510.66 (18.0) 77

1997-98 5173.02 (13.2) 4265.34 (21.5) 82

1998-99 7394.33 (42.9) 5029.36 (17.9) 68

Total 32960.78 (207.0) 27023.35 (206.1) 858

Average 3296.07 (20.7) 2702.33 ( 20 .6 ) 86

Note: Bracketed figures indicate Growth rate over pervious year.

Source: - Annual Reports, Pravara Co-operative bank Ltd. Loni.

The Pravara co-operative bank indicates increasing trend in deposit

m obilisation from Rs. 1367.98 lakhs to Rs. 7394.33 lakhs in a time span of ten

years. The percentage of deposit mobilisation was highest 42.9% over previous

year in 1998-99 because of rescheduling of deposit rate. The average aggregate

deposits in the span of ten year were Rs. 3296.07. lakhs. The average growth

rate in same period was shown at 20.7 percent.

The Pravara bank has also increased the loan lending from Rs. 983.24

lakhs to Rs. 5029.36 lakhs under the penod for consideration. Dunng 10-year

193
 period, the percentage of loan disbursem ent was highest 49.6% over pervious

year, during 1990-91 and lowest was 4.5% in 1994-95. The average

disbursem ent in 10 year was Rs. 2702.33 lakhs. The growth rate over pervious

year has shown an increase trend but it was an uneven percentage i.e. between

4.5% to 49.6% during span of 10 years penod.

The C/D ratio was 72% in 1989-90; it increased and reached at 106% in

1992-93, but there after decreased during rest of the period and reached 68% in

1998-99, The average C/D ratio during 10 years period was 85.9%.

5.4.4 Purpose-wise loan disbursem ents by Pravara co-op. bank.

Pravara Co-operative bank provides finance fo r different purposes and

activities such as small -scale industries, self -em ploym ent transport, trading,

business, agro-base industries, agricultural allied activities, education housing

etc. The bank also provides credit fo r consumption, m edical help daughter

m arnages on personal guarantee or against gold. Such type of loan was given

under the heading of other purposes. The perform ance of purposes loan

disbursem ent by Pravara bank shows in the following table from the period 1989-

90 to 1998-99.

In 1989-90, the total loan disbursem ent by the bank in Pravara area was

Rs.983.24 lakhs. Out of the total 9.0% to SSI unit, 3.3% to self employm ent

14.3% to transport, 12% to trading and business 18.5% to agro base and allied

activities, 1.3% to education, 13.5% to housing and 28.0% to others purpose was

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

decreased except fo r agro based and allied activities such as 7.5% to SSI unit,

2.4% to self employment, 8.6% to transport, 6.9% to Trading, 0.4% to education

8.6% to housing and 20.8% to others.

194
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 During the first five year period rate of growth was 319.5% in SSI, it has

decreased in next five-year period i.e. 2.7%. The rate of grov;4h in first five year

period w as 113.5% in self em ploym ent, 244.6% in transport, 119.7% in trading,

97.9%, in agro base and allied activities, 43.7 percent in housing and others was

107.7 percent but in case of education growth rate was - 6.8% in the same

period.

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em ploym ent i.e. 126.2% but decreased in transport and trading i.e. 5.6% and

61.3% . In agricultural allied activity and agro base industries growth rate was

increased 4 tim es during the five -year penod of 1994-95 to 1998-99. The grov^h

rate increased for education and housing i.e. 142.1% and 51.6% but decreased

fo r other activities i.e. 72.8%. The growth rate of total loan disbursem ent in first

five-year period was 130.6% but it was decreased in next five-year period up to

112 . 2 %

The total disbursem ent duhng the 10 year was Rs. 27023.54 lakhs, out of

which 10.5% fo r SSI unit, 3.0% for self employment, 16.0% fo r transport, 10.4%

fo r trading, 26.0% for agro base and allied, 0.6% for education, 9.1% fo r housing

and 24.4% for other. That means the highest percentage o f disbursem ent was to

agricultural allied (26%) and agro base industries and lowest 0.6% fo r education

during penod from 1989-90 to 1998-99.

During ten year penod the total growth rate was 324.6% in S.S.l, 268.2%

in self employment, 207.2% in transport, 193.5% in trading, 1303.6% in agro

base and allied, 65.4% in education, 225.3 in housing and 280.2% in other. The

total growth rate in total am ount of loan disbursem ent during 10-year period was

197
 411.5 percent. W e observe that the perform ance of Pravara co-operative bank

was more satisfactory than other banks in Pravara area are because of

professional management.

5.4.5 W orking results of Pravara co-operative banl<.

The Pravara co-operative bank v^'orking its activity in Pravara area. The board

of director residing in Pravara area, it is a local managem ent. The m anagement

had taken more efforts for recovery of loan. The follow ing table shows the

am ount of dem and loan, recovery and over dues. The table also showing the

profit and loss, rate of dividend, information about audit from the period 1989-90

to 1998-99.

Table show that, the am ount of demand loan has continuously increased

from Rs. 983.43 lakhs in 1989-90 to Rs. 5033.38 lakhs upto 1998-99. The total

am ount of dem and loan of Pravara co-operative bank was Rs. 27026.50 lakhs

duhng the period under consideration. The average percentage of recovery and

over dues to demand was 87.1% and 12.1%. The highest recovery percentage

was 93.28% in 1991-92 and lowest percentage of recovery was 82.16% in 1993-

94. The recovery percentage was between 82.16% to 93.28% during the period

1989-90 to 1998-99.

The Pravara co-operative bank has obtained profit every year during the

span of 10-year pehod. The am ount of profit was Rs. 14.88 lakhs in 1989-90; it

has continuously increased and reached to 51.88 lakhs in 1998-99. In first fi

year period, the rate of growth in profit was 54.9% but increased in last five-y(

pehod i.e. 124.3%.

198
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 In the first five year period, the growth rate in dem and was 130.5%, it

decreased in next five year period i.e. 112.4%, the growth rate in recovery was

110.0% in five year period, it indicate small increase in next five year period. The

growth rate in overdues indicate high percentage (318.0% ) in first five year

period, but it decreased in next five year period (70.1%). During 10 year period

the grov^h rate was in demand 411.8%, in recovery was 400.0% and in overdues

was 513.7%.

The Pravara co-operative bank declared and distributes a dividend at the

rate of 13% in first two year, in the third year rate of dividend was 14% and in

rem aining year the rate of dividend was 15% continuously. The Pravara Co­

operative bank obtained always 'A ’ A udit class during spans of 10-year period.

The num ber of em ployed works in Pravara bank was 155 in 1989-90, it increased

and reached upto 169 at the end of 1998-99. The total perform ance of Pravara

co-operative bank has more satisfactory, when com pared to ADCC and

com m ercial banks in Pravara area, because of professional m anagement, good

recovery perform ance and limited num ber of workers.

5.5 Primary Agricultural co-operative societies (PACS) in Pravara area.

The first primary agricultural co-operative society was established in 1911

at Ashvi Kd. in Pravara area. At present 44 PACS are functioning as every village

in this area. The PACS functions as interm ediary agent between farm ers and

ADCC bank in providing short and medium term loans to the farmers. They

involved in m aking recovenes, supervision and guidance. PACS also supply of

seeds, fertilizers, and insecticides at reasonable rate to farmers.

200
5.5.1 M em b ership

M em bership of a PACS is open to all person residing within its area

of operation irrespective of race, creed, colour, or sex. The principle of

universal m em bership has since been enshrined in the co-operative

societies Acts of all the states. To become m em ber a person should have

attained the age of 18 years and must be com petent to contact as per

existing laws. The growth of m em bers from 1989-90 of 44 PACS from

Pravara area was given in the following table.

Table No. 5.12

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

Year No. of m embers Growth rate over A verage member

previous year per society.

1989-90 22460 2.5 510

1990-91 23045 2.6 524

1991-92 23534 2.1 535

1992-93 24313 3.3 552

1993-94 24826 2.1 564

1994-95 25188 1.4 572

1995-96 25401 0.8 577

1996-97 25757 1.4 585

1997-98 25842 0.3 587

1998-99 25998 0.6 591

Total 246364 17.1 5597

Average 24636 1.7 560

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

201
 The m em bership of the societies has increased substantially from 22460

in 1989-90 to 25998 in 1998-99. The average m em bership of per society was

only 510 in 1989-90, has gone up to 572 in 1994-95 and 591 in 1998-99

respectively.

The annual growth rate over pervious year was 2.5 in 1989-90, which

increased every year in small percentage during the 10-year period under

consideration. The highest growth was at 3.3 percent in 1997-98. At the end of

the 10 years period, average m em bership was 24636 and per society

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

percent.

5.4.2 Sources of funds

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

3) Deposits and 4) Borrowing

I) Share capital and Reserves

Each individual who is adm itted to the m em bership of a PACS is

required to purchase at least one share. The borrowing members are

required to purchase share in a fixed proportion to their borrowing from the

society. Thus there is a linking of share holdings w ith the borrow ings of an

individual member. This proportion is higher in case o f big farm ers and

sm aller in case of small and marginal farmers, rural artisans and other

m em bers belonging to the w eaker section of the society. The total share

capital held by a society is in its turn a determ inant of its borrowing power

from the district central co-operative bank. The DCCB however, also takes

into account the am ount of reserves held by a society in deciding the

maximum borrowing limit of a society. Thus higher the paid-up capital and

202
reserves, higher the borrowing capacity of a PACS from DCCB. The

share capital and reserve taken together constitute the owned funds of a

society. The following table shows the growth of owned funds of PACS

since 1990-91.

Table No. 5.13

Share capital and Reserve funds of PACS in Pravara area

(Rs. In lakhs)
Year Share capital Reserves Owned Per PACS
funds.
1989-90 248.60 65.52 314.12 7.13

1990-91 289.57 74.39 363.96 8.27

1991-92 318.38 78.79 397.17 9.02

1992-93 367.88 86.77 454.65 10.33

1993-94 409.08 96.21 505.29 11.48

F.F.Y.G.R.% (64.5) (46.8) (60.8) (61.0)

1994-95 459.40 105.87 565.27 12,84

1995-96 494.30 124.30 618.60 14.05

1996-97 505.01 156.63 661.64 15.03

1997-98 581.83 168.47 750.30 17.05

1998-99 605.88 183.63 789.51 17.94

S.F.Y.G.R.% (31.8) (73.4) (39.6) (39.7)

Total 4279.93 1140.58 5420.51 123.19

T.G.R. % 143.7 180.2 151.3 151.6

Source .- Field surveys, 44 PACS from Pravara area.

It may be seen from above table that the paid- up capital of the

PACS which was only Rs. 248.60 lakhs in 1989-90 w ent up to Rs. 459.40

Lakhs in 1994-95 and Rs. 605.88 lakhs in 1998-99 respectively. The

reserve of the PACS had also gone up from Rs. 65.52 lakhs in 1989-90 to

203
 Rs. 105.87 lakhs in 1994-95 and Rs. 183.63 lakhs in 1998-99. Similarly,

the owned funds of the societies which were only Rs. 314.12 lakhs in

1989-90, had gone-up to Rs. 565.27 lakhs in 1994-95 and Rs. 781.51 in

1998-99. The average capital per societies was Rs. 5.65 lakhs in 1989-90

went up to Rs. 13.73 lakhs in 1998-99. The portion of share capital in total

owned fund was 78.95% and reserve was 21.05% during 10 years pehod

from 1989-90 to 1998-99.

During the first five -year periods, growth rate was 64.5% in share

capital, but it decreased in next five- year period i.e. 31.8%. The reserve

showed 46.8% growth rate in first five year period, it increased in next five

year period up to 73.4%, but the growth rate in owned fund was shown at

60.8% in first five year period, it also decreased in next five year period i.e.

39.6%.

During 10 years period, the total growth rate was 143.7% in share

capital, 180.2% in reserves and 151.3% in own funds. So the annual

average growth rate was 14.3 % in share capital, 18.0% in reserve and

15.1% in own funds. In 10 years period PACS transfer maximum amount

in reserve fund, it is useful for strengthening sources of own funds.

5.5.3 Deposits

At, present, the PACS m erely act as agencies for disbursem ent of loans

and distribution of farm inputs. They are ill equipped to accept deposits and

provide other banking services. As a first step, therefore, sehous efforts should

be made to strengthen the PACS financially and make them organizationally

com petent to undertake various banking facilities including m obilization of

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

204
 loaning to the rural sector and even to protect politically m otivated interference in

the recovery of loans. The deposit strength will further help the PACS to keep the

level of over dues in member loans relatively low. Further as a sizeable portion of

the deposits may be cheaper than even borrow ings from higher financing

agencies, the deposits have im m ense potential in augm enting the viability

prospects o f the pnmaries.

The PACS do not collects any deposits from rural people in Pravara and

also in Ahm ednagar area though they have facility and authority to collect the

deposits because no efforts were taken by m anagem ent and secretary in this

regard.

5.5.4 Borrowings and working capitals

The PACS borrow funds from Government, DCCB and other sources to

enable it self to lend to the ultimate borrowers. The borrow ings of the PACS

since 1989-90 from different source are given in the table 5.14.

It may be seen in the table 5.14, that the total borrow ings of the PACS

which stood at Rs. 674.42 lakhs in 1989-90 went up to Rs. 1121.93 lakhs in

1994-95 and Rs. 1485.87 lakhs in 1998-99 respectively.

The working capital of the PACS, which was only Rs. 988.54 lakhs in

1989-90, w ent up to Rs. 1687.20 lakhs in 1994-95 and Rs. 2275.38 lakhs in

1998-99. The major com ponent of the working capital was in the form of

borrow ing which constituted more than 60 percent of the total working capital

dunng the period 1989-90 to 1998-99.

205
 Table No. 5.14

Borrowings and working capitals of 44 PACS in Pravara area

(Rs. In lakhs.)
Year Owned funds Borrowings W orking capital
(2+3)

1 2 3 4

1989-90 314.12 (31.7) 674.42 (68.3) 988.54 (100)

1990-91 363.96 (33.4) 722.90 (66.6) 1086.86 (100)

1991-92 397.17 (33.4) 790.23 (66.6) 1187.40 (100)

1992-93 454.65 (34.6) 858.61 (65.4) 1313.26 (100)

1993-94 505.29 (32.1) 1066.80 (67.9) 1572.09 (100)

F.Y.G.R.% (60.8) — (58.1) — (59.0) —

1994-95 565.27 (33.5) 1121.93 (66.5) 1687.20 (100)

1995-96 618.60 (36.8) 1060.03 (63.2) 1678.63 (100)

1996-97 661.64 (36.5) 1148.26 (63.5) 1809.90 (100)

1997-98 750.30 (38.0) 1221.67 (62.0) 1971.97 (100)

1998-99 789.51 (34.7) 1485.87 (65.3) 2275.38 (100)

F.Y.G.R.% 39,6 — 32.4 — 34.8 —

Total 5420.51 (34.8) 10150.72 (65.2) 15571.23 (100)

T.G.R. % 151.3 120.3 ~ 130.1 —

Note: - Bracketed figures indicate percentage to working capital.

Source: - Annual Reports, and statem ents 44 PACS from Pravara area.

During the ten -year periods the highest share of borrowing in working

capital was 68.3% in 1989-90 and lowest was at 62.0% in 1997-98. The share of

borrowing in total of working capital was 65.2% during the span of ten-years.

Such borrowing was not in a good sign in case of PAS therefore it always

depends on borrowing am ount for loan disbursem ent purposes.

206
 The growth rate in first five-year period was 58.1 percent in borrowing it

decreased in next five-year period i.e. 32.4%. The total growth of borrowing was

120.3% during 10-year period from 1989-90 to 1998-99. So the annual average

growth rate was shown 12.03%. The Growth of working capital was 59.0% in first

year period; it decreased in next five-year period i.e. 34.8%. The total growth rate

in working capital was 130.1% during span of 10 years period.

5.5 .5 L o a n s an d A d v a n c e s

The PACS provides short -term as well as medium term credit to its

members. Short term loans are given for periods generally not exceeding one

year for seasonal agricultural operations such as purchase of seeds, insecticides,

pesticides etc. and are recoverable from the proceeds of the harvest. These

societies provide short -term credit on the basis of the crop loan system under

w hich appropriate scales of finance per acre per crop are fixed fo r two

com ponents 'A ’ and 'B ’. Com ponent 'A ’ is fixed at one third of the gross value of

produce per acre per crop plus the additional expenses on labor engaged in

application o f fertilizers, insecticides etc. and is disbursed in cash. Com ponent

‘B’, covers the expenses on fertilizers and other inputs and is disbursed in kind.

The eligibility of the individual farm er fo r credit is a function of two variables, viz.,

the scale of finance per acre, per crop composed of the two com ponents and the

area under cultivation under each crop. The scales of finance fo r the different

crops will be different as the outlay on the inputs varies from crop to crop.

In the production ohented system of crop loans, short term credit is

needed to meet the cash outlays on paym ents of wages, rent, taxes etc. or the

outlays on purchasing inputs like seed fertilizers etc. It follows therefore, credit

207
should be provided during the period that outlays have to be made. Further, the

farm er is expected to repay the short-term loans out of the crops growth. There

has to been therefore some seasonally in the disbursem ent and recovery of the

credit needed for carrying on seasonal aghcultural operations. The eligibility of a

crop loan is determ ined not v^/ith reference to the value of land cultivated or other

tangible security but on the basis of the out lay on cultivation and the repaying

capacity from out of agricultural production. As the small farm ers who have very

little land to offer as security and do not have any other tangible security to offer,

if the loans are determ ined on the value of land only. The loans advanced may

not be adequate to meet the needs of such farmers. In the interest of agriculture

production as well as social justice, therefore, it is necessary to place the

purpose above security in the grant of short-term credit facility to the farmers.

Medium term loans are given fo r penod ranging from 3 to 5 years for

purposes such as, installation of pum ping sets, purchase o f tractors, agricultural

impliments, milch animals, repairs of wells, construction of bunds, and so on. The

loan operation of the primary agricultural credit societies in the Pravara area

since 1989-90 may be seen in table 5.15. The data has been depicted in the from

of graph (Chart 5.6)

It may be seen from the table 5.15 that the loans and advances of the

PACS w hich stood at Rs. 602.70 lakhs in 1989-90, it increased upto Rs. 1660.55

lakhs in 1998-99. The total loan advances was Rs. 9640.93 lakhs during study

period, out of which about 48 percent to agricultural allied activities for purposes

on medium term basis, and 52 percent for crop loan for production purposes on

short-term penod. Crop loan advances was highest (53.7 percent) in 1991-92

and lowest 49.9 percent in 1996-97. Loan disbursem ent for agricultural allied

208
 activities was highest i.e. 50% in 1996-97 and lowest was 46.3 percent in 1991-

92.

Table No. 5.15

Loan operations of PACS in Pravara area from 1989-90 to 1998-99.

(Rs. n lakhs)
Year Crop loan Agricultural Total loan Loan % of Grov^/th
Advances allied actives Advances memb loan Rate in
advances er memb Total
er to advanc
total es over
memb previou
er s year

1989-90 322.28 (53.5) 280.42 (46.5) 602.70 (100) 7636 34 6.5

1990-91 337.36 (52.6) 304.16 (47.4) 641.52 (100) 8065 35 6.4

1991-92 390.11 (53.7) 336.49 (46.3) 726.60 (100) 8707 37 13.2

1992-93 396.39 (53.0) 351.78 (47.0) 748.17 (100) 8266 34 2.9

1993-94 443.91 (50.7) 432.08 (49.3) 875.99 (100) 9682 39 17.0

1994-95 480.70 (51.2) 459.83 (48.8) 940.53 (100) 9319 37 7.3

1995-96 540.12 (52.3) 494.30 (47.7) 1034.42 (100) 10160 40 9.9

1996-97 550.95 (49.9) 553.27 (50,1) 1104.22 (100) 9014 35 6.7

1997-98 665.12 (51.0) 641.11 (49.0) 1306.23 (100) 9820 38 18.2

1998-99 884.33 (53.3) 776.22 (46.7) 1660.55 (100) 9359 36 27.1

Total 5011.27 (51.98) 4629,6 (48.2) 9640.93 (100) 900.28 36.5 ~

Note; - Bracketed figures indicate percentage to total loan advances.

Source: - Annual reports and statem ents of PACS from Pravara area.

The growth rate over pervious year in total advances was 6.5 percent in

1989-90; it increased and reached up to 27.1 percent in 1998-99. The highest

growth rate was at 27.1 percent in 1998-99 and lowest was 2.9 percent in 1992-

93 over pervious year.

209
 There was a constant increased in the m em ber of PACS it appeared as

uneven trend during study period. As a matter o f fact the percentage of

borrowing m em bership has increased from 34 percent to 40 percent dunng the

span of 10 year. The average borrower membership was 36.5 percent of the total

m em bers during study period. It is noticed that some m em bers of PACS do not

take loan and fo r some, loan facilities was not available because.

1) All the m em bers of a fam ily are eligible fo r borrowing loan but only one of

them was borrowing.

2) Several affluent members did not resort to borrowing.

3) The loan was inadequate and its disbursem ent untimely.

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

5) Defaulters are not eligible for loan.

6) C onsum ption credit was not available in adequate.

Besides, the reasons stated above, the defective loaning pollicies and

procedures and ever-increasing num ber of defaulting m em bers inhibited the

growth of borrowing m em bership. Further under the multi agency approach

according to w hich agriculture, credit was available from other institutional

agencies like com m ercial bank, many of then m em bers of PACS have borrowed

from the form er agencies.

210
5.5.6 Recovery and over dues:-

One of the most distressing features of the co-operative banking system at

the base level is ever increasing incidence of over dues due to non-repaym ent of

loans by the borrowers in time. Following table recovery and over-dues of PACS

in Pravara Area. The data also shown in the from of graph (C hart 5.6)

Table No. 5.16

P o s itio n o f R ecovet 7 and o v e r d u e s o f P A C S in P ra v a ra area.

(Rs. In lakhs)

Y ear Demand Recovery % 0f Over dues % of over

Recovery dues

1989-90 559.64 404.61 72.3 155.03 27.7

1990-91 596.99 452.52 75.8 144.47 24.2

1991-92 597.25 441.96 74.0 155.29 26.0

1992-93 831.39 638.51 76.8 192.88 23.2

1993-94 805.52 589.64 73.2 215.88 26.8

F.Y.G.R.% (43.9) (45.7) — (39.2) —

1994-95 945.84 774.11 75.5 171.73 24.5

1995-96 1009.76 742.17 73.5 267.59 26.5

1996-97 1040.96 728.67 70.0 312.29 30.0

1997-98 1181.73 875.66 74.1 306.07 25.9

1998-99 1368.06 991.84 72.5 376.22 27.5

F.Y.G.R.% (44.6) (28.1) — (119.6) —

Total 8937.14 6639.69 73.3 2297.45 26.3

T.G.R. % 144.4 145.1 — 142.6 —

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

211
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 The loans disbursed by the PACS have been increasing In absolute terms

from year to year; their capacity to recycle their funds and accelerate the flow of

credit to the ultimate borrowers has been seriously retarded due to their poor

recovery performance. W hich has adversely affected their profitability and

viability. The PACS due to heavy overdues find it difficult to borrow from the

DCCB on account of their failure to honour their com m itm ents in time which in

turn affects the smooth working o f the DCCB whose funds rem ain locked up in

overdues. The overdues not only affect the credit-absorbing capacity of the

PACS but also makes it ineligible fo r refinance facilities from higher financing

agencies. The members also in turn become ineligible to borrow on account of

their defaults to the society.

The over-dues of the PACS have shown an increasing trend from the year

1990-91. The overdues of the PACS, which were only Rs. 155.03 lakhs in 1989-

90, went up to Rs. 37.22 lakhs in 1998-99. The percentage of over dues to

dem and which a real index of recovery performance was only 27.7 percent in

1989-90. It has since gone up to 30.0 percent in 1996-97 and reduced in 1997-98

and 1998-99 i.e. 25.9 percent and 27.5 percent. The position o f overdues was

alarm ing and has practically choked the credit pipeline in many PACS.

In the first five -year periods, the growth rate in am ount of demand was

shown of 43.9% but in next five- year period growth rate was a small increase

and reached to 46.6%. The am ount of recovery indicated fo r first five-year growth

was 45.7% it, decreased in next five -year periods up to 28.1%. it is a good sign

in perform ance of recovery programme. In the first five -year penod growth rates

in overdue was given 39.2% but it was high increase in next five-year period i.e.

1196.6%.

212
 During the ten year period percentage of recovery was 73.7% to the total

am ount of demand. In the same period overdues was shown 26.3% to demand.

The total growth rate during span o f 10 year in am ount o f dem and was 144.6%,

recovery was 145.1% and over due was shown at 152.6%. 'k, . ; .

A w ide range of factors external and internal influenced the level of and

the trend in recovery perform ance of the PACS. The external factors included

natural calam ities like floods, fam ines and drought, defective legal frame work

and lack of governm ent assistance in effecting recoveries through legal

measures, socio political environm ent in which the PACS and other credit

institutions are required to function etc. The absence of infrastructure facilities,

linkages fo r ensuring Inputs supplies and extension services on the one hand

and processing, storage m arketing and other services on the other w ere serious

lacunae of imparting the productive and effective use of credit resulting in

realization of low level of income and consequential defaults. The low recovery of

loans was also largely due to a vitiated recovery clim ate m aking the borrowers,

with hold repaym ents in the anticipation of write off.

Internal factors of the credit system directly affecting recoveries are the

poor quality of lending, defective loan policies and procedures. Unsatisfactory

and ineffective supervision regarding the utility of credit, delay in sanction and

disbursem ent of loans, fixation of unrealistic or shorter repaym ent schedules,

failure to provide working capital to borrowers of term loans, over em phasis on

targeted and directed credit etc.

5.5.7 P ro fit and L o ss in fo rm a tio n o f P A C S in P ra v a ra area.

In Pravara area 44 PACS started working from many years to this date. PACS

were working its activity under the local management. They follow rules and

213
regulations as per Act. and ADCC bank guidelines. PACS provide short and

m edium term finance to farm ers and also supplying seeds, fertilizer, and

insecticides in reasonable rate. The perform ance of profit and loss o f 44 PACS in

Pravara area shown under follow ing table.

Table No. 5.17

P ro fit and loss o f P A C S in P ra va ra are a fro m

1 9 8 9 -9 0 to 1 998-99.

(Rs. In lakhs)
Y ear Profits Loss Net
No. of Am ount No. of Loss Result
societies Rs. societies Rs.
1989-90 23 24.42 21 22.79 1.63

1990-91 25 27.26 19 20.42 6.84

1991-92 28 31.24 16 23.92 7.32

1992-93 28 34.54 16 24.70 9.84

1993-94 26 35.77 18 27.75 8.02

F.Y.G.R.% — (46.4) — (21.7) (392.0)

1994-95 25 37.08 19 29.46 7.62

1995-96 29 40.17 15 30.61 9.56

1996-97 26 41.33 18 32.54 8.79

1997-98 27 43.50 17 35.15 8.35

1998-99 25 45.56 19 39.40 6.16

F.Y.G.R.% — (23.0) — (33.7) -(1 9 .8 )

Total 262 360.87 178 286.74 74.13

Average 26 36.08 17.8 28.67 7.41

■ , =^=

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

214
 During 1989-90, 23 PACS showed a profit of about Rs. 24.42 lakhs, while

rem aining 21 showed a loss of Rs. 22.71 lakhs. This trend continued fo r a period

of 10 years still 1998-99. There w as significant progress in profit of PACS. On an

average 26 PACS were showed in profit and 17 were in loss in same period. The

average profit amount of Rs. 36.08 lakhs and loss am ount w as Rs. 28.67 lakhs

per year.

Net result in profit and loss of 44 PACS in Pravara area shows a profit of

Rs. 1.63 lakhs in 1989-90; it increased to Rs. 6.16 lakhs in 1998-99. The highest

profit was Rs. 9.84 lakhs in 1992-93, and lowest was Rs. 1.63 lakhs in 1989-90.

The total net result in profit of 44 PACS during 10 years penod was Rs. 74.13

lakhs, and per year average was Rs. 7.41 lakhs.

During first five year the rate of growth in profit was 46.4 percent, it

decreased in next five year up to 23.0 percent, The total grov^h rate o f ten-year

period in profit was 86.5%. The grov\4h rate in first five -year periods was 21.7%

in loss, which it increased, in next five-year pehod up to 33.7 percent. The total

growth rate in loss dunng 10-year period was 72.8 percent. In the first five year

period the growth rate in net result was 392.0 percent, it was highly decreased in

next five year period to (-) 19.3 percent. The total growth rate in net result of

profit was 277.9% during period from 1989-90 to 1998-99.

W e observed that the reasons behind the loss in PACS w ere low recovery

from farm er, political interference, heavy m anagem ent and adm inistrative

expenses and lack of professional out look.

5.6 P e rfo rm a n c e o f c o m m e rc ia l b an ks in P ra v a ra area.

There are five branches of com m ercial banks, located in Pravara area, of which

S.B.I. in Loni and Songaon village, central bank of India at Ashvi BK and Kolhar BK

village and Union bank of India at Pravaranagar sugar factory. These banks

215
provide financial support to trader, businessman, SSI units, cottage industry,

transport, self-em ploym ent and agriculture. The follow ing table shows the

perform ance of deposit and advances of com m ercial banks in Pravara during from

1989-90 to 1998-99. These data also depicted in the from a diagram (Chart 5.7)

Table No. 5.18

D e p o s its and A d v a n c e s o f c o m m e rc ia l b an ks in P ra v a ra area

(Rs. In crore)
Y ear Deposit Advances C/D Ratio.

1989-90 9.72 5.20 53

1990-91 10.15 5.41 53

1991-92 11.03 6.17 56

1992-93 12.73 6.48 51

1993-94 14.10 7.62 54

F.Y.G.R.% (45.0) (46.5) (1.08)

1994-95 15.21 8.81 58

1995-96 16.78 10.32 61

1996-97 18.82 11.06 59

1997-98 19.46 12.86 66

1998-99 20.21 13.05 64

F.Y.G.R.% (32.8) (48.1) (10.3)

Total 148.21 86.98 59

T.G.R.% (107.9) (150.9) (20.7)

Source: Loan section from com m ercial banks 1989-90 to 1998-99.

Com m ercial banks provided finance of Rs. 5.20 crore in 1989-90 and reached

up to Rs. 13.05 crore in 1998-99. During ten year period com m ercial bank also

m obilizing deposit am ounted to Rs. 9.72 crore in 1989-90 and increased over time
216
 Chart 5.7

Deposits and Advances of Conrmereial Banks in Pravara Area

(Rs. in Cnore)

25 — i - z —z::r: ~
□Depcsits
2Q iA ck /an ces

sr n>r rST
K

Year

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 up to Rs. 20.21 crore in 1998-99. The people, who w ere engaged in trading and

business activities, the invested more am ount as deposits in com m ercial bank. On

an average branches of com m ercial banks collected am ount of deposit was Rs.

14.7 crore during the period under review.

The C/D ratio of branches of commercial banks in Pravara area was

between 51 to 66 during period under study. The highest C/D ratio was 66 in 1997-

98 and lowest was 51 in 1991-92. The average C/D ratio was 59 during 10-year

period. The growth rate of deposit in first five-year period was 45.0% and it

decreased in next five-year period i.e. 32.8%. The total growth rate of deposit in

ten-year period was 107.9%. The growth rate in first five-year period was 46.5%; it

increased m arginally in next five-year penod i.e. 48%. The total grov\/th rate in

advances was 150.9% during ten -year period of study.

W e observed that branches of commercial banks were disbursed low

am ount fo r agriculture and allied activities compared to collection of deposits. At

the same time balance surplus am ount was transferred in urban area because of

secured recovery.

5.6.1 P u rp o s e w is e Loan d is b u rs e m e n t by c o m m e rc ia l b an k

Com m ercial banks providing finance to the farm ers directly on the basis of

short, medium and long-term basis. Finance are given for the purpose for

agriculture-allied activities, trade, business, small scale industry, transport and

housing purposes. The com m ercial bank also providing finance for self -

em ploym ent, artisans, gobergas plant education and private loan against gold.

The follow ing table shows purpose wise loan disbursem ent of com m ercial bank

during the period from 1989-90 to 1998-99.

217
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The purposes are agriculture; agriculture allied activity, trade and business, S.S. I

units, transport, construction and other purposes. Agriculture includes crop-Loan,

irrigation, agriculture impliments, tractor, electnc motor etc., agricultural allied

activities include horticulture dairy and poultry and other purposes include self

em ploym ent, artisans, education, private loan etc.

The total amount of loan disbursem ent was 86.98 crore in span of 10

years, of which, 18.7% for agnculture, 21% fo r agriculture allied activity, 25% for

construction and 8.2% for other purposes during the period from 1989-90 for

1998-99. On an average 40% am ount was disbursed for agriculture and

agriculture allied activity. Pravara is a rural area so com m ercial bank have no

more choice fo r providing finance in high percentage to reaming purposes.

5.6.2 Com parison of deposits and advances between com m ercial banks
and co-operative banks.

In Pravara area branches of ADCC bank sub branches of LDB, Pravara co­

operative bank and branches of com m ercial banks w ere m obilizing deposits. All

the branches of above banks were also disbursing loan for various purposes.

The follow ing table shows the com parison of deposits and loan disbursem ents of

co-operative banks, Pravara bank and commercial banks from period 1989-90 to

1998-99.

The follow ing table reveals that co-operative banks include ADCC bank

and LDB branch, showing figure of deposit and disbursem ent together. The total

am ount of deposits was Rs. 31.60 crore during 1989-90, of w hich 31% (9.72

crore) of com m ercial bank, 26% (8.20 crore) of co-operative banks and 93

percent (13.68 crore) of Pravara bank. At the end of 10 year period amount was

gone up to Rs. 126.93 crore of which 16% of (20.21 crore) of com m ercial banks,

219
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 26% of (32.78 crores) o f co-operative bank 58% (73.94 crore) of Pravara bank.

The highest deposit m obilisation of com m ercial bank was 31% (9.72 crore) in

1989-90, co-operative banks was 28% (27.29 crore) in 1997-98 and Pravara

bank was 58% (73.94 crore) in 1998-99. Total am ount of deposit mobilisation

w as 643,33 crore of which 23% (147.81 crore) of com m ercial banks, 26%

(165.52 crore) of co-operative banks operative bank and 51% (329.60 crore) of

Pravara bank.

The total disbursem ent of loan was Rs. 20.48 crores in 1989-90, of which

25% (5.20 crore) of com m ercial banks 27% (5.45 crore) of co-operative banks

operative bank and 48% (9.83 crore) of Pravara bank. At the end of 10 year

period loan disbursem ent was Rs. 80,70 crore in 1998-99, of which 16% (13.05

crore) of com m ercial bank, 22% (17.36 crore) of co-operative banks and 62%

(50.20 crore) of Pravara banks. The highest percentage of loan disbursem ent

was 25% (5.20 crore) by com m ercial banks in 1989-90, 27% (5.43) of co­

operative banks in 1989-90 and 62% (50.29 crore) of Pravara bank in 1998-99.

Total am ount of loan disbursem ent was Rs. 455.73 crore, of w hich 19% (86.98

crore) of com m ercial banks 22% (98,92 crore) of co-operative banks and 59%

(270.83 crore) of Pravara bank during 1989-90 to 1998-99.

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

It will be interesting to study the relative share of each category of banks in

financing agriculture and activities allied to agriculture. These two activities are

closely related to rural development. Table 5.20 depicts those co-operative banks

and institutions take away a lion’s share in rural finance followed by Pravara

urban co-operative bank, which m ainly finances for activities allied, to agriculture.

221
The contributions form com m ercial banks were very m eager in rural

developm ent. Table 5.21 presents the com parison between co-operative and

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

Table No. 5.21

Loan disbursem ent fo r agriculture and allied purposes by co-operative and

com m ercial banks in Pravara area during period from 1989-90 to 1998-99
(Rs. in crore)

Year Co-operative Urban bank C om m ercial Total

banks (ADCC (Pravara banks.
+ LDB) bank)
1989-90 5.45 1.82 2.28 9.55
(57.1) (19.0) (23.9) (100)
1990-91 6.01 2.25 2.30 10.56
(56.9) (21.3) (21.8) (100)
1991-92 6.67 3.73 2.74 13.14
(50.8) (28.3) (20.9) (100)
1992-93 7.25 3.11 2.12 12.48
(58.0) (24.9) (23.1) (100)
1993-94 8.81 3.60 2.69 15.10
(58.3) (23.8) (22.1) (100)
F.Y.G.R.% 61.6 97.8 17.9 58.1
1994-95 10.61 4.34 3.36 18.31
(57.9) (23.7) (18.4) (100)
1995-96 10.85 8.19 3.97 23.01
(47.1) (35.6) (23.3) (100)
1996-97 11.89 5.97 3.82 21.68
(54.8) (27.5) (17.7) (100)
1997-98 13.62 7.40 5.41 26.43
(51.5) (28,0) (20.5) (100)
1998-99 17.36 8.52 5.74 31.62
(54.9) (26.9) (18.2) (100)
F.Y.G.R.% 63.6 96.3 70.8 72.6
Total 98.52 48.93 34.43 181.88
154.2J_ (26.9) (18.9) (100)
T.G.R.% 218.5 368.1 151.7 231.1

Note: - Bracketed figures indicate percent to total.

Source: -Annual reports and account statem ent from branches of ADCC, LDB,

Pravara and com m ercial banks.

222
 In Pravara area, the co-operative bank such as ADCC bank and LDB sub

branches have always given m axim um percentage of loan to agriculture as

com pared to Pravara co-operative bank and com m ercial banks betv^een 1989-90

and 1998-99. At the beginning co-operative banks (ADCC and LDB) allotted 57%

loans (Rs. 5.45 crore) and minimum was given by Pravara co-operative bank

about 19% (Rs. 1.82 crore) of the total Rs. 9.55 crore. The branches of

com m ercial banks disbursed a loan of 23.9% (Rs. 2.28 crore) only, but at the end

of lO year period the percentage of loan disbursed by co-operative bank (ADCC

and LDB) was 54.9% where as the Pravara co-operative bank increased to

26.9% but com m ercial bank decreased upto 18.2 percent.

During the period of 10 years the co-operative banks have disbursed a

loans of about 54.2% (Rs. 98.52 crore) w here as 26.9% (Rs. 48.93 crore) by

Pravara co-operative bank and com m ercial bank 18.9% (Rs. 34.43 crore). There

fore, the maxim um loan disbursed was 58.3% in 1993-94 by co-operative banks,

w here as Pravara bank was disburse was 35.6% in 1995-96 and commercial

bank was disburse 23.9% in 1989-90.

W e observe that in Pravara area the ADCC, LDB and Pravara bank have

disbursed maximum loan of about 81% as com pared to com m ercial bank of

about 19%. As we assumed in the hypothesis it is proved that the co-operative

banks were providing maximum loan for agncultural and allied activities

com pared to com m ercial and other financial institutions.

223