RAUT SURAJKUMAR DNYANESHWAR

Transcription

1 PERFORMANCE OF DISTRICT CENTRAL CO-OPERATIVE BANKS IN MAHARASHTRA STATE BY RAUT SURAJKUMAR DNYANESHWAR M.Sc. (Ag.) DEPARTMENT OF AGRICULTURAL ECONOMICS FACULTY OF AGRICULTURE DR.BALASAHEB SAWANT KONKAN KRISHI VIDYAPEETH, DAPOLI DIST. RATNAGIRI (M.S.) NOVEMBER, 2017

2 PERFORMANCE OF DISTRICT CENTRAL CO-OPERATIVE BANKS IN MAHARASHTRA STATE A thesis submitted to the FACULTY OF AGRICULTURE DR.BALASAHEB SAWANT KONKAN KRISHI VIDYAPEETH, (Agricultural University) Dapoli, Dist. Ratnagiri (M.S.) In partial fulfilment of the requirements for the degree of Doctor of Philosophy (Agriculture) in AGRICULTURAL ECONOMICS by RAUT SURAJKUMAR DNYANESHWAR M.Sc. (Ag.) DEPARTMENT OF AGRICULTURAL ECONOMICS FACULTY OF AGRICULTURE, DR.BALASAHEB SAWANT KONKAN KRISHI VIDYAPEETH, DAPOLI DIST. RATNAGIRI (M.S.) NOVEMBER, 2017

3 PERFORMANCE OF DISTRICT CENTRAL CO-OPERATIVE BANKS IN MAHARASHTRA STATE A thesis submitted to the FACULTY OF AGRICULTURE DR.BALASAHEB SAWANT KONKAN KRISHI VIDYAPEETH, (Agricultural University) Dapoli, Dist. Ratnagiri (M. S.), India In partial fulfilment of the requirements for the degree of Doctor of Philosophy (Agriculture) in AGRICULTURAL ECONOMICS by RAUT SURAJKUMAR DNYANESHWAR M.Sc. (Ag.) Approved by the Advisory Committee Chairman and Research Guide (S. S. Wadkar) Professor, Department of Agril. Economics, College of Agriculture, Dapoli :Members: (J. M. Talathi) Associate Dean (Lower Education) and Head, Department of Agril. Economics, Dr. B. S. K. K. V. Dapoli. (P. A. Sawant) Associate Dean, College of Horticulture, Mulde, Dr. B.S.K.K.V. Dapoli. (J. S. Dhekale) Professor (Statistics), Department of Agril. Economics, College of Agriculture, Dapoli. (V. A. Thorat) Associate Professor, Department of Agril. Economics, College of Agriculture, Dapoli.

4 4 Dr. S.S. WADKAR M.Sc. (Ag.) Ph.D. Professor, Department of Agricultural Economics, College of Agriculture, Dapoli Dist. Ratnagiri (M.S.) C E R T I F I C A T E This is to certify that the thesis entitled, PERFORMANCE OF DISTRICT CENTRAL CO-OPERATIVE BANKS IN MAHARASHTRA STATE submitted to the Faculty of Agriculture, Dr. Balasaheb Sawant Konkan Krishi Vidyapeeth, Dapoli, Dist. Ratnagiri, Maharashtra State, in partial fulfilment of the requirements for the degree of Doctor of Philosophy (Agriculture) in Agricultural Economics, embodies the results of the piece of bona-fide research work carried out by RAUT SURAJKUMAR DNYANESHWAR under my guidance and supervision and that no part of this thesis has been submitted for any other degree or diploma. All the assistance and help received during the course of investigation and the sources of literature have been duly acknowledged by him. Place: Dapoli Dated: Dr. S. S. WADKAR Chairman Advisory Committee and Research Guide

5 5 ACKNOWLEDGEMENT PRAISE TO LORD GANESHA Towards the end of my endeavor, it s my privilege to extol (my profound etiquette to) all those who have directly or indirectly helped me to accomplish this project. There are several occasions when you say Thanks to someone in your life time, but when a person divert your life towards a new achievement without whom you can t think about that, that condition creates a real respect and faith in your heart and your words become an Acknowledgement in respect to that great personality. At this time, I am on that golden moment of my life I would like to express my sincere and reverential feelings of deep affection, respect and gratitude for my chairman and honorable research guide Dr. S. S. Wadkar, Professor, Department of Agricultural Economics, Dr. Balasaheb Sawant Konkan Krishi Vidyapeeth, Dapoli, whose valuable guidance, constant encouragement, profound interest in research, constructive suggestions, unfailing co-operation, hard work and helping mind throughout the course of my Ph.D. study, gave me this unique experience of planning, conducting and presenting the research. I place on record my cordial thanks to Dr. T. Bhattacharya Hon. Vice- Chancellor, Dr. Balasaheb Sawant Konkan Krishi Vidyapeeth, Dapoli, Dr. S. S. Narkhede, Dean, College of Agriculture, Dapoli and Dr. U. V. Mahadkar, Associate Dean, College of Agriculture, Dapoli for providing all the necessary help during the course of my academic year. It is my ethereal pleasure to express my deepest feelings of gratitude to the members of my Advisory Committee, Dr. J. M. Talathi, Associate Dean (Lower Education) Dr. B. S. K. K. V., Dapoli and Head, Department of Agricultural Economics, Dr. P. A. Sawant, Associate Dean, College of Horticulture, Mulde, Dr. J. S. Dhekale, Professor (Statistics), Department of Agricultural Economics and Dr. V. A. Thorat, Associate Professor, Department of Agricultural Economics, Dr. B. S. K. K. V., Dapoli for giving me valuable guidance and timely help during the course of my Ph.D. study. I gratefully acknowledge the co-operation and help extended by Dr. A. C. Deorukhkar, Dr. V. G. Naik and Dr. S. R. Torane Professors, Mrs. S. M. Kulkarni, Associate Professor (Statistics), Dr. R. M. Joshi, Dr. P. J. Kshirsagar, Dr. D. B. Malve and Dr. S. S. Bhosale Assistant Professors, Department of Agricultural Economics, for their valuable guidance during the course of my Ph.D. study.

6 6 I convey my thanks to all the staff members of my department who helped me regularly by making all the material available at hand, very promptly, whenever needed. I express my heartfelt gratitude towards my beloved Grandfather Late. Shri Ganpat Vithoba Raut, my beloved Grandmother Late. Shrimati. Shevantabai Ganpat Raut my beloved father Shri. Dnyaneshwar Ganpat Raut, my beloved Mother Sau. Hirabai Dnyaneshwar Raut, my beloved uncle Shri. Vishnu Ganpat Raut, my beloved aunt Sau. Anjana Vishnu Raut, my younger brother Ganesh and my younger sisters Ashwini, Dipali, Gauri, Gayatri, Shivaratri, for their love, support, encouragement and sacrifice made by them to shape my career and whose long cherished dreams are turning into reality in the form of dissertation. Their love and affection has been guiding path of my life. I express my heartfelt thanks to Ph.D. scholars Dr. D. S. Perke sir, Dr. S. T. Gore sir, Dr. Manisha Lagare mam, Mrs. Archana Shinde mam, Miss. Ashwini Meshram, Mrs. S. S. Torane mam, Sachin sir, Vikram Anap sir, Jayesh Yadav sir and thanks to Sr. M.Sc. students Santosh, Sagar, Prasad, Rajendra, Rupali, Bhagyashri, Shilpa, Tanuja, and Jr. M. Sc. students Sandesh, Nitish, Aarti, Pooja, Vidya, Priyanka, Trupti, and also thanks to all my seniors and juniors who helped me directly and indirectly. I express my special thanks to all my Ph.D. Batchmates, Karade sir, Mingire sir, Dnyandeo, Somnath, Gaurish, Ganesh, Aniruddha, Lalge mam, Joytshana, Minal, Sunanda, Radika, Ashwini, Snehal, Bhagyashri. I would like to thank all the officials of Maharashtra State Co-operative Bank, Vashi, Mumbai, District Central co-operative banks in Maharashtra, NABARD office, Pune and Agriculture and Horticulture Department Government of Maharashtra, Pune for their co-operation and sparing their valuable time in providing me requisite information during collection of data. I end my thanks to all those whom I am able to recall here, also to whom, I am not able to recall here and also those whom might have left unknowingly. Now as I carry this thesis in my hand, I carry with me memories that will enrich my nostalgia. Place: Dapoli Date: (Raut. S. D)

7 7 CONTENTS Chapter No. Title Page No. 1 Introduction Review of Literature Methodology Results and Discussion Summary and Conclusions Literature Cited i-ix Appendices x-xxii

8 8 LIST OF TABLES Table No. Title Page No. 1.1 Flow of institutional credit to agriculture in India during to Progress of district central co-operative banks in India Business growths of DCCBs in Maharashtra Districts included in different regions of Maharashtra Trends in number of branches of DCCBs in Maharashtra during to Trends in membership of DCCBs in Maharashtra during to Average membership and their composition of DCCBs during to in Maharashtra Trends in total number of employees of DCCBs in Maharashtra during to Trends in total share capital of DCCBs in Maharashtra during to Average total share capital and its composition in DCCBs during to in Maharashtra Trends in total reserve funds of DCCBs in Maharashtra during to Average total reserve fund and its composition of DCCBs in Maharashtra during to Trends in total owned funds of DCCBs in Maharashtra during to Average total owned funds and its composition of DCCBs in Maharashtra during to Trends in total deposits of DCCBs in Maharashtra during to

9 Average total deposit and its composition of DCCBs in Maharashtra during to Trends in total borrowing of DCCBs in Maharashtra during to Average total borrowing and its composition of DCCBs in Maharashtra during to Trends in total working capital of DCCBs in Maharashtra during to Average total working capital and its composition of DCCBs in Maharashtra during to Trends in total investment of DCCBs in Maharashtra during to Average total investment and its composition of DCCBs in Maharashtra during to Trends in total loans and advances issued by the DCCBs in Maharashtra during to Average total loans and advances issued and its composition of DCCBs in Maharashtra during to Region wise average total credit disbursement, average total deposit and 4.21 CD ratio per DCCBs in Maharashtra during to Trends in total loans outstanding of DCCBs in Maharashtra during to Average Total Loans Outstanding and its composition of DCCBs in Maharashtra during to Trends in total loan recovery of DCCBs in Maharashtra during to Average total loan recovery and its composition of DCCBs in Maharashtra during to Trends in total loan Overdues of DCCBs in Maharashtra during to Average total loan overdues and its composition of DCCBs in Maharashtra during to Overdues as percentage of total loan outstanding in DCCBs during

10 to in Maharashtra Trends in total cost of management of DCCBs in Maharashtra during to Average Total cost of management, its composition and proportion of cost of management to working capital of DCCBs in Maharashtra during to Trends in per employee cost of management of DCCBs in Maharashtra during to Trends in working results in DCCBs during to in Maharashtra Ranking of DCCBs according to average performance index during to in Maharashtra Ranking of Regions according to average performance index during to Trends in total crop loan disbursed by DCCBs in Maharashtra during to Trends in total loan disbursed for minor irrigation by DCCBs in Maharashtra during to Trends in total loan disbursed for land development by DCCBs in Maharashtra during to Trends in total loan disbursed for dairy development by DCCBs in Maharashtra during to Trends in total loan disbursed for farm mechanization by DCCBs in Maharashtra during to Trends in total loan disbursed for plantation and horticulture by DCCBs in Maharashtra during to Trends in total loan disbursed for poultry by DCCBs in Maharashtra during to Trends in total loan disbursed for Sheep & Goat production by DCCBs in Maharashtra during to Trends in total loan disbursed for fisheries by DCCBs in Maharashtra during to

11 Trends in total loan disbursed for forestry & west land development by DCCBs in Maharashtra during to Trends in total loan disbursed for storage godowns & market yard by DCCBs in Maharashtra during to Trends in total loan disbursed for biogas by DCCBs in Maharashtra during to Trends in total loan disbursed for sericulture by DCCBs in Maharashtra during to Trends in total loan disbursed for other purposes by DCCBs in Maharashtra during to Trends in total crop loan disbursed by financial institutions in Maharashtra during to Trends in total term loan disbursed by financial institutions in Maharashtra during to Trends in total agricultural loan disbursed by financial institutions in Maharashtra during to Share of DCCBs in total credit disbursement in Maharashtra during to Average per hectare requirement of credit, availability of credit and credit gap for crops in Maharashtra in the year Region wise per hectare short term credit flow and the indicators of agricultural importance Region wise coefficient of variance in short term credit flow by DCCBs during to in Maharashtra Region wise coefficient of variance in medium term credit flow by DCCBs during to in Maharashtra Trends in regional inequality in short term credit flow by DCCBs during to in Maharashtra Trends in Regional inequality in Medium term Credit flow by DCCBs during to in Maharashtra Gini coefficient of regional inequality in short term agricultural credit flow by DCCBs in Maharashtra

12 Gini coefficient of regional inequality in medium term agricultural credit flow by DCCBs in Maharashtra Determinants of regional inequality in disbursement of per hectare short term credit agricultural loans in Maharashtra Percentage position and their corresponding Garrett s Table value Problems faced by the DCCBs in Maharashtra Suggestions for efficient workings of DCCBs in Maharashtra 150 LIST OF FIGURES Fig. No. Title After page 1 Map showing study area 44 2 Regionwise trends in number of branches of DCCBs in Maharashtra 55 3 Regionwise share in number of branches of DCCBs in Maharashtra 55 4 Regionwise trends in membership of DCCBs in Maharashtra 57 5 Composition of membership of DCCBs in Maharashtra 58 6 Trends in number of employee of DCCBs in Maharashtra 59 7 Regionwise trends in share capital of DCCBs in Maharashtra 60 8 Composition of share capital in DCCBs in Maharashtra 61 9 Regionwise trends in reserve funds of DCCBs in Maharashtra Composition of reserve funds in DCCBs in Maharashtra Regionwise trends in owned funds of DCCBs in Maharashtra Composition of owned funds in DCCBs in Maharashtra 65

13 13 Regionwise trends in deposits of DCCBs in Maharashtra Composition of deposits in DCCBs in Maharashtra Regionwise trends in borrowing of DCCBs in Maharashtra Composition of borrowing in DCCBs in Maharashtra Regionwise trends in working capital of DCCBs in Maharashtra Composition of working capital in DCCBs in Maharashtra Regionwise trends in investment of DCCBs in Maharashtra Composition of working capital in DCCBs in Maharashtra Regionwise trends in loan and advance of DCCBs in Maharashtra Composition of loan and advances in DCCBs in Maharashtra Regionwise trends in loan outstanding of DCCBs in Maharashtra Composition of loan outstanding in DCCBs in Maharashtra Regionwise trends in loan recovery of DCCBs in Maharashtra Composition of recovery in DCCBs in Maharashtra Regionwise trends in loan overdues of DCCBs in Maharashtra Composition of loan overdues in DCCBs in Maharashtra Regionwise trends in cost of management of DCCBs in Maharashtra Composition of cost of management in DCCBs in Maharashtra Per cent share of various medium term activities Share of financial institutions in crop loan disbursement in Maharashtra Share of financial institutions in term loan disbursement in Maharashtra Per cent share of financial instiutions 126

14 35 Coefficient of varience of short term and medium term credit flow Theils entropy coefficient of short term and medium term credit flow Gini ratios of short term and medium term credit flow a Lorenz curve for short term credit flow in different regions of Maharashtra b Lorenz curve for short term credit flow in Maharashtra a Lorenz curve for medium term credit flow in different regions of Maharashtra b Lorenz curve for medium term credit flow in Maharashtra 143

15 Abstract 15

16 Introduction 16

17 Appendices 17

18 Summary and Conclusions 18

19 Literature cited 19

20 20 Results and Discussion

21 Methodology 21

22 Review of Literature 22

23 23 DEPARTMENT OF AGRICULTURAL ECONOMICS COLLEGE OF AGRICULTURE, DAPOLI Title of Thesis : Performance of District Central Cooperative Banks in Maharashtra State Name of Student : Mr. Raut Surajkumar Dnyaneshwar Regd. No. : ADPD/14/204 Name of Research Guide : Dr. S. S. Wadkar Degree : Ph.D. (Ag.) Major Subject : Agricultural Economics THESIS ABSTRACT The present study entitled Performance of District Central Cooperative Banks in Maharashtra State has been undertaken to examine the performance of DCCBs in Maharashtra by way of studying the trends in performance indicators both periodwise and regionwise. The attempt has been made to examine purposewise lending activities by DCCBs and share of DCCBs in total credit disbursement for agriculture in Maharashtra. The attempt has been made to examine the magnitude and direction of inequality in the flow of credit and the determinants in the short term credit amongst the regions in the state. The problems faced by the DCCBs in disbursing and recovery of agricultural loans have been studied alongwith the remedial measures. The study is based on secondary data obtained from 30 DCCBs in Maharashtra for the period of past 15 years from The rates of compound growth were estimated for entire period from to Further the ranking of DCCBs and regions in the state was done by estimating Performance Index (PI). The purposewise lending activities and share of DCCBs in total credit disbursement for agriculture were studied. The credit gap based upon the scale of finance exercised in different regions and the actual requirement for different crop was studied. The regionwise Coefficient of Variance (CV), Theils Entropy Coefficient I (Y i ), Gini ratio and Lorenz curve were used for measuring regional inequality in the disbursement of short term and medium term

24 24 credit in the state. In order to study the determinants in short term credit flow by DCCBs, a multiple linear regression analysis for each of the regions was attempted. The problems faced by DCCBs in Maharashtra were studied with the help of Garrett s Ranking technique. The total number of branches of the DCCBs in the state had decreased from 3722 to The performance of DCCBs in respect of branch expansion was non-satisfactory at the state level because of declined in branches in Marathwada and Vidarbha. The total membership of DCCBs in Maharashtra had increased from to with per cent growth over base year. The growth in total membership in Maharashtra was mainly attributed to positive growth in PACS membership. The total number of employee declined from to with per cent reduction over the base year. The reduction in employment in Maharashtra was mainly due to the reduction in number of branches and modernization in working of DCCBs in Maharashtra. These were the main reasons of reduction in number of employees in the state. Hence the DCCBs in Maharashtra need to pay more attention for branch expansion, increasing membership and requirement of staff for efficient and profitable working of DCCBs in the state in near future. A significant increase in the total share capital, reserve fund, owned funds, deposits, investment and working capital during the study period indicated the financial soundness of DCCBs in Maharashtra state. Although there was significant trends in borrowings of DCCBs in Maharashtra over the entire period indicated that the increased dependency of DCCBs for financial requirement in the state. The total advances by DCCBs were increased in Maharashtra. The proportion of total agricultural loans (both ST and MT) in the total loans was above 20 per cent in the base year, which increased to about 40 per cent during the terminal year. Whereas, the loan disbursed for non-agricultural purposes declined from 65 per cent to 49 per cent it was good sign in the view of increased agricultural advances in the Maharashtra. The increase in total loan outstanding it was quite clear that indicated poor performance of DCCBs in recovery of loans in the state. The overdues also increased during study period due to increase in share of short-term loan overdues in total overdues was per cent in the DCCBs of Maharashtra in the base year, which had increased to per cent during the terminal year of the study. The increases in cost of management during study period mainly attributed due to significant increase in salaries and other expenditure of each DCCB in the state. The DCCBs in the Western Maharashtra secured a top position in the state by way of contributing more per cent share in the selected performance indicators, which showed a well-developed cooperative banking system in the region.

25 25 The higher magnitude of average performance index achieved by the DCCBs in Konkan and Western Maharashtra regions had developed system of DCCBs in the state. The DCCBs in the Marathwada and Vidarbha regions had a poor record in their performance indicated by low average performance index. This call for suitable economic measures for reducing overdues and improving recovery ultimately these DCCBs would improve their performance in near future. During study period the DCCBs in Maharashtra provided short-term credit Viz., Crop loan and medium term credit, included loan disbursed for the purpose of minor irrigation, land development, dairy development, farm mechanization, plantation and horticulture, poultry production, sheep and goat production, fisheries, forest and west land development, storage godowns and market yard, biogas plant, sericulture unit and other purposes (bullocks / other draught animals, bullock carts, Agri-clinics and agribusiness centers). Out of the total agricultural loans more than 80 per cent loan were disbursed for short term period in the state during study period. The total loan disbursed for agriculture increased in absolute term but share of DDCB s declined and the share of CB s increased over the year. This was because of less recovery of short term loan and medium term loan, mounting overdues, less rainfall during terminal years resulted the less amount of credit with DCCBs for recycle. Whereas, the share of CB s showed increase might be due to government policy of compulsory lending 18 per cent out of their 40 per cent priority sector to agricultural and allied activities and doubling agriculture loan policy introduced by the Government from resulted increase in loan disbursement for agriculture purposes in state. The credit gap was noticed in the Western Maharashtra, Marathwada and Vidarbha regions, while in the case of Konkan region, excess finance was advanced to same important crops indicating the adequacy of funds to advance. The coefficient of variance, Theils entropy coefficient, Gini ratio and Lorenz curve were used for measuring inequality in disbursement of short term and medium term credit flow by DCCBs in Maharashtra. The results showed that there was an inequality in short term and medium term credit flow during study period. The inequality in disbursement of per hectare short term and medium term credit might be due to variation in gross cropped area in Maharashtra. The gross cropped area, area under commercial crops and deposits play important role in determining ST credit flow in Maharashtra. Whereas, the average rainfall had positive association and recovery percentage had negative association with ST credit flow in the state.

26 26 The R 2 suggest that the above determinants have jointly explained 99 per cent of the variation in the disbursement of short term credit flow in Maharashtra. The major problems experienced by DCCBs Maharashtra are no any contribution by state government (87.00), government policies (87.00), less value of farm produce (87.00) thus three problems stood first rank followed by need to improve administration and management (86.55), less productivity (86.55), mentality of the farmers (85.64) and so on.at the end DCCBs in Maharashtra faced problems related to delay in availability of fund (63.00). The DCCBs in Maharashtra need to pay more attention for branch expansion, increasing membership and requirement of staff for efficient and profitable working of DCCBs in the state in near future. The DCCBs are required to be operated more transparently to minimize the level of percentage of NPAs as compared with international standards and disbursement may be strictly based upon repaying capacity of borrowers, technical efficiency and economical soundness of the societies. There is a need to enhance fund investment in Government securities and fixed deposits for transparency in financial management. The more attention is required to be given to increase the coverage of loans through Kisan Credit Cards which would result in easy and timely credit disbursement to the borrowers when we are moving towards cashless economy. The efforts are needed to increase recovery performance by implementing intensive recovery programme and timely supervision of utilization of credit. The problem of overdues is more and requires greater attention for formulating future policy. The co-operative administration and concerned authorities shall pay more attention towards the recovery of agricultural loans so as to increase fund availability for credit disbursement. The more attention is required to be given to minimize the credit gap by supplying required scale of finance for important crops to avoid improper utilization for crop production.

27 27 CHAPTER I INTRODUCTION The word co-operation is derived from the Latin word cooperate and its elementary sense it simple means working together. The principle of co-operation is as old as human society. It is truly the basis of domestic and social life. With the passing of co-operative credit society act 1904, the great efforts have been done by the officials to eliminate the peculiar problems of farmers and common public. Since the last few years the speed of co-operative credit institution has drastically changed due to the competition from commercial banks, undue intrusion of political parties and failure of many cooperative banks. A co-operative bank is a financial entity which belongs to its members, the owners and the customers of their bank. Agriculture sector plays a strategic role in the process of economic development. As the World Bank describes, Credit is often a key element in the modernization of agriculture. In India, agriculture loans are mostly provided by co-operative banks, commercial banks, regional rural banks etc. Among these co-operative banks play an important role in the rural credit.(kaur, 2015) India is agricultural based country. Agriculture sector has been the backbone of the Indian economy. Two thirds of the population is dependent on the agricultural sector through direct as well as indirect. In India, agriculture contributed 17.9 per cent to GDP (2015). Agriculture is facing many challenges like the shortage of manpower and water along with increasing prices of inputs like seeds and fertilizers. Cooperative banks should provide credit to farmers at low rates of interest for meeting the agricultural challenges. Cooperative banks supplement the efforts of the commercial banks in credit delivery and deposit mobilization particularly in rural areas. The Cooperatives which are the life blood of the Indian economy. (Prakash and Palanivelu, 2014). 1.1 Co-operative movement in India In India, the inspiration for the co-operative movement came largely from Germany. Mr. Fredrick Nicholson was sent to Europe to study the working of agricultural banks and to suggest measures for the introduction of co-operative movement in India. Based on his recommendations mostly on the pattern of credit society in Germany, the co-operative structure was introduced in India. The Famine Commission appointed by the Government of India in 1901, strongly recommended that in order to prevent further famines, credit should be

28 28 made available to the farmers to improve agriculture. This point was referred to a Committee in Shimla, which in 1901 drafted a bill for establishment of co-operative societies under the president ship of Sir Edward Law. After much discussion, the bill took the form of Co-operative Society s Act of The Co-operative Society Act was enacted in 1904 but was soon replaced by a more comprehensive legislation passed in 1912 known as The Co-operative Societies Act After this Act, the co-operative movement was on the threshold of large scale expansion. Societies were now classified as limited and unlimited. The Act (1912) also recognized non-credit forms of co-operatives, such societies were for the purchase of supplies, sale of produce, insurance and housing. It also recognized three kinds of central societies such as a) Unions comprising primary societies for the mutual control and credit, b) Central Bank consisting partly of societies and partly of individuals and c) Provincial Banks consisting of individuals. After 1912, there was rapid growth not only of the number of co-operative credit societies but also of non-agricultural credit societies and membership. However, it was observed that more rapid growth took place in Bombay, Madras and Punjab. The year 2004 was a historical landmark in the Indian Co-operative Movement marking hundred years of its glorious existence. Today co-operative movement in India is one of the largest movements in the world. Initially, it was started with a limited spectrum of activities; dispensation of rural credit has now entered in all fields of economic activity with social content (Olekar & Shiralshetti, 2007). 1.2 Co-operative movement in Maharashtra Co-operative movement in Maharashtra has been a pioneering sector of the cooperative movement in the country. Thereafter, co-operative began to strike roots. Bombay state was the first to give the lead with an Act of The first cooperative sugar factory was started in Maharashtra at Pravaranagar in In 1950, on the basis of the reports of the Gadgil Committee and the Saraiya Committee, the bank made a policy statement accepting the responsibility for the organization of agricultural credit facilities for credit-worthy borrowers. The crop loan system became an instrument for agricultural development and the Apex bank accepted its responsibility in directing and developing the system through co-operative societies in the villages for the farmer since During this period the State Government authorized all central co-operative banks to extend medium term loans for repairs to old wells, purchase of electric motors and for other agriculture purposes (Borude, 1993).

29 Importance of credit in agriculture In recent times, agriculture is being modernized. The adoption of modern technology calls for increased capital needs. Majority of the farmers has very low capital base and as such it would be difficult for them to adopt new technology without adequate external finance. The availability of credit enables farmers to switch over to superior production possibilities. There is a significant impact of credit on agriculture with regards to adoption of new technology and increase in farm income. Agricultural credit is very important instrument in facilitating the process of agricultural development and thereby initiating the growth of rural economy. The role of agricultural credit and credit institutions in the developing countries like India is very important due to the pressing needs for increasing agricultural production and productivity to meet the needs of increasing population. Extension of area under irrigation facilitates cultivation of high value cash crops and horticultural crops require more capital. Credit still continues to be one of the limiting factors in the rural weak irrespective of being small and agricultural labourers. The farmers have very low capital base and mainly depend on credit. Due to unavailability of credit, it would be difficult for them to adopt advanced technologies and also leads to compulsory marketing of their produce with lower prices. The literature on credit suggests that the availability of credit enabled the borrower farmer to adopt multiple cropping and also to raise intensity of cropping. A shift in cropping pattern from low income crops to high income crops with improvement in yields enabled the borrower farmer to realize higher farm income. 1.4 Sources of agricultural credit In India, the various non-institutional agencies viz.; moneylenders, relatives and traders and institutional agencies like Commercial Banks, Regional Rural Banks and Cooperatives meet the credit requirements of the farmers and rural communities. Prior to independence, farmers not being able to obtain sufficient institutional credit were dependent on non-institutional credit agencies, which have exploited them by charging higher rate of interest. Soon after the independence, the Government realized the need for institutionalizing rural credit structure. Meanwhile, the All India Rural Credit Survey Committee ( ) reviewed credit situation in the country and recommended new initiation and financial support for the co-operatives from the Government of India. The definite policy of integrated co-operative credit emerged by the end of First Five Year Plan. A shift of credit policy towards multiagency approach to agriculture finance is seen during 1970 s, with the nationalization of 16 major commercial banks, concept of Lead Bank Scheme and afterwards creation of Regional Rural Banks in Inspite of entry of several other institutions, co-operatives are the most important agencies, which supply

30 the largest amount of institutional finance to agriculture. In order to solve the problems relating to agriculture credit NABARD was setup in Flow of institutional credit to agriculture Institutional funding of the farm sector is mainly by commercial banks, regional rural banks and co-operative banks. Table 1.1 Flow of institutional credit to agriculture in India during to (` in crores) Institutions Commercial banks Regional Rural Banks Cooperative banks Total 3,68,616 (72.13) 54,450 (10.65) 87,963 (17.21) 5,11,029 4,32,491 (71.21) 63,681 (10.48) 1,11,203 (18.31) 6,07,375 5,27,506 (71.25) 82,653 (11.32) 1,19,964 (16.43) 7,30,123 (Figures in parentheses are percentages to respective totals) Source: Annual Report of NABARD ,04,376 (72.50) 1,02,483 (12.12) 1,38,469 (16.38) 8,45,328 6,04,668 (68.93) 1,19,261 (13.60) 1,53,295 (17.47) 8,77,224 The flow of institutional credit for agricultural and allied activities was presented in Table 1.1. During , banks have disbursed ` 8,77,224 crores credit to the agriculture sector, against a target to Commercial banks, Regional Rural Banks (RRBs) and cooperative banks disbursed ` 6, 04, 668 crores ` 1, 19,261 crores and ` 1, 53,295 crores, respectively. The Commercial banks contributed per cent followed by cooperative banks per cent and Regional rural banks per cent in credit flow for agriculture by financial intuitions in India. 1.6 Role of district central co-operative banks in agricultural finance Cooperation is no way new to India. It has been known and practiced in this country since time immemorial. The growth of modern movement of co-operatives is 100 years old; beginning with the enactment of Co-operative Credit Societies Act on 25 th March, 1904.The cooperative sector in India has made its humble beginning prior to independence as an effective weapon to fight against the clutches of moneylenders. After independence, the co-operative sector received its due role in the process of economic development. Within the short-term cooperative credit structure, Primary Agricultural Credit Societies (PACSs) at the village level form

31 31 the base level, while District Central Co-operative Banks (DCCBs) are placed at the intermediate level and the State Co-operative Banks (SCBs) work at the apex level. District Central Cooperative Banks (DCCBs) form the middle tier of co-operative credit institutions. They form a useful link between primary agriculture credit societies at the base and the apex bank at the top. They draw their funds from share capital, deposits, and loans from SCBs, R.B.I. and NABARD and commercial banks. The main function of DCCBs is to finance the primary agricultural credit societies. They link between SCBs and PACSs to provide credit to both farmers and other beneficiaries. They also mobilize the savings from different groups of the society (both urban and rural areas) by offering various deposit schemes. They also provide other banking facilities like locker facility, cheque facility, transfer of funds, payment of bills etc. DCCBs lay facilities leads to high efficiency and profitability. (Hooda, 2014) The co-operative credit is the only agency suitable for agricultural credit. It has local participation democratic management and responsive to local needs of village. The cooperative credit system can mobilize funds from urban area through DCCBs and lend them in rural areas. The intermediate level unit that is DCCBs has been playing a crucial role in promoting agriculture and allied activities by providing credit to the needy through primary agricultural credit societies. They provide a strong linkage between rural based credit societies, which do not have a close contact with money market and the urban biased apex co-operative bank, which does have a healthy connection with money market. 1.7 Progress of district central co-operative banks in India. Co-operative banks in India have been assigned the distinct role viz., to serve up the rural poor masses by advancing timely and easy credit and to mobilize small servings. Currently out of 372 total district central co-operative banks (DCCBs) in India (Kaur, 2015). Progress of cooperative credit program largely depends on the strength of DCCBs because the entire funds from apex institutions for seasonal agricultural operations and marketing of agricultural produce are advanced to them on their financial strength. The progress of district central cooperative banks in India is presented in Table 1.2. Progress made by the DCCBs from to

32 55 Table 1.2 Progress of district central co-operative banks in India. Sr. N o Particulars No. of DCCBs No. of 2. offices NA Membershi p of Societies (Lakhs) Owned funds Deposits Borrowing s Working capital Loan advanced (` in crores) Source: Various National Federations of State Cooperative Banks Report , NA-Not Available The number of DCCBs declined from 509 in to 371 in the year and it was mainly due to the reorganization of DCCBs on the basis of the recommendation (one DCCB for one district) of the All India Rural Credit Review Committee (1986). The owned funds of DCCBs had increased from ` 9.81 crores in to ` crores in The state

33 56 partnership by way of share capital participation and branch expansion policy had contributed much to the development of owned funds. The deposits had increased from ` 38.23crores to ` crores in There was a tremendous growth in deposits due to the policy of RBI in lending to DCCBs, which was linked with minimum involvement and compulsory deposit mobilization by DCCBs. Further, the borrowings increased from ` crores in to ` crores in The district central co-operative banks in Maharashtra Sr. No Particulars No. of Banks 2 Branches NA 867 1,703 3,147 3,722 3, Total Membership 4. Share capital Owned funds Deposits , , Borrowings , Working Capital Loan advanced , , , , Demand NA , , Recovery NA , ,

34 Percentage of recovery to demand Loans overdue NA , Maharashtra is the most industrialized State in the country. Agricultural and allied activities are still predominant in the state. As per the population census 2011, about 56 per cent of the population is dependent on agriculture for its livelihood. However, the contribution of agricultural sector in the state income is reducing over the period. Nearly, one-third area of the state falls under rain shadow region, where the rainfall is scanty and erratic. Each State has its Cooperative Societies Act, as Maharashtra State Co-operative Societies Act, 1961, regulating the working of the co-operative faction in Maharashtra (Darade, 2015). The co-operative movement in Maharashtra has played a significant role in the social and economic development of the State. Maharashtra has witnessed successful development as compared to other states in co-operative sector during the last four decades. In Maharashtra, State Co-operative Bank (Apex Bank) acts as banker s bank to 31 DCCBs, providing the funds to all DCCBs. Table 1.3 revealed that the business growth of District Central Co-operative Banks in Maharashtra from to The number of banks decreased from 35 in to 26 in due to policy of one DCCB for one district, by All India Rural Credit Review Committee (1966). Further, the number of DCCBs had increased to 31 in 2015 due to the formation of new districts in the state. Table 1.3 Growths of DCCBs in Maharashtra (Members (000) and ` in crores) Source: National Federation of State Co-operative Banks Report, , NA-Not Available The owned funds of the DCCBs have increased from Rs crores in to Rs crores in due to the branch expansion, Governments participation and increased membership of PACS. The deposits showed an increase from Rs crores in to Rs crores in There was a significant growth in deposits due to the compulsory deposit mobilization by DCCBs and minimum involvement policy. The working capital of DCCBs in Maharashtra has increased from ` crores in to `

35 crores in The borrowings also showed an increase from ` crores in to ` crores in The lending policies of DCCBs underwent many changes due to the implementation of various agricultural development schemes viz.; Rural Infrastructure Development Fund, Kisan Credit Cards, involvement of NGOs. The overdues of the DCCBs in Maharashtra have increased from ` 4.6 crores in to ` crores in , indicating a tremendous increase of overdues over the last five decades. No serious efforts have been taken to curb the overdues. In this world of competition, DCCBs without profit may not be able to have strong financial base and thereby would not be able to withstand competition from the external opposing and counteracting forces. Hence, the necessary efforts in respect of increasing owned funds, deposits and recovery of loans, decreasing level of overdues and total expenditure are needed. Removals of dual control on cooperatives, recapitalization support by Government were the measures required to emerge the co-operatives as strong efficient viable institutions. 1.9 Conceptual Framework In Maharashtra, the co-operative banks have changed the socio-economic status of the rural masses. These co-operative banks have influenced the economic development of farmers, by changing cropping pattern, increased production, creating employment opportunities, increasing income, adoption of new technologies and overall changes in the rural society. Credit plays an important role in enhancing productivity and thereby production of agricultural commodities. These banks have not only brought the economies of large-scale production to the members but also provided them with opportunities to organize and manage their own business. The DCCBs in the Maharashtra had played a pivotal role in the development of agriculture by providing a regular flow of short term and medium term credit to the agriculturists through the PACS in rural areas. With a view to strengthen the co-operative banks both in short-term and longterm structure and keeping them as viable units on a sustainable basis, the system of preparing Development Action Plans (DPAs) for each unit entering into Memorandum of Understanding (MoU) with the concerned agencies, was initiated during The DAP/MoU mechanism was reported to have had positive impact on the performance of Co-operative banks. Many of the banks have recorded good progress in terms of certain

36 59 business indicators and were quite sensitized towards the concept of cost effectiveness strategy, business planning, etc. The comprehensive evaluation of business performance of DCCBs in Maharashtra will be useful for finding out the weaknesses in the operation of DCCBs and to adopt the measures to remove the causes of weaknesses. DCCBs supply ST/MT credit to agriculture for encouraging the use of HYV seeds, fertilizers, and pesticides for sustained adoption of improved agricultural practices. But the benefits of ST/MT loans are not being generally equitably distributed among the regions and farmers. The DCCBs in the state also encounter certain problems in disbursement and recovery of loans. Such issues call for a scientific assessment of the performance of DCCBs in the state of Maharashtra 1.10 The Problem The recent breakthrough in agricultural production technology has no doubt, made it possible to achieve spectacular increase in productivity. However, this breakthrough has also pushed up the capital needs of the farm sector manifold as most of the inputs are purchased from non-farm sector. Recent studies conducted in farm management economics have made clear that capital plays a crucial role in the adoption of new technology. The crucial and modern inputs are scarce with the farmers especially with marginal and small farmers, who numerically predominate in agrarian ladder, have to depend upon some other sources for obtaining funds to meet their farming requirements. Thus, in order to sustain and intensify the use of new inputs in agriculture, provision of timely and adequate credit facilities is imperative. The tempo of agricultural development therefore could be accelerated through the provision of adequate credit to the farmers at the right time, at right place and through right institution. In the past, the rural credit was well dominated by the private agencies, which generally have exploited the borrowers, by charging fabulous rates of interest. As a result, there was sharp increase in the incidence of indebtedness of rural people, who couldn t become free from debt throughout their life and even after their offspring s remained in the clutches of moneylenders. The piquant situation attracted the attention of policy makers. Although, the co-operatives have been the main source of institutional finance to farmers but they were unable to meet the vast and expanding credit needs of the farm sector. The DCCBs are most important in the entire co-operative credit structure. The success of co-operative credit structure depends to a very large extent on the working of the DCCBs. These banks not only safeguard the interest of the PACS but also various other types of credit and non- credit societies in the District. Hence there is a need for the existence of a strong and

37 60 good working District Central Co-operative Bank at the district level. Such a strong bank would act as a balancing center by drawing surplus funds from the surplus societies and by providing funds to the deficit societies. Doubts are raised about the efficient functioning and proper management of DCCBs because of mounting overdues. Though the quantum of credit advanced to agriculture has increased over the years, the flow is not uniform over the districts. The need was felt to have the scientific study of the issues such as inequality in disbursement of the present loans, factors responsible for such inequality, regionwise and periodwise performance of DCCBs. Problems in disbursement and recovery of loans in respect of the DCCBs in a cooperatively impressive state like Maharashtra. In view of this the present investigation viz., the study of Performance of District Central Co-operative Banks in Maharashtra State was undertaken. It was decided to study the performance of DCCBs in respect of different economic indicators, disparity in credit flow, factors influencing disparity in credit flow and problems faced by DCCBs in banking operations with the help of following specific objectives Objectives The specific objectives of the study are as under. 1. To assess the performance of DCCBs in Maharashtra. 2. To study the purposewise lending activities by DCCBs in Maharashtra. 3. To examine the share of DCCBs in total credit disbursement for agriculture. 4. To identify the determinants in flow of agricultural credit through DCCBs in Maharashtra. 5. To examine the problems faced by DCCBs in disbursement and recovery of agricultural loans and to suggest remedial measures Hypotheses of the Study In the light of the foregoing theoretical propositions and the review of literature, the following hypotheses are proposed to be tested for fulfilling requirements of the above objectives under study. 1. The DCCBs in the study areas having fluctuating growth in terms of physical and financial indicators. 2. The performance of district central cooperative banks in all the regions of Maharashtra state is uneven during the study period.

38 61 3. The agricultural performance having strongly influence in the flow of short term credit in different regions of the state. 4. The DCCBs in the study areas face the problems related to management, administration, disbursement and recovery of loans The Scope and Utility of the Study The findings of the present study will be useful in understanding the strengths and weaknesses of DCCBs in Maharashtra. The study will be helpful to the co-operative banks in determining ways and means for improving their efficiency in performing different activities. The results will be useful in planning further for strengthening the activities of co-operative banks in different regions of the state. The findings of the study will be helpful at the state level to reorient policies of agricultural development across various regions of the state. Findings of this study will be helpful to different financing agencies engaged in the state to plan their credit policies in Maharashtra state. The study will also provide necessary feedback to DCCBs for necessary modification if required in the credit planning of the different areas in the state. The methodology adopted in the study will be useful for evaluating DCCBs in similar manner in other states. The study will be useful to students and scientists in the field of Agricultural Finance working on similar subject and project. The study will be useful for co-operative finance to find out remedies in regional disparities. The study is based on the information obtained from 30 DCCBs in Maharashtra for the period of 15 years i.e. from to As regards the inequality in distribution of credit (short and medium), the data obtained from 29 DCCBs (excluding Mumbai DCCB) were utilized. The response obtained by the problems faced by the DCCBs was not satisfactory. The officials of 22 DCCBs in the state responded on problems of DCCBs. The study efforts were therefore constrained to some extent. Inspite of these limitations, the finding of the study will facilitate in depth the understanding of the performance of the DCCBs both regionwise and periodwise in Maharashtra.

39 62 CHAPTER II REVIEW OF LITERATURE Review of literature related to a research topic is a necessary step in the conduct of any research. The review of literature on relevant aspects under the study forms an integral part of the research work. The exercise helps, in highlighting the methodology and results obtained in similar fields and serves as a guideline for the research to be carried out. As such it helps in proper understanding of the concepts and methodological and analytical issues relating to problem under study. In view of this, the present chapter had been devoted to present in abstract form the reviews of the relevant studies conducted in the recent past. The major theme of the present study is to assess the performance of DCCBs in Maharashtra, to study the purposewise lending activities by DCCBs in Maharashtra, to examine the share of DCCBs in total credit disbursement for agriculture, to identify the determinants in flow of agricultural credit through DCCBs in Maharashtra and to examine the problems faced by DCCBs in disbursement and recovery of agricultural loans and to suggest remedial measures. The available literature on the above said aspects of co-operative credit had been reviewed and the same had been abstracted under the following major heads depending upon the objectives under study. 2.1 Growth and performance of co-operative credit 2.2 Purposewise lending activities 2.3 Share of Cooperatives in agricultural credit 2.4 Inequality in credit flow 2.5 Determinants in flow of agricultural credit 2.6 Problems in co-operative credit and suggestions for improvement 2.1 Growth and performance of co-operative credit Bedback (1982) appraised the progress and performance of co-operative movement in general and co-operative banking in particular during to in Orissa. The study revealed that the rise in working capital of SCB and DCCBs even though steady and gradual during study period. It was much due to the faster increase of their borrowings rather than due to contribution made by their own funds. The amount of

40 63 deposits was relatively lower as compared to working capital, which indicated sluggish progress in deposit mobilization. Short term and medium-term loans and advances had grown voluminously but the rate of annual growth remained fluctuating downward indicating a snail pace progress in lending operations during the last 3 decades. Deorukhkar and Borude (1983) studied progress of Ratnagiri DCCB in Maharashtra for a period of 23 years i.e. from to Study revealed that individual membership increased by 5.11 per cent per annum and institutional membership increased by per cent per annum indicating more emphasis in enrolling institutions as members than individuals. The annual compound growth rate of capital was quite high ( per cent) which enabled self-sufficiency of working capital requirements. The annual growth rate in the case of loan advances to agricultural and non-agricultural sector were per cent and per cent, respectively. This had indicated the progress made in advancing loans for non-agricultural purposes was nearly one and half times more than that for agricultural purposes. The growth in deposits ( per cent) was faster than the growth in share capital ( per cent). Ratnaparkhe and Pagire (1988) examined the relationship between the cost of cultivation (cost A) and the scale of finance for selected crops viz., bajara, groundnut and sugarcane for to They revealed that there was a gradual increase of 8 to 20 per cent in the cost of cultivation of bajara and groundnut during the study period. The study showed that the credit gap was smaller for bajara and groundnut. A little enhancement in the scale of finance of these two crops will bridge the gap. However, in the case of sugarcane, a wide gap existed between the cost of cultivation and scale of finance. There was a need to enhance the scale of finance for sugarcane. Moreover, no consistency was observed in the scale of finance when the cost of cultivation was considered. Suryawanshi (1988) examined the requirement, availability and credit gap in irrigated agriculture in Bhima Command area of Western Maharashtra during to The study revealed that the area under commercial crops increased significantly due to irrigation and it accelerated the use of high cost inputs resulting into increased demand for credit. It was observed that before irrigation, the loan received from different agencies was more than requirement, however after introduction of irrigation, the credit gap widened. It indicates that there was a substantial gap in meeting the credit requirement. The financial institutions may provide more credit to the agricultural sector.

41 64 The working expenditure in cost of cultivation of crops must be taken into consideration in deciding the loan policy. Patil et. al. (1990) had similar conclusions from their studies. Borude (1993) studied the co-operative movement in Maharashtra during 1971 to As regards DCCBs she observed, statistically significant positive and more than 12 per cent growth rates in working capital, owned funds, deposits, loan advances, loan outstanding and overdues. The per annum CGR for membership of banks, branches, share capital and amount of profit were positive but less than 10 per cent. This revealed that both in accepting the deposits and advancing loans to PACS, the DCCBs did perform efficiently. However, there was also higher growth of loans outstanding and overdues due to poor recovery from PACS. Bhaskar et al. (1994) studied the performance of Karimnagar DCC bank in Andhra Pradesh during to The study revealed that the proportionate share of PACS in total share capital steadily increased from per cent to per cent. The share of Government in total share capital slightly decreased from 9.26 to 8.43 and the contribution from others substantially decreased from per cent to per cent during the study period. It was observed that nearly 80 per cent of its credit need was met through borrowings. The volume of borrowings showed continuous increase, indicating dependence on borrowings. Another important feature was that the proportional share of owned funds in total working capital increased from per cent in to per cent in The erratic trend was observed in lending, while increasing trend was noticed in the case of total outstanding and total overdues. Percentage of overdues to demand increased from per cent to per cent and percentage of cost of management to working capital increased from 3.44 per cent to per cent during study period, which indicated the poor performance of KDCCB during the study period. Parmeshwar (1994) analysed the branch expansion in DCCBs in Andhra Pradesh during to He revealed that the number of branches moved from 134 in to 539 in The branch expansion registered a fourfold increase during two decades under review. He inferred that the branch expansion of DCCBs during to was significant. The assistance and encouragement from Andhra Pradesh State Govt. and SCB were the main causes for such progress. Rao and Rao (1994) evaluated growth and development of co-operatives in Andhra Pradesh for the period to In this study they observed that the share capital, working capital, deposits and borrowings of DCCBs in Andhra Pradesh had increased by 84

42 65 times, 107 times, 36 times and 73 times, respectively over the base year. It indicated that DCCBs had improved financial position during the study period. The net loans advanced by all DCCBs increased by 45 times while outstanding and overdues showed an increase by 64 times and 160 times. Sankaran (1995) evaluated the performance of PLDBs in Kerala by using a model of quantitative analysis of operational efficiency. He pointed out that the performance evaluation carried out by using quantitative variables provided a better format for comparison than the recovery related eligibility criteria. Better performance was judged on the basis of higher performance index. The ranking of districts and regions carried out on the basis of performance index showed that the PLDBs in northern part of the State (Tichur 18.54, Malappuram 14.57, Kozhilkode 9.92, Kasargode 4.34 and Cannore 3.49) had performed better as compared to those in the southern part (Ernakulam 0.81, Palghat 0.63, Alleppey 0.43 and Wynadu 0.10) which was clear from significantly higher performance index. Sarma and Kharmowphlang (1995) analyzed the overdues of agricultural credit in East Khasi Hill district of Meghalaya State. They conclude that, overdues during study area in were not so much; it constitutes only 11 per cent of the total borrowing. The marginal farmers have more overdues than small farmers. Lack of supervision of loan by institutional agencies may be one of the reasons for overdues. They suggested that supervise their credit more for decreasing overdues. Shollapure (1995) reported that the working performance of Karnataka State Cooperative Bank during to The study revealed that share of owned funds in the total funds declined from 16 per cent to 9 per cent, however substantial increase of 182 per cent was observed in the working funds. Though, there had been three-fold increase in deposits, its share in working funds had not improved. The share of borrowings in the working funds had increased from 14 per cent in to 33 per cent in , wherein indicated poor pace of resource mobilization and increased cost burden. As regards to deployment of funds, it was observed that the loans and advances accounted for lions share in the total funds deployed. The percentage of recovery to demand declined from 94 per cent to 54 per cent in total credit and from 95 per cent to 54 per cent in agricultural credit revealing the poor performance of credit collection. The increase in total overdues was observed by 13 times and required linked promotion plans. The percentage of profits to working funds could never reach one per cent during any of the year during study period.

43 66 Srinath (1995) reported that the Mysore DCC bank had made progress in respect of share capital, deposits and reserve funds, by registering the annual compound growth of per cent, per cent and per cent, respectively. In the case of borrowing from apex bank and Government showed decreasing growth, which indicated that the bank was not dependent on these two sectors for borrowing during the period ( to ) under study. Junare and Deshpande (2001) studied co-operative institutes and human resource development and pointed out that country had witnessed a substantial growth in the cooperative sector in the diverse areas of the economy during last five decades. The country had the largest network of the co-operatives in the world. Study also revealed that there was a significant increase in number of societies and membership. The role of co-operatives had acquired a new dimension in the changing scenario of globalization and liberalization of the economy. The co-operative movement in the country had provided employment to more than 20 lakh persons and around 50 per cent of them were only in Maharashtra State. Barik and Dugalavannan (2001) studied management of funds in Central Co-operative Banks in India during to They concluded that the owned funds of DCCBs had increased by 646 times. The branch expansion policy and State partnership by way of share capital contributed for increase in owned funds. The deposits had increased by 1090 times. It was mainly due to the policy of RBI in lending to DCCBs, which was linked with minimum involvement and compulsory deposit mobilization by DCCBs. After the introduction of minimum involvement of DCCBs, the level of the borrowings had reduced to a greater extent. Loans advanced increased by 344 times during last five decades. The percentage of overdues had increased over the period of four decades. Suggestions for improving the operational efficiency and effective management of funds of DCCBs were change in mix of resources change in the composition of deposits, cash management and appropriate investment of funds. Bhaskaran (2001) studied the investment management and invest efficiency in cooperative banks with particular reference to SCBs and DCCBs in India during to He reported that the investment of DCCBs including SLR/CRR (Rs crores) stood at Rs crores in It is estimated that the SLR was maintained by way of deposits with the higher institution. It is observed that the investment volume of DCCBs grew at faster rate in the years and 1998=99.The growth in funds available for investment was 17 per cent over previous year in and As regards to the investment of DCCBs, the cash and bank balance together adds up to more than 12 per cent. This was an area, which the

44 67 DCCBs must attend. Another fact that the DCCBs placed most of their money in the SCB as deposits. The investment in debentures of LDB and investment in other trusties decreased over the years. Ganvir et al. (2001) analyzed the performance of Co-operative Banks in supply of short term, medium term and long term loans to farmers in Maharashtra. The study revealed that the overall performance of DCCBs showed an increase in working capital by 114 per cent during As regards the loan advanced and overdues, there was a substantial increase of per cent and per cent, respectively. The performance in respect of all economic indicators such as, working capital, and loan advanced and loan outstanding was the highest in Marathwada region as compared to other regions, except the proportion of outstanding loans in Konkan region. Misra et al. (2001) studied the relevance of prudential norms and their impact on cooperative structure in India. They reported that the prudential norms were meant to reveal the financial health of the banks in a transparent manner. During , as many as 249 banks were in profit to the tune of Rs 362 crores. The overdues and NPAs of DCCBs increased from Rs crores and Rs crores in to Rs and Rs in However, the percentage increase of NPAs decreased from 18.7 percent to 17.8 per cent during the same period. Niranjan (2001) examined the performance of DCCBs in Kerala. He reported that the overall ranking of the banks based on their Composite Marks (CM) depicted Thiruananthpuram DCCB stood first (CM ) followed by Ernakulam DCCB (CM ) at the second place and Malapuram DCCB ranked lowest (CM ). A regionwise study of the banks showed that DCCBs in the central Kerala performed well, followed by South Kerala region and Malbar region. Shah (2002) attempted to analyze the performance of Kolhapur District Central Cooperative Bank (KDCCB) during the pre and post-reform period. It was found that the financial health of KDCCB has improved in loan advances, deposits, membership and return on owner s equity in the post-economy reform period. But the share of net worth in its total liability, liquidity ratio had declined in the post-reform period. As the return on owner s equity has increased significantly during the post-reform period, it could be interpreted that financial health and economic viability of KDCCB has improved considerably in recent times.

45 68 Jadhav (2004) studied the performance analysis of District Central Cooperative Banks in Maharashtra. He concluded that the DCCBs in the Western Maharashtra secured a top position in the state by way of contributing more than 50 per cent share in the selected performance indicators, which showed a well-developed cooperative banking system in the region. The higher magnitude of average performance index achieved by the DCCBs in Western Maharashtra and Konkan region indicated a developed system of DCCBs in these two regions. The DCCBs in the Marathwada and Vidarbha regions had a poor record in their performance as indicated by low average performance index. Based on DCCBwise average performance index, Kolhapur, Mumbai, Satara, Pune, Solapur, Ahmednagar, Thane, Nashik, Jalgaon and Raigad DCCBs were the strong units among the 30 DCCBs. The DCCBs having very low average performance index were Nagpur, Jalna, Gadchiroli, Amravati and Wardha, which call for suitable economic measures, so that these DCCBs would improve their performance in future. There was a credit gap in the flow of short-term credit supplied by the DCCBs. Harshitha (2007) examined the management appraisal of District Central Co-Operative Bank-A case of DCC Bank Shimoga, Karnataka. She concluded that, the growth in the number of branches, employees, membership and deposit account was positive and significant. Except the number of loan account and overdue amount all the other financial variables showed positive and significant growth. The liquidity and solvency position of the bank was found to be sound. However, the net profit to net worth ratio was found to be negative from to Koli and Landage (2007) evaluate the performance of the Ratnagiri District Central Cooperative Bank (RDCC Bank) in India from the time it was established in 1983 up to the time it has expanded by The annual growth rate of total deposits ranged from 1.26 per cent to per cent during the study period. The bank was however; heavily dependent on borrowing which is not a healthy sign. The percentage of loan recovery ranged between per cent and per cent whereas the percentage of overdues ranged between 9.45 per cent and per cent, showing that the bank was trying to be efficient. The bank was in profit and maintained audit class "A" except for two periods when it merited a class "B". Erosion in owned funds was always less than the 50 per cent of total owned funds of RDCC Bank. But the provision made against non-performing assets was increasing in trend and its annual growth rate ranged from 1.33 per cent to per cent indicating seriousness in the financial performance of the bank. Harshitha et al. (2008) analysed the growth in the performance indicators of DCC Bank, Shimoga (Karnataka). The study was based on the secondary data collected for the period 1990-

46 69 91 to from various sources alongwith primary data relating to income level, experience and number of trainings given to the officials and non-officials of the bank for assessing their impact on overall performance of the bank. The results of head office revealed that the number of deposit accounts showed the maximum growth of around 8 per cent followed by the number of employees (6 %) and the number of members (3 %) among others. All the financial indicators for the head office showed high positive growth, the highest one being in respect of advances (36 %). Similar trends were also observed for branches. The overall performance of the bank was dependent mainly on the training and experience of Chairman and Managing directors. Pujari (2008) studied the performance of Primary Agricultural Cooperative Credit Societies in Haryana and Karnataka during to He concluded that, the Number of societies, membership, paid up share capital deposits, borrowings, working capital, loans advanced to agricultural purposes, loans outstanding, overdues and cost of management have increased over the study period. Share of owned funds to working capital were in small proportion for both the states. Deposits have increased significantly over the study period for Haryana but share of deposits in working capital was small in Haryana but optimum for Karnataka state. Still borrowings constituted majority share of working capital. The credit deposit ratios shown more than unity depicted more loan advanced than the deposits. Jadhav (2009) analyzed the performance of Pune District Central Co-operative Bank in Maharashtra. The study was based on secondary data for the period from to The performance of PDCCB in terms of network and coverage was satisfactory as the number of offices and membership had increased substantially during the study period. A significant increase in the total share capital, reserve fund, owned funds, deposits, investment and working capital during the study period indicated financial soundness of PDCCB in Maharashtra state. Unsatisfactory performance was observed in respect of cost of management, reduction in profit and increase in overdues in some of the years of study. Most of the researches have studied the growth rates of different performance indicators of cooperative banks by using time series data. The researcher has attempted to study the growth of credit disbursement. He observed that the District Central Co-operative banks as well as other co-operatives institutions have made satisfactory progress in branch expansion, coverage, tapping of financial resources, deposit mobilization and credit disbursement. The researcher has appealed to give adequate attention towards recovery.

47 70 Hooda and Chahal (2010) made an attempt to study the growth of PACS in India for a period of ten years, i.e., to For the purpose of the study, several indicators, i.e., number of 140 societies, membership, borrowers, employees, owned funds, deposits, advances, borrowings, working capital and recovery performance were analysed. It was found that there was not significant growth in terms of expansion of societies but number of members and borrowers showed an increasing trend. It was also found that owned funds, deposits, loans and working capital showed an increasing trend but at the same time overdues were also increasing. It was suggested that there is need of proper infrastructural facilities, close inspection and regular audit and loan policies should be framed according to the requirements of beneficiaries and steps should be taken to increase deposits from members. Chander and Chandel (2011) examined the financial performance and viability of Cooperative Banks - A study of four DCCBs in Haryana. In the study, an attempt was made to analyze the financial performance and viability of four District Central Cooperative Banks (DCCBs) operating in Hisar division in Haryana for a period of twelve years ( to ) by financial analysis with different parameters. The financial parameters here taken were profitability, liquidity, efficiency, solvency, risk and bankruptcy. The results revealed that four DCCBs with approximately fifty branches have not been performing well on all financial parameters taken for study. The banks performed well on one parameter but deteriorated on another and in different years as well. All the banks have been a part of bankruptcy zone (weak performance zone) throughout the study period. The banks need to visualize their operations, policies and strategies for effective utilization of available financial and human resources. Chandragouda (2011) studied the Performance of PACS s in Dharwad District. The 15 PACS s were selected for the study, which represented three different agro-climatic zones. The study was based on both primary and secondary data. He reported that the growth in the employees, membership and loan account was positive and significant in most of the societies. Growth in financial variables like overdues and loss showed positive for most of the societies. This implied that most of the societies incurring losses. The liquidity and solvency position of the bank was found to be sound. However, the net profit to net worth ratio was found to be negative. The recovery percentage for the selected PACS s increased over the years. Kanchu (2012) examined the performance of DCCBs in India. He reported that the growth of number of DCCBs and their branches have negative trend up to certain period later there was negligible positive trend whereas the membership in cooperatives have been

48 71 increasing. The capital, reserves, and borrowings increased almost double during the study period, with a nominal percentage of variation. The cooperative banks have been maintaining on an average 78.15% of C/D ratio. The cost of management per employee has been increasing during the study period due to decrease in number of employees; the management of DCCBs has to concentrate on cost of management. The DCCBs have been showing maximum growth in investment. It is suggested that government should formulate specific policies and they should be implemented for the upliftment of District Central Cooperative Banks in India. DCCBs should try to upgrade technology and should formulate customer friendly policies to face competition with commercial banks. Bhosale (2012) analyzed the performance of DCCBs in Konkan Region. He observed that, the performance of DCCBs in terms of network coverage was satisfactory as the number of offices and membership had increased substantially. Significant increase in the total share capital, reserve fund, owned funds, deposits, investment and working capital indicated the financial soundness of DCCBs in the Konkan region. Growth of borrowings after banking reform period was found declining which indicated self-reliance. The Thane DCCB secured the top position in the region for contributing more share in the selected performance indicators. The better performance of DCCBs in the Konkan region during the first decade period, to , was noticed based on various indicators, viz. number of branches, membership, share capital, reserve funds, owned funds, total deposits, working capital, investment, loan and advances, loan collection, cost of management, etc. Satisfactory performance in second period, i.e to was observed in loan outstanding, reduction in overdues and profit levels. The magnitude of average performance index achieved by the Thane and Raigad DCCBs was 4.23 and 2.37, respectively. The credit gap was found in kharif paddy crop while credit gap was observed in rabi crops, vegetables and fruit crops. Hegde (2012) analyzed the business performance of DCC Bank, Uttara Kannada. He reported that, the growth in the number of branches and membership was positive and significant. The share capital, reserve funds, deposits and borrowings have shown positive and significant growth. The liquidity and solvency position of the bank was found to be satisfactory. The net worth of KDCC Bank was found to be positive and higher during the study period. Singh (2013) studied the Performance of Haryana State Co-Operative Apex Bank. In his paper he narrated that in Haryana, there is three tier systems of co-operative credit institutions. The Haryana State Co -operative Apex Bank Ltd. is the apex co-operative bank which is also known as HARCO Bank. This is an attempt to highlight the financial performance and some

49 72 other achievements of the bank. It was observed that this bank has served the state with maintaining a satisfactory level of performance especially in recovery. Amount of deposits, borrowings and working capital has been increased with more than hundred per cent growth rates. It advanced good amount of loans to its customers and also earned reasonable profits. More appreciable indicator has been recovery position of the bank that has been almost hundred per cent. Unnamalai (2013) examined working capital management of TDCC bank. The performance of the Tiruchirapalli District Central Co-operative bank in India was analyzed using different statistical techniques. He observed that the growth of TDCCB and its branches positively trend up to certain period later there was negligible negative trend. The cost of management per employee has been increasing during the study period due to decrease in number of employees; the management of TDCCB has to concentrate on cost of management. The financial position of this bank analyzed by ratio analysis techniques and it was found that the solvency position, liquidity and profitability were satisfactory. Shelke et al. (2014) studied the performance of Parbhani District Central Cooperative Bank-A Case study for the period 1991 to They observed that the amount of overdues increased from Rs lakhs to Rs lakhs during the study period. The average amount of overdue per society was Rs.6.51 lakhs. The average overdue amount at borrower level for marginal, small, medium and large farmer was Rs.2117, 5857, and respectively. Percentage of overdue was 3, 17, 39 and 41.Short term loan overdue was predominant which accounted for 94 per cent at institute level. The important reasons reported for non-repayment were inadequate farm income, absence of other sources of income, poor economic condition of defaulter, anticipation of debt relief, repayment of other loan dues and division of funds. The overdue upto 1 year at institute level contributed major portion i.e. 57 per cent to the total agricultural loan overdue. The short term loan overdue contributed 90 per cent defaulters and 92 per cent amount at borrower level. The loan overdue was positively correlated with caste, net cropped area, gross cropped area, net income, gross income and area under cash crops. Willful default contributed maximum overdue amount i.e. 62 per cent at overall level. Bharti Hiremath and Mamata Bannur (2014) studied financial performance of Bijapur district Central Co-operative Bank Ltd. They analyzed data revealed that there was significant growth in the deposits mobilization, membership, loans and advances,

50 73 working capital, reserves, owned funds, total income, total expenditure and over dues with reference to BDCC Bank. Pramendra (2014) examined the financial performance of the Hisar District Central Co- Operative Bank in Haryana. He observed that, the number of membership, borrowings, working capital, loan outstanding and loan advanced, overdues and cost of management has increased over the study period. The amount of share capital has decreased over the study period. The share of owned funds to total working capital was very small in proportion. The PCARDB is highly dependent on borrowed funds from higher financial institutions for undertaking various credit and service activities. It appears from the reviews that most of the studies relating to the growth rates of different performance indicators of co-operative banks have used time series data. The studies have indicated varying type of performance regarding growth rates over the period of time. The researchers have attempted to understand the pattern of growth of credit co-operatives and possible reasons for variations. Some of the researchers have used results for predicting the trends in performance indicators. The studies by and large concluded that the District Central Co-operative Banks and other credit institutions have made progress in branch expansion, coverage, strong financial resources, deposit mobilization and credit disbursement. However, the co-op. Banks, in general had failed to give adequate attention to recovery of loans, which led to mounting overdues and thereby bringing the financial soundness in doldrums. 2.2 Purposewise lending activities Gupta et al. (1998) assessed the impact of co-operative finance provided by Raipur DCCB in Madhya Pradesh on irrigation, cropping pattern and per hectare profit. Study revealed that the beneficiary farmers had not only utilized the loan amount but also earned a significantly higher profit per hectare than non beneficiary farms for all the crops for which loan from co-operative bank was availed. The beneficiary farms had a net profit of ` 684, ` 1730 and ` 1979 per hectare over the non-beneficiary farms for paddy, gram and vegetables, respectively. Deorukhakar and Nikam (2007) studied the crop loan system in Raigad District of Maharashtra. They observed that, the proportion of loan lifting was very low as against loan sanctioned. Borrowers mainly taken crop loan for kharif paddy. Pujari (2008) studied the performance of Primary Agricultural Cooperative Credit Societies in Haryana and Karnataka during to He observed that major proportions of loans were advanced to agricultural purposes which ranged from 88 to 90 per

51 74 cent for Haryana and 70 to 92 per cent for Karnataka. Major portion of short term credit was given as seasonal agricultural loan (crop loan) followed by other agricultural purposes as supply and distribution of inputs and consumption loans Vijayalakshmi (2009) studied the performance evaluation of the Thoothukudi District Central Co-operative Banks Limited. She concluded that, the Co-operative banks are a part of the vast and powerful super structure of Co-operative institutions which are engaged in the tasks of production, processing, marketing, distribution, servicing and banking, in India. Co operative banks were created as a new type of institution based on the principles of co-operation to solve the problems peculiar to the Indian conditions. In rural areas, as far as agricultural and related activities were concerned, the corporative banks have provided adequate short-term and long-term institutional credit at reasonable rates of interest. Chandragouda (2011), analyzed the performance of PACS s in Dharwad district. He observed that the agricultural loan dominated among the loan amount advanced for different purposes followed by non-agricultural loan for small farmers. In all the societies showed same trend whereas for medium farmer s non-agricultural loan dominated followed by agricultural loan in all societies. In case of large farmer s agricultural loan dominated followed by non-agricultural loan. But some slight variations were found in these societies. This may be due to constant encouragement given by the societies to these purposes and also variation in the allocation of funds by the societies after meeting the credit requirements for agriculture and allied sector. Sharma (2011) analyzed the farm credit provided by District Central Co-Operative Bank (DCCB) Branch Gormi, Bhind District of Madhya Pradesh. He reported that, the performance of purposewise loan advancement by District Central Cooperative Bank (DCCB) Branch Gormi was satisfactory as indicated by present case study which highlighted that the utilization of purpose loans appreciably increased the additional crop productivity, B:C ratio and net income of the farmers. Within the different purpose loan, loan provided for the purchase of diesel pump-set as well as crop loan giving higher impact on productivity and net income compared to other purpose loans. Gupta Joyti and Suman Jain (2012) studied Cooperative Banks in India with special reference to lending practices. They concluded that, the majority (32% as per the study) of the respondent were having housing loan from this bank. Most (64% as per the study) of the people prefer to take long term loan which was more than 3 years.

52 75 Uma Devi (2013) studied the District Central Co-Operative Banks in the agricultural development of E.G. District of Andhra Pradesh. The credit deployment of the DCCB was broadly categorized into two viz., farm and non-farm advances. Farm advances include agricultural term loans and crop loans whereas non-farm advances include advances to rural artisans, self-employed, self-help groups, small and cottage industries, etc. The DCCB has given equal importance to both sectors as far as the deployment of credit is concerned. Through PACS, the DCCB extended its services even to the remote places of the district. Killedar (2013) Studied the o Cooperative Credit Societies in Sindhudurg District. He reported that, the share of short term borrowing was more both in defaulter and non-defaulter groups contributing per cent and per cent respectively. Prakash and Palanivelu (2014) examined the role of Salem District Central Cooperative Bank in agricultural financing with special reference to crop loan in Salem district. They concluded that, the cooperative banking structure has unique position in the rural credit delivery system in India. They serve both rural and urban population and are mainly cooperative banks supporting to development of agricultural and rural areas. Their key role is to give credit to various rural based entrepreneurships. The borrowers of this bank mainly give preference to Kisan Credit Card scheme compared with other schemes of crop loan. The bank has good position in loan distribution and recovery. Saroj Kumari Sharma (2014) studied the performance of Primary Agriculture Cooperative Societies in Himachal Pradesh: An Appraisal. She concluded that, the PACS in Himachal Pradesh improved the agriculture sector by providing credit for agricultural inputs, consumer goods and marketing facilities. The distribution of consumable items and fertilizers has declined in the year But distribution of agriculture marketing has increased. PACS also provide credit for activities which helps beneficiaries to earn money. These activities are like dairying, poultry farming, aquaculture, goat and sheep rearing and sericulture, etc. In rural areas PACS has diversified their activities in number of direction like; agriculture marketing, processing, spinning, fertilizer, and various consumable items, etc. It is quite understandable from the above reviews that the credit plays an important role in enhancing production and productivity of agricultural commodities. Majority of cooperative banks provide loan for purchase of agricultural inputs, consumable goods, marketing and other loans. The Co-operative banks have played a pivotal role in the development of rural credit over the years.

53 Share of co-operatives in agricultural credit Patel (1998) examined the need for agricultural credit in rural areas, the sources which provided the credit and their performance and drawbacks in India during 1951 to It was revealed that, the share of non-institutional agencies in agricultural credit had declined from 93 per cent to 36.8 per cent between 1951 and 1981, while the share of institutional agencies had increased from 7 per cent to 63 per cent during the same period. The major defect in financing by private sources was that they provided credit at high rate of interest for unproductive and consumption purposes which was unsuitable in the context of planning for larger production. The commercial banks, which provided the credit to the agricultural sector, were saddled with the problem of staff in rural areas and recovery. Sale et al. (1998) studied the agricultural credit system in India. Investigation revealed that the significance of private agencies in rural finance came down due to effective working of the institutional agencies. The percentage share of institutional credit had increased but the demand for credit in the farm sector was so large and diverse that all the institutional credit agencies were still far in meeting the requirements of credit. Shiyani et al. (1998) examined the role of different credit institutions for promoting agricultural development in Gujarat. It was revealed that out of total branches of all the banks, 48 per cent branches were rural branches and involved, in agricultural development through extending credit for different agricultural activities. The creditdeposit ratio ranged from 41 per cent (in nationalized banks) to 78 per cent (in private banks), with the overall average of about 49 per cent. The nationalized banks contributed the most in credit support for agricultural development in the State (42 per cent) followed by co-operative banks (36 per cent), State bank group (17 per cent) and RRBs (5 per cent). The proportion of chronic overdues of the agricultural sector was the highest in the case of co-operative banks (52.90 per cent) followed by nationalized banks (28.35 per cent). Report on Economic survey of India ( ) The agency-wise share of credit flow to agriculture shows that the Commercial Banks accounted for the major share (61 per cent), followed by Cooperative Banks (28 per cent) and Regional Rural Bank (11 per cent). However, there is a declining trend in the share of co-operative banks in the flow of institutional credit over the years, which is indicative of the need for restructuring and reforming these banks.

54 77 Devaraja (2011) analyzed the Institutional Financing and Agricultural Credit Policy in India. He reported that notwithstanding their wide network, co-operative banks, particularly since the 1990s have lost their dominant position to commercial banks. The share of cooperative banks (22 per cent) during was less than half of what it was in (62 per cent), while the share of commercial banks (33 to 68 per cent) including RRBs (5 to 10 per cent) almost doubled during the above period. The efforts to increase the flow of credit to agriculture seems to have yielded better results in the recent period as the total institutional credit to agriculture recorded a growth of around 23 per cent during to from little over 14 per cent during to In terms of total credit to agriculture, the commercial banks recorded a considerable growth (from around 43 per cent to about 69 per cent), while cooperative banks registered a fall (over 52 per cent to over 18 per cent) during the above period. There is a considerable increase in RRBs from 5 per cent to 13 per cent. Matkar and Jadhao (2015) reported that the Commercial banks entered the field of agricultural credit in a major way following their nationalization in A major in the year share of commercial banks increased upto 54 per cent. At present, they are the largest source of institutional credit to agriculture. In these banks have accounted Rs 81,481 crore (65 per cent) in agriculture credit and this fluctuation in commercial bank supply was continuing till the year in this year commercial banks share in credit was Rs. 4,31,543 crore (68 per cent). The agriculture credit by Co-operatives has grown from Rs. 31,424 crore in to Rs. 95,565 crore in In the year share of cooperative bank in total agriculture credit was 25 percent. After agricultural supply from cooperative banks were decreasing continuously upto Total supply was Rs. 95,565 crore and this amount was 18 percent of total agriculture credit. The Regional Rural Banks in accounted Rs. 12,404 crore (10 per cent) in agriculture credit. This fluctuation in Regional Rural banks supply was continuing till the year in this year banks share in credit was Rs. 73,856 crore (14 percent). They concluded that the share of Commercial Banks and Regional Rural Banks were increased and the share of Cooperative Banks was declined during study period. Saudagar et al. (2015) attempted to analyze of agencywise crop loan supply in Maharashtra State. In the period in between to , an amount to the tune of Rs crore is disbursed towards crop loan through Co-operative Banks. The share of cooperative banks in providing crop loan is 48.40% from total purveyance of crop loan within this years and same is more. Through commercial banks, crop loan to the tune of Rs crore is provided and its ratio is 46.40% from total purveyance of crop loan and such banks stood on

55 78 2nd place. If there was increase in providing crop loan of Regional Rural Bank, however, in total disbursement of crop loan share of Regional Rural Bank, it revealed that their share was only 04.94% and this ratio was less considering the other Banks Shivaswamy (2012) studied economic analysis of institutional finance for on-farm irrigation development in Karnataka. He reported that, the share of commercial banks in total minor irrigation credit increased from per cent to per cent over the study period while that of Regional Rural Banks increased from 9.50 per cent to per cent. But, the share of co-operatives declined from per cent to 6.06 per cent over the same period. In Bagalkot district, among all the institutional sources commercial banks had a major share in disbursement of minor irrigation credit (Rs crores) followed by regional rural banks (Rs crores) and co-operatives (Rs crores) during and There was an increase in the share of regional rural banks (from 18.99% to 40.88%) and co-operatives (from 15.70% to 25.24%) in total minor irrigation credit over the years. But, the share of commercial banks declined from per cent to per cent during the same period. In Belgaum district, from to , Regional Rural Banks were major sources of minor irrigation credit (Rs crores) followed by commercial banks (Rs crores) and cooperatives (Rs.3.53 crores). Interestingly, share of commercial banks and co-operatives was taken away by the regional rural banks revealing vigorous contribution towards minor irrigation development in the district over the years. Shivaswamy (2012) studied economic analysis of institutional finance for on-farm irrigation development in Karnataka. He reported that, co-operatives were the important sources of minor irrigation credit to small farmers (52.94%) largely due to their proximity, accessibility and lower rate of interest. Whereas commercial banks and RRBs were important sources to large farmers due to their larger credit requirements and larger percentage credit sanctioned to credit demanded was more compared to co-operatives. It is quite understandable from the above reviews that the financial institutions provide various types of loans. The share of commercial banks increased over the years whereas, the share of cooperative banks and Regional Rural Banks declined over the period. This was meanly due to government policies for compulsory lending to the agricultural and allied activities. 2.4 Inequality in Credit flow

56 79 Jairath (1990) estimated the extent of regional disparities in the flow of rural credit from PACS in different regions of Himachal Pradesh at two points of time i.e and 1987 with the help of Harfindal index. He reported that the trends in regional imbalances of coefficient of Herfidal index of loan advanced per hectare of GCA increased from 0.59 in 1977 to 0.99 in 1987 in the developed region. However, the declining trend of coefficients of Herfindal index from 0.40 to 0.29, 0.41 to 0.35 and to was noticed in the developing region, backward region and at the State level, respectively. It indicated that the loans advanced per hectare of GCA by co-operative societies reduced regional inequalities to a large extent. He also suggested the measures to reduce inequality, like opening new branches, proper credit plan and monitoring with due weightage to productivity of credit. Ramesha (1990) estimated the extent of disparities in PACS amongst districts in Kerala for three points of time i.e , and with the help of CV ratio. He concluded that the disparity in membership decreased over the periods. Disparity in loan advances increased over the periods. However, disparity in overdues and share capital decreased in period II but later on it increased in period-iii. Chand (1992) studied distributional disparities in agricultural credit in India, by using CV ratio for the period to He concluded that the statewise CV in the distribution of agricultural credit through PACS showed increasing trend over a time and there was no improvement in flow of credit to traditionally under developed regions. The commercial banks and RRBs did not improve the status. The distribution pattern of total term credit by all agencies did not show any perceptible change over 10 years. The CV in statewise distribution of term credit by all agencies showed similar pattern of decreasing trend indicating that multi-agency approach was not reducing regional disparities. Zeratsion et al. (2001) assessed the inter-district inequality per hectare of credit by PACS in Karnataka from to in credit flow across the years. Coefficient of variation, Theils entropy coefficient, Gini ratio and Lorenz curve were the measures used for assessment. The coefficient of variation of short-term credit flow across the districts was low at per cent in and it marginally rose to in The Theils entropy coefficient which was 0.51 in rose over years though marginally and unsteadily to be 0.55 in The Gini ratio was 0.57, 0.58 and 0.61 for the base year, average year and terminal year, respectively for the short-term agricultural credit flow. The results of Gini ratio and Lorenz curve indicated that there was inequality in the flow of agricultural credit among the districts in Karnataka state and it was continuing. As regards to medium term credit flow, the

57 80 CV had increased from per cent in to per cent in Theils entropy had also increased from 0.45 in to 0.70 in It has clearly indicated that inequality in medium term credit flow increased over the years. Jadhav (2004) studied the performance analysis of District Central Cooperative Banks in Maharashtra. He reported that the trend analysis of Theil s entropy coefficient and coefficient of variation showed that there was a significant decline in inequality in short-term credit flow in the Konkan region during the period. In the Marathwada region, the coefficient of trend equation indicated a slight increase in inequality in short-term credit flow but statistically it was non-significant. The results of trend analysis of Theil s entropy coefficient and coefficient of variation for MT credit flow showed that there has been significant increase in inequality in the medium term credit flow in Marathwada region. At the same time, there was an increase in inequality at the state level but it was non-significant. Jadhav (2004) studied the performance analysis of District Central Co-operative banks in Maharashtra. He concluded that the results of Gini ratio and Lorenz curve for short-term credit flow showed an increase in intra-regional inequality in the average year and subsequently reduction in inequality in the terminal year of the study. As regards the inter-regional inequality in the short-term credit flow, increase in inequality in the average year and subsequent reduction in inequality in the terminal year of the study was observed in Vidarbha region. The reverse trend was noticed in the Marathwada region. However, the declining rate of interregional inequality in respective years of the study was noticed in the Western Maharashtra and Konkan regions. The results of Gini ratio and Lorenz curve analysis clearly showed that there was an increase in the inter-regional inequality in the disbursement of MT loans in Marathwada and Vidarbha regions, while a decline in inequality was noted in the Western Maharashtra during the period under study. In the Konkan region, inequality in MT loans decreased, but subsequently increased in the terminal year. The intra-regional inequality in the medium term credit flow has been reduced over the years. Since the Gini ratio was above 0.50 in all the years for medium term agricultural credit flow, inequality in the flow of MT credit existed among the regions in Maharashtra State during the period from to Bhosale (2012) studied the performance of district Central Cooperative banks in Konkan Region. He reported that the analysis of coefficient of variation showed that there was intradistrict inequality in short-term and medium-term credit flows in all DCCBs of the region. Gini ratio and Lorenz curve for short-term and medium term credit flow showed intra-district inequality from base year ( ) to terminal year ( ). Intra-district inequality

58 81 occurred more in medium-term loans compared to short-term loans. The most important factors responsible for inequality in disbursement were total deposits, loan in the base year. Satyasai (2012) examined rural credit and input use: an empirical study. He concluded that the marginal farm-size class which indicates that they enjoyed less than their due access to institutional sources. The Theils index of inequality has further indicated that the inequality, though not very high, increased over time from to This was the picture till The trend reversed to some extent by , as the index of access value for marginal farmers rose to 0.78 and the Theils index value declined. Sale (2014) analyzed the acquisition, utilization and repayment of institutional and noninstitutional loan for agriculture in Maharashtra. He concluded that Coefficient of Variation, Theils entropy coefficient and Gini coefficient for loan distribution across the years indicated that there were moderate inequalities in loan distribution by the DCCBs. To sum up, it looks that there existed, the inequality in the disbursement of short-term and medium-term credit by the co-operative institutions in different states of the country. The various measures (Coefficient of variation, Theils entropy coefficient, Gini ratio and Lorenz curve) were used to assess the inequality in disbursement of short-term and medium-term credit in the studies reviewed so far. 2.5 Determinants in flow of agricultural credit Singh and Jain (1990) studied the factor affecting overdues of agricultural loans in Agra district of Uttar Pradesh. They reported that the amount of loan borrowed, amount of loan put under non-productive uses, size of holding and repayment capacity were found to be most important factors affecting overdues. Rao (1994) emphasized the role of co-operative banks in financing agricultural credit in India from to He revealed that many factors such as poverty, illiteracy, consumption and ceremonial expenditures, increase in cultivation expenses were responsible for large scale borrowing by farmers. Prior to independence, farmers not being able to obtain sufficient institutional credit were depending up on private agencies, which generally exploited them. Soon after independence, the Government of India realizing need for institutionalizing rural credit structure relied heavily on co-operatives for a long time. Zeratsion et al (2001) used the multiple linear regression analysis to determine the relative importance of different factors affecting the short term credit flow by PACS. He

59 82 reported that the factors like irrigation, area under commercial crops, term agricultural credit, area under HYV and deposits per member were important and significant variables in determining the flow of short term credit to agriculture by PACS. Fertilizer consumption and rainfall were the only variables, which had no significant role in influencing the flow of shortterm credit to agriculture. Jadhav (2004) studied the performance analysis of District Central Co-operative Banks in Maharashtra. He concluded that the most important factors influencing the regional inequality in the disbursement of per hectare ST credit in all the regions as well as Maharashtra State were GCA, average rainfall and deposits with the DCCBs. The influence of commercial crops and horticultural crops in regional inequality in the ST credit was observed to be varying across the regions in the State. However, these two factors do not have the positive association in influencing the ST credit in almost all the regions except commercial crops in the Konkan region. Bhosale (2012) studied the performance of district Central Cooperative banks in Konkan Region. He concluded that the important factors influencing the district inequality in the disbursement of per hectare ST credit flow were total deposits, loan recovery and net cultivated area. However, average rainfall did not have the positive association in influencing the ST credit in almost all the DCCBs except Ratnagiri DCCB in the Konkan region. Rakshit and Chakrabarti (2012) in their case study analyzed the factors influencing the financial performance of an Apex Cooperative Bank. The analysis was based on regression model used on chronological data from to The study has brought out that the impact of some explanatory variables is significantly high; while some other variables were found with low impact on the net income as a percentage of total assets. The outcomes provide useful lesson about the impact of last year s performance on present year s performance. Net income of the bank was influenced by several factors but the result of the extended equation has shown loan & advances were areas of concern of the apex cooperative bank. Loan and advances have a negative impact in the net income of the bank, but to a lower extent. Nowadays, cooperative banks are having ample fund, but the required phenomenon is the effective utilization of funds available to the bank at a lower cost. If the cooperative banks are highly efficient in utilizing their fund at reasonable operating expenses, they can maximize their net income. We can conclude from the above that control of operating expenses will improve net income of cooperative bank.

60 83 Sale (2014) examined the economic analysis of acquisition, utilization and repayment of institutional and non-institutional loan for agriculture in Maharashtra. He reported that the variation in the gross cropped area, area under commercial crops and horticultural crops, average rainfall and recovery of loans were responsible for the regional inequality in disbursement of per hectare loan in Maharashtra. To sum up, it can be said that the inherent differences and account of the agro-climatic conditions do create variations in the socio-economic and institutional development of different districts, regions and States. The major agro-climatic features responsible for the variation in credit flow in agriculture were, gross cropped area, gross irrigated area, rainfall, area under HYV, area under commercial crops and fertilizer consumption. Apart from this, the recovery percentage of the co-operative institutions was important factor influencing the inequality in the credit flow. 2.6 Problems in co-operative credit and suggestions for improvement Jadhav (2004) examined the problems faced by the DCCBs in Maharashtra and concluded that the defective and improper appraisal of loan applications by the lending institutions, lack of effective supervision and follow up and inadequate monitoring of credit utilization by the borrowers largely due to inadequate and untrained staff, diversion of income generated by the use of loan to other businesses and weaknesses in the recovery procedures such as failure to remind for payment of loan installments in advance and contact the borrowers at the time of harvesting and marketing of produce for collection of dues were the other important reasons for low recovery of loans. The major suggestions reported by the respondents to improve the working performance of the DCCBs in Maharashtra were NABARD may directly finance to DCCBs, which would enable them to provide farm loans with lower rate of interest, removal of dual control on DCCBs, revenue department may take guarantee for recovery of loans issued for government schemes and programmes besides avoiding illegal transactions in land, linking of credit with marketing and the incentives may be given to the farmers for their prompt repayment of loans and also to the employees of the DCCBs for their better contribution to the recovery performance of the bank and avoiding political interference. In addition to this proper recovery management, verification of credit utilization and proper appraisal technique while sanctioning the loans were the measures reported to manage the NPAs. Strict implementations of crop insurance policy, conversion of short-term loans into medium term loans were the measures suggested by the respondents for the recovery of agricultural loans at the time of natural calamities.

61 84 Hatai el al. (2006) identified the causes and determinants of overdues. The study was conducted in Uttar Pradesh. It was observed that overall major reasons to wilful default were slackness in timely recovery by banks followed by diversion of income for purchasing land and other property and uncertainty about fresh loans on the whole. Whereas the low crop yields, failure of crop due to natural calamities and inadequate finance were the main reasons of nonwilful default. Dutta and Basak (2008) in their case study analyzed the financial performance of Urban Co-operative Banks. They concluded that, the Cooperative banks should improve their recovery performance, adopt new system of computerized monitoring of loans, implement proper prudential norms and organize regular workshops to sustain in the competitive banking environment. Pujari (2008) studied the performance of Primary Agricultural Co-operative Credit Societies in Haryana and Karnataka during to He observed that, the amount of overdues more or less has increased in the same phase for both the states. The problem of chronic overdues as well as defaulters was serious problem in PACSs of both the states. Burark et al. (2009) analyzed the regional rural bank in Udaipur district of Rajasthan related to recovery performance of agricultural loans. They examined the various aspects of losing branch of Mevar Aanchlik Gramin Bank i.e pattern of loan distributions, repayment behaviour, share of repayment and various factors affecting the repayment of loan. Half of the beneficiaries of this bank were Kisan Credit Card (KCC) hold and used short-term credit. They concluded that about half of the beneficiaries of Losing branch repaid more than 75 per cent of the total loan taken by them. Level of gross returns from farm and repayment of loan were found positive relationship. High expenditure on social and religious activities was found to be the most important factor for overdue or non-repayment of loans. Chander and Chandel (2011) studied the evaluation of financial performance and viability of Cooperative Banks - A study of four DCCBs in Haryana. They concluded that, the banks should emphasize on proper utilization of the available resources including manpower in order to increase the profitability, liquidity, and efficiency. The banks should also lower the NPAs so that risk can also be minimized. As the banks have been suffering from financial mismanagement and underutilization of resources, so these banks should change their vision besides bringing transparency in their working to sustain in the competition and become dynamic financial institutions.

62 85 Bhosale (2012) Observed that the study has revealed that DCCBs in the Konkan region have no problem of funds. The agricultural loans were disbursed to farmers through PACS and Kisan Credit Cards. However, banks were facing the problem of loan recoveries. The study has clearly indicated that the performance appraisal could provide a better format for the related eligibility criteria to assess the working of banks in the Konkan region of Maharashtra. Gupta Joyti and Suman Jain (2012) examined Co-operative Banks in India with special reference to Lending Practices. They concluded that, 1. The cooperative financial institution is facing severe problems which have restricted their ability to ensure smooth flow of credit, a) Limited ability to mobilize resources. b) Low level of recovery. c) High transaction of cost. d) Administered rate of interest structure for a long time. 2. Due to cooperative legislation and administration, Government interference has become a regular feature in the day to-day administration of the cooperative institution. Some of the problems are that arise out of the applicability of the cooperatives legislative: a) deliberate control of cooperatives by the government. b) Nomination of board of director by the government. c) Participation of the nominated director by the government. d) Deputation of government officials to cooperative institution, etc. 3. The state cooperative banks are not able to formulate their respective policies for investment of their funds that include their surplus resources because of certain restrictions. 4. Prior approval of RBI is mandatory for opening of new branches of SCBs. The SCBs are required to submit the proposal for opening of new branches to RBI through NABARD, whose recommendation is primarily taken into consideration while according permission. The suggestions for improvement, 1.The banks should adopt the modern methods of banking like internet banking, credit cards, ATM, etc. 2. The banks should plan to introduce new schemes for attracting new customers and satisfying the present ones. 3. The banks should plan for expansion of branches. 4. The banks should improve the customer services of the bank to a better extent. Chandel (2012) studied financial performance of DCCBs in Haryana- A comparative analysis. The results revealed that all the DCCBs performed poorly on profitability, liquidity, efficiency and solvency parameters, but were little comfortable on risk parameter. The reasons behind this weak performance were financial mismanagement, underutilization of resources, improper investments, improper capital structure, inadequate cash availability and lack of innovative products, so there is a great need of change in the vision and strategies in these banks for better service to

63 86 the people of the country. Besides above, these banks should focus on becoming more competitive and vivacious. Unnamalai (2013) examined the working capital management of TDCC Bank. He suggested that government should appoint the sanctioned strength of employees. TDCCB should try to upgrade technology and should formulate customer friendly policies to face competition with commercial banks. Thirteen of the 23 district central cooperative banks in the State are operating under loss. Only 10 banks made profits. Their aggregate profit stood at Rs crores. Out of ten banks the best performed bank is TDCC Bank. If the bank upgrade technology and connect all the branches with head office, there is no doubt that it may render remarkable services to its customers both in rural and urban. Soni and Saluja (2013) studied the financial ratio analysis of DCC Bank Limited Rajnandgaon -A case study. They concluded that Problems (weaknesses) of the bank, 1. DCC Bank Rajnandgaon has not succeeded in mobilizing deposits because of severe competition from other banks and financial institutions. 2. The DCC Bank Rajnandgaon suffers from heavy overdues. 3. It has been noticed that there is unusual delay in the sanction of loans. 4. The loan recovery system/ procedure of bank are very poor. 5. The important defects- management by untrained members. Recommendations for improvement of the bank, 1. The DCC Bank Rajnandgaon should try to increase their deposits by opening branches in business areas, improve the services to clients, introduce different types of deposit schemes and offer competitive rates of interest. 2. The DCC Bank Rajnandgaon should change their loan policies. 3. The DCC Banks Rajnandgaon should drop a scientific method to recover over dues and must maintain up to date records on daily basis. 4. The DCC Bank Rajnandgaon must maintain adequate liquid resources, margin, properly scrutiny of loans and should try to qualitative improvement to the staff. 5. Accountability and transparency need to be brought in the implantation of the schemes. Hooda (2014) examined the progress of District Central Co-operative Banks in India: A Snapshot on Productivity. He concluded that the employees of DCCBs have been working efficiently for improving the productivity of their respective banks consistently as ACGRs have shown. Further it is found that branch-wise productivity of the banks have been increased with good growth rate. But, employee-wise productivity has been increased with higher rate than that of branchwise opportunities has been found more beneficial than opening branches by DCCBs during the study. It is happened when number of employees is showing decreasing

64 87 trend. So, it may be said that employees of DCCBs have worked efficiently and effectively. It may be suggested that DCCBs should appoint more human resource for their growth and sustainability because it would be beneficial to DCCBs and there is great and significant association between labour productivity and branch production in both -absolute term growth rate-wise. i.e. when labour productivity increases, productivity of that branch definitely will enhance. Saroj Kumari Sharma (2014) studied the performance of Primary Agriculture Cooperative Societies in Himachal Pradesh: An appraisal. The PACS in Himachal Pradesh faced problems like, 1. Some cleaver members are misusing the credit because of there are no proper checks on the Societies. 2. Lake of storage facilities and lake of accountability. 3. The time limit of recovery is very small; it puts heavy burden on the beneficiaries. Suggestions for better functioning of PACS were, 1. The working of PACS should be extended on the remotest area. 2. Forms and procedures for the grant of loans should be simplified.3. Before granting an advance borrowers integrity, honesty, need and requirements of credits should be checked to avoid misuse of credit.4. Recovery management is an important aspect and requires continuous monitoring of the loans made for this purpose an efficient and technologically trained staff should be recruited. Selvaraj (2015) studied financial evaluation of the Dindigul District Central Co- Operative Bank Limited - A case study. He concluded that, the researcher has analysed the financial evaluation of Dindigul District Central Co-operative Bank Limited with the help of information collected from the annual reports available in the head office of the study unit. The financial statements provide rich information on the operational results of a business unit and much can be learnt from a careful examination of these statements. On the basis of the results of the analysis, the researcher found that the financial evaluation of the study unit was not highly encouraging. It is also clear that the liquidity position of the bank is not enough to meet its obligations. The following are the suggestions derived from the study for enhancing the performance of the DDCC Bank. 1. As there is positive relationship between deposits and loans and advances of the Bank, the more deposits should be mobilized so as to lend more which in turn brings more revenue to the Bank. In these regards the bank should open more branches so that it could mobilize more deposit by covering more members of customers. 2. The Bank should offer miscellaneous and agency services to the customers to earn non-operating income. Such non-operating income from these services shall increase the overall profit

65 88 of the Bank. 3. As the commercial banks open more rural branches now, they are giving stiff competition to district co-operative banks. The district co-operative banks could face such competition only by way of rendering all these services as provided by the commercial bank to the customers. This step on the part of district co-operative bank shall bring more customers into their fold and thereby more revenues. 4. Though the Bank is not found to be financially sick at present, it is in danger of becoming so. Hence the Bank should increase its credit worthiness by utilizing its working capital efficiently. Kaur (2015) studied the financial performance of District Central Co-operative Banks (DCCBs) in Haryana. He concluded that, the co-operative credit institutions being leader in rural and agriculture financing proved their worth at various stances and particularly when the Indian economy is recognized as rural economy worldwide. The DCCBs play an important role in the co-operative credit institutions. But the financial position of DCCBs is not so good in Haryana because there have been fluctuations in profits over the period of time. The reasons behind this weak performance were mismanagement, underutilization of resources, improper investment, improper capital structure, inadequate cash availability and lack of innovative products, so there is great need of change in the vision and strategies in these banks for better service to the people of the country. The DCCBs should draw up a programme of rehabilitation and efforts should be made to recover overdue by all possible methods. The borrowings societies should recover their loans from the members and pay it back to the central co-operative banks. The banks should be given loans in installment and proper link should be established between advancing and repayment of loans with sowing and harvesting seasons. The banks should also provide other funds which can be used at the time of emergency. The state government and NABARD need to pay more attention in providing the loans to small and marginal farmers without any delay. The banks should increase the share of loans to be provided for non-agriculture should be given loans to the central cooperative banks on easy term and conditions at cheaper rates at interest to be provided to the agriculture sector and farmers. An adequate margin should be kept between borrowing and lending rates so as to build a strong reserve fund, separate record should be kept overdue of principal interest and adequate provision out of the profits into debts. Serious step should be taken for rationalizing the capital structure of the central cooperative banks to strengthen and increase their owned and working capital to the prescribed economic level.

66 89 Vishwanath (2016) studied the financial performance of DCC Bank with special Reference to Vijayapur District. The findings of financial performance of DCC Bank, Vijayapur are (1) Target has not been reached for every year there is a wide gap between target and achievement due to same problem, it may be Financial management, Loan Distribution, Recovery Loan, Generation of Funds, etc. yearwise average and percentage of particular has been increased after which is the positive indicator of financial transaction and the growth rate of financial performance is better during five year period to Some suggestions for better functioning of bank in future are 1. The banks should adopt the modern methods of banking like internet banking, credit cards and ATM, etc. 2. The banks should plan to introduce new schemes for attracting new customers and satisfying the present ones. 3. The banks should plan for expansion of branches. 4. The banks should improve the customer services of the bank to a better extent. From the above said reviews, it is observed that researchers have identified the major problems faced by the credit co-operatives. They are low recovery, poor resource base, inadequate recovery staff, increasing NPAs, mounting overdues, high cost of management and problems in inefficient administration and management. The major suggestions made to overcome these constraints include, loans should not be sanctioned in hurry or under pressure, the lending institutions should strictly monitor the utilization of the loans, efforts should be made well in advance to collect installments by sending reminders and notices, the officials of the credit institutions be properly educated, attractive schemes of saving and deposits should be introduced, which are useful for efficient management of credit co-operatives, bringing transparency in banking operations and thereby improve the recovery performance and achieving reduction in overdues.

67 90 CHAPTER III METHODOLOGY This chapter is devoted to discuss in brief the methodology adopted to accomplish the objectives of the present study. It provides an insight into the sources of data, sampling design, method of data collection, and meanings of different variables chosen for study and method of analysis deployed in the analysis of data in relation to the objectives of study. The main purpose of the present study was to analyze and compare the performance of the DCCBs in Maharashtra during the period of last 15 years i.e. from to In consonance with the objectives of the study, the methodology followed is explained under the following headings. 3.1 Basic approach of the study 3.2 Brief description of the study area 3.3 Data requirements and sources of data 3.4 Meanings of terms and concepts used in the study 3.5 Sampling technique 3.6 Method of analysis 3.1 Basic approach of the study Methodological aspects of the research study deserve significance in its scientific completion and to arrive at the meaningful conclusions. One of the major aspects of the present study was to study the purposewise lending activities by DCCBs in Maharashtra. Secondly, it was decided to assess the regionwise and periodwise performance of the DCCBs in Maharashtra with reference to selected key indicators like number of branches, membership, share capital, working capital, reserve funds, borrowings, deposits, loan advanced, loan outstanding, recovery, overdues and cost of management, inequality in per hectare disbursement of short-term and medium-term credit to agriculture in different regions of the State. Naturally, the information regarding gross cropped area and total short-term and medium-term credit disbursed

68 91 to the members in different regions is imperative to accomplish the objective. Thirdly, it was decided to examine the share of DCCBs in total credit disbursement for agriculture. Further, it has been decided to identify the factors influencing the inequality in disbursement of credit by way of a multiple regression analysis. This will of course include the selection of appropriate variables as independent variables having influence on the magnitude of disbursement of short-term loans through the DCCBs in selected regions. Finally, it is proposed to examine the problems faced by DCCBs in disbursing and recovery of agricultural loans and to suggest remedial measures for the efficient working of the District Central Co-operative Banks in Maharashtra. The methodology adopted to accomplish these aspects of study is briefly explained as under. 3.2 Brief description of the study area The study area refers to the entire state of Maharashtra covering an area of 3.08 lakh sq. km., occupying nearly 10 per cent of the total geographical area of the country. It was decided to cover all the 30 DCCBs in the State for study Regions of Maharashtra state On reorganization of the Indian states on lingual basis, Brihan Maharashtra came into existence on April 1, This big state included all the districts of erstwhile Bombay State excluding Vijapur, Belgaon and Dharwad and included eight districts erstwhile Nagpur and five districts of erstwhile Hyderabad State. This arrangement continued upto April 30, 1960 when the final decision was made to bifurcate Brihan Maharashtra in two states (viz.: Maharashtra and Gujrat). The present state of Maharashtra was formed on May 1, On reorganization the state was divided into four regions viz., Western Maharashtra, Konkan, Marathwada and Vidarbha on the basis of different agro-climatic conditions, soil types, soil-cultural factors and other political and administrative considerations. Presently, the State is comprised of 4 regions (36 districts) as indicated in table 3.1. Table 3.1 Districts included in different regions of Maharashtra Region Districts Konkan Mumbai, Navi Mumbai*, Thane, Palghar*, Raigad, Ratnagiri, Sindhudurg

69 92 Western Maharashtra Vidarbha Marathwada Ahmednagar, Dhule, Jalgaon, Nandurbar*, Nashik, Kolhapur, Pune, Sangli, Satara, Solapur. Akola, Amravati, Buldana, Yavatmal, Washim*, Bhandara, Chandrapur, Gadchiroli, Gondia*, Nagpur, Wardha. Aurangabad, Beed, Hingoli*, Jalna, Latur, Nanded, Osmanabad, Parbhani * Newly created districts (i) Konkan Region The Western Ghat (Sahyadri ranges) runs North to South separating the coastal districts of this region. In this region, the rainfall is very high ranging from 2000 to 2500 mm. The soils are lateritic and non -lateritic and region has a high lying topography. Warmed humid climate is predominant in this region throughout the year. Paddy is an important crop of this region. This region is famous for growing mango (esp. Alphonso), coconut, arecanut, cashewnut and a variety spices. Konkan region is comprised of seven districts namely Mumbai, Navi Mumbai*, Thane, Palghar*, Raigad, Ratnagiri and Sindhudurg. (ii) Western Maharashtra Region Western Maharashtra region lies to the east of the Western Ghat It comprises of ten districts viz.; Ahmednagar, Dhule, Jalgaon, Nandurbar*, Nashik, Kolhapur, Pune, Sangli, Satara and Solapur. The region is also known as scarcity zone, soils are reddish brown and black. Rainfall ranges from 500 to 2000 mm. The crop pattern includes partly kharif and partly rabi crops. The region is famous for the commercial production of fruit crops such as banana, grapes and pomegranates and vegetables such as potato, onion, tomato, brinjal, etc. This region is mainly famous for sugarcane industries in co-operative sector. (iii) Vidarbha Region Tropical rainy climate is observed in this region. Rainfall ranges from 900 to 1700 mm. The soils are calcareous grayish black formed from mixed rocks. The crops are grown mostly during kharif season. These crops are jowar, cotton, tur, soybean, etc. Among the fruits, mandarin orange is important. Vidarbha region includes eight districts viz; Akola, Amravati, Buldana, Yavatmal, Washim*, Bhandara, Chandrapur, Gadchiroli, Gondia*, Nagpur, Wardha. From the 36 districts of the state, 6 districts viz., New

70 93 Mumbai, Nandurbar, Washim, Gondia, Hingoli and Palghar have been newly formed districts in the state respectively. (iv) Marathwada Region Assured rainfall and deep black soils are the important resources of this region. Rainfall ranges from 700 to 900 mm. and it is well distributed. Jowar and cotton are the two important crops of this region. The climate is tropical rainy. In this region, the irrigation facilities have been increased on completion of Jayakwadi irrigation project. Marathwada region includes eight districts viz., Aurangabad, Beed, Hingoli*, Jalna, Latur, Nanded, Osmanabad and Parbhani. 3.3 Data requirements and sources of data Since the investigation is based on macro level data, an attempt has been made to estimate regionwise and periodwise growth rates of performance of different indicators in DCC banks of Maharashtra over a period of last 15 years from to The time series data used for analysis of the various aspects of the study are as follows, 1. The time series data on various selected indicators were obtained from the published data of NAFSCOB (Basic Data on Performance of District Central Cooperative Banks from the period to ) and annual reports of DCCBs to workout various performance indicators and trends in advances. 2. The districtwise report on Potential linked credit plans from the year to were secured from NABARD office Pune, Maharashtra and obtained data used to workout purposewise lending activities and per cent share of DCCBs in total credit disbursement. 3. The districtwise data on scale of finance fixed by district central cooperative banks in Maharashtra for the period The districtwise gross cropped area was secured from the published reports of Handbook of Basic Statistics of Maharashtra state.

71 94 5. The time series data on area under commercial crops and average rainfall were secured from the published reports of Department of agriculture, Government of Maharashtra. 6. Time series data on area under horticultural crops was available from The Directorate of Horticulture, statistical Division, Shivajinagar Pune, Maharashtra. 7. The information related to the problems faced by DCCBs was obtained with the help of opinions, suggestions obtained from the Chief of Agricultural Loan Sections, General Manager and Member of Management Committees of 30 DCC banks in Maharashtra. Out of the total 30 DCCBs eight DCCBs did not respond in sending the information on mailed questionnaire. Thus in all 22 Chiefs of Agricultural Loan Sections were contacted either by mailed questionnaire or by personal contact method to get the requisite information. The questionnaire used for this purpose has is given in Appendix-III. 3.4 Meaning of terms and concepts used in the study Membership Membership of DCCBs is open to all individual farmers, primary agricultural credit societies, marketing co-operative societies, consumer store and farming societies, etc Share capital Share capital is one of the important sources of funds of the DCCBs; Member societies and individuals are the main sources of share capital Reserve funds Reserve funds of DCCBs include statutory reserve fund means the amount of liquid assets that DCCBs hold in order to protection against a substantial, agricultural stabilization fund and other reserves include building funds, depreciation fund and educational tour funds Owned funds The owned fund of the DCCBs is the sum of share capital and reserve funds.

72 Deposits The co-operative societies and individuals were the major sources of deposits in DCCBs Borrowings Borrowings are useful to assess the dependence of DCCBs. The DCCBs generally borrow from the State Co-operative Bank, loans from Government loans from commercial banks cash credit and overdrafts Working capital Working capital indicates the amount of funds available for undertaking various credit and service activities in a co-operative organization. Larger the working capital, greater is the potential of services and credit activities of the District Central Cooperative banks. The important components of working capital in a District Central Cooperative Bank are: 1) owned funds (share capital + reserve funds), ii) Deposits and iii) Borrowings. A bank with a higher working capital base can easily meet the credit requirements of its clients Investment Having understood the need for proper management of funds, it becomes necessary to plan its deployment in the best possible manner to increase the returns on one hand and ensure virtually zero risk of liquidity on the other. The investments were primarily confined to meeting statutory requirements of cash reserve ratio (CRR) and statutory liquidity reserves (SLR). The reserves cannot be invested in the business of the bank, but when the total accumulated reserves exceed the paid up share capital, the surplus may be invested in the business of the bank and that too with the special sanction from the Registrar of co-operatives. Investment made by the DCCBs on Government securities, other trustee securities, fixed deposits and other investment includes investment in SCB mutual agreement scheme, deposits, SCB reserves, share of industrial finance corporation, etc Credit flow

73 96 This refers to the amount of short and medium term agricultural credit made available to the farmers through PACS by District Central Co-operative Banks in each of the districts Loan outstanding The loan outstanding in DCCBs means the amounts which remain to be recovered on particular date (principal + interest amount) Loan overdues An overdue in DCCBs means the amount which was due to be paid on particular date, but has not been repaid by the borrower Cost of Management The expenditure of the bank mainly includes expenditure on salaries of staff and other expenditure. The other expenditure includes interest paid, establishment expenses and operating expenses like rent and taxes, printing and stationery, audit fees, telegram and postage and miscellaneous expenditure Agricultural credit The term agricultural credit includes two types of credit viz., short-term credit and medium term credit at the district level, rather than at the individual level Short-term credit The short-term credit refers to the amount of credit available for the purpose of crop production from the District Central Co-operative Banks for the period of 12 to 18 months Medium-term credit This refers to medium-term investment credit made available by the District Central Co-operative Banks for the period of 3 to 5 years Irrigation

74 97 It is measured in terms of the proportion of the gross irrigated area to gross cropped area. It represents the developments in terms of spread of irrigation Commercial crops It is expressed as the proportion of area under commercial crops to the gross cropped area. The commercial crops include cotton and sugarcane which generally need higher credit facilities Horticultural crops It is expressed as the proportion of area under horticultural (fruit) crops to the gross cropped area. Horticultural crops include the area under grapes, mangoes, pomegranates, guava, coconut, orange and other fruit crops Rainfall The quantum of rainfall (mm) received during the particular year is taken as the weather parameter. 3.5 Sampling Technique All the 36 district central co-operative banks in Maharashtra were selected for the study. Out of 36 DCCBs, 30 DCCBs were more than 15 years old and 6 DCCBs (newly created) were less than 15 years old. Hence in all the 30 District Central Co-operative banks in Maharashtra were selected for the study. However, the sample varied according to the response obtained for a particular aspect of the study. For instance, the officials of 22 DCCBs in the state responded to the aspect relating to the problems of DCCBs. As regards the study of inequality in distribution of credit (short and medium), the data obtained from 29 (excluding Mumbai District Central Co-operative Bank) DCCBs were utilized. For other aspects of study particularly the work performance, all the 30 DCCBs formed the sample of study. 3.6 Method of analysis

75 98 To accomplish the objectives under study, different analytical tools were employed to analyze the data. The methods of analysis employed were tabular analysis, growth function, inequality measures like coefficient of variation, Theils entropy coefficient, Gini ratio, Lorenz curve and regression analysis. The regionwise and periodwise performance of DCCBs was studied with the help of different performance indicators by simple tabular method of analysis besides estimating their compound growth rates and subsequently ranking of regions based on performance index of DCCBs Tabular analysis Simple tabular analysis was employed to evaluate the performance of District Central Co-operative Banks amongst different regions and over the period of time in Maharashtra. The following composition proportions and ratios of various co-operative performance indicators were calculated for each region and the state as a whole for period from to A. Physical Indicators: 1. Number of branches (Nos.) 2. Number of members (Nos.) 3. Number of employees (Nos.) B. Financial Indicators: 1. Share capital (`. in crores) 2. Reserve funds (`in crores) 3. Owned funds (`.in crores) 4. Total borrowings (`. in crores) 5. Total deposits (`.in crores) 6. Total working capital (`. in crores) 7. Total investments (`. in crores) 8. Total loan and advances / outstanding (`. in crores) 9. Total loan collection (recovery) (`.in crores) 10. Total overdues (`.in crores) 11. Total cost of management (`.in crores) 12. Credit deposit ratio (CDR) 13. Percentage of over dues to loan outstanding 14. Ratio of cost of management to working capital Estimation of rates of compound growth in performance indictors:

76 99 The growth in the progress of the performance indicators was estimated by using per cent change over the base period To assess the growth of District Central Co-operative Banks in different regions of the state during the study period, the compound growth rates of development indicators of co-operatives were computed for the performance indicators under consideration by using exponential model. The regionwise and periodwise compound growth rates for different indicators (as listed above) of DCCBs have been estimated using the following type of exponential model. Y = ab t e Where, Y = Dependent variable (indicator). a = Intercept b = Trend value t = Time period in years E = Error term The significance of the estimated compound growth rates was tested with the help of Student t test Ranking of districts and regions based on the performance index The ranking of districts and regions was based on Performance Index (PI) of DCCBs, which was obtained as under. (Jadhav, 2004 and Bhosale, 2011) PI = Lo LD Lod X MB MBs Where,

77 100 PI = Performance Index Lo = Loan outstanding LD = Loan demand Lod = Overdues MB = Number of borrowing members MBs = Membership at state level Credit deposit ratio The credit deposit ratio was worked out by using the following formula: Credit deposit ratio = Total credit advanced Total deposits Scale of finance and credit gap in regions of Maharashtra The schedules of the scale of finance of the DCCBs for the year in the four regions of the Maharashtra were utilized for analysis of regional scale of finance offered by the DCCBs. This was compared with the regional scale of finance recommended by the Department of Agriculture to work out the regionwise credit gap Measures of inequality in credit flow by DCCBs The regional inequality in disbursement of short term and medium term loans by DCCBs were assessed with the help of following measures of inequality Coefficient of variation To accomplish the objective relating to the inequality, the regionwise coefficient of variation (CV) was calculated for each of the 15 years ( to ) by using the following formula. (Jadhav, 2004 and Bhosale, 2011) CV = SD Mean X 100 Where,

78 101 CV = Coefficient of variation SD = Standard deviation Mean = X/ N X = per hectare credit flow N = Number of districts Theils entropy Theil (1967) evolved the measure of inequality to assess the income inequality which was given by (Jadhav, 2004 and Sale, 2014) H (Y i ) = N Y i i=1 X log ( 1 Y i ) Where, H (Y i ) = Theils entropy Y i = Proportion of i th district in the total credit flow from DCCBs in the State H (Y i ) has been modified and is given by I (Y i ) = log N - H (Y i ) Where, I (Yi) = Theils entropy coefficient which ranges from 0 to log N N = Number of districts Taking I (Yi) as dependent variable, linear trend equation was fitted to examine the regionwise inequality over the period of 15 years ( to ). I (Y i ) = a + bt + u The regression coefficient was tested for its statistical significance. A significant positive regression coefficient indicates an increase in the variability in credit flow while

79 102 a significantly negative regression coefficient indicates a tendency of reduction in variability over the last 15 years period ( to ) Gini ratio The Gini ratio (L) is estimated as follows. (Grewal, 1987) N L = 1 - i=1 (P i - P i-1 ) X (Q i - Q i-1 ) Where, P i = Cumulative percentage of number of DCCBs up to and including i th class. Q i = Cumulative percentage of credit flow per hectare of gross cropped area by DCCBs upto and including i th class N = Number of DCCBs. Higher the value of Gini ratio (L), more is the inequality in distribution of credit and vice versa (0 < L < 1) Lorenz curve technique A measure of income inequality developed by Kuznets (1963) by constructing Lorenz curve has also been used here. It is the graphical representation of cumulative proportion of number of DCCBs in Maharashtra on horizontal X-axis and cumulative proportion of agricultural credit flow per hectare of gross cropped area by DCCBs on the vertical Y-axis. The line of equal distribution is the straight line at 45 0 angle joining (0, 0) and (100,100) points. The degree to which a line Lorenz Curve deviates from the line of equal distribution is a measure of the inequality of disbursement of loan. Further, the curve moves away from the equality line, the greater is the inequality. (Grewal, 1987)

80 103 Both Gini Ratios and Lorenz Curves were obtained for base year, mid-year and terminal year of the study Identifying the factors influencing regional inequality in credit flow In order to study the factors influencing per hectare short term credit flow by DCCBs, a multiple linear regression analysis involving per hectare short term agricultural credit in rupees (Y) as dependent variable and gross cropped area in lakh hectares (X 1 ), proportion of area under commercial crops to GCA (X 2 ),, average rainfall in (mm) (X 3 ), total deposits in crores of rupees (X 4 ) and short term agricultural loan recovery in per cent (X 5 ) as the independent variables was attempted. This analysis was carried out regionwise as well as for the State as a whole. The form of the equation used for analysis is given below Y = a +b 1 X 1 +b 2 X 2+b 3 X 3+ b 4 X 4+ b 5 X 5+ u Where, Y = Per hectare short term agricultural credit (`.) a = Constant b 1 to b 5 = Regression coefficients X 1 = Gross cropped area (thousand hectares) X 2 = Proportion of area under commercial crops to gross cropped area (per cent) X 3 = Annual rainfall (mm) X 4 = Total deposits (` in crores) X 5 = Short term agricultural loan recovery (per cent) u = Error term. *Area under commercial crop includes area under commercial crops (sugarcane + cotton) and area under fruit crops

81 104 The significance of the coefficients of each of the variables from the estimated model was tested with the help of t statistic and goodness of fit was judged on the basis of analysis of variance Problems faced by DCCBs An attempt to understand the problems concerning to administration, management, finance, disbursement of loan and recovery of loan was made by analyzing the information obtained from the officials of the DCCBs in Maharashtra. Similarly, the suggestions obtained from the officials of the DCCBs for improvement in the work performance of DCCBs and the empirical conclusions of the study served the basis to suggest the remedial measures to overcome the above said problems. To examine importance of the problems faced by DCCBs in disbursing and recovery of agricultural loans and suggest remedial measure for efficient working of DCCBs in Maharashtra through Garrett s Ranking Technique was used. By referring Garrett s table the per cent position estimated were converted into scores (Garrett and Woodworth, 1967). Per cent position = 100 X R ij 0.5 N j Where, R ij = Rank given to i th problems by j th districts N j = Number of problems ranked by j th districts Thus for each problem the score of various districts were added and then mean score was estimated. The means thus obtained for each of the problems were arranged in descending order. The problems with highest mean value were considered as the most important one and the others followed in order.

82 105 CHAPTER IV RESULTS AND DISCUSSION The District Central Co-operative Banks situated at the center of the three tier structure of co-operative credit in Maharashtra have been playing a crucial role in promoting agriculture and allied activities by purveying credit to the needy through Primary Agricultural Co-operative Societies (PACS). These banks (DCCBs) act as friend, philosopher and guide to the entire cooperative movement in the district, for they not only safeguard the interests of the PACS but also various other types of credit and non-credit societies in the district. It is essential to probe in detail the growth of DCCBs among the four regions of the state over a time period in respect of different performance indicators. 4.1 Regionwise and periodwise performance of DCCBs in Maharashtra during to The present study seeks to analyses regionwise performance of DCCBs based on various indicators in Maharashtra during different time periods. The empirical evidence relative to DCCBs performance has been derived from the percentage growth over the base year and estimated compound growth rates in different regions for the period to The performance indicators selected for the analysis were, number of branches, membership, share capital, reserve funds, owned funds, deposits, borrowing, working capital, investment, loan issued, loan outstanding, loan recovery, loan overdues, working results and cost of management. Furthermore, the regionwise average compositions and ratios of these indicators were estimated for the base year i.e and terminal year, The regionwise and periodwise performance of DCCBs during to was studied for different indicators. The details of the analysis are presented as under Number of branches The information on trends in number of branches of DCCBs in Maharashtra is presented in Table 4.1 It could be seen from Table 4.1 that the Western Maharashtra region occupied a dominant place in the state by covering more than 50 per cent of the branches during both the base year and the terminal year of the study. The total number of branches of the DCCBs had decreased from 3722 in to 3718 in i.e. by per cent. The regionwise per cent change over base year of DCCBs in respect of number of branches showed highest growth

83 106 in Konkan region (45.15 per cent) followed by Western Maharashtra (2.62 per cent), whereas, negative growth was observed in Vidarbha (-4.98 per cent) and Marathwada ( per cent). Table 4.1 Trends in number of branches of DCCBs in Maharashtra during to (Nos.) Regions Period Per cent Change CGR (per cent) Konkan 268 (7.20) 389 (10.46) * (0.0016) Western Maharashtra 1949 (52.36) 2000 (53.79) Ns ( ) Marathwada 802 (21.55) 661 (17.78) * (0.0022) Vidarbha 703 (18.89) 668 (17.97) Ns (0.0013) Maharashtra Ns (0.0082) (Figures in parentheses are the percentages to the respective totals and standard errors) * = Significant at 5 per cent level, NS = Non-significant The annual rate of compound growth in number of branches of DCCBs in the state as a whole was per cent per annum, which was non-significant during the entire period under study. The regionwise growth shows that the branches of DCCBs in Konkan region had significantly increased at the rate of 2.32 per cent per annum and in Marathwada it was significantly declined ( per cent). The Western Maharashtra ( per cent) and Vidarbha (-0.24 per cent) had non-significant growth during whole period under study. It looks that the performance of DCCBs in respect of branch expansion was nonsatisfactory at the state level because of branches in Marathwada and Vidarbha declined it might be due to inefficient management as a result declined in branches in terminal year. The branch expansion was satisfactory in Konkan and Western Maharashtra may be due to wellfunctioning and profitable working of DCCBs in that region. The results have also been

84 107 presented by way of bar graph in figure 2 and regionwise and period wise share in number of branches is presented in figure Membership The DCCBs have been primarily organized to provide credit and to extend guidance and technical assistance to PACS without affecting their autonomy and independent character. The DCCBs also act as financing agencies to other type of societies such as weaver s societies, processing co-operatives and consumer s stores etc. and such societies therefore become member of the DCCBs Trends in total membership The information about the regionwise and periodwise trends in total membership of DCCBs in Maharashtra during to is presented in Table 4.2. It could be noted from Table 4.2 that the Western Maharashtra region occupies a conspicuous position in the state with more than 50 per cent of the total membership during both years. Moreover, there was a steady increase in the total membership of DCCBs in Maharashtra during the period. The number of members had increased from in to in i.e. by per cent over the base year. The maximum increase in the total membership was noticed in Konkan region (60.38 per cent) followed by Western Maharashtra (15.64 per cent), Marathwada (9.16 per cent) and Vidarbha region decreased by ( per cent). This indicates the satisfactory performance of DCCBs in respect of expansion and coverage with large amount of lending, highest interest margins and more profits. Trends in total membership of DCCBs in Maharashtra State as a whole witnessed a significant positive trend with an annual rate of compound growth being 1.33 per cent during the entire period. Table 4.2 Trends in membership of DCCBs in Maharashtra during to (Nos.) Regions Period Per cent Change CGR (per cent) Konkan (17.67) (23.63) * (0.0019)

85 108 Western Maharashtra (53.09) (51.19) * (0.0011) Marathwada (12.57) (11.44) * (0.0012) Vidarbha (16.67) ( 13.74) Ns (0.0014) Maharashtra * (0.0073) (Figures in parentheses are the percentages to the respective totals and standard errors) * = Significant at 5 per cent level, NS = Non-significant The annual rate of compound growth in total membership of DCCBs was positive and significant with high magnitudes in Konkan region (3.34 per cent) followed by Western Maharashtra (1.07 per cent), Marathwada (3.16 per cent) and with a low magnitude and nonsignificant growth in Vidarbha region (0.23 per cent) during the whole period under study. The total membership of DCCBs was increased mainly due to significantly increases in PACS membership at state and regional level. (see Appendix-I a). The trends in membership of DCCBs according to regions in Maharashtra have been depicted by way of bar graph in figure Average membership and its composition In order to assess the performance of the DCCBs, it is necessary to study the average total membership per DCCB and its composition in different regions of the state. The regionwise and periodwise average total membership per DCCB and its composition is presented in Table 4.3. Table 4.3 revealed that the average total membership per DCCB at the State level was during , which increased to in As regards to the regionwise analysis, the Western Maharashtra region occupied a top position with maximum membership per DCCB in the State during both the periods. The DCCBs in Marathwada regions had relatively lower average membership during both the years of the study. Table 4.3 Average membership and their composition of DCCBs during to in Maharashtra

86 109 (Nos.) Regions PACS Individuals Total membership PACS Individuals Total Membership Konkan (85.11) (14.89) (88.66) (11.34) Western Maharashtra (77.16) (22.84) (81.45) (18.55) Marathwada (97.65) (2.35) (97.82) (2.18)) Vidarbha (67.17) (32.83) (71.25) (28.75) Maharashtra (79.48) (20.52) (83.63) (16.37) (Figures in parentheses are the percentages to the respective totals) Furthermore, the proportion of PACS membership in total membership of DCCBs at the State level increased from per cent in to per cent in There was an increasing trend in PACS membership per DCCB in all the regions over the years. It was clearly indicates that the proportional share of PACS membership in total membership had increased during the study period. As regards the proportion of individual membership in total membership of DCCBs, it could be observed that the proportional share of individual membership showed a decline from per cent in to per cent in at the State level. The similar declining trend was noticed in all the regions except Konkan region during the study period. The significantly declining individual membership in Western Maharashtra, Vidarbha and state level during study period (see Appendix-I a). This was due to the policy of restricting individuals as members in DCCBs (Jadhav, 2004). The individual membership in the Konkan region increased due to significantly increase in number of branches (see Table No.4.1). The regionwise and periodwise average total membership per DCCB and its composition is presented in figure 5.

87 Trends in Employment The information on regionwise and periodwise growth in the total employment of DCCBs in Maharashtra during to is presented in Table 4.4. From Table 4.4 observed that the total number of employee working in DCCBs in Maharashtra decreased from 27,743 in to 22,887 in , the number employee showed declined by (17.50 %) over the base year. The regionwise analysis shows that the declined growth was seen in all regions of Maharashtra except Konkan region. Table 4.4 Trends in total number of employees of DCCBs in Maharashtra during to (Nos.) Regions Period Per cent Change CGR (per cent) Konkan 3163 (11.40) 3314 (14.48) Ns (0.0014) Western Maharashtra (51.04) (49.98) * (0.0025) Marathwada 5224 (18.83) 3804 (1662) * (0.0015) Vidarbha 5197 (18.73) 4329 (18.91) * (0.0028) Maharashtra * (0.0015) (Figures in parentheses are the percentages to the respective totals and standard errors) * = Significant at 5 per cent level, NS = Non-significant The highest per cent number of employee declined in Marathwada (27.18 %) followed by Western Maharashtra (19.20 %) and Vidarbha (16.70 %), while increased in number of employee by (4.77 %) in Konkan region. The rate of growth in total employment of DCCBs in Maharashtra and regions of Maharashtra was negative except Konkan region. The highest growth in total employee was observed in Konkan region (0.13 per cent) followed by Vidarbha

88 111 region (-1.18 per cent), Western Maharashtra region (-1.64 per cent) and least in Marathwada ( per cent). The reduction in employment in all the regions and state level except Konkan region was mainly due to the reduction in number of branches in Marathwada and Vidarbha regions due to inefficient management, high overdues, less recovery results less amount of credit with banks for recycle and modernization in DCCBs of Maharashtra. These were the main reasons of reduction in number of employee in the state. The number of employee increased non-significantly in Konkan region due to significant increase in number of branches in Konkan region. The trends in number of employee of DCCBs according to regions in Maharashtra have been depicted by way of bar graph in figure Share capital A District Central Co-operative Bank like any other banking organization needs funds for lending to the members. Total funds needed by a DCCB depends on factors such as volume of business, type of services it provides, kinds of physical facilities available, nature and competition it faces and degree of risk it takes in the day to day business. Whatever the total amount of funds, it is normally related to the number of members and volume of business. By and large, a DCCB raises funds in four ways viz., i) Share capital, ii) Reserve funds, iii) Deposits from members and non-members and iv) Borrowings from higher financing agencies. These funds together called working capital, which indicate the financial strength of the DCCB. The financial soundness is most important for better credit and service activities of DCCBs. Share capital is one of the important sources of funds of the DCCBs; Member societies and individuals are the main sources of share capital Trends in total share capital The detail information of share capital position of DCCBs in different regions of the Maharashtra state during to is presented in Table 4.5. From the Table 4.5 revealed that the total share capital of the DCCBs in Maharashtra has steadily increased from ` crores in to ` crores in Regionwise trend showed the highest growth in total share capital in Vidarbha ( per cent) followed by Western Maharashtra ( per cent), Konkan ( per cent) and Marathwada region ( per cent) over the base year. The DCCBs in Western Maharashtra region had maintained top position with respect to total share capital throughout the period of study. Out of total share capital of DCCBs in the

89 112 State as a whole, Western Maharashtra region alone shared about 53 per cent during both the years. This was mainly due to the highest membership and therefore lending not only to agriculturist but also for related activities such as processing, marketing dairying, etc. in the region (Jadhav, 2004). Table 4.5 Trends in total share capital of DCCBs in Maharashtra during to (` in crores) Regions Period Per cent Change CGR (per cent) Konkan (8.62) (8.43) * (0.0019) Western Maharashtra (53.00) (53.64) * (0.0030) Marathwada (21.79) (16.04) * (0.0034) Vidarbha (16.58) (21.90) * (0.0024) Maharashtra * (0.0023) (Figures in parentheses are the percentages to the respective totals and standard errors) * = Significant at 5 per cent level, NS = Non-significant Total share capital of DCCBs at state the level, registered significant compound growth rate of 9.66 per cent per annum during the entire period. Regionwise results clearly indicated that there was satisfactory growth of share capital in all the regions registering a significant growth rate of 7 to 12 per cent per annum. The increasing (positive) trend in total share capital during the entire period showed the financial soundness of DCCBs, in the State. The increase in share capital of DCCBs in Maharashtra and regional level over the years was mainly due to the increased in number of PACS membership. The regionwise trends in total share capital of DCCBs have been presented graphically in figure Average total share capital and its composition

90 113 The regionwise average total share capital per DCCB and the proportional share of PACS, individuals and Government in average total share capital for the base year and the terminal year of the study are presented in Table 4.6 From Table 4.6 it is observed that the average total share capital of DCCBs in the Maharashtra State was ` crores in , which has increased to ` crores in The Western Maharashtra had maximum total share capital per DCCB. It was the lowest in the Konkan region during the period under study. The proportional share of PACS in the average total share capital of DCCBs at the state level showed decrease from per cent in to per cent in The similar trend in the share of PACS was noticed in all the regions of the state except Konkan during the study period. It therefore clearly indicates that the PACS had a lion s share in the total share capital of DCCBs in the State. Table 4.6 Average total share capital and its composition in DCCBs during to in Maharashtra (` in crores) Regions PACS Govt. Individuals Total share capital PACS Govt. Individuals Total share capital Konkan (97.52) 0.13 (1.13) 0.15 (1.32) (99.59) 0.00 (0.00) 0.18 (0.41) Western Maharashtra (98.41) 0.35 (0.90) 0.27 (0.69) (96.91) 4.60 (2.97) 0.19 (0.12) Marathwada (98.44) 0.32 (1.56) 0.00 (0.00) (92.58) 4.42 (7.42) 0.00 (0.00) Vidarbha (98.25) 0.21 (1.75) 0.00 (0.00) (84.73) 9.64 (15.23) 0.02 (0.03) Maharashtra (98.31) 0.26 (1.20) 0.11 (0.49) (93.78) 5.30 (6.12) 0.09 (0.10) (Figures in parentheses are the percentages to the respective totals)

91 114 The percentage of individuals in the total share capital showed marginal increase in Western Maharashtra, Konkan and also at the State level, while it remained stagnant in Marathwada and Vidarbha regions. This was due to the declining trend in individual membership and the larger credit transactions by PACS. The contribution by the Government in total share capital of the DCCBs at the state and regional level had increased during study period except Konkan region; it had maximum share capital from PACS per cent. The results at the state level are also depicted by way of pie diagram in figure Reserve fund Trends in total reserve fund The total reserve fund of the DCCBs has witnessed a steady growth over a period. The detailed position of total reserve funds of DCCBs in the state is depicted in Table 4.7. It was seen from the Table 4.7 that the reserve funds of DCCBs in the State had increased from ` crores in to ` crores in As regards to the regionwise trend, the total reserve funds of DCCBs in Western Maharashtra registered a higher growth ( per cent) followed Vidarbha ( per cent), Konkan region ( per cent) and Marathwada ( per cent), and over the base year. In the size of total reserve funds of DCCBs in the State, Western Maharashtra region had a lion s share, which was per cent in , which subsequently increased to per cent in Table 4.7 Trends in total reserve funds of DCCBs in Maharashtra during to (` in crores) Regions Period Per cent Change CGR (per cent) Konkan (25.48) (24.19) * (0.0070) Western Maharashtra (39.80) (41.88) * (0.0072) Marathwada (18.90) (17.93) * (0.0019)

92 115 Vidarbha (15.82) (16.00) * (0.018) Maharashtra * (0.010) (Figures in parentheses are the percentages to the respective totals and standard error) * = Significant at 5 per cent level, NS = Non-significant For the State as a whole, the total reserve funds showed a significant increase by per cent per annum during the entire period. Amongst the regions, the Western Maharashtra region had registered maximum compound growth rate of per cent followed by Marathwada (10.54 per cent), Konkan (10.05 per cent) and Vidarbha (9.20 per cent). The significant growth in total reserve funds was possible mainly because of a continuous and significant flow of credit through statutory reserve, other reserves and agricultural stabilization fund during the period under study (See Appendix-I b). The trends in reserve funds of DCCBs according to regions in Maharashtra have been depicted by way of bar graph in figure Average total reserve fund and its composition The regionwise average total reserve funds and their composition during and in respect of DCCBs in Maharashtra are presented in Table 4.8 From the Table 4.8 it was observed that the average total reserve funds in the DCCBs at the state level were ` crores in , which increased to ` crores in The share of other reserves showed slightly declined from 83 per cent and 82 per cent whereas, the share of statutory fund in the total reserve fund showed an increase from per to per cent and the share of agricultural stabilization fund in the total reserve fund showed decline from 6.44 per to 5.48 per cent during study period. Out of the total reserve funds, other reserve fund occupied a conspicuous place in the DCCBs of Maharashtra. The DCCBs in Konkan region had the highest average total reserve funds followed by Western Maharashtra, Marathwada and the Vidarbha region during both the period of study. Table 4.8 Average total reserve fund and its composition of DCCBs in Maharashtra during to (` in crores)

93 Regions Statutory fund Agril. stab. Fund Others Total reserve fund Statutory fund Agril. stab. fund Others Total reserve fund Konkan 9.10 (10.65) 4.65 (5.44) (83.90) (11.44) (3.83) (84.73) Western Maharashtra (14.52) 7.58 (10.22) (75.26) (13.36) (8.01) (78.63) Marathwada 2.37 (5.22) 0.94 (2.08) (92.70) (9.49) 5.39 (2.57) (87.94) Vidarbha 1.94 (6.60) 1.10 (3.73) (89.67) (13.58) 6.73 (4.63) (81.79) Maharashtra 5.88 (10.53) 3.60 (6.44) (83.03) (12.23) (5.48) (82.29) (Figures in parentheses are the percentages to the respective totals) The regionwise composition of average total reserve fund reveals that there was a substantial increase in the proportional share of the other reserve funds, statutory funds and agricultural stabilization funds in all the regions during the period under study. These results at the state level are also depicted by way of pie diagram in figure Owned funds The owned funds of the DCCBs normally include share capital and reserve fund Trends in total owned funds Table 4.9 gives regionwise and periodwise growth in the total owned funds of DCCBs during to in Maharashtra. Table 4.9 depicted that the total owned funds of the DCCBs at the state level had increased from ` crores in to ` crores in showing an increase of more than 36 times over the base year. As regards the regionwise analysis, the growth in owned funds in Vidarbha region (40.22 times) recorded an increase over the base year

94 117 followed by Western Maharashtra (37.50 times), Konkan (35.43 times) and Marathwada region (30.96 times). The share of owned funds of DCCBs in Western Maharashtra was per cent of the total funds of DCCBs in the year , which later on increased to per cent of the total owned funds of the DCCBs in Western Maharashtra secure a top position as compared to other regions in the state. The total owned funds of DCCBs in Maharashtra registered a compound growth rate of per cent per annum during the entire period of the study. The growth in reserve funds was relatively satisfactory in all the regions and at the State level during the entire period. The branch expansion policy also contributed for improvement in the owned funds of the DCCBs. Table 4.9 Trends in total owned funds of DCCBs in Maharashtra during to (` in crores) Regions Period Per cent Change CGR (per cent) Konkan (20.74) (20.39) * (0.0064) Western Maharashtra (43.51) (44.72) * (0.0054) Marathwada (19.72) (17.48) * (0.015) Vidarbha (16.03) (17.42) * (0.014) Maharashtra * (0.0018) (Figures in parentheses are the percentages to the respective totals and standard error) * = Significant at 5 per cent level, NS = Non-significant Regionwise trend in growth of owned funds indicated that the Western Maharashtra region (10.44 per cent) has recorded the highest compound growth rate per annum followed by Konkan (10.00 per cent), Vidarbha (9.83 per cent) and Marathwada region (9.82 per cent) during the whole period under study. The total owned fund showed increase in all the regions

95 118 and at the state level was mainly because of significant increase growth in share capital and reserve funds of the DCCBs in Maharashtra. The trends in owned fund of DCCBs according to regions in the Maharashtra have been depicted by way of bar graph in figure Average total owned funds and its composition The average total owned funds of the DCCBs indicate the amount of funds available with DCCBs from their own share capital and reserve fund. The regionwise average total owned funds and their composition during and in respect of DCCBs in Maharashtra has been presented in Table 4.10 Table 4.10 revealed that the average total owned funds per DCCB at the State level were ` crores during , which increased to ` crores in The Western Maharashtra region had maximum owned funds per DCCB during both the years under study because of more total share capital and reserve funds. It indicated that the DCCBs in Western Maharashtra region had sound position in respect of owned funds. It could be noted that the proportion of total reserve funds in the total owned funds showed a significant increase from per cent in to per cent in Table 4.10 Average total owned funds and its composition of DCCBs in Maharashtra during to (` in crores) Regions Total Share capital Total Reserve Funds Total Owned Funds Total Share capital Total Reserve Funds Total Owned Funds Konkan (11.68) (88.32) (9.97) (90.03) Western Maharashtra (34.22) (65.78) (28.94) (71.06) Marathwada (31.05) (68.95) (22.15) (77.85)

96 119 Vidarbha (29.05) (70.95) (30.33) (69.67) Maharashtra (28.10) (71.90) (24.13) (75.87) (Figures in parentheses are the percentages to the respective totals) while that of share capital depicted a decline from per cent to 24.13per cent during the above period at the state level due to per cent decline in individual membership. It was thus clear that the reserve funds formed an important constituent of total owned funds in the DCCBs of the state. These results at the state level are also presented by way of a pie diagram in figure Deposits Deposits in a Central Co-operative Bank assume special urgency and importance in the context of the need for extending credit support to cover growing credit requirements of agricultural and non-agricultural sector. Deposits help the bank, immediately by cushioning the overdues and thereby maintain an uninterrupted flow of credit from the higher financing agency. The expanding scales of activities and growing diversification have also made it necessary that the DCCBs should build up large resources by way of deposits. The growth in deposits helps the DCCBs to reduce their reliance on external resources Trends in total deposits The regionwise and periodwise trends in total deposits of DCCBs during to in Maharashtra presented in Table 4.11 From Table 4.11 revealed that the total amount of deposits of DCCBs in the Maharashtra had increased from ` crores in to ` crores in the year , recording an impressive growth of more than 21 times over the base year. Regionwise analysis showed that the DCCBs in Vidarbha region had recorded the highest growth (29 times) followed by Western Maharashtra (25 times), Marathwada (19 times) and Konkan (12 times) over the base year. Table 4.11 Trends in total deposits of DCCBs in Maharashtra during to (` in crores)

97 120 Regions Period Per cent Change CGR (per cent) Konkan (30.71) (21.73) * (0.011) Western Maharashtra (46.39) (52.14) * (0.0040) Marathwada (9.64) (9.22) * (0.0070) Vidarbha (13.26) (16.91) * (0.0030) Maharashtra * (0.0037) (Figures in parentheses are the percentages to the respective totals and standard error) * = Significant at 5 per cent level, NS = Non-significant The magnitudes of annual compound growth rates in deposits of DCCBs for all the regions and for the state as a whole ranged between 7-10 per cent during the entire study period, which indicated the satisfactory performance in respect of deposits in all the regions and state as a whole. It indicated the self-reliance of DCCBs during the period under study. The total deposits of DCCBs increased due to significant growth in deposits from PACS, individuals, local bodies and deposits from other sources at the state and regional level except other deposits in Konkan region had negative and non-significant (See Appendix I.d). There was a significant growth in total deposits of DCCBs due to the policy of RBI in lending to Central Cooperative Banks, which was linked with the minimum investment (MI) policy and compulsory deposit mobilization by the DCCBs.

98 121 Table 4.12 Average total deposit and its composition of DCCBs in Maharashtra during to (` in crores) Regions Cooperative Society Individuals Local Bodies Others Total Deposits Cooperative Society Individuals Local Bodies Others Total Deposits Konkan (46.68) (50.99) (2.17) 1.87 (0.16) (47.12) (41.81) (11.07) 0.00 (0.00) Western Maharashtra (49.48) (40.64) (8.90) 9.82 (0.98) (30.65) (62.23) (4.62) (2.50) Marathwada (31.02) (59.65) (4.70) (4.83) (15.36) (63.49) (16.18) (4.97) Vidarbha (19.65) (68.00) (10.79) 4.48 (1.56) (12.24) (60.27) (20.84) (6.65) Maharashtra (42.88) (49.25) (6.71) 7.50 (1.15) (29.71) (57.58) (9.83) (2.88)

99 (Figures in parentheses are the percentages to the respective totals) 122

100 123 ( Barik & Dugalavannan (2001)). The trends in deposits of DCCBs according to regions in Maharashtra have been depicted by way of bar graph in figure Average total deposit and its composition The total deposits do not generally reflect the true deposit performance as the number of DCCBs varied in different regions. Hence, the deposit per DCCB was worked out to draw inferences on the deposit position of DCCBs in different regions in Maharashtra. Table 4.12 presents the average total deposits per DCCB and their composition according to regions at two points of time in Maharashtra. An examination of average total deposit per DCCB indicated that average total deposit per DCCB for the State as a whole stood at ` crores in , which has increased, to ` crores in As regards the regionwise analysis, the maximum deposits per DCCB were noticed in Konkan region (` crores) followed by Western Maharashtra (` crores), Vidarbha (` crores) and Marathwada (` crores) during the base year. In terminal year of the study, Western Maharashtra region secured a top position, where the average deposits per DCCB were ` crores and the Marathwada region recorded the lowest total deposits at ` crores per DCCB. The co-operative societies and individuals were the major sources of deposits in DCCBs. These sources combinely contributed more or less 90 per cent of total deposits of DCCBs in all the regions and for the State as a whole during study period. The deposit from local bodies and other sources contributed more than 7 per cent to the total deposits. This was because the cooperative banks do not get Government support for receiving deposits from local boards and semi- Govt. institutions. On this account, commercial banks were in better position than the cooperative banks. The co-operative banks did not formulate novel schemes for attracting deposits suitable to the general public Therefore, these banks may formulate schemes at regular intervals and capture the potential depositors with competitive market approach. The physical facilities of the DCCB branches need to be improved besides locating branches in busy and potential centers for commercial orientation. The composition of deposits in DCCBs at the state level has been depicted by way of pie graph in figure 14.

101 Borrowings: Borrowings are useful to assess the dependence of DCCBs. The DCCBs generally borrow from the State Co-operative Bank. A DCCB should rely less on borrowings; it has to make all other special serious efforts to augment its deposits and owned funds Trends in total borrowings The regionwise and periodwise trends in borrowing of DCCBs during to in Maharashtra are presented in Table 4.13 Table 4.13 revealed that the total borrowings of the DCCBs for the State level had increased from ` crores in to ` crores in Regionwise analysis indicated that the increasing growth in total borrowings was observed in all the regions under study. The maximum growth in total borrowings was recorded in Vidarbha region (499 per cent) followed by Western Maharashtra (247 per cent), Konkan region (66.91 per cent) and lastly by Marathwada (27.85 per cent). Out of the total borrowings of DCCBs at the State level, the DCCBs in Western Maharashtra had the share more than per cent during the base year of the study. However, this increased to per cent during the terminal year of the study. Similar trend was observed in Konkan and Vidarbha regions whereas; declining trend was noticed in Marathwada region. Table 4.13 Trends in total borrowing of DCCBs in Maharashtra during to (` in crores) Regions Period Per cent Change CGR (per cent) Konkan (4.17) (2.53) * (0.033) Western Maharashtra (51.60) (64.93) * (0.022) Marathwada (37.20) (17.26) Ns (0.015) Vidarbha (7.03) (15.28) * (0.029)

102 125 Maharashtra * (0.014) (Figures in parentheses are the percentages to the respective totals and standard error) * = Significant at 5 per cent level, NS = Non-significant Total borrowings of DCCBs had increased by 6.61 per cent per annum at the State level for the entire period under study. The maximum growth in total borrowings was recorded in Vidarbha region (19.69 per cent) and lowest in Western Maharashtra region (7.34 per cent) during the whole period. The growth in borrowings

103 126 Table 4.14 Average total borrowing and its composition of DCCBs in Maharashtra during to (` in crores) Regions Loans from SCB Loans from Govt. Loans From Commercial banks Cash credits and overdrafts Total borrowings Loans from SCB Loans from Govt. Loans From Commercial banks Cash credits and overdrafts Total borrowings Konkan (65.77) 2.40 (12.84) 4.00 (21.39) 0.00 (0.00) (0.00) 0.00 (0.00) 0.00 (0.00) Western Maharashtra (89.42) (0.01) (8.47) 2.70 (2.10) (97.93) (0.001) 4.22 (0.95) 4.99 (1.12) Marathwada (99.71) 0.00 (0.00) 0.00 (0.00) 0.34 (0.29) (95.31) 0.00 (0.00) 0.00 (0.00) 7.14 (4.69) Vidarbha (0.00) 0.00 (0.00) 0.00 (0.00) (97.84) 0.00 (0.00) 0.00 (0.00) 2.26 (2.16) Maharashtra (93.01) 0.40 (0.54) 3.93 (5.26) 0.89 (1.19) (97.52) 0.00 (0.00) 1.27 (0.62) 3.84 (1.86)

104 127 (Figures in parentheses are the percentages to the respective totals) 71

105 128 was negative and non-significant in the Marathwada region might be due to decline in total membership, less share capital, less deposit, some of the branches in that region stop their working due to weak performance as a result the SCBs not given fund to DCCBs in Marathwada region due to that the non-significant growth in borrowing was seen. The trends in borrowing of DCCBs according to regions in Maharashtra have been depicted by way of bar graph in figure Average total borrowings and its composition The details on average total borrowings and its composition during and in respect of DCCBs according to regions in Maharashtra are presented in Table The average total borrowings of the DCCBs at the overall level were ` crores in , which had increased to ` crores in The similar increasing trend was noticed in all the regions of the State. Such an increasing trend was possible only when the bank effectively checks the problem of overdues and improves its recovery performance. The State Cooperative Bank was the major source of borrowing for DCCBs in all the regions and State as a whole during the period under study. The proportional share of borrowings from the SCB to the total borrowings was per cent in , which has increased to per cent in The similar increasing trend was noticed in Western Maharashtra and Konkan region while decreasing trend was noticed in Marathwada and Vidarbha region respectively. The proportional share of borrowing from Govt. showed a clear decline in all regions and state as a whole during the period under study. The DCCBs from Western Maharashtra and Konkan region taken loans from the Commercial banks during the year as compared to other regions in the State and it was declined in terminal year of the study. The cash credits and overdrafts showed increases in terminal year in all the regions of the state during the period under study. The composition of borrowings in DCCBs at the state level has been depicted by way of pie graph in figure Working capital Working capital indicates the amount of funds available for undertaking various credit and service activities in a co-operative organization. Larger the working capital, greater is the potential of services and credit activities of the District Central Co-operative banks. If the working capital increases over the years, it reflects the financial strength of the DCCBs, which is an indication of better performance.

106 Trends in total working capital The regionwise and periodwise growths in total working capital of DCCBs during to in Maharashtra are presented in Table 4.15 Table 4.15 Trends in total working capital of DCCBs in Maharashtra during to (` in crores) Regions Period Per cent Change CGR (per cent) Konkan (27.22) (20.02) * (0.0036) Western Maharashtra (46.50) (52.13) * (0.0024) Marathwada (13.36) (11.00) * (0.0058) Vidarbha (12.92) (16.85) * (0.0041) Maharashtra * (0.0021) (Figures in parentheses are the percentages to the respective totals and standard errors) * = Significant at 5 per cent level, NS = Non-significant Table 4.15 depicted that; the total working capital of DCCBs in Maharashtra has increased from ` crores in to ` crores in All the regions exhibited a similar growth, meaning thereby that sufficient amount of funds were available with DCCBs for undertaking various credit and service activities during the period under study. Importantly the working capital of DCCBs in Western Maharashtra alone shares more than 45 per cent of the total working capital of DCCBs in Maharashtra. This means that the DCCBs in Western Maharashtra had quite a substantial working capital for their credit activities as compared to other regions in the State.

107 130 The rate of compound growth in total working capital was 9.39 per cent per annum during the entire period at the State level. It was noted that the compound growth rates in the total working capital of DCCBs, for the state as a whole and among the four regions of the state were ranged from 7-11 per cent during the entire period of the study. The trends in working capital of DCCBs according to regions in Maharashtra have been depicted by way of bar graph in figure Average total working capital and its composition The working capital plays an important role in mobilizing the confidence of public and managing affairs of the bank on sound basis. The important components of working capital in a District Central Co-operative Bank are:

108 131 Table 4.16 Average total working capital and its composition of DCCBs in Maharashtra during to (` in crores) Regions Total owned funds Total Deposits Total borrowing Total working capital Total owned funds Total Deposits Total borrowing Total working capital Konkan (7.36) (91.22) (1.42) (14.10) (84.90) (1.00) Western Maharashtra (9.04) (80.66) (10.30) (11.88) (78.23) (9.88) Marathwada (14.48) (59.26) (26.26) (21.99) (65.56) (12.45) Vidarbha (11.97) (82.98) (5.05) (14.32) (78.49) (7.19) Maharashtra (9.68) (81.02) (9.30) (13.85) (78.22) (7.93)

109 (Figures in parentheses are the percentages to the respective totals) 132

110 133 1) owned funds (share capital + reserve funds), ii) Deposits and iii) Borrowings. The reserves cannot be invested in the business of the bank, but when the total accumulated reserves exceed the paid up share capital, the surplus may be invested in the business of the bank and that too with the special sanction from the Registrar of co-operatives. A bank with a higher working capital base can easily meet the credit requirements of its clients. The average total working capital and its composition during and in respect of DCCBs according to regions in Maharashtra is depicted in table 4.16 Table 4.16 revealed that the total working capital per DCCB at the State level was ` crores in to ` crores in , which has increased to, owing to the increase in the owned funds and deposits. The DCCBs in Konkan region secured a top position during but later on the DCCBs in Western Maharashtra region secured top position in The total working capital per DCCB was the highest in the Western Maharashtra region (` crores) followed by the Konkan region (` crores). It indicted a sound financial position of DCCBs in both the regions as compared to the DCCBs of Marathwada and Vidarbha regions. The proportional share of owned funds, deposits and borrowings in the working capital helps to determine the self-reliance and dependence of DCCBs. From the Table 4.15, it was observed that 9.68 per cent of the working capital of DCCBs in Maharashtra State was made up of owned funds in the year This percentage share has increased to per cent in the year Contribution of owned funds to working capital was highest in the Marathwada region during study period. The percentage of owned funds to working capital of DCCBs showed an increasing trend in over the year in all the regions and state as a whole. The percentage share of deposits to working capital of DCCBs is another indicator to assess the inherent financial strength of the DCCBs. It indicates the level of dependence of DCCBs on apex institution for working capital. On an average, per cent of working capital of DCCBs in Maharashtra state was made up of deposits in the year and it further declined to per cent in the year The proportionate share of deposits in the working funds had decreased by 2.80 per cent during the study period. The percentage of deposits to working capital was very high and maximum in DCCBs of Konkan region (91.22 per cent) followed by Vidarbha region (82,98 per cent), Western Maharashtra (80.66 per cent) and Marathwada region (59.26 per cent) in the year In the year , the percentage

111 134 of deposits to working capital was maximum in Konkan region (84.90 per cent) followed by Vidarbha region (78.49 per cent), Western Maharashtra region (71.58 per cent) and Marathwada region (65.56 per cent). The percentage share of borrowings in total working capital was 9.30 per cent in the DCCBs of Maharashtra in which subsequently declined to 7.93 per cent in the terminal year of the study in all regions except Vidarbha and the state as whole indicating a good pace of resource mobilization and declined in cost burden of DCCBs. The percentage of borrowings to working capital in Vidarbha region showed an increase from 5.05 per cent in to 7.19 per cent in indicated increased dependency of DCCBs. While percentage of borrowings to working capital substantially decreased in Western Maharashtra region from per cent to 9.88 per cent, in Konkan region, it decline from 1.42 per cent to 1.00 per cent, in Marathwada region, it declined from per cent to per cent. This was mainly because of significant growth in deposits of the DCCBs in these regions (See Table 4.10). It indicated that the movement of DCCBs towards the self-reliance in the state. The composition of working capital in DCCBs at the state level has been depicted by way of pie graph in figure Investment Having understood the need for proper management of funds, it becomes necessary to plan its deployment in the best possible manner to increase the returns on one hand and ensure virtually zero risk of liquidity on the other. The investments were primarily confined to meeting statutory requirements of cash reserve ratio (CRR) and statutory liquidity reserves (SLR) Trends in total investment The proper investment of funds in the secured institution leads to better performance of DCCBs. The regionwise and periodwise Trends in the total investment by the DCCBs during to in Maharashtra is presented in Table 4.17 From Table 4.17, revealed that the DCCBs in Maharashtra had recorded satisfactory growth in total investment over a period of 15 years. It has increased from ` crores in to ` crores in The growth in total investment had registered around 4 times increase over the base year The total investment by the DCCBs showed an increasing growth in all the regions during the period under review. The highest growth in total investment was observed in Vidarbha region ( per cent), followed by Marathwada region ( per

112 135 cent), Western Maharashtra region ( per cent) and Konkan region ( per cent) during the terminal year Table 4.17 Trends in total investment of DCCBs in Maharashtra during to (` in crores) Regions Period Per cent Change CGR (per cent) Konkan (38.25) (26.88) * (0.0058) Western Maharashtra (42.48) (49.48) * (0.009) Marathwada (6.20) (7.40) * (0.012) Vidarbha (13.07) (16.24) * (0.0062) Maharashtra * (0.006) (Figures in parentheses are the percentages to the respective totals and standard error) * = Significant at 5 per cent level, NS = Non-significant Out of total investment (` crores) by the DCCBs in the state, the DCCBs in Western Maharashtra occupied a top position by contributing per cent and per cent in during study period. The proportion in total investment of DCCBs in Konkan region was per cent in , which was decreased to per cent in the terminal year of the study. The increase in investments was noticed in Marathwada and Vidarbha region during the period under study. The annual rate of growth in the total investment by the DCCBs in the State was per cent, which indicated satisfactory performance by the DCCBs during the entire period under study. Regionwise analysis indicated that Marathwada region registered a maximum annual growth of per cent followed by Western Maharashtra region (12.04 per cent), Vidarbha

113 136 region (11.29 per cent) and Konkan region with 6.26 per cent for the entire Period. In view of the significant rise in the owned funds and deposits, this led to surplus amount of funds to invest. It was clearly observed from (Appendix I g) that the growth in total investment of DCCBs in Maharashtra was mainly attributed to significant growth in investment in Government securities per cent, in other securities per cent and Fixed deposits during study period 8.28 per cent per annum. The non-significant growth in other securities (debentures of LDBs and other trustee securities) 8.79 per cent indicated that the less amount invested in other securities by DCCBs in the state. The investment in other securities showed significantly increases in Western Maharashtra, Vidarbha and

114 137 Table 4.18 Average total investment and its composition of DCCBs in Maharashtra during to (` in crores) Regions Government securities Other securities Fixed deposits Others Total investment Government securities Other securities Fixed deposits Others Total investment Konkan (4.12) 7.23 (1.24) (54.86) (39.78) (37.51) (5.70) (37.35) (19.44) Western Maharashtra (3.96) 6.41 (1.78) (89.74) (4.52) (23.10) (2.26) (70.94) (3.70) Marathwada 0.33 (0.49) 0.52 (0.77) (74.98) (23.76) (16.87) 0.00 (0.00) (80.72) 7.24 (2.41) Vidarbha (17.54) 1.95 (1.76) (78.80) 2.10 (1.90) (17.70) 1.80 (0.35) (73.75) (8.20) Maharashtra (5.58) 3.84 (1.51) (74.05) (18.86) (25.64) (2.71) (63.09) (8.56)

115 (Figures in parentheses are the percentages to the respective totals 138

116 139 state level indicated that DCCBs in these regions diverting their funds to other sources of investment because of highest interest rate. The DCCBs in Konkan (17.04%) and Marathwada (43.93%) significantly increased investment of their money on Government securities. The trends in investment of DCCBs according to regions in Maharashtra have been depicted by way of bar graph in figure Average total investment and its composition Table 4.18 presents the average total investment and it composition during and in respect of DCCBs according to regions in Maharashtra. The average total investment per DCCBs in the Maharashtra state had increased from ` crores in to ` crores in the terminal year of the study period. In the year , the highest total investment per DCCB was observed in Konkan region (` crores) followed by Western Maharashtra (` crores), Vidarbha (` crores) and the least in Marathwada region (` crores). In the terminal year, the highest total investment per DCCB was observed in Western Maharashtra (` crores), followed by Konkan region (` crores), Vidarbha (` crores) and the least in Marathwada region (` crores). Fixed deposits occupied a lion s share per cent in total investment during the year which increased to per cent in the terminal year The percentage share of investment in Govt. securities and other securities was 5.59 per cent and 1.51 per cent in the base year, which was decreased in Government securities to 1.04 per cent and increased in other securities to 2.71 per cent respectively in At the same time the percentage of investments in others had substantially decreased from per cent to per cent indicating the reduction of funds in other sources of investment, which was a good sign. Similar trend was noticed in all the regions of the State except Vidarbha region. The composition of investment in DCCBs at the state level has been depicted by way of pie graph in figure Loan advanced The lending policies of District Central Co-operative Banks have undergone many changes due to the implementation of various agricultural developmental schemes. Besides, banks also diversified their activities. They had started providing credit to small-scale industries

117 140 and business activities of the weaker sections under differential rate of interest scheme. Special attention was bestowed on implementation of the credit part of the District Rural Development Agency Programme, Drought Prone Area Programme and Integrated Rural Development Programme. All these schemes were intended to assist the small and marginal farmers and landless agricultural labourers to benefit from the economic growth and development in the rural sector by maintaining the production on their small holdings through intensive cultivation and undertaking subsidiary occupation, which would generate employment and income. The short-term loans were provided for cultivation of crops to the identified farmers, while medium term loans were advanced for subsidiary occupations such as dairying, poultry farming, sheep and goat rearing Trends in total loan and advances The credit activities of the DCCBs in different regions of Maharashtra were analysed by looking at the total loan advanced during to The details are presented in Table 4.19 From Table 4.19 clearly indicated that there has been upward trend in total loan disbursement during the period under review. The total loan advances comprised of short term, medium term and other loans. The total loan advanced by the DCCBs in Maharashtra state had increased from ` crores in to ` crores in Table 4.19 Trends in total loans and advances issued by the DCCBs in Maharashtra during to (` in crores) Regions Period Per cent Change CGR (per cent) Konkan (11.45) (11.63) * (0.0091) Western Maharashtra (62.83) (67.66) * (0.013) Marathwada (13.37) (8.95) * (0.013)

118 141 Vidarbha (12.35) (11.76) * (0.016) Maharashtra * (0.011) (Figures in parentheses are the percentages to the respective totals and standard error) * = Significant at 5 per cent level, NS = Non-significant The growth in total loan advanced witnessed a positive trend in all the regions of the State. The maximum increase in the total loans advanced was noticed in DCCBs of Western Maharashtra ( per cent) followed by Konkan (185.41), Vidarbha (167.83) and least in Marathwada region (88.14). From this result, it is clearly indicated that the growth in total loan issued in absolute term as well as in terms of percentages was the highest in Western Maharashtra. It was mainly due to the increasing commercialization of agriculture, availability of irrigation facility, growth in short term and medium term enterprises were more than other regions in the state, which necessarily call for more investments in input use and plant protection and therefore increase in demand for loans. Out of total loans advanced by the DCCBs in the Maharashtra state, the DCCBs in Western Maharashtra region alone shared per cent in , which later on increased to per cent in It clearly indicated that the DCCBs in Western Maharashtra gave better attention towards the loans and advances. In the remaining regions, the proportionate share of total loans advanced to the overall State level ranged from per cent (Marathwada), per cent (Vidarbha) and per cent (Konkan) in and from per cent (Konkan), per cent (Vidarbha) and 8.95 per cent (Marathwada) in the terminal year of the study. From Table 4.19 observed that the total loans and advances issued by the DCCBs in the state of Maharashtra registered a compound growth rate of 8.63 per cent per annum for the entire period. The regionwise results revealed that the magnitude of compound growth of total loans in the Konkan was high (11.21 per cent) as compared to Vidarbha (10.90 per cent), Western Maharashtra (7.97) and Marathwada (7.08 per cent). The trends in loans and advances of DCCBs according to regions in Maharashtra have been depicted by way of bar graph in figure Average total loan issued and its composition

119 142 In order to examine the trends in the amount of total loans supplied per DCCB in all the regions of Maharashtra State during the study Period, the average total loan issued and its compositions was worked out and the results are presented in Table 4.20 The results clearly revealed from Table 4.20 that the total amount of loan issued per DCCB to its members in Maharashtra state had increased from ` crores in to ` crores in In the year , the total loan issued per DCCB was relatively more in Western Maharashtra (` crores) followed by Konkan region (` crores), Marathwada (` crores) and Vidarbha (` crores). In the terminal year of the study, the DCCBs from Western Maharashtra region had maintained its top position by issuing total loans of ` crores per DCCB followed by Konkan region (` crores), Vidarbha (` crores) and Marathwada (` crores). This had also indicated that the DCCBs in Western

120 143 Table 4.20 Average total loans and advances issued and its composition of DCCBs in Maharashtra during to (` in crores) Regions Period Agricultural Short Term Loans Non- Agricultural Total Short Term Agriculture Agricultural Medium Term Loans Non- Agricultural Total Medium Term Agriculture Other Loans and Advances Total Loans and Advances Konkan (5.16) (9.56) (72.40) (60.78) (77.56) (70.34) 3.03 (0.92) (1.34) (10.90) (9.50) (11,82) (10.84) (10.62) (18.82) Western Maharashtra (15.52) (38.98) (68.31) (45.49) (83.83) (84.47) (4.12) (3.58) (1.74) (4.75) (5.86) (8.33) (10.31) (7.20) Marathwada (42.24) (50.65) (92.89) (3.79) 3.86 (1.40) (5.19) 5.29 (1.92)

121 144 (56.10) (38.63) (94.72) (0.19) (4.04) (4.23) (1.05) Vidarbha (20.14) (48.27) (29.92) (16.02) (50.06) (64.29) (5.37) (12.42) (6.12) (12.68) (11.51) (25.10) (38.43) (10.61) Maharashtra (18.47) (38.18) (61.68) (43.19) (80.15) (81.37) (3.86) (4.06) (3.29) (6.17) (7.15) (10.23) (12.70) (9.88) (Figures in parentheses are the percentages to the respective totals)

122 145 Maharashtra had offered maximum credit facilities to their members during the period under study. Over 80 per cent of total loans and advances issued were in the form of short term loans and remaining being medium term and other loans and advances indicating focused emphasis on short term loans by the DCCBs in Maharashtra. In regionwise study, it was revealed that, the share of short term loans was the highest in Marathwada per cent followed by Western Maharashtra per cent, Konkan per cent and Vidarbha per cent, in base year. Similarly in the terminal year of the study, the share of short-term loan was the highest in Marathwada per cent followed by Western Maharashtra per cent, Konkan per cent and Vidarbha per cent respectively. The percentage shares of medium term loan and other loan were 7.15 and per cent in , which had marginally increased in medium term loan to and decreased in other loan 9.88 per cent in respectively. At the regional level the Konkan region issued less per cent amount to agriculture 11 per cent out of the total advances than the other regions in the state, it might be due to less farming activities than the other regions in the state. Whereas, percentage of other loans and advances showed increased may be due to increased medium term and long term activities such as dairying, poultry, plantation and horticulture, other processing industries, land development, etc. in the Konkan region. In Marathwada and Vidarbha region loan disbursed for medium term non-agriculture shows increased than agricultural loan because of farming and allied activities mainly depends on monsoon in that region due to less rainfall the less production that affects on recovery of loan whereas in case of non-agricultural loans the guarantee of recovery is more than agricultural loans due to that increases non-agricultural advances is more in that regions than the other regions in state. The proportion of total agricultural loans (both ST and MT) in the total loans was above 20 per cent in the base year, which increased to about 40 per cent during the terminal year. Whereas, the loan disbursed for non-agricultural purposes declined from 65 per cent to 49 per cent it is good sign in the view of agricultural advances in the Maharashtra. Regionwise analysis indicated that the per cent share of agricultural loans showed an increase in all regions and state as a whole may be due to government announced policy of doubling agricultural loans and compulsory 18 per cent lending to agriculture, subsidy to the people those who repay loans in time as a result loan issued for agricultural purposes increased

123 146 during study period. The composition of loans and advances in DCCBs at the state level has been depicted by way of pie graph in figure Credit deposit ratio Credit deposit ratio is one of the indicators of performance are presented in Table Higher C: D ratio simply means that the advances are larger than the deposits. It does not necessarily imply that the magnitude of advances is large. The volume of advances may be small but the ratio could be higher because the deposits are very small. Higher the C: D ratio better is the performance of bank in purveying the credit requirements of their members. A favorable C: D ratio does determine the profitability of the banks. Hence a bank should aim at higher C: D ratio. Table 4.21 Regionwise average total credit disbursement, average total deposit and CD ratio per DCCBs in Maharashtra during to (` in crores) Regions Total Credit Total Deposit C: D Ratio Total Credit Total Deposit C: D Ratio Konkan Western Maharashtra Marathwada Vidarbha Maharashtra The results revealed that the C: D ratio had witnessed a declining trend in all the regions except Konkan region and state as a whole during the period under study. The C: D ratio of DCCBs in Maharashtra had declined from 0.73 in to 0.66 in Similarly the C: D ratio showed a decline in all the regions except Konkan region during the period under study. It could be noted that deposits and advances had witnessed a steady increase over a period. But the increase in deposits was not in the direct proportion to the increase in advances. Further higher incidence of overdues had adversely affected the lending and hence the declined in credit-deposit ratio.

124 Loan outstanding The performance of loan outstanding is also another criteria used to assess and evaluate the growth as well as efficiency in management of DCCBs. Apart from the total amount of loans outstanding, the average total loan outstanding per DCCB was also worked out Trends in total loan outstanding From the increase of total loan outstanding it is quite clear that this was a poor performance of DCCBs in recovery of loans in the state. The regionwise and periodwise trends in total loan outstanding is presented in Table 4.22 Table 4.22 Trends in total loans outstanding of DCCBs in Maharashtra during to (` in crores) Regions Period Per cent Change CGR (per cent) Konkan (10.90) (11.90) * (0.0073) Western Maharashtra (59.32) (54.71) * (0.0055) Marathwada (17.50) (15.22) * (0.0047) Vidarbha (12.28) (18.17) * (0.0034) Maharashtra * (0.0036) (Figures in parentheses are the percentages to the respective totals and standard errors) * = Significant at 5 per cent level, NS = Non-significant It could be seen from Table 4.22 that the total loan outstanding in DCCBs of Maharashtra State had increased from ` crores to ` crores during study

125 148 period. This shows that the growth in total loan outstanding was more than 3 times over the base year of the study. The total loan outstanding of DCCBs in Maharashtra State as a whole registered a compound growth rate of 7.90 per cent per annum for the entire period under study. The DCCBs in Vidarbha registered the highest growth per annum of per cent with reference to total loan outstanding followed by Konkan per cent, Marathwada 6.43 per cent and Western Maharashtra 6.45 per cent. It could be revealed from the above results that there was a significant increase in total loan outstanding. It is quite understandable that there was a poor performance of DCCBs in the state in respect of loan recovery. The trends in loan outstanding of DCCBs according to regions in Maharashtra have been depicted by way of bar graph in figure Average total loan outstanding and its composition In order to examine the trends in the amount of total loan outstanding per DCCB in all the regions of Maharashtra State during the study Period, the average total loan

126 149 Table 4.23 Average Total Loans Outstanding and its composition of DCCBs in Maharashtra during to Regions Period Total Short Term Total Medium Term Other Loans and Advances (` in crores) Total Loans and Advances Konkan (53.48) (37.33) (30.70) (23.18) (15.82) (39.49) Western (61.67) (17.25) (21.08) Maharashtra (64.23) (23.13) (12.64) Marathwada (79.98) (82.40) (13.95) (11.25) (6.07) (6.35)

127 150 Vidarbha (54.22) (63.50) (30.70) (28.75) (15.08) (7.75) Maharashtra (63.07) (63.66) (19.79) (22.35) (17.14) (13.99) (Figures in parentheses are the percentages to the respective totals)

128 151 outstanding and its compositions was worked out and the results are presented in Table 4.23 Average total loan outstanding per DCCB in Maharashtra state had increased from ` crores in to ` crores in During the base year ( ), the DCCBs in Western Maharashtra region had relatively larger outstanding per DCCB than the other regions while loan outstanding per DCCB was low in the Vidarbha region (` crores). At terminal year ( ), average total outstanding loan was larger in DCCBs of Western Maharashtra region (` crores) followed by Konkan (` crores), Marathwada (` crores), and Vidarbha (` crores). About per cent of total loan outstanding were in the form of short- term loan in , which had increased to per cent in the terminal year The per cent share of medium- term loan outstanding in total outstanding had increased from per cent to per cent during the whole study period. Besides, the per cent share of other loans and advances had declined from per cent to per cent during the same period. Regionwise analysis showed that the per cent share of short term loan outstanding in total loan outstanding had ranged between per cent in Marathwada to per cent in Konkan in , while it was between per cent in Marathwada region to per cent in Konkan region. This means that the short-term loans had the lions share 64 per cent in the total loan outstanding followed by medium term 22 per cent and other loans and advances 14 per cent during the year in Maharashtra. The composition of loan outstanding in DCCBs at the state level has been depicted by way of pie graph in figure Loan Recovery Performance of loan recovery is another criteria used to assess the trend as well as efficiency in management of District Central Co-operative Banks Trends in total loan recovered The regionwise and periodwise growth in total loan recovery by the DCCBs in Maharashtra during to is presented in Table 4.24 The results showed that the total loan recovered by DCCBs in Maharashtra state had increased from ` crores in the base year to ` crores in the terminal year

129 152 recording a growth of 3 times increase over the base year i.e The regionwise analysis it is clearly noted that the highest growth in the total recovery of loan was achieved by Konkan region (401.61) followed by Vidarbha (179.58), Western Maharashtra (165.13) and Marathwada (74.95) over the base year of the study. Table 4.24 Trends in total loan recovery of DCCBs in Maharashtra during to (` in crores) Regions Period Per cent Change CGR (per cent) Konkan (9.02) (16.69) * (0.012) Western Maharashtra (59.92) (58.59) * (0.016) Marathwada (18.94) (12.22) * (0.025) Vidarbha (12.12) (12.50) * (0.013) Maharashtra * (0.014) (Figures in parentheses are the percentages to the respective totals and standard errors) * = Significant at 5 per cent level, NS = Non-significant The DCCBs in Western Maharashtra recovered about 60 per cent of total loan recovered by DCCBs in the state during both the years under study. Remaining recovery of 40 per cent was contributed by all the three regions of the state. Thus, it is revealed from the data that the increase in total loan collection in absolute term was the highest in Western Maharashtra and the least in Konkan region. But, in terms of percentage change in recovery during the study period, it was the highest in Konkan region and the least in Marathwada region indicated DCCBs in Konkan region taken more attention on recover of the loans than the other regions in the state.

130 153 The amount of total loans and advances recovered by the DCCBs in Maharashtra registered a compound growth rate of 9.92 per cent per annum during the entire period. Regionwise results revealed that the growth in total recovery of loan was highest in Konkan region per cent followed by Vidarbha region per cent, Western Maharashtra per cent, Marathwada 6.67 per cent during the entire period under study. Because of the non-agricultural and other loans advanced was more in Konkan region (See Table 4.19) that s have more recovery than the agricultural loans whereas, the Marathwada having less growth in recovery was mainly due to negative and non-significant trends in short term non-agriculture (-4.90%) and medium term agriculture (-3.39%) (See Appendix I-j). The drought condition, low income, mentality of farmers and government policy related to loan waivers (Karj mafi) were the major reasons of low recovery in Marathwada region. The trends in loan recovery of DCCBs according to regions in Maharashtra have been depicted by way of bar graph in figure Average total loan recovery and its composition In order to examine the trends in amount of total loan recovered by each DCCB in different regions of Maharashtra state during the study period, the average total loan recovery and its composition was assessed and depicted in Table 4.25 Average total loan collection per DCCB in Maharashtra state had increased from ` crores in to ` crores in In the base year of the study, the average recovery of total loans per DCCB was ` crores, ` cores ` crores and ` crores in Western Maharashtra, Marathwada, Konkan and Vidarbha regions, respectively. Table 4.25 Average total loan recovery and its composition of DCCBs in Maharashtra during to (` in crores) Regions Period Total Short Term Total Medium Term Other Loans and Advances Total Loan Collection Konkan

131 154 (70.65) (10.09) (19.26) (58.91) (22.16) (18.93) Western Maharashtra (90.75) (87.90) (8.36) (9.06) 3.40 (0.90) (3.03) Marathwada (84.19) (93.30) 8.00 (5.19) 9.75 (3.60) (10.62) 8.34 (3.10) Vidarbha (77.12) (78.49) (15.26) (17.67) 5.85 (7.62) 8.24 (3.84) Maharashtra (86.04) (82.55) (8.75) (11.66) 9.90 (5.21) (5.79) (Figures in parentheses are the percentages to the respective totals) In the terminal year of the study, the average recovery of total loans per DCCB was ` crores; ` crores ` crores and ` crores in Western Maharashtra, Konkan, Marathwada and Vidarbha regions, respectively. About per cent of total loans recovered were in the form of short-term loans in , which had declined to per cent in the in DCCBs of Maharashtra. The percent share of medium term loan and other loans was 8.75 per cent and 5.21 per cent in the base year of the study. This was increased to per cent and 5.79 per cent in the terminal year of the study.

132 155 Among the regions, per cent share of short term loan recovery to total loan recovery ranged from per cent in Konkan to per cent in Western Maharashtra in base year of the study. At the terminal year it was ranged between per cent in Konkan to per cent in Marathwada. This means that the proportion of recovery of short-term loans in total loans was prominent. The recovery in medium term loan and other loans and advances was highest in Konkan region than the other regions in the state. From Appendix I-j that the growth in total recovery was mainly attributed due to significant growth in short term, medium term and other loans and advances with 9.74 per cent, 9.48 per cent and per cent annual growth at state level and similar trend was observed in all regions in the state. Increases in total recovery were mainly due to increases in recovery in short term agriculture and other loans and advances at state and regional level. The composition of recovery in DCCBs at the state level has been depicted by way of pie graph in figure Loan Overdues One of the serious issues affecting the performance of District Central Co-operative Banks is mounting overdues. Inspire of the facilities of conversion and replacement extended to borrowers in times of natural calamities, there has been pronounced increase of overdues largely on account of organized resistance to recovery of overdues. Overdues grip the DCCB and cripple its activities unless it is checked in time. It is bound to spread throughout and would cripple the entire structure Trends in total overdues The information on regionwise and periodwise growth in the total overdues of DCCBs in Maharashtra during to is presented in Table The poor performance of DCCBs was due to increase in total overdues of the DCCBs in Maharashtra State from ` crores in the base year to ` crores in the terminal year The growth witnessed a positive trend in all the regions and state as a whole. At the overall level, the growth in overdues was about 4 times in over the base year of the study. This was clearly indicated from Table 4.26 that the rising overdues had seriously weakened the DCCBs in Maharashtra. The highest growth in overdues was observed in Vidarbha region followed by Western Maharashtra, Marathwada and the least in DCCBs of Konkan region.

133 156 Table 4.26 Trends in total loan Overdues of DCCBs in Maharashtra during to (` in crores) Regions Period Per cent Change CGR (per cent) Konkan (6.00) (4.07) * (0.014) Western Maharashtra (39.33) (47.42) * (0.012) Marathwada (29.16) (18.19) * (0.015) Vidarbha (25.53) (30.32) * (0.0074) Maharashtra * (0.010) (Figures in parentheses are the percentages to the respective totals and standard errors) * = Significant at 5 per cent level, NS = Non-significant It was seen from the Table 4.25 that in the base year out of the total overdues (` crores) of DCCBs in the State, the DCCBs in Western Maharashtra had relatively large overdues (39.33 per cent) followed by Marathwada (29.16 per cent), Vidarbha (25.52 per cent) and Konkan region (6.00 per cent). In the year the proportion of overdues was more (47.42 per cent) in Western Maharashtra followed by Vidarbha (30.32 per cent), Marathwada (18.19 per cent) and Konkan region (4.07 per cent). Further it is noted that the overdues of DCCBs in the state of Maharashtra registered a compound growth rate of 9.50 per cent per annum during the entire period of study. The magnitudes of growth rates in the total overdues showed that the overdues of DCCBs in all the regions and state as a whole had significantly increased over the years. The highest growth in total overdues was noticed in Vidarbha region (12.04 per cent) followed by Western Maharashtra (11.05 per cent), Marathwada (5.00 per cent) and Konkan (4.85 per cent) for the entire period of the study.

134 157 It was noted from (Appendix I- k) that the total overdues increased mainly due to that the significantly increases in overdues in short term and medium term loan overdues at the state and regional level except Konkan region medium term loan outstanding was nonsignificant during study period. The trends in overdues of DCCBs according to regions in Maharashtra have been depicted by way of bar graph in figure Average total overdues per DCCB and its composition Loan overdues per DCCB and its composition during and according to regions in Maharashtra are depicted in Table 4.27 Table 4.27 Average total loan overdues and its composition of DCCBs in Maharashtra during to (` in crores) Regions Period Total Short Term Total Medium Term Other Loans and Advances Total Loan Balances Konkan (30.48) (57.82) (51.75) (36.25) 5.43 (17.77) 5.62 (5.93) Western Maharashtra (80.05) (87.85) (14.25) (10.47) 6.35 (5.70) (1.68) Marathwada (82.53) (83.97) (11.66) (12.47) 6.15 (5.81) (3.56) Vidarbha (74.74) (21.16) 2.96 (4.10) 72.21

135 (80.41) (17.73) 7.30 (1.86) Maharashtra (76.45) (83.66) (17.50) (14.09) 5.13 (6.05) 8.74 (2.25) (Figures in parentheses are the percentages to the respective totals) It was seen from Table 4.27 that the average overdues per DCCB in Maharashtra State had increased from ` crores in the base year to ` crores in the terminal year of the study. In the year , loans overdue per DCCBs were higher in Western Maharashtra ` crores and the least in the Konkan region ` crores. In the year , overdues per DCCB ranged between ` crores in Konkan region to ` crores in Western Maharashtra region. The share of short-term loan overdues in total overdues was per cent in the DCCBs of Maharashtra in the base year, which had increased to per cent during the terminal year of the study. Similarly, the share of medium-term loan overdues in total overdues had declined from per cent to per cent. However, the share of other loans and advances had declined from 6.05 per cent in to 2.25 per cent in As regards the regionwise analysis, the share of short-term and medium term agricultural loan overdues showed an significantly increased in all the region and state level (See Appendix I- k). Causes and determination of overdues in wilful defaultors were slackness in timely recovery by banks followed by diversion of income for purchasing land and other property and uncertainty about fresh loans on the whole. Whereas the low crop yields, failure of crop due to natural calamities and inadequate finance were the main reasons of non-wilful defaultors (Hatai el.al. (2006)). The composition of overdues in DCCBs at the state level has been depicted by way of pie graph in figure Overdues as percentage of outstanding loans The percentage of overdues to outstanding loans is one of the most important indicators of effectiveness of agricultural credit system.

136 159 Table 4.28 Overdues as percentage of total loan outstanding in DCCBs during to in Maharashtra (` in crores) Regions Total Overdues Total Outstanding Percentage of Overdues to outstanding Total Overdues Total Outstanding Percentage of overdues to outstanding Konkan Western Maharashtra Marathwada Vidarbha Maharashtra (Figures in parentheses are the percentages to the respective totals) It was noted from Table 4.28 that, percentage of overdues to outstanding loans showed an increase from per cent in to per cent in the terminal year of the study for the state as a whole. It was seen from Table 4.28 that the percentage of overdues to outstanding loan was increased from per cent in to in in Western Maharashtra. However, the percentage of overdues to loan outstanding showed a marginal decreased from per cent to per cent in Konkan region. Importantly, the highest percentage of overdues to loan outstanding was noticed in Vidarbha region (38.56 per cent) in , which had further increased to per cent in the terminal year. In Marathwada also, the proportion of overdues to outstanding loan showed an increase from per cent in to per cent in This means that, by and large, the proportion of overdues to outstanding loans in DCCBs had increased in all the regions except Konkan region in the State Working results of the DCCBs There is a school of thought which argues that the co-operatives being service organizations, they should not aim at maximizing the profit. But it should be remembered that they are also economic organizations. All economic organizations whether co-operatives, joint

137 160 stock companies private or partnership firms, do need profit. A cooperative must earn profit to effectively serve its members. In this word of competition, a co-operative without profit may not be able to have strong financial base and thereby may not be able to withstand competition from external opposing and counteracting forces. A co-operative in the interest of its member should strive for profit Trends in total cost of management expenditure. The expenditure of the bank mainly includes expenditure on salaries of staff and other The other expenditure includes interest paid, establishment expenses and operating expenses like rent and taxes, printing and stationery, audit fees, telegram and postage and miscellaneous expenditure. It could be revealed from Table 4.29 that the total cost of management registered an upward trend. The total cost of management in DCCBs of Maharashtra had increased from ` crores in the base year to ` crores in the terminal year of the study period. Table 4.29 Trends in total cost of management of DCCBs in Maharashtra during to (` in crores) Regions Period Per cent Change CGR (per cent) Konkan (11.48) (16.94) * (0.077) Western Maharashtra (61.11) (56.63) * (0.011) Marathwada (12.89) (10.38) * (0.0060) Vidarbha (14.52) (16.05) * (0.0054) Maharashtra * (0.0057) (Figures in parentheses are the percentages to the respective totals and standard error)

138 161 * = Significant at 5 per cent level, NS = Non-significant Regionwise analysis indicated that the highest per cent change over the base year in total cost of management was observed in Konkan region followed by Vidarbha, Western Maharashtra region and Marathwada region of the study period. The rate of growth in total cost of management of DCCBs in Maharashtra was 7.68 per cent per annum and it was significant during the entire period of study. This means that the expenditure on cost of management had significantly increased over the years. The highest growth in total cost of management was observed in Konkan region (11.21 per cent) followed by Vidarbha region (10.00 per cent), Marathwada (7.18 per cent) and Western Maharashtra region (6.13 per cent). The growth in cost of management was highest in Konkan region mainly because of significantly increased in number of branches and number of employees. The trends in cost of management of DCCBs according to regions in Maharashtra have been depicted by way of bar graph in figure Average cost of management and its compositions The information on average cost of management per DCCB and its composition is presented in Table Table 4.30 revealed that the average total cost of management per DCCB in Maharashtra region was ` crores in the base year, which had increased to ` crores in the terminal year. In the year , the highest cost of management per DCCB was observed in Western Maharashtra region (` crores) followed by Konkan (` crores), Marathwada (` crores) and the least in Vidarbha region (` crores). In the year , the highest cost of management per DCCB was observed in Western Maharashtra region (` crores) followed by Konkan (` crores), Vidarbha region (` crores) and the least in Marathwada (` crores). From the total cost of management, the percentage share of expenditure on salaries at state level accounted for per cent in the base year, which had marginally declined to per cent in the year because of reduction in number of branches ultimatly reduction in number of employee in all the regions except Konkan region and state level (See Table 4 31). The percentage share of other expenditure had increased from to per cent during the same entire period of the study. Among the regions, the percentage share of salaries in total cost of management ranged between per cent (Western Maharashtra) to

139 per cent in Marathwada region in while it ranged between per cent in Western Maharashtra region to per cent in Marathwada

140 163 Table 4.30 Average Total cost of management, its composition and proportion of cost of management to working capital of DCCBs in Maharashtra during to (` in crores) Regions and period Expenditure on salaries Other expenditure Total Cost of Management Proportion of cost of management to working capital Expenditure on salaries Other expenditure Total Cost of management Proportion of cost of management to working capital Konkan (70.55) 4.22 (29.45) (66.44) (33.56) Western Maharashtra (50.41) (49.59) (47.72) (50.28) Marathwada 8.86 (77.04) 2.64 (22.96) (77.79) 6.60 (22.21) Vidarbha 7.80 (77.38) 2.28 (22.62) (64.45) (35.55)

141 164 Maharashtra (60.06) 8.32 (39.94) (57.83) (42.17) (Figures in parentheses are the percentages to the respective totals)

142 165 region in the year It was clearly noted that the total cost of management mainly attributed due to significant growth in salaries and other expenditure in all the regions and state level except other expenses in Western Maharashtra shows non-significant during study period (see Appendix I- l). The composition of cost of management in DCCBs at the state level has been depicted by way of pie graph in figure Trends in cost of management per employee The information on regionwise and periodwise growth in per employee cost of management of DCCBs in Maharashtra during to is presented in Table Table 4.31 revealed that per employee total cost of management was 0.59 crores in base year that was increased to ` 2.40 crores which was near about 3.07 times over the base year. Table 4.31 Trends in per employee cost of management of DCCBs in Maharashtra during to (` in crores) Regions Period Per cent Change CGR (per cent) Konkan 0.11 (18.64) 0.52 (21.66) * (0.013) Western Maharashtra 0.22 (37.30) 0.84 (35.00) * (0.012) Marathwada 0.11 (18.64) 0.37 (15.42) * (0.0063) Vidarbha 0.15 (25.42) 0.67 (27.92) * (0.0072) Maharashtra * (0.0033) (Figures in parentheses are the percentages to the respective totals and standard error)

143 166 * = Significant at 5 %, NS = Non-significant The share of per employee cost of management in Western Maharashtra was highest in entire period of study than other regions. Per employee highest growth in total cost was observed in Konkan followed by Vidarbha, Western Maharashtra and Marathwada over the base year. The annual compound growth rate of total cost of management was per cent per annum at state level and at regional level it was highest in Konkan region (11.41) followed by Vidarbha (11.30), Marathwada (10.04) and Western Maharashtra (8.22). The cost of management per employee has been increased during the study period due to decrease in number of employees (See Table 4.31). The management of DCCBs has to concentrate on cost of management Proportion of cost of management to working capital Table 4.31 also revealed that the proportion of cost of management to working capital showed declining trend in all the regions except Konkan region and also at the State level. The proportion of total cost of management to total working capital at the State level was 2.59 per cent in , which declined to 2.57 per cent with a negative growth of 0.02 per cent over the base year. The highest declining growth was recorded in Western Maharashtra ( per cent) followed by Vidarbha region ( per cent) and Marathwada (-4.33 per cent) while in Konkan region it was increased by (100 per cent). The proportion of total cost of management to total working capital was highest in Western Maharashtra region during the period under study while it was the least in Konkan region Profit / Loss The working results of the DCCB comprises of total loss, total profit and audit class. From the Table 4.32, it was observed that the total profits of the DCCBs in the state had increased from ` crores in to ` crores in the terminal year, which indicated an increasing trend in the profits of DCCBs during the period under study. The highest growth in total profits was noticed in Konkan region (5.90 %) followed by Marathwada region (2.92 %), Vidarbha (2.82 %) and Western Maharashtra (0.37%) and over the base year. As regards the number of DCCBs in profit, it could be seen that the 19 DCCBs were running in profit and 11 DCCBs in loss in and it was increased to 25 DCCBs running in profit and 5 DCCBs in loss in

144 167 The DCCBs in Konkan region was working efficiently without loss and having better performance than the other regions in Maharashtra during study period because of less overdues and timely recovery of advanced loans. Table 4.32 Growth in working results in DCCBs during to in Maharashtra Regions and Period Profit (` in crores) No. of banks in profit Loss (` in crores) No. of banks in loss Total No of banks Audit class A B C D Konkan (5) % change Western Maharashtra (9) % change 0.37 Marathwada (7) % change Vidarbha (9) % change Maharashtra (30)

145 168 % change The performance indicators selected for the study were performance of DCCBs in respect of branch expansion was non-satisfactory at the state level, Vidarbha and Marathwada region declined in number of branches in terminal year whereas, it was satisfactory in Konkan and Western Maharashtra region. The maximum increase in the total membership was noticed in Konkan region per cent followed by Western Maharashtra per cent, Marathwada 9.16 per cent and Vidarbha region decreased by per cent. The highest per cent number of employee declined in Marathwada per cent followed by Western Maharashtra per cent and Vidarbha 16.70per cent, while increased in number of employee by 4.77 per cent in Konkan region. The highest growth in total share capital in Vidarbha per cent followed by Western Maharashtra per cent, Konkan per cent and Marathwada region per cent over the base year. The total reserve funds of DCCBs in Western Maharashtra registered a higher growth per cent followed Vidarbha per cent, Konkan region per cent and Marathwada per cent, and over the base year. The growth in owned funds in Vidarbha region times recorded an increase over the base year followed by Western Maharashtra times, Konkan times and Marathwada region times. The deposits in Vidarbha region had recorded the highest growth 29 times followed by Western Maharashtra 25 times, Marathwada 19 times and Konkan 12 times over the base year. The maximum growth in total borrowings was recorded in Vidarbha region 499 per cent followed by Western Maharashtra 247 per cent, Konkan region per cent and lastly by Marathwada per cent over the base year. Importantly the working capital of DCCBs in Western Maharashtra alone shares more than 45 per cent of the total working capital of DCCBs in Maharashtra. The highest growth in total investment was observed in Vidarbha region per cent, followed by Marathwada region per cent, Western Maharashtra region per cent and Konkan region per cent during the terminal year The maximum increase in the total loans advanced was noticed in DCCBs of Western Maharashtra per cent followed by Konkan , Vidarbha and least in Marathwada region The DCCBs in Vidarbha registered the highest growth in per cent with reference to total loan outstanding followed by Konkan per cent, Western Maharashtra per cent and Marathwada per cent. The regionwise analysis it is clearly noted that the highest growth in the total recovery of loan was achieved by Konkan region followed by Vidarbha ,

146 169 Western Maharashtra and Marathwada over the base year of the study. The highest growth in overdues was observed in Vidarbha region followed by Western Maharashtra, Marathwada and the least in DCCBs of Konkan region. The highest growth in total cost of management was observed in Konkan region per cent followed by Vidarbha region per cent, Western Maharashtra region per cent and Marathwada per cent. The DCCBs in the Western Maharashtra secured a top position in the state by way of contributing more per cent share in the selected performance indicators, which showed a well-developed cooperative banking system in the region.this interpretation is in line with hypothesis entitles the DCCBs in the study areas having fluctuating growth in terms of physical and financial indicators hence the hypothesis is accepted. The results of various performance indicators are in the line of observations made by Sholapure (1995), Srinath (1995), Barik and Dugalavannan (2001), Jadhav (2004), Harshitha et al.(2008), Pujari (2008), Jadhav (2009), Hooda and Chahal (2010), Kanchu (2012), Bhosale (2011), Sale (2014) and Shelke et al. (2014) Performance Index (PI) Ranking of DCCBs for the purpose of performance index has been made as follows. The 30 DCCBs have been selected for detailed study. It has been decided to estimate the performance index for the year to The next step was to find out the average performance index for them and ranking has been made in the descending order of performance index as given in Table 4.33 Table 4.33 Ranking of DCCBs according to average performance index during to in Maharashtra Rank No. Name of DCCB Performance Index 1 Satara Mumbai Pune Thane Kolhapur 0.38

147 170 6 Solapur Latur Ahmednagar Raigad Dhule Sindhudurg Jalgaon Nasik Akola Nanded Beed Gadchiroli Aurangabad Osmanabad Ratnagiri Gondia Buldana Chandrapur Bhandara Yavatmal Parbhani Amravati Jalna Nagpur Sangli In fact, based on DCCBwise average performance index, Satara (2.61), Mumbai (1.74), Pune (0.53), Thane (0.43), Ahmednagar (0.38) Solapur (0.26), Latur (0.20) and Ahmednagar

148 171 (0.10) DCCBs were the strong units among the 30 DCCBs covered by the study. The DCCBs having very low average performance index were Raigad (0.09), Dhule (0.06), Sindhudurg (0.05), Jalgaon (0.06), Nasik (0.05) and Akola (0.05), while all other DCCBs having negligible or zero performance index and Sangli DCCB having negative performance index (-0.10), which call for suitable economic measures, so that these DCCBs would improve their performance in future. Table 4.34 Ranking of Regions according to average performance index during to Sr.No. Region DCCBs Bank wise Region Average Rank Mumbai 1.74 Thane Konkan Raigad 0.09 Ratnagiri 0.01 Sindhudurg 0.06 Ahmednagar 0.10 Dhule 0.06 Jalgaon I 2 Western Maharashtra Nasik 0.05 Kolhapur 0.38 Pune II Sangli Satara 2.62 Solapur 0.26 Aurangabad Marathwada Beed 0.02 Jalna 0.00 Latur III

149 172 4 Vidarbha Nanded 0.02 Osmanabad 0.01 Parbhani 0.00 Akola 0.05 Amravati 0.00 Buldana 0.01 Yavatmal 0.00 Bhandara 0.01 Chandrapur 0.01 Gadchiroli 0.01 Gondia 0.01 Nagpur IV The performance of DCCBs mainly reduced due to less capital for advance than the demand, high overdues and less membership of the DCCBs in the state level. The DCCBs having high performance index was mainly due to fewer overdue than those DCCBs having less performance index. Most of the banks in Maharashtra have been a part of bankruptcy zone (weak performance zone) throughout the study period. The banks need to visualize their operations, policies and strategies for effective utilization of available financial and human resources (Chander and Chandel (2011)). The ranking of DCCBs and regions based on performance index (Table 4.34) revealed that DCCBs in Konkan region of the state had performed better as compared to other regions in Maharashtra. The significantly higher average index of performance achieved by the DCCBs in Konkan (0.47) and Western Maharashtra (0.44) indicated a developed system of DCCBs in these regions. The DCCBs in the Marathwada and Vidarbha regions had a poor record in their performance as indicated by average index 0.04 and 0.01 respectively throughout the period. It was clear from the Table 4.34 that the better performance (as understood from the higher PI) of DCCBs in the Konkan Region had performed better. Comparing the DCCBs of Konkan region of the state to those in Marathwada and Vidarbha region, it was found that broadly the lending operations of the former continued for the purposes like crop production,

150 173 marketing of crops, land development, farm mechanization, poultry, plantation and horticulture, etc. The influence of the rate of recovery and high overdues on overall performance of DCCBs, however continued to be significant and it may be said that higher the rate of recovery and lower the overdues better the overall performance of DCCBs. With this interpretation hypothesis entitled the performance of district central cooperative banks in all the regions of Maharashtra state is uneven during the study period hence the hypothesis is accepted. 4.2 Purposewise lending activities by DCCBs in Maharashtra are as follows Trends in total crop loan disbursed by DCCBs in Maharashtra The Maharashtra is one of the largely agrarian and agricultural is main stay in the state. The crop loan is one of the dominant components of agricultural credit. The trends in total crop loan disbursed by DCCBs in Maharashtra during to are presented in Table 4.35 From the Table 4.35 observed that the total crop loan disbursed by the DCCBs at the state level significantly increased from ` crores to ` crores with 3.61 per cent annual compound growth during study period. The activities considered while disbursing loans by the DCCBs for crop production, maintenances and marketing of crop produce. At regional level crop loan disbursed showed significantly increase in all the regions of the state. The Vidarbha region had highest annual growth followed by Konkan, Western Maharashtra and Marathwada regions respectively. Table 4.35 Trends in total crop loan disbursed by DCCBs in Maharashtra during to (` in crores) Regions Period CGR (per cent) Konkan (2.08) (2.91) 16.62* (0.010) Western *

151 174 Maharashtra (60.16) (65.43) (0.010) Marathwada (23.16) (14.03) 12.24* (0.020) Vidarbha (14.60) (17.63) 17.21* (0.015) Maharashtra * (0.060) (Figures in parentheses are the percentages to respective totals and standard error) * = Significant at 5 per cent level, NS = Non-significant The Western Maharashtra showed maximum share in crop loan disbursement during both the periods. This was mainly because of the area under cultivation was more; availability of irrigation facility, diversified cropping and marketing of crop produce thus activities were more in the Western Maharashtra than other regions in the state. Due to Monocropping in Konkan i.e. paddy cultivation in kharif and Rabi season, required less credit than the other crops due to that the less amount of credit was disbursed in Konkan region than the other regions Medium-term credit disbursed by DCCBs in Maharashtra It includes loan disbursed for the purpose of minor irrigation, land development, dairy development, farm mechanization, plantation and horticulture, poultry production, sheep and goat production, fisheries, forest and waste land development, storage godowns and market yard, biogas plant, sericulture unit and other purposes (bullocks / other drought animals, bullock carts, Agri-clinic and Agribusiness centers) Trends in total loan disbursed for minor irrigation by DCCBs in Maharashtra. Minor irrigation holds key for boosting agriculture production and productivity. These projects are small in nature and are manageable by a group of people as well as individuals. Trends in total loan disbursed for minor irrigation by DCCBs in Maharashtra during to are presented in Table 4.36.

152 175 Table 4.36 depicted that the total loan disbursed for minor irrigation by the DCCBs at the state level non-significantly increased from ` crores to ` crores with 3.06 per cent annual compound growth during study period. At regional level loan disbursed for minor irrigation showed significant increase in Western Maharashtra and non-significant in Konkan and Vidarbha regions and negative and non- significant growth in Marathwada region. Table 4.36 Trends in total loan disbursed for minor irrigation by DCCBs in Maharashtra during to (` in crores) Regions Period CGR (per cent) Konkan 1.89 (1.55) 8.66 (5.49) 7.99 NS (0.07) Western * Maharashtra (90.78) (88.90) (0.018) Marathwada 0.51 (0.42) 0.40 (0.25) NS (0.09) Vidarbha 8.87 (7.25) 8.43 (5.36) 2.55 NS (0.029) Maharashtra NS (0.019) (Figures in parentheses are the percentages to respective totals and Standard error) * = Significant at 5 per cent level, NS = Non-significant The loan disbursed for minor irrigation through DCCBs for various activities include dug well, purchase pump sets (5 HP), construction of pump house, water harvesting, lift irrigation, drip irrigation, sprinkler irrigation, renovation of wells, pipe line, construction of cement tanks and small farm pounds. Thus activities were more in Western Maharashtra and Konkan region as result loan disbursement showed increase. The negative growth was observed in Marathwada and Vidarbha region might be due to drought conditions in terminal years the less minor irrigation activities in the regions as a result less credit were disbursed.

153 Trends in total loan disbursed for land development by DCCBs in Maharashtra. Soil and water are the two basic natural resources in agriculture. Therefore they must be conserved well and used scientifically to ensure sustained level of production and productivity. Land development activities include all activities undertaken by farmers to improve productivity of land, to prevent erosion of soil and to improve land quality, which include, soil conservation measures, land reclamation, on farm development, etc. Trends in total loan disbursed for land development by DCCBs in Maharashtra during to are presented in Table From Table 4.37 revealed that the total loan disbursed for land development by the DCCBs at the state level significantly increased from `6.213 crores to ` crores with per cent annual compound growth during study period. At regional level loan disbursed for land development showed significantly increase in Western Maharashtra and Konkan region whereas the non-significant growth in Marathwada and Vidarbha region. Table 4.37 Trends in total loan disbursed for land development by DCCBs in Maharashtra during to (` in crores) Regions Period CGR (per cent) Konkan 0.85 (13.69) (83.60) 22.96* (0.038) Western * Maharashtra (72.10) (9.00) (0.038) Marathwada (0.05) 0.00 (0.00) 5.45 NS (0.17) Vidarbha 0.88 (14.16) 2.40 (7.40) 2.12 NS (0.04) Maharashtra *

154 177 (0.02) (Figures in parentheses are the percentages to respective totals and Standard error) * = Significant at 5 %, NS = Non-significant There was increase in loan disbursed for land development in Maharashtra and all the regions except Marathwada region. Land development activities were more in Konkan region includes land leveling, bunding, creation of field and drainage channels, water harvesting structure, fertility restoration treatments like reclamation, adoption of organic farming technique like use of bio fertilizers and bio-pesticides, improved agronomics practices, etc. than the other regions in the state. Whereas in the case of Marathwada region declined and non-significant growth was observed might be due to drought conditions in terminal years of the study Trends in total loan disbursed for dairy development by DCCBs in Maharashtra Animal husbandry sector is one of the rapidly progressing sectors playing a significant role in improving rural economy in the state by providing gainful employment to rural poor and thereby increasing their abilities to face crop failure during droughts and floods. Dairying is one of the important sources of subsidiary income to the farmers. As the income from dairy is stable and continuous throughout the year, during slack season of agriculture, it becomes major source of income. Trends in total loan disbursed for dairy development by DCCBs in Maharashtra during to are presented in Table Table 4.38 Trends in total loan disbursed for dairy development by DCCBs in Maharashtra during to (` in crores) Regions Period CGR (per cent) Konkan 0.65 (1.68) (7.98) 21.52* (0.045) Western * Maharashtra (86.59) (87.68) (0.029)

155 178 Marathwada 0.43 (1.11) 0.24 (0.16) NS (0.19) Vidarbha 4.12 (10.62) 6.29 (4.18) 1.18 NS (0.032) Maharashtra * (0.025) (Figures in parentheses are the percentages to respective totals and Standard error) * = Significant at 5 per cent level, NS = Non-significant It could be noted From Table 4.38 that the total loan disbursed for dairy development by the DCCBs at the state level significantly increased from ` crores to ` crores with per cent annual compound growth during study period. At regional level loan disbursed for dairy development showed significant increase in Western Maharashtra and Konkan region whereas the non-significant growth in Vidarbha region and negative and nonsignificant growth in Marathwada. The loan disbursed for dairy development by the DCCBs for the activities like, purchasing cows, buffaloes, indigenous cows, calf rearing, mini dairy units (5 animals), fodder cultivation, commercial dairy units (10 animals), bulk milk coolers, concentrate feed plant and private veterinary clinic were more in Western Maharashtra and emerging enterprise in Konkan region in the state. Whereas, loan disbursed for dairy showed decline in Marathwada might be due to drought conditions in terminal years of the study Trends in total loan disbursed for farm mechanization by DCCBs in Maharashtra. Farm mechanization is an important sector as it leads to increased crop production and land productivity, better utilization of irrigation potential, adoption of multiple cropping patterns, etc. Considering the shortage and costly labour for cultivation of land, besides decreasing population of drought animals in the districts, necessitates the increased use of farm machineries and implements. The activities considered for financing under farm mechanization by the DCCBs were purchasing tractors, power tillers, combine harvesters and agricultural implements, etc. Trends in total loan disbursed for farm mechanization by DCCBs in Maharashtra during to are presented in Table 4.39.

156 179 From Table 4.39 observed that the total loan disbursed for farm mechanization by the DCCBs at the state level significantly increased from ` crores to ` crores with per cent annual compound growth during study period. At regional level loan disbursed for farm mechanization showed significant increase in all the regions except Vidarbha region during study period Table 4.39 Trends in total loan disbursed for farm mechanization by DCCBs in Maharashtra during to (` in crores) Regions Period CGR (per cent) Konkan 0.10 (0.22) (25.08) 44.34* (0.04) Western * Maharashtra (84.22) (71.53) (0.025) Marathwada 0.01 (0.02) 0.34 (0.21) 58.42* (0.096) Vidarbha 6.99 (15.54) 5.12 (3.18) NS (0.028) Maharashtra * (0.018) (Figures in parentheses are the percentages to respective totals and Standard error) * = Significant at 5 %, NS = Non-significant The loan disbursed for farm mechanization by the DCCBs in Western Maharashtra and Konkan region who more and the same might be due to availability of irrigation facility, more area under cultivation, use of modern technology such as tractors, power tillers, harvesters, power sprayer, etc. were more than the other regions in the state Trends in total loan disbursed for plantation and horticulture by DCCBs in Maharashtra.

157 180 In 12 th Five Year Plan ( ), Government of India set a target 8 per cent growth over the five year period for plantation and horticulture sector. With a view to giving focused attention of horticultural development in the country GOI has launched various centrally sponsored schemes. The climatic condition of Maharashtra is suitable for cultivation of various horticultural crops in different regions of the state. It includes plantation of horticultural (fruits) crops, flower crops and plantation of medicinal plants. Trends in total loan disbursed for plantation and horticulture by DCCBs in Maharashtra during to are presented in Table Table 4.40 depicted that the total loan disbursed for plantation and horticulture by the DCCBs at the state level significantly increased from ` crores to ` crores with per cent annual compound growth during study period. At regional level loan disbursed for plantation and horticulture increased significantly in Western Maharashtra and Konkan regions whereas, non-significant growth was observed in Marathwada and Vidarbha regions during study period. Table 4.40 Trends in total loan disbursed for plantation and horticulture by DCCBs in Maharashtra during to (` in crores) Regions Period CGR (per cent) Konkan 0.75 (1.34) (6.91) 23.09* (0.036) Western * Maharashtra (96.29) (91.46) (0.023) Marathwada 0.54 (0.97) 2.32 (1.17) NS (0.087) Vidarbha 0.78 (1.40) 0.92 (0.46) 8.54 NS (0.06) Maharashtra *

158 181 (0.021) (Figures in parentheses are the percentages to respective totals and Standard error) * = Significant at 5 per cent level, NS = Non-significant From the Table 4.40 it was concluded that the total loan disbursed for plantation and horticulture by DCCBs in Maharashtra, the Western Maharashtra and Konkan region showed a major contributor in the state during study period. Due to GOI has launched various centrally sponsored schemes and availability of irrigation facility, suitable climatic conditions the area under plantation and horticulture crops increased as a result credit requirement also increased. Whereas less rainfall, drought conditions, non-availability of irrigation facility in Marathwada and Vidarbha region less growth was observed during study period Trends in total loan disbursed for poultry by DCCBs in Maharashtra. Poultry development is considered as an important allied commercial activity. Trends in total loan disbursed for poultry by DCCBs in Maharashtra during to are presented in Table It could be observed from Table 4.41 that the total loan disbursed for poultry by the DCCBs at the state level significantly increased from ` 1.68 crores to ` 6.06 crores with per cent annual compound growth during study period. At regional level loan disbursed for poultry showed significant increase in Konkan region whereas, non-significant growth was observed in Western Maharashtra, Marathwada and Vidarbha regions during study period Table 4.41 Trends in total loan disbursed for poultry by DCCBs in Maharashtra during to (` in crores) Regions Period CGR (per cent) Konkan 0.08 (4.77) 2.45 (40.42) 29.21* (0.052) Western NS Maharashtra (84.52) (32.84) (0.054)

159 182 Marathwada 0.00 (0.00) 0.02 (0.33) NS (0.16) Vidarbha 0.18 (10.71) 1.60 (26.41) ns (0.20) Maharashtra * (0.046) (Figures in parentheses are the percentages to respective totals and Standard error) * = Significant at 5%, NS = Non-significant The poultry is a profitable business when proper management, marketing facilities and credit availability in time. The loan disbursed for poultry significantly increased in Konkan region might be due to high demand for poultry and poultry products and easy marketing facility in metropolitan city like Mumbai due to these reasons the growth in poultry business especially in broiler farming was more in Konkan region than the other regions in the state Trends in total loan disbursed for sheep and goats by DCCBs in Maharashtra. Sheep and goats serve as sources of subsidiary income to a large number of peoples living in rural areas. The income comes out from sale of wool, meat, manure and skin of dead animals. Trends in total loan disbursed for sheep and goats by DCCBs in Maharashtra during to are presented in Table From Table 4.42 observed that the total loan disbursed for sheep and goats by the DCCBs at the state level significantly increased from ` 3.34 crores to ` crores with 8.72 per cent annual compound growth during study period. At regional level loan disbursed for sheep and goats showed significant increase in Western Maharashtra and Konkan region whereas, significant decline in Marathwada and non-significant decline in Vidarbha region was recorded during study period Table 4.42 Trends in total loan disbursed for Sheep & Goats production by DCCBs in Maharashtra during to Regions Period CGR ( ` in crores)

160 (per cent) Konkan 0.22 (6.59) 5.10 (34.85) 13.23* (0.046) Western * Maharashtra (27.54) (45.25) (0.029) Marathwada 0.04 (1.20) 0.00 (0.00) * (0.16) Vidarbha 2.16 (64.67) 2.91 (19.90) NS (0.026) Maharashtra * (0.017) (Figures in parentheses are the percentages to respective totals and Standard error) * = Significant at 5 %, NS = Non-significant The significant increases in loan disbursement in Western Maharashtra and Konkan region for various activities were sheep rearing (20+1), goat rearing (10+1) and commercial goat rearing (50+2), might be due to suitable climatic conditions, availability of fodder throughout year and more profitability in the business, farmers in these regions interested to tundertake sheep and goat as a subsidiary business than the other regions in the state Trends in total loan disbursed for fisheries by DCCBs in Maharashtra. Fisheries sector play strategic role in Maharashtra s economy in terms of contribution towards export, food security, meeting nutritional challenges and employment generation in the inland areas of Maharashtra. Trends in total loan disbursed for fisheries by DCCBs in Maharashtra during to are presented in Table Table 4.43 revealed that the total loan disbursed for fisheries by DCCBs in Maharashtra negative but non-significant increase from ` 6.00 crores in base year to ` 7.13 crores in terminal year with per cent annual growth. The negative and non- significant growth in all regions in the state except Western Maharashtra observed positive but nonsignificant trends during period.

161 184 The loan disbursed for fisheries in Konkan region was highest in both the periods of study there is more scope for fisheries because of 720 km of coastal line and the main occupation of the people reside nearer to the coastal line were fishing and fish related activities. Fishermen require credit for purchase and repair of fishing boat, fishing net and other fishing material. But now days they become self-sufficient in credit availability may be due to that the loan disbursement showed decline in terminal year. Table 4.43 Trends in total loan disbursed for fisheries by DCCBs in Maharashtra during to (` in crores) Regions Period CGR (per cent) Konkan 5.23 (87.17) 4.90 (68.73) NS (0.015) Western NS Maharashtra (8.83) (22.01) (0.041) Marathwada 0.01 (0.17) 0.01 (0.14) NS (0.22) Vidarbha 0.23 (3.83) 0.65 (9.12) NS (0.15) Maharashtra NS (0.014) (Figures in parentheses are the percentages to respective totals and Standard error) * = Significant at 5 per cent level, NS = Non-significant Loan disbursed for fisheries in Western Maharashtra and Marathwada region showed increase it might be due to increase in number of village ponds, reservoirs, irrigation tanks, fisheries in dams and river water. Due to non-availability of water facilities these was less growth of fisheries sector in Marathwada region. Inland fishery is under taken mostly in reservoirs or natural water bodies and activities provide good opportunities for selfemployment.

162 Trends in total loan disbursed for forestry and waste land development by DCCBs in Maharashtra. Trends in total loan disbursed for forestry and waste land development by DCCBs in Maharashtra during to are presented in Table Table 4.44 Trends in total loan disbursed for forestry and waste land development by DCCBs in Maharashtra during to (` in crores) Regions Period CGR (per cent) Konkan 0.05 (0.85) 0.48 (20.08) 39.18* (0.13) Western NS Maharashtra (92.20) (74.48) (0.043) Marathwada 0.17 (2.89) 0.04 (1.67) NS (0.18) Vidarbha 0.18 (3.06) 0.09 (3.77) NS (0.18) Maharashtra NS (0.039) (Figures in parentheses are the percentages to respective totals and Standard error) * = Significant at 5 %, NS = Non-significant It could be seen from Table 4.44 that the total loan disbursed for forestry and waste land development by DCCBs in Maharashtra showed negative and non-significant decline from ` 5.89 crores in base year to ` 2.39 crores in terminal year with 2.80 per cent annual growth. The negative and non- significant growth in all regions in the state was observed except Konkan region was positive and significant trend was observed during period under study. The area under forest and waste land was more in the Konkan region, cultivable waste land was also more in the Konkan region the increased trend in plantation and horticulture

163 186 was observed, increases area under cultivation in Konkan region than the other regions in the state as a result positive and significant growth was observed in the region Trends in total loan disbursed for storage godowns and market yard by DCCBs in Maharashtra. There is a significant growth in agricultural production and productivity over the years in Maharashtra. However, the producers/farmers continue to face hurdles in realizing reasonable returns for their produce. Inadequate infrastructure for post-harvest services like cleaning, grading, sorting, storage and marketing of their surplus produce is the major problem of the farming community. The farmers therefore need a well-developed infrastructure, adequate captive storage capacity of their own at the village or facilities available for hiring in the rural areas to avoid wastage and post-harvest deterioration. Trends in total loan disbursed for storage godowns and market yard by DCCBs in Maharashtra during to are presented in Table From the Table 4.45 it was observed that the total loan disbursed for storage godowns and market yard by DCCBs in Maharashtra non-significantly declined from `9.95 crores in base year to ` 8.15 crores in terminal year with 1.99 per cent annual growth. The negative and non-significant trends in all regions were observed in the state. Western Maharashtra region recorded positive and non-significant trend during period under study. Table 4.45 Trends in total loan disbursed for storage godowns & market yard by DCCBs in Maharashtra during to (` in crores) Regions Period CGR (per cent) Konkan 2.60 (26.13) 0.16 (1.96) NS (0.081) Western NS Maharashtra (8.04) (54.85) (0.090) Marathwada

164 187 (0.00) (0.00) Vidarbha 6.55 (65.82) 3.52 (43.19) NS (0.063) Maharashtra NS (0.0585) (Figures in parentheses are the percentages to respective totals and Standard error) * = Significant at 5 per cent level, NS = Non-significant The negative and non-significant trend in storage godowns and market yard was observed in all the regions except Western Maharashtra. It might be due to sufficient rainfall, irrigation facilities results more agriculture production need to store surpluses of the farm produce required facilities for storage godowns resulted more credit was disbursed by Western Maharashtra region than the other regions of the state Trends in total loan disbursed for biogas plant by DCCBs in Maharashtra Due to rising population and greater use of the wood as fuel by the rural masses, forest cover in India is decreasing. To reverse this trend greater emphasis on biogas is needed. Trends in total loan disbursed for biogas plant by DCCBs in Maharashtra during to are presented in Table From Table 4.46 observed that the total loan disbursed for biogas plant by DCCBs in Maharashtra significantly increased from ` crores in base year to ` crores in terminal year with per cent annual growth. At the regional level the Western Maharashtra showed significant trend while in case of Vidarbha it was non-significant during study period. Table 4.46 Trends in total loan disbursed for biogas by DCCBs in Maharashtra during to (` in crores) Regions Period CGR (per cent) Konkan

165 188 (0.00) (0.00) Western * Maharashtra (99.42) (99.75) (0.080) Marathwada 0.00 (0.00) 0.00 (0.00) 0.00 Vidarbha (0.58) 0.23 (0.25) Ns (0.17) Maharashtra * (0.075) (Figures in parentheses are the percentages to respective totals and Standard error) * = Significant at 5 per cent level, NS = Non-significant Positive trend in loan disbursed for biogas plant by the DCCBs in Western Maharashtra and Vidarbha region were observed indicating well developed animal husbandry sector in these regions. Whereas DCCBs in Konkan and Marathwada region there were no loan disbursement for biogas plant which might be due to less development in animal husbandry and unsuitable climatic conditions for the development in biogas Trends in total loan disbursed for sericulture unit by DCCBs in Maharashtra. Trends in total loan disbursed for sericulture unit by DCCBs in Maharashtra during to are presented in Table Table 4.47 depicted that the total loan disbursed for sericulture units by DCCBs in Maharashtra non-significantly increased from ` 0.17 crores in base year to ` crores in terminal year with per cent annual growth. At the regional level the Western Maharashtra only disbursed loan to sericulture in the state. Table 4.47 Trends in total loan disbursed for sericulture by DCCBs in Maharashtra during to

166 189 Regions Period (` in crores) CGR (per cent) Konkan 0.00 (0.00) 0.00 (0.00) 0.00 Western NS Maharashtra (0.11) Marathwada 0.00 (0.00) 0.00 (0.00) 0.00 Vidarbha 0.00 (0.00) 0.00 (0.00) 0.00 Maharashtra NS (0.11) (Figures in parentheses are the percentages to respective totals and Standard error) * = Significant at 5 %, NS = Non-significant The loan disbursed for sericulture unit in Western Maharashtra increased mainly due to favorable environmental condition for the growth of sericulture units in the region no loan was disbursed for sericulture in other three regions Trends in total loan disbursed for other purposes by DCCBs in Maharashtra The loan for other purposes is one of the types of medium term loan. It includes loan given by DCCBs for purchase of bullocks / other drought animals, bullock carts and establishment of Agri-clinic and Agribusiness centers. Trends in total loan disbursed for other purposes by DCCBs in Maharashtra during to are presented in Table It could be observed from Table 4.48 that the total loan disbursed for other purposes by DCCBs in Maharashtra non-significantly increased from `` crores in base year to ` crores in terminal year with per cent annual growth. Table 4.14 also showed that the total loan disbursed for other purposes by DCCBs at regional level, the Western Maharashtra contribution was highest in both the years of the study. Table 4.48 revealed that

167 190 the loan disbursed for other purposes by DCCBs in Maharashtra showed increasing trend at state and regional level except Marathwada. The loan for other purposes significantly declined in Marathwada it might be due to problem of recovery and drought conditions in terminal year. The farming activities were more in the western Maharashtra than other regions it might be due to that increases in number of Agri-clinic and agribusiness centers in that region as a result loan disbursement for other purposes increased. Table 4.48 Trends in total loan disbursed for other purposes by DCCBs in Maharashtra during to (` in crores) Regions Period CGR (per cent) Konkan 3.55 (9.25) 5.54 (3.38) 8.61 NS (0.064) Western NS Maharashtra (77.33) (67.41) (0.076) Marathwada 3.94 (10.27) * (0.14) Vidarbha 1.21 (3.15) (29.21) 26.21* (0.041) Maharashtra NS (0.059) (Figures in parentheses are the percentages to respective totals and Standard error) * = Significant at 5 %, NS = Non-significant. The use of the bullocks and bullock carts for agricultural operations and for transportation in rural areas is as old as agriculture. Despite modernization of agriculture and increased use of improved agricultural implements, the use of bullocks and bullock carts by small/marginal farmers and also by medium farmers is still in vogue. Simple technology involved and availability of raw material locally for cart and drought animals have made both

168 191 the activities an integral part of rural economy in Maharashtra. It is also a means of generating supplementary income for small and marginal farmers and agricultural labourers. Purposewise lending activities by DCCBs in Maharashtra, it includes loan disbursed for the purpose of crop loan and term loan, term loan includes minor irrigation, land development, dairy development, farm mechanization, plantation and horticulture, poultry production, sheep and goats production, fisheries, forest and waste land development, storage godowns and market yard, biogas plant, sericulture unit and other purposes (bullocks / other drought animals, bullock carts, Agri-clinic and Agribusiness centers). From above results it was concluded that the loan disbursed by DCCBs in Maharashtra showed increasing trend for different activities under short term and medium term loan. Out of the total loan disbursed for agriculture purposes at the state level loan disbursed by Western Maharashtra were more than other regions of the state. It indicated that the developed agricultural system in Western Maharashtra region than the other regions of the state. These results are in the line of observations made by Pujari (2008), Vijayalakshmi (2009), Chandragouda (2011), Uma Devi (2013), Saroj kumari Sharma (2014). The per cent shares of various medium term activities have been presented by way of pie diagram in figure Share of DCCBs in total credit disbursed for agriculture Trends in share of DCCBs in total crop loan disbursed. The Maharashtra is one of the largely agrarian and agricultural is main stay in the state. The crop loan is one of the dominant components of agricultural credit. The trends in total crop loan disbursed by financial institutions in Maharashtra during to are presented in Table 4.49 It could be seen from Table 4.49 that, the total crop loan disbursed by financial institutions in Maharashtra significantly increased from ` crores to ` crores during study period with per cent annual compound growth. The significant increases in crop loan in case of DCCBs it was ` crores to ` crores with 3.61 per cent annual growth, in case of CBs it was from ` crores to ` crores with per cent annual growth and in case of RRBs from ` crores to ` crores with per cent annual growth during study period.

169 192 Table 4.49 also shows that the total crop loan disbursed by financial institutions at regional level, the Marathwada contributed highest share per cent to the total crop loan disbursed at state level followed by Western Maharashtra per cent, Vidarbha per cent and least contribution was observed in Konkan region 1.88 per cent in the year Whereas, the Western Maharashtra per cent share followed by Marathwada per cent, Vidarbha per cent and Konkan region 2.70 per cent respectively in the year In Marathwada highest share observed in base year was mainly due to the more loans disbursed through RRBs than the other regions due to significant growth and efficient working of RRBs in that region. Whereas, in terminal year the Western Maharashtra secures top position in total loan disbursed at state level because the commercialization, farm mechanization and agriculture development is more in Western Maharashtra than other regions in the state and significantly increases in loan disbursed by CBs in that region. From Table 4.49 revealed that the crop loan disbursed by the financial institutions in Maharashtra showed highest share in total crop loan disbursement by DCCBs (52.09%), CBs (26.09%) and RRBs (21.91%) at state level in base year of the study. Table 4.49 Trends in total crop loan disbursed by financial institutions in Maharashtra during to (` in crores) Regions Financial Institutions Period CGR (per cent) DCCBs (57.54) (37.82) 16.62* (0.010) Konkan CBs RRBs (39.36) 2.07 (2.70) (57.35) (4.83) 23.00* (0.020) 25.14* (0.011) Total (1.88) (2.70) 19.92* (0.012) Western Maharashtra DCCBs (75.03) (42.07) 14.60* (0.010)

170 193 CBs (24.80) (48.92) 24.45* (0.016) RRBs 2.79 (0.17) (9.01) 52.90* (0.065) Total (41.77) (54.73) 18.61* (0.012) Marathwada DCCBs (28.38) (21.93) 12.24* (0.020) CBs (23.28) (64.09) 21.23* (0.017) RRBs (48.34) (13.97) 15.68* (0.036) Total (42.49) (22.51) 16.36* (0.018) Vidarbha DCCBs (54.85) (30.94) 17.21* (0.015) CBs (36.15) (63.18) 25.13* (0.008) RRBs (9.00) (5.88) 16.07* (0.015) Total (13.87) (20.05) 20.89* (0.010) Maharashtra DCCBs (52.09) (35.19) 3.61* (0.060) CBs (26.09) (55.43) 23.63* (0.012) RRBs *

171 194 (21.91) (9.38) (0.031) Total * (0.011) (Figures in parentheses are the percentages to respective totals and standard error) * = Significant at 5 per cent level, NS = Non-significant The similar trend was noticed in all regions except Marathwada the more share was observed by RRBs followed by DCCBs and CBs in base year. In the terminal year the highest share was observed by CBs (55.43%) followed by DCCBs (35.19%) and RRBs (9.38%) in total crop loan disbursement at state and regional level. It was concluded from the table that the loan disbursed increases in absolute term but share of DDCBs declined and the share of CBs increased over the year. This is because of less recovery of short term loan, mounting overdues, less rainfall the less amount of credit with DCCBs for recycle as a result declined share was observed. Whereas the share of CBs showed increasing trend mainly because of government policy of compulsory lending to agriculture and doubling agriculture loan policy from resulted increases in crop loan disbursement in state and regional level. Apart from that the DCCBs in Western Maharashtra disbursed highest crop loan than the other regions because of more rural network, more number of PACS and efficient working in rural area. Share of financial institutions in crop loan disbursement in Maharashtra have been depicted by way of pie diagram in figure Trends in share of DCCBs in total term loan disbursement This refers to medium-term investment credit made available by the financial institutions for the period of 3 to 5 years. It includes loan disbursed for the purpose of minor irrigation, land development, dairy development, farm mechanization, plantation and horticulture, poultry production, sheep and goat production, fisheries, forest and waste land development, storage godowns and market yard, biogas plant, sericulture unit and other purposes (bullocks / other drought animals, bullock carts, Agri-clinic and Agribusiness centers). Trends in total term loan disbursed by financial institutions in Maharashtra during to are presented in Table From Table 4.50 observed that the total term loan disbursed by financial institutions in Maharashtra significantly increased from `` crores in base year to ` crores in terminal year with per cent annual growth. The total term loan disbursed by DCCBs

172 195 significantly increased from ` crores to ` crores with per cent annual growth, CBs significantly increased from ` crores to `` crores with per cent annual compound growth and RRBs significantly increased from ` crores to `` crores with per cent annual growth during study period. Table 4.50 showed that the total term loan disbursed by financial institutions at regional level, the Western Maharashtra Total 4.50 Trends in total term loan disbursed by financial institutions in Maharashtra during to (`` in crores) Regions Financial Institutions Period CGR (per cent) DCCBs (22.15) (22.04) 12.39* (0.043) Konkan CBs RRBs (72.00) 4.22 (5.85) (75.39) (2.57) 19.96* (0.016) 6.54* (0.017) Total (8.01) (5.20) 18.16* (0.021) DCCBs (47.56) (24.52) 11.93* (0.18) Western CBs (52.12) (73.89) 23.40* (0.016) Maharashtra RRBs 1.72 (0.29) (1.60) 46.06* (0.042) Total (65.32) (69.78) 19.99* (0.014)

173 196 DCCBs 5.64 (4.41) 3.39 (0.24) 0.18 NS (0.082) Marathwada CBs RRBs (77.65) (17.94) (91.32) (8.44) 24.10* (0.027) 16.80* (0.040) Total (14.19) (13.86) 22.44* (0.024) DCCBs (28.65) (6.92) 7.12* (0.016) Vidarbha CBs RRBs (63.57) 8.74 (7.78) (87.19) (5.89) 22.17* (0.014) 15.77* (0.021) Total (12.48) (11.16) 19.27* (0.012) DCCBs (37.04) (19.06) 11.44* (0.016) Maharashtra CBs RRBs (58.78) (4.18) (77.89) (3.08) 23.30* (0.013) 20.94* (0.024) Total * (0.012) (Figures in parentheses are the percentages to respective totals and Standard error) * = Significant at 5 %, NS = Non-significant

174 197 Contributed highest share per cent to total term loan disbursed at state level followed by Marathwada per cent, Vidarbha per cent and least contribution was observed in Konkan region 8.01 per cent in the year The similar trend was observed in terminal year of the study. From the Table 4.50 observed that the term loan disbursed by the financial institutions in Maharashtra showed highest share in total term loan disbursement by CBs (58.78%), DCCBs (37.04%) and RRBs (4.18%) at state level in base year of the study. The similar trend was observed in all regions except Marathwada the more share was observed by RRBs followed by CBs and DCCBs in base year. The similar trend was observed in terminal year. It was concluded from the table that the loan disbursement increased in absolute terms but share of DDCBs declined and the share of CBs increased over the year. This is because of less amount of credit disbursed by the DCCBs for term loan because after disbursing short term credit banks not having sufficient money for disbursement and less recovery of term loan as a result declined share was observed. Whereas the share of CBs showed increasing trend mainly because of government policy of compulsory lending of 18 % of total advances form priority sector to agriculture and allied activities and doubling agriculture loan policy from , government subsidy, timely supervision of credit and more recovery resulted increases in loan disbursement in state and regional level. The loan disbursed by RRBs declined in terminal year in state and all the regions except Western Maharashtra because of less recovery thus banks had huge losses during terminal year of the study. Share of financial institutions in term loan disbursement in Maharashtra have been depicted by way of pie diagram in figure Trends in share of DCCBs in total agricultural loan disbursement The term agricultural credit includes two types of credit viz., short-term credit and medium term credit at the district level. The short-term credit refers to the amount of credit available for the purpose of crop production from the financial institutions for the period of 12 to 18 months. The medium-term investment credit made available by the financial institutions for the period of 3 to 5 years. Trends in total term loan disbursed by financial institutions in Maharashtra during to are presented in Table It could be observed from Table 4.51 that the total agricultural loan disbursed by financial institutions in Maharashtra significantly increased from `` crores in base year to ` crores with per cent annual growth. The total agricultural loan disbursed

175 198 by DCCBs increased from ` crores to ` crores with per cent per annual growth, CBs increased from ` crores to `` crores with per cent annual growth and Table 4.51 Trends in total agricultural loan disbursed by financial institutions in Maharashtra during to (` in crores) Regions Financial institutions Period CGR (per cent) DCCBs (40.58) (31.53) 15.38* (0.021) Konkan CBs RRBs (55.19) 6.29 (4.23) (54.54) (9.93) 21.48* (0.013) 16.28* (0.0087) Total (2.99) (3.34) 19.13* (0.015) DCCBs (67.98) (36.71) 14.25* (0.0097) Western CBs (31.82) (56.55) 23.94* (0.011) Maharashtra RRBs 4.51 (0.20) (6.74) 52.96* (0.050) Total (46.02) (58.59) 18.99* (0.0099) Marathwada DCCBs CBs (26.74) (27.00) (18.14) (68.86) 12.13* (0.018) 21.99* (0.017)

176 199 RRBs (46.26) (13.00) 15.55* (0.034) Total (37.37) (20.29) 17.17* (0.018) DCCBs (50.51) (27.06) 16.47* (0.014) Vidarbha CBs RRBs (40.69) (8.80) (67.04) (5.90) 24.39* (0.0090) 16.19* (0.014) Total (13.62) (17.77) 20.62* (0.0096) DCCBs (49.37) (31.06) 14.32* (0.010) Maharashtra CBs RRBs (31.92) (18.70) (61.18) (7.76) 23.52* (0.0085) 19.63* (0.029) Total * (0.0093) (Figures in parentheses are the percentages to respective totals and Standard error) * = Significant at 5 per cent level, NS = Non-significant The total agricultural loan disbursement by RRBs increased from ` crores to `` crores with per cent annual growth during study period. From the Table 4.51 observed that the total loan disbursed for agriculture by the financial institutions in Maharashtra showed highest share in total agricultural loan disbursement by DCCBs (49.37%) CBs (31.92%) and RRBs (18.70%) at state level in base year of the study. Whereas, in terminal year highest share was observed in CBs (61.18%), DCCBs (31.06%) and RRBs (7.76%) at state level. Table 4.51 also depicted that the total agricultural loan disbursed by financial

177 200 institutions at regional level, the Western Maharashtra contributed highest share per cent followed by Marathwada per cent, Vidarbha per cent and least contribution was observed in Konkan region 2.99 per cent in the year Similar trend was observed in terminal year of the study. From Table 4.51 it could be concluded that the loan disbursement by financial institutions increased in absolute term but the share of DCCBs and RRBs decreased and share of CBs showed increased over the years. The less recovery of short term and medium term loan, mounting overdues, less rainfall the less amount of credit with DCCBs for recycle as a result declined share was observed these are the major reasons for declining share of DCCBs in total credit disbursement at state and regional level. Whereas the share of CBs showed increased trend mainly because of government policy of compulsory lending to agriculture and allied activities and doubling agriculture loan policy from resulted increases in crop loan and term loan disbursement in state and regional level. Apart from that the DCCBs in Western Maharashtra disbursed highest total agriculture loan than the other region because of more rural network, more number of PACS, easy process of loan availability than commercial banks and efficient working in rural area Share of DCCBs in total credit disbursement for agriculture The total credit disbursed by financial institutions for agricultural purpose in Maharashtra and regions in Maharashtra are calculated to know the share of each financial institutions in loan disbursed for agriculture i.e. crop loan and term loan. The regionwise and periodwise shares of total loan disbursed for agriculture by DCCBs during to in Maharashtra are presented in Table The Table 4.52 depicted that the total agricultural loan disbursed by financial institutions in Maharashtra increased from ` crores to ` crores during to

178 201 Table 4.52 Share of DCCBs in total credit disbursement in Maharashtra during to (` in crores) Regions/period Loan type / Institutions CBs Cooperatives RRBs Total CBs Cooperatives RRBs Total Crop loan (39.36) (57.94) 2.07 (2.70) (57.35) (37.82) (4.83) Konkan Term loan (72.00) (22.15) 4.22 (5.85) (75.39) (22.04) (2.57) Total agricultural loan (55.19) (40.58) 6.29 (4.23) (64.54) (31.53) (3.93) Crop loan (24.80) (75.04) 2.79 (0.16) (48.93) (42.07) (9.00) Western Maharashtra Term loan (52.15) (47.56) 1.72 (0.29) (73.89) (24.51) (1.60) Total agricultural loan (31.82) (67.98) 4.51 (0.20) (56.55) (36.71) (6.74) Marathwada Crop loan (23.27) (28.38) (48.35) (64.09) (21.94) (13.97)

179 202 Term loan (77.65) 5.64 (4.41) (17.94) (91.32) 3.39 (0.23) (8.45) Total agricultural loan (27.00) (26.74) (46.26) (68.85) (18.14) (13.01) Crop loan (36.15) (54.85) (9.00) (63.18) (30.94) (5.88) Vidarbha Term loan (63.57) (28.65) 8.74 (7.78) (87.19) (6.92) (5.89) Total agricultural loan (40.69) (50.51) (8.80) (67.05) (27.07) (5.88) Crop loan (26.00) (52.09) (21.91) (55.43) (35.19) (9.38) Maharashtra Term loan (58.78) (37.04) (4.18) (77.86) (19.06) (3.08) Total agricultural loan (31.93) (49.37) (18.70) (61.18) (31.06) (7.76) (Figures in parenthesis are percentages to respective totals

180 203 The total loan disbursed for agriculture by CBs increased from ` to ` crores, loan disbursed by DCCBs increased by ` crores to` crores and loan disbursed by RRBs increased by ` crores to ` crores respectively during study period. The share of DCCBs in total loan disbursed for agriculture was decreased from per cent to per cent, share of RRBs was decreased from per cent to 7.77 per cent and share of CBs increased from per cent to per cent respectively during study period. From Table 4.52 observed that the total agricultural loan disbursed by financial institutions in Western Maharashtra increased from ` crores to ` crores during to The total loan disbursed for agriculture by CBs increased from ` to ` crores, loan disbursed by DCCBs increased by ` crores to ` crores and loan disbursed by RRBs increased by ` 4.91 crores to ` crores respectively during study period. The share of DCCBs in total loan disbursed for agriculture was decreased from per cent to percent, share of RRBs was increased from 0.20 per cent to 6.74 per cent and share of CBs increased from per cent to per cent respectively during study period. It could be revealed from Table 4.52 that the total agricultural loan disbursed by financial institutions in Konkan Region increased from ` crores to ` crores during to The total loan disbursed for agriculture by CBs increased from ` to ` crores, loan disbursed by DCCBs increased by ` crores to ` crores and loan disbursed by RRBs increased by ` 6.29 crores to ` crores respectively during study period. The share of DCCBs in total loan disbursed for agriculture was decreased from per cent to per cent, share of RRBs was decreased from 4.23 per cent to 3.93 per cent and share of CBs increased from per cent to per cent respectively during study period. Table 4.52 also observed that the total agricultural loan disbursed by financial institutions in Marathwada Region increased from ` crores to ` crores during to The total loan disbursed for agriculture by CBs increased from `

181 204 crores to ` crores, loan disbursed by DCCBs increased by ` crores to ` crores and loan disbursed by RRBs increased by ` crores to ` crores respectively during study period. The share of DCCBs in total loan disbursed for agriculture was decreased from per cent to per cent, share of RRBs was decreased from per cent to per cent and share of CBs increased from per cent to per cent respectively during study period. Table 4.52 depicted that the total agricultural loan disbursed by financial institutions in Vidarbha Region increased from ` crores to ` crores during to The total loan disbursed for agriculture by CBs increased from ` crores to ` crores, loan disbursed by DCCBs increased by ` crores to ` crores and loan disbursed by RRBs increased by ` crores to ` crores respectively during study period. The share of DCCBs in total loan disbursed for agriculture was decreased from per cent to per cent, share of RRBs was decreased from 8.80 per cent to 5.88 per cent and share of CBs increased from per cent to per cent respectively during study period. From the Table 4.52 it was concluded that the loan disbursed by CBs was increased over the period and loan disbursed by DCCBs and RRBs decreased over the period in Maharashtra and all regions during study period. The total loan disbursed for agriculture increased in absolute term but share of DDCBs declined and the share of CBs increased over the year. This is because of less recovery of short term loan and medium term (term loan), mounting overdues, less rainfall the less amount of credit with DCCBs for recycle as a result declined share was observed. Whereas the share of CBs showed increase mainly because of government policy of compulsory lending 18 per cent out of their 40 per cent priority sector to agricultural and allies activities and doubling agriculture loan policy introduced by Government from resulted increases in loan disbursement for agriculture purposes in state and regional level. Apart from that the DCCBs in Western Maharashtra disbursed highest agricultural loan than the other regions because majority of area under sugarcane cultivation and more number of cooperative sugarcane factories and other cooperative organizations such as dairy, poultry in the region that s why more number of people already connected with cooperative credit organization. These reasons people still believe in cooperative organizations because of their efficiently working in rural areas of Western Maharashtra than the other regions in the state.

182 205 These results are in the line of observations made by Pujari (2008), Chandragouda (2011), Uma Devi (2013) and Matkar and Jadhao (2015). Share of financial institutions in total agriculture loan disbursement in Maharashtra have been depicted by way of pie diagram in figure Inequality Measures a Scale of finance The scale of finance refers to the actual amount of finance offered for different crops by the DCCBs. The scale of finance is mainly decided taking into account the cost of cultivation (cost of inputs) of crops. Since the cost of cultivation undergoes changes due to the rise in wages and prices of inputs like seeds, fertilizers, pesticides etc. over a period of time, the scales of finances are required to be raised so as to cover the cost of cultivation of crops. The credit requirement is the projected demand of capital by the farmers for cultivation of their crops. Credit is said to be the lifeblood of agriculture for increasing agricultural production. Based on the cost of cultivation of different crops, the Commissioner of Agriculture finalizes the total requirement of credit for different crops. The average per hectare requirement of credit, availability of credit and credit gap for crops in Maharashtra in the year are presented in Table Based on the limits given by SCB, the every DCCB finalizes its own scale of finance separately for its operating area. Looking to the importance of crops in the district, the DCCB changes its policy for deciding scales of finance. The credit gap is considered as the difference between the credit requirement and the credit availability for different crops. In the present study, the scale of finance fixed by the DCCBs for important crops and fruit crops in the year was considered as the credit requirement and the actual scale of finance offered by the DCCBs was treated as credit available for crops for the year b Average per hectare credit requirement, credit availability and credit gap for the important crops in Maharashtra The information of credit requirement and credit availability, the credit gap was estimated separately for the major crops and fruit crops are presented in Table It is noted that there is a credit gap in the flow of short-term credit supplied by the DCCBs. For most of the crops, the credit gap was noticed in the Western Maharashtra Marathwada and Vidarbha region, while in the case of Konkan region, excess finance was advanced to same important crops indicating the adequacy of funds to advance. In Western Maharashtra, the credit gap in

183 206 the finance by DCCBs was observed for all crops grown in region, whereas excess finance was advanced to pomegranate (+7.84) per cent than the credit requirement in Western Maharashtra. There was a wide credit gap in the flow of credit provided by the DCCBs to almost all crops grown in the Konkan region, whereas excess finance was advanced to improved paddy (+ 6.25) per cent,

184 207 Table 4.53 Average per hectare requirement of credit, availability of credit and credit gap for crops in Maharashtra in the year (Value in `) Sr. No. Crops Credit Require- ment Konkan Availability of credit Western Maharashtra Marathwada Vidarbha Konkan Credit gap ( Per cent) Western Maharashtra Marathwada Vidarbha A) Cash crops 1 Sugarcane a) Adsali 95,000 22,500 84,778 95,714 22, b) Preseasonal 90,000 22,500 67,722 91,429 53, c) Suru 85,000 58,750 72,222 84,286 70, d) Ratoon 75,000 55,000 61,111 76,429 57, Banana a) Simple 76,000 63,750 60,389 77,000 67, b) Tissuculture 105,000 83,333 84,333 75,000 49, Grape 200, , ,429 10, Cotton

185 208 a) Hy.Rainfed 39,000-24,139 31,386 29, b) Hy.Irrigated 33,000-27,000 32,643 32, c) Improved 39,000-12,944 17,714 2, B) Cereal crops 5 Wheat a) Rainfed 24,000 6,250 5,194 9,357 10, b) Irrigated 26,000 12,750 22,250 26,429 23, Jowar a) Improved 20,000-14,143 19,971 14, i) Rainfed 20,000-14,417 15,607 10, Ii) Irrigated 22,000-10,889 17,114 12, b) Hybrid - - i) Rainfed 20,000 5,500 9,500 15, ii) Irrigated 22,000-5, Bajara a) Improved Table 4.53 cont 16,000-15,167 15,929 4, b) Hybrid 20,000-12,861 13,214 1,

186 209 8 Paddy a) Improved 40,000 42,500 20,750 21,429 3, b) Hybrid 50,000 32,500 15,944 18,000 6, c) Summer 33,000 37,625 15,278 14, Maize 25,000 6,250 17,500 22,821 5, C) Pulse crops 10 Tur 25,000 22,000 18,333 22,750 20, Udid 16,000 16,250 14,083 15,857 14, Green Gram 16,000 16,250 14,083 15,857 14, Javas 18,000 1,563 6,289 12,786 11, Sesamun 18,000 11,250 9,611 15,357 13, Safflower 18,000-8,889 6,829 7, Sunflower 20,000 16,250 15,806 17,929 13, Groundnut a) Rainfed 30,000 30,250 22,972 25,614 19, b) Summer 26,000 16,250 15,361 16,786 11,

187 Gram 21,000 19,125 14,028 18,686 13, Soybean 30,000 20,000 25,972 31,286 27, D) Vegetables 20 Tomato 56,000 37,500 42,389 49,286 20, Onion 50,000 35,250 40,944 48,714 26, Zinger 75,000 75,000 64,722 75, Turmeric 75,000 75,000 67,500 75,714 68, Potato 56,000 28,000 33,444 55,857 36, Chilli 56,000 55,250 28,722 57,286 32, Qualiflower 30,000 6,250 12,611 26,229 4, E) Fruit Crops 27 Cashunut 50,000 47,500 31,000 21, Sapota 45,000 43,750 22,778 38,571 10, Pomegranate 85,000-91,667 85,000 32, Table Guava 4.53 cont. 45,000 40,000 28,333 38,571 14, Kagdi lime 55,000 26,250 26,667 47,143 30,

188 Mango 75, ,000 24,111 75,000 12, Ber 25,000 10,500 16,111 17,857 3, Aonla 30,000 30,000 22,500 25,000 6, Orange 62,000-45,500 52,857 29, Sweet lime 62,000-45,500 61,714 30, Coconut 42,000 66,250 28,667 30, Custard apple 42,000 10,500 24,667 37,857 8, F) Flower crops 39 Rose 40,000 20,000 29,028 35,286 11, Mogara 32,000 22,500 12,889 22,429 3, Shevanti 30,000 15,000 13,361 25,829 9, Mrrigold 30,000 27,500 16,917 21,857 9, Jai 32,000-3,333 13, Aster 30,000 7,500 11,000 17,257 5, G) Fodder Crops 45 Gajraj 30,000 22,500 5,889 17,

189 Lusarn grass 60,000 50,000 20,556 35,143 1, Pavna gavat 60,000 48,750 13,056 35, Maize 30,000 15,000 6,667 17, Bajra 15,000 7,500 3,333 8, J0war 20,000 10,000 4,444 11, (+ indicate per cent excess of finance advanced) (- indicate per cent credit gap) Source: The Maharashtra State Co-operative Bank, Scale of Finance Report

190 213 summer paddy ( ) per cent, udid and green gram (+ 1.56) per cent, rainfed groundnut (+ 0.83) per cent, mango ( ) per cent and coconut ( ) per cent than the credit requirement in Konkan Region. In Marathwada Region, the credit gap in the finance by DCCBs was observed for almost all crops grown in region, whereas excess finance was advanced to sugarcane adsali (+ 0.75) per cent, preseasonal (+ 1.59) per cent and ratoon (+ 1.90) per cent, Banana (1.32) per cent, irrigated wheat (+ 1.65) per cent, Soybean (+ 4.29) per cent, Ginger & Turmeric (+ 0.95) and Chili ( ) per cent than the credit requirement in Marathwada Region. There was a wide credit gap in the flow of credit provided by the DCCBs to almost all crops grown in the Vidarbha region it means there is inadequate fund available with DCCBs in Vidarbha Region Determinants of regional disparity The issue of regional disparities in credit flow is increasingly engaging the attention of common people, economists, regional planners and policy makers. The issue assumes special importance in the state like Maharashtra, which is marked by diversities and disparities among and within the regions. In the case of disbursement of agricultural credit, identification and quantification of various factors leading to overall development of agriculture is imperative, as it forms the basis for further planning and balanced development of individual regions in the state. The information on per hectare short-term agricultural credit flow and the factors for the regional inequality have been presented in Table It was observed from the Table 4.54 that the per hectare short-term agricultural credit flow was high to the extent of ` in Western Maharashtra followed by Marathwada ` , Konkan ` and Vidarbha ` , while it was ` at the state level during the base year of the study. Similarly, wide imbalances in the flow of short-term agricultural credit between the regions in the terminal year was high to the extent of ` in Western Maharashtra followed by Konkan ` , Vidarbha ` and Marathwada ` , while it was ` at the state level during the terminal year of the study. Table 4.54 revealed that the per hectare medium-term agricultural credit flow was high to the extent of ` in Western Maharashtra followed by Vidarbha ` , Konkan ` and Marathwada ` , while it was ` at the state level during the base year

191 214 of the study. Similarly, wide imbalances in the flow of medium-term agricultural credit between the regions in the terminal year was high to the

192 215 Table 4.54 Regionwise per hectare short term credit flow and the indicators of agricultural importance Region and Period Per ha ST credit flow to GCA (`) Per ha MT credit flow to GCA (`) Gross cropped area (000 ha) Proportion of area under commercial Crop to GCA (per cent) Average Rainfall (mm) Deposits (` crores) ST agricultural credit recovery (per cent) Konkan Western Maharashtra Marathwada Vidarbha

193 216 Maharashtra

194 217 extent of ` in Western Maharashtra followed by Vidarbha ` , Konkan ` and Marathwada ` 10.58, while it was ` at the state level during the terminal year of the study. The gross cropped area of the state was thousand hectares during the year , which was increased to thousand hectares in It was clear from the Table that the Western Maharashtra region had maximum gross cropped area followed by Marathwada, Vidarbha and Konkan region during the period under review. The proportion of commercial crops to GCA during was the highest in Vidarbha region per cent followed by Marathwada region per cent, Western Maharashtra region per cent and Konkan region per cent respectively. The proportion of commercial crops to GCA during was the highest in Marathwada region per cent followed by Vidarbha region per cent, Western Maharashtra region per cent and Konkan region per cent respectively. The rainfall distribution showed the high rainfall in the Konkan region followed by Vidarbha, Western Maharashtra and Marathwada during the study period. As regards the total deposits, the DCCBs in Western Maharashtra had maximum deposits, followed by Konkan, Vidarbha and Marathwada region during the period under consideration. The recovery percentage of short-term agricultural credit in base year was highest per cent in Western Maharashtra region followed by Marathwada per cent, Vidarbha per cent and Konkan per cent respectively. The recovery percentage of short-term agricultural credit in terminal year was highest in Konkan region per cent followed by Marathwada per cent, Vidarbha per cent and Western Maharashtra per cent respectively. The recovery per cartage showed decrease from per cent to per cent during study period. From the Table 4.54 it was clear that there were wide variations in the four regions of the state, in credit flow, geographical and agricultural conditions. The growth in short term credits was not uniform. The Western Maharashtra region have greatest advantages, followed by Marathwada, Vidarbha and Konkan regions in the state as far as disbursement of credit is concerned. The Western Maharashtra has unique position in development of credit system in view of increased irrigation facilities and commercialization of agriculture as compared to other regions in the state.

195 Inequality in credit flow by DCCBs: The inter-regional inequality in credit flow by DCCBs over the years was assessed by using different measures. The findings are briefly explained in the discussion that follows Coefficient of variance for short term credit flow In order to examine whether or not the DCCBs disbursed the short-term credit uniformly across the regions and state, the coefficient of variation was computed for each year from the period to The trend equations were fitted by taking coefficient of variance as dependent variables and time as independent variable for each of the regions and at the state level, separately. The regionwise coefficient of variance in short term credit flow by DCCBs during to are presented in Table 4.55 Table 4.55 Regionwise coefficient of variance in short term credit flow by DCCBs during to in Maharashtra (CV percent) Year Konkan Western Maharashtra Marathwada Vidarbha Maharashtra

196 Average No. of Districts Konkan CV= NS Western Maharashtra Marathwada Vidarbha Maharashtra (0.94) CV= NS (0.55) CV= NS (0.94) CV= * (0.91) CV= NS (0.54) (Figures in parentheses are the standard errors of respective coefficients) * Significant at 5 per cent level, NS=Non-Significant It could be seen from the Table 4.55 that the coefficient of variance of short-term credit flow per hectare of GCA across the regions was low at per cent in and the highest at per cent in at the state level. The Coefficient of variance in short term credit flow in case of Western Maharashtra it was low per cent in year and highest per cent in the year The coefficient of variance in short term credit flow in case of Konkan region it was low per cent in year and highest per cent in the year The Coefficient of Variance in short term credit flow in case of Marathwada region it was low per cent in year and highest per cent in the year The coefficient of variance in short term credit flow in case of Vidarbha region it was low per cent in year and highest per cent in the year The average variation across the years in the state was per cent. The average variation across the years was highest in Konkan region (71.45

197 220 per cent) followed by Vidarbha (59.93 per cent), Marathwada (53.18 per cent) and lowest in Western Maharashtra (45.54 per cent) respectively. The regression coefficients for short term credit flow, the trend equations were positive and non-significant in Western Maharashtra, Konkan and at the state level, this indicated variation in the short-term credit flow over the study period. The regression coefficient for Marathwada region was observed to be negative and non-significant indicating no significantly decline in variation in short-term credit flow during the study period. Importantly, there was significant increase in variation in short-term credit disbursement in Vidarbha region during the period under study. At the state level, Coefficient of Variance for short-term credit flow across the years indicated that there was a moderate inequality in the disbursement of short-term credit flow by the DCCBs. Coefficient of variance of short term and medium term credit flow depicted by way of bar graph in figure Coefficient of Variance for medium term credit flow In order to examine whether or not the DCCBs disbursed the medium term credit uniformly across the regions and state, the coefficient of variance was computed for each year from the period to The trend equations were fitted by taking coefficient of Variance as dependent variables and time as independent variable for each of the regions and at the State level, separately. The regionwise coefficients of Variance in medium term credit flow by DCCBs during to are presented in Table Table 4.56 Regionwise coefficient of variance in medium term credit flow by DCCBs during to in Maharashtra (CV in per cent) Years Konkan Western Maharashtra Marathwada Vidarbha Maharashtra

198 Average No. of Districts Konkan CV= NS (1.55) Western Maharashtra CV= NS (0.92) Marathwada CV= NS (1.99) Vidarbha CV= NS (1.46) Maharashtra CV= NS (1.54) (Figures in parentheses are the standard errors of respective coefficients) * Significant at 5 per cent level, NS=Non-Significant It could be seen from the Table 4.56 that the coefficient of variation of medium term credit flow per hectare of GCA across the regions was low at per cent in and the highest at per cent in at the state level. The Coefficient of Variance in medium term credit flow in case of Western Maharashtra it was low per cent in year and

199 222 highest per cent in the year The Coefficient of Variance in medium term credit flow in case of Konkan region it was low per cent in year and highest per cent in the year The Coefficient of Variance in medium term credit flow in case of Marathwada region it was low per cent in year and highest per cent in the year The Coefficient of Variance in medium term credit flow in case of Vidarbha region it was low per cent in year and highest per cent in the year The average variation across the years in the state was per cent. The average variation across the years was highest in Marathwada region ( per cent) followed by Konkan ( per cent), Vidarbha ( per cent) and lowest in Western Maharashtra ( per cent) respectively. The regression coefficients for medium term credit flow, the trend equations were positive and non-significant in all regions and at the state level, which indicated nonsignificantly increases in variation in the medium term credit flow over the study period. At the state level, Coefficient of Variance for medium term credit flow across the years indicated that there was a moderate inequality in the disbursement of medium term credit flow by the DCCBs Theils Entropy index for short term credit flow In order to examine whether or not the DCCBs disbursed the short-term credit flow uniformly across the regions and state, the Theils Entropy was employed. The trend equations were fitted by taking Entropy coefficient I (Yi) as dependent variables and time as independent variable for each of the regions and at the state level, separately. The regionwise Theils Entropy coefficient for short term credit flow by DCCBs during to are presented in Table 4.57 From the Table 4.57, it was observed that the Theils entropy coefficient was as low as 1.34 in and as high as 1.42 in initial years from to at the state level. The average value of the coefficient (inequality across the years) for Maharashtra state was The Theils entropy coefficient in short term credit flow in the case of Western Maharashtra it was low 0.83 in year and highest 0.92 in the year and The Theils entropy coefficient in short term credit flow in case of Konkan region it was low 0.47 in year and and highest 0.58 in the year Theils entropy coefficient in short term credit flow in the case of Marathwada region it was low 0.74 in years to and highest 0.80 in the years to The Theils entropy coefficient in short term credit flow in case of Vidarbha region it was low 0,83 in years and highest

200 in the year to The average variation across the years in the state was The average variation across the years was highest in Vidarbha region (0.88) and Western Maharashtra (0.88) followed by Marathwada (0.77) and lowest in Konkan (0.53) respectively. Table 4.57 Trends in regional inequality in short term credit flow by DCCBs during to in Maharashtra Theils Entropy Coefficient, I (Y i ) Year Konkan Western Maharashtra Marathwada Vidarbha Maharashtra Average Log N Value

201 224 Theils Entropy Coefficient I (Yi) Konkan Western Maharashtra Marathwada Vidarbha Maharashtra I (Y i )= * (0.0015) I (Y i )= * ( ) I (Y i )= * (Figures in parentheses are the standard errors of respective coefficients) * Significant at 5 per cent level ( ) I (Y i )= * ( ) I (Y i )= * ( ) The regression coefficients for short term credit flow, the trend equations were negative and significant in all regions and at the state level, which indicate significantly declining in inequality in short term credit flow over the study period. At the state level, Theils entropy coefficient for short term credit flow across the years indicated that there was a moderate inequality in the disbursement of short term credit flow by the DCCBs. Theils entropy coefficient of short term and medium term credit flow depicted by way of bar graph in figure Theils Entropy Index for medium term credit flow: In order to examine whether or not the DCCBs disbursed the medium term credit flow uniformly across the regions and state, the Theils Entropy was employed. The trend equations were fitted by taking Entropy coefficient I (Yi) as dependent variables and time as independent variable for each of the regions and at the state level, separately. The regionwise Theils Entropy coefficient for medium term credit flow by DCCBs during to are presented in Table 4.58 Table 4.58 Trends in Regional inequality in Medium term Credit flow by DCCBs during to in Maharashtra Theils Entropy Coefficient, I (Y i ) Year Konkan Western Marathwada Vidarbha Maharashtra

202 225 Maharashtra Average Log N value Theils Entropy Coefficient I (Yi) Konkan Western Maharashtra Marathwada Vidarbha Maharashtra I (Y i )= * (0.0017) I (Y i )= NS (0.0011) I (Y i )= * (0.0018) I (Y i )= **

203 226 (0.0018) I (Y i )= NS (0.0013) (Figures in parentheses are the standard errors of respective coefficients) * and ** Significant at 5 and 10 per cent level, NS=Non-Significant Table 4.58, revealed that the Theils entropy coefficient was as low as 1.35 in and as high as 1.42 in years from to at the state level. The average value of the coefficient (inequality across the years) for Maharashtra state was The Theils entropy coefficient in medium term credit flow in case of Western Maharashtra was low 0.85 in years , and and highest 0.91 in the year The Theils entropy coefficient in medium term credit flow in case of Konkan region it was low 0.44 in year and highest 0.58 in the year Theils entropy coefficient in medium term credit flow in case of Marathwada region it was low 0.70 in year and highest 0.83 in the years to The Theils entropy coefficient in medium term credit flow in case of Vidarbha region was low 0.81 in year and highest 0.92 in the years and The average variation across the years in the state was The average variation across the years was highest in Vidarbha region (0.88) and Western Maharashtra (0.88) followed by Marathwada (0.79) and lowest in Konkan (0.54) respectively. The regression coefficients for medium term credit flow, the trend equations were negative and non-significant in Western Maharashtra and at the state level, which indicate non-significant decline in inequality in the medium term credit flow over the period. The regression coefficients for medium term credit flow, the trend equations were negative and significant in Konkan and Vidarbha region which indicate significant decline in inequality in the medium term credit flow over the study period. The regression coefficient in Marathwada region for medium term credit flow was positive and significant which indicate significant increases in inequality in the disbursement of medium term credit flow. At the state level, Theils entropy coefficient for medium term credit flow across the years indicated that there was a moderate inequality in the disbursement of medium term credit flow by the DCCBs Gini concentration ratio and Lorenz curve analysis for short-term credit flow

204 227 From the Table 4.59, it was observed that the Gini ratio was 0.49, 0.52 and 0.52 for the base year, mid-year and terminal year, respectively for short term credit flow, indicating moderate intra-regional inequality in short term credit flow by DCCBs in Maharashtra. The results of Gini ratio and Lorenz curve for short term credit flow showed an increase in intraregional inequality in the mid-year and constant in terminal year of the study. Lorenz curve was constructed for short-term agricultural credit for all the regions and state as a whole separately. This presents a picture of the cumulative percentage of DCCBs for the individual regions or Maharashtra state on the X axis and cumulative percentage of agricultural credit given by DCCBs per hectare of gross cropped area on the Y axis for the base year, mid-year and terminal year. Table 4.59 Gini coefficient of regional inequality in short term agricultural credit flow by DCCBs in Maharashtra Year Konkan Western Maharashtra Marathwa da Vidarbh a Maharasht ra Base year ( ) Mid-year ( ) Terminal year ( ) Fig. 38.a and 38.b present the Lorenz curves for short-term agricultural credit was concerning to base year, mid-year and terminal year depicting inter-regional and intra-regional inequality. It could be seen that these curves being were away from the line of equal distribution (45 0 degree line) indicated unequal distribution of short-term agricultural credit among the regions and among the districts in the regions during study period in Maharashtra state. Regionwise cumulative proportion of number of DCCBs and cumulative proportion of per hectare short term credit flow in base-year, mid-year and terminal year has been given in Appendix-II. a. and b. As regards the inter-regional inequality in the short term credit flow, the results of the Gini ratio and Lorenz curve showed increase in inequality in Konkan and Vidarbha region over

205 228 the years, while in Western Maharashtra it was increased in the mid-year and subsequent reduction in the terminal year of the study. The reverse trend was noticed in the Marathwada region, where inequality showed a declined over the study period. The declining rate of interregional inequality in respective years of the study was observed in Marathwada. As regards the intra-regional inequality in the short-term credit flow it was observed that the Gini ratio was 0.49 in the base year, which had increased to 0.52 in the average year and constant 0.52 in the terminal year of the study. This has indicated that inequality at the state level showed an increase in the average year and constant in the terminal year of the study Gini concentration ratio and Lorenz curve analysis for medium term credit flow From the Table 4.60, it was observed that the Gini ratio was 0.61, 0.72 and 0.72 for the base year, mid-year and terminal year, respectively for medium term credit flow, indicating moderate intra-regional inequality in medium term credit flow by DCCBs in Maharashtra. The results of Gini ratio and Lorenz curve for medium term credit flow showed an increase in intraregional inequality in the mid-year and constant in terminal year of the study. Gini ratios of short term and medium term credit flow depicted by way of bar graph in figure 37. Table 4.60 Gini coefficient of regional inequality in medium term agricultural credit flow by DCCBs in Maharashtra Year Konkan Western Maharashtra Marathwa da Vidarbh a Maharasht ra Base year ( ) Mid-year ( ) Terminal year ( ) Lorenz curve was constructed for medium term agricultural credit for all the regions and state as a whole separately. This presents a picture of the cumulative percentage of DCCBs for the individual regions or Maharashtra state on the X axis and cumulative percentage of agricultural credit given by DCCBs per hectare of gross cropped area on the Y axis for the base year, mid-year and terminal year.

206 229 Fig. 39.a and 39.b present the Lorenz curves for medium term agricultural credit was concerning to base year, mid-year and terminal year depicting inter-regional and intra-regional inequality. It could be seen that these curves being was away from the line of equal distribution (45 0 degree line) indicated unequal distribution of short-term agricultural credit among the regions and among the districts in the regions during study period in Maharashtra state. Regionwise cumulative proportion of number of DCCBs and cumulative proportion of per hectare short term credit flow in base-year, mid-year and terminal year has been given in Appendix-II. c. and d. As regards the inter-regional inequality in the medium term credit flow, the results of the Gini ratio and Lorenz curve showed increase in inequality in Marathwada and Vidarbha region over the years, while in Western Maharashtra and Konkan region it was increased in the mid-year and subsequent reduction in inequality in the terminal year of the study. As regards the intra-regional inequality in the medium term credit flow in the state level it was observed that the Gini ratio was 0.61 in the base year, which had increased to 0.72 in the average year and constant 0.72 in the terminal year of the study. This has indicated that inequality at the state level showed in increase in the average year and constant in the terminal year of the study. For measuring inequality the various inequality measures like Coefficient of variance, Theils entropy coefficient and Gini ratios were used for per hectare short term and medium term credit flow. From the results it was observed that there was inequality in short term and medium credit flow in all regions and state as a whole. For reducing inequality the some measures, like opening new branches, proper credit plan and monitoring with due weightage to productivity of credit (Jairath (1990)) Determinants in flow of short-term agricultural credit In order to study the determinants of per hectare short-term credit flow by DCCBs, a multiple linear regression analysis was attempted for all the regions and state as a whole separately covering the period from to The multiple linear regression analysis included the following variables Y = Per hectare short term agricultural credit (`.) X 1 = Gross cropped area (Thousand hectares) X 2 = Proportion of area under commercial crops to GCA (per cent)

207 230 X 3 = Average rainfall (mm) X 4 =Total deposits (`. crores) X 5 = Short term agricultural loan recovery (per cent) The flow of credit to agriculture is supposed to be associated with the social, economic policy and natural factors related to agricultural activities. The selection of variables is based on some of the priori expectations so that these variables would provide sufficient economic explanations. Gross cropped area was taken as a proxy for agricultural infrastructure including irrigation and the proportion of commercial crops to GCA variable represent the extent of commercialization in agriculture, recovery percentage of short-term credit represents amount of funds available for reutilization and rainfall is taken as a proxy for climate in this analysis. The results of the multiple linear regression analysis for factors influencing the inequality in short term credit flow are presented in Table 4.61 for all the regions and Maharashtra state as a whole. From Table 4.61 it was observed that at the state level, the per hectare short term credit flow was influenced significantly by the determinants viz; gross cropped area (X 1 ), area under commercial crops (X 2 ) and deposits (X 4 ) during the period under study. The results of multiple regression analysis showed a positive influence on short-term credit flow by all the variables. The regression coefficient of average rainfall (X 3 ),

208 231 Table 4.61 Determinants of regional inequality in disbursement of per hectare short term credit agricultural loans in Maharashtra Variables Constant Gross cropped area (000 ha) Proportion of area under commercial crop to GCA (per cent) Average Rainfall (mm) Deposits (` in crores) ST agricultural credit recovery (per cent) R 2 Regions A X 1 X 2 X 3 X 4 X 5 Konkan (118.10) NS (17.60) 14.30* (3.89) 0.53 NS (0.41) 0.19 NS (0.53) -0.64** (0.10) 0.97 Western Maharashtra (60.23) NS (6.49) 0.11 NS (0.49) NS (0.20) 1.18* (0.24) -4.49* (0.20) 0.97 Marathwada (28.16) 3.77 NS (3.41) 1.72 NS (0.97) 0.31 NS (0.37) NS (0.40) 0.09 NS (0.30) 0.83 Vidarbha (28.97) -9.81* (3.64) 2.23** (1.06) NS (0.30) 1.93* (0.16) NS (0.17) 0.97 Maharashtra (24.16) 6.24* (2.46) 0.70* (0.37) 0.20 NS (0.13) 1.17* (0.14) NS (0.11) 0.99

209 232 (Figures in parenthesis indicate standard error of respective regression coefficient) *and **are significant at 5 and 10 per cent level respectively, NS=Non- significant

210 233 was positive but non-significant, and recovery percentage (X 5 ), was found to be negative and non-significant. The gross cropped area, area under commercial crops and deposits play important role in determining ST credit flow in Maharashtra. Whereas, the average rainfall had positive association and recovery percentage had negative association with ST credit flow in the state. The R 2 suggest that the above said five determinants have jointly explained 99 per cent of the variation in the disbursement of short term credit flow in Maharashtra. In Western Maharashtra, the regression coefficients of deposits (X 4 ) found to be positive and significant. The regression coefficients of recovery per cent (X 5 ) found to be negative and significant. The regression coefficients of gross cropped area (X 1 ) and average rainfall (X 3 ) were found to be negative and non-significant. Proportion of commercial crops to GCA (X 2 ) found to be positive and non-significant. This has therefore indicated that the determinants viz; the deposits play an important role in determining the disbursement of short term credit in Western Maharashtra. The proportion of commercial crops to GCA has positive association with ST credit flow in the region whereas, gross cropped area, average rainfall and ST loan recovery shows the negative association with the disbursement of short term loans in Western Maharashtra. It must be indicated that these five determinants jointly explained 97 per cent of the variation in the disbursement of short term credit in Western Maharashtra. In Konkan region, regression coefficient of proportion of area under commercial crops to GCA (X 2 ) was found to be positive and significant. The coefficients of recovery per cent (X 5 ) found to be negative and significant. The regression coefficient of gross cropped area (X 1 ) was negative and non-significant. The regression coefficients of average rainfall (X 3 ) and deposit (X 4 ) were found to be positive and non-significant. The proportion of area under commercial crops to GCA plays important role in determining ST agriculture credit in the region. The average rainfall and deposit has positive association with ST credit flow whereas, gross cropped area and ST recovery has negative association with ST credit flow in Konkan region. The R 2 was 0.97, which has indicated that the five determinants jointly explain 97 per cent of the variation in disbursement of short term credit in Konkan region. In Marathwada region it was noted that the regression coefficients of the determinants viz; gross cropped area (X 1 ), proportionate area under commercial crops to GCA (X 2 ), average rainfall (X 3 ) and recovery per cent of short term loans (X 5 ) were observed to be positive but turned out to be non-significant. Thus all above said determinants had positively associated with ST agricultural credit flow in the region whereas, the deposits had

211 234 negatively associated with ST agricultural credit flow in the region. It was seen that these determinants together explained 83 per cent of the total variation in the disbursement of short term credit in Marathwada region. As regards Vidarbha region, it was noted that the regression coefficients of determinants viz; proportionate area under commercial crops (X 2 ) and deposits (X 4 ) were observed to be positive and significant. The regression coefficient of gross cropped area (X 1 ) was negative but significant. The regression coefficients for average rainfall (X 3 ) and recovery per cent (X 5 ) were found to be negative and non-significant. The proportionate area under commercial and deposits had played important role in determining ST credit flow in the region. Whereas, gross cropped area, average rainfall and recovery per cent had negative association with ST credit flow in the region. The R 2 suggest that 97 per cent of the total variation in the disbursement of short term credit in Vidarbha region due to above five determinants. The gross cropped area, area under commercial crops and deposits play important role in determining ST credit flow in Maharashtra. Whereas, the average rainfall had positive association and recovery percentage had negative association with ST credit flow in the state. The R 2 suggest that the above five determinants have jointly explained 99 per cent of the variation in the disbursement of short term credit flow in Maharashtra. Thus the hypothesis in this regards entitled the agricultural performance have strong influence in the flow of short term credit in different regions of the state hence the hypothesis is accepted. These results are in the line of observations made by Zeratsion (2001), Jadhav (2004), Bhosale (2011), Rakshit and Chakrabarti (2012) and Sale (2014). 4.5 Problems faced by DCCBs An attempt to understand the problems concerning to administration, management, finance, disbursement of loan and recovery of loan was made by analyzing the information obtained from the officials of the DCCBs in Maharashtra. Similarly, the suggestions obtained from the officials of the DCCBs for improvement in the work performance of DCCBs and the empirical conclusions of the study served the basis to suggest the remedial measures to overcome the above said problems. It was propose to examine the problems faced by DCCBs concerning to administration, management, availability of funds and disbursement of loan and

212 235 recovery of loan and suggest remedial measure for efficient working of DCCBs in Maharashtra through Garrett s Ranking Technique. By referring Garrett s table the per cent position estimated were converted into scores (Garrett and Woodworth, 1967). The per cent positions of each rank were converted into scores referring to the table given by Garrett and Woodworth (1967). For each factors, the scores of individual respondents will be added together and divided by the total number of the respondents for whom scores will be added. These mean scores for all the constraints will be arranged in descending order; the constraints were accordingly ranked. Percentage position and their corresponding Garrett s Table value are presented in Table 4.62 Table 4.62 Percentage position and their corresponding Garrett s table value Rank Percentage position Garrett s Table value 1 100*((1-0.5)/18) *((2-0.5)/18) *((3-0.5)/18) *((4-0.5)/18) *((5-0.5)/18) *((6-0.5)/18) *((7-0.5)/18) *((8-0.5)/18) *((9-0.5)/18) *((10-0.5)/18) *((11-0.5)/18) *((12-0.5)/18) *((13-0.5)/18) *((14-0.5)/18)

213 *((15-0.5)/18) *((16-0.5)/18) *((17-0.5)/18) *((18-0.5)/18) From Table 4.62 it was observed that, the respondents were asked to rank the eighteen factors identified for the purpose of this study as 1, 2, 3, in order to know their preference in the selection of constraint. The calculated percentage position for the rank 1, 2, and their correspondent Garrett table as show in Table 4.62 For factors, the total score is calculated by multiplying the number of respondents ranking that factor as 1, 2, 3,,,,,, and Problems faced by DCCBs in Maharashtra It was proposed to examine the problems faced by DCCBs related to administration, management, availability of fund, disbursement of loan and recovery of loan and suggest remedial measure for efficient working of DCCBs in Maharashtra through Garrett s Ranking Technique and the results are presented in Table Table 4.63 Problems faced by the DCCBs in Maharashtra Sr. No. Problems Mean value Rank 1 No any contribution by state Government Government policies (loan waivers) Less value to the farm produce Need to improve administration and management Less productivity Mentality of the farmers Less recovery Fluctuating climate

214 237 9 Less operation and awareness about KCC in the farmers Monocropping High overdues Inadequate fund with bank Problems of NPAs Miss utilization of borrowed loan Most of the borrowers only farming as income source Non-availability of staff Non-availability of Irrigation facility Delay in availability of fund The various problems faced by the DCCBs in Maharashtra are presented in Table The major problems experienced by DCCBs Maharashtra are no any contribution by state government (87.00), government policies (87.00), less value of farm produce (87.00) these three problems having first rank followed by need to improve administration and management (86.55), less productivity (86.55), mentality of the farmers (85.64) and so on.the last problem experienced by DCCBs in Maharashtra was delay in availability of fund (63.00) which having 13 th rank. This interpretation is in line with hypothesis entitled the DDCBs in the study areas face the problems related to management, administration, disbursement and recovery of loans hence the hypothesis is accepted Suggestions for improvement to DCCBs in Maharashtra It was proposed to examine the suggestions for efficient workings of DCCBs in Maharashtra through Garrett s Ranking Technique and the results are presented in Table Table 4.64 Suggestions for efficient workings of DCCBs in Maharashtra Sr. Suggestions for improvement Mean Rank

215 238 No. value 1 Direct funding of NABARD to DCCBs with low interest rate Recovery in linking format Selection of proper borrower and timely supervision of the loan projects Increased share capital and deposits through various bank schemes Banks provide new fresh loan to farmers at the time of natural calamities Increased repayment period at the time of natural calamities Timely legal action against those persons who missutilized borrowed loan and willful defaulters Conversion of loans at the time of natural calamities Higher minimum support prices to crops produce Cooperation from revenue department for recovery Implementation of intensive recovery programme Improve the administration and management of DCCBs Placement of block level officer for recovery Target given to the staff for recovery Crop and enterprise diversification Provide budgetary support to DCCBs Written bond from loan persons Availability of irrigation facilities The suggestions for efficient working of DCCBs in Maharashtra are presented in Table The major suggestions for DCCBs in Maharashtra are Direct funding of NABARD to DCCBs with low interest rate (87.00), recovery in linking format (87.00), selection of proper borrowers and timely supervision of lone project (87.00), Increases share capital and deposits through various bank schemes (87.00 ), at the time of natural calamities the banks provide new fresh loan (87.00 ), increases repayment period at the time of natural calamities

216 239 (87.00 ), timely legal action against those persons who miss utilized borrowed loan and willful defaulters (87.00 ), conversion of loans at the time of natural calamities (87.00 ), higher minimum prices to crop produce (87.00 ) followed by cooperation from revenue department (86.55 ) and so on. The last suggestion given by DCCBs was availability of irrigation facilities to farmers for higher production for increasing recovery. Suggestions to overcome the problems of DCCBs by improving administration and management of DCCBs, increase share capital and deposits to overcome problems related to availability of funds, improving loan disbursement through proper selection of borrower and timely supervision of lone projects. Increases in recovery and reduction in overdues by adopting recovery in linking format, timely legal action against those persons who miss utilized borrowed loan and willful defaulters, implementing intensive recovery programme and placing and target given to block level recovery officer. Thus suggestions would be more useful to DCCBs in Maharashtra for better and efficient working in near future. Comment on results: The performance of DCCBs in respect of branch expansion was non-satisfactory at the state level because of some branches in Marathwada and Vidarbha stop their working due to inefficient management as a result decline in branches in terminal year. The total membership of DCCBs in Maharashtra state as a whole witnessed a significant positive trend. The growth in total membership in Maharashtra was mainly attributed to positive growth in PACS membership. The reduction in employment in Maharashtra was mainly due to the reduction in number of branches, less amount of credit with banks for recycle and modernization in working of DCCBs in Maharashtra. These were the main reasons of reduction in number of employee in the state. Hence the DCCBs in Maharashtra need to pay more attention for branch expansion, increasing membership and requirement of staff for efficient and profitable working of DCCBs in the state in near future. A significant increase in the total share capital, reserve fund, owned funds, deposits, investment and working capital during the study period indicated the financial soundness of DCCBs in Maharashtra state. Although there was significant trends in borrowings of DCCBs in Maharashtra over the entire period indicated that the increased dependency of DCCBs for financial requirement in the state. The total advances by DCCBs were increased in Maharashtra. The proportion of total agricultural loans (both ST and MT) in the total loans was above 20 per cent in the base year, which increased to about 40 per cent during the

217 240 terminal year. Whereas, the loan disbursed for non-agricultural purposes declined from 65 per cent to 49 per cent it was good sign in the view of increased agricultural advances in the Maharashtra. The increase in total loan outstanding it was quite clear that indicated poor performance of DCCBs in recovery of loans in the state. The overdues also increased during study period due to increase in share of short-term loan overdues in total overdues was per cent in the DCCBs of Maharashtra in the base year, which had increased to per cent during the terminal year of the study. The increases in cost of management during study period mainly attributed due to significant increase in salaries and other expenditure of each DCCB in state. The higher magnitude of average performance index achieved by the DCCBs in Konkan and Western Maharashtra regions had developed system of DCCBs in the state. The DCCBs in the Marathwada and Vidarbha regions had a poor record in their performance indicated by low average performance index. This call for suitable economic measures for reducing overdues and improving recovery ultimately these DCCBs would improve their performance in near future. During study period the DCCBs in Maharashtra provided short-term credit Viz., Crop loan and medium term credit, included loan disbursed for the purpose of minor irrigation, land development, dairy development, farm mechanization, plantation and horticulture, poultry production, sheep and goat production, fisheries, forest and waste land development, storage godowns and market yard, biogas plant, sericulture unit and other purposes (bullocks / other drought animals, bullock carts, Agri-clinics and agribusiness centers). Out of the total agricultural loans more than 80 per cent loan were disbursed for short term period in the state during study period. The total loan disbursed for agriculture increased in absolute term but share of DDCB s declined and the share of CB s increased over the year. This was because of less recovery of short term loan and medium term loan, mounting overdues, less rainfall during terminal years resulted the less amount of credit with DCCBs for recycle. Whereas, the share of CB s showed increased might be due to government policy of compulsory lending 18 per cent out of their 40 per cent priority sector to agricultural and allied activities and doubling agriculture loan policy introduced by the Government from resulted increases in loan disbursement for agriculture purposes in state.

218 241 The coefficient of variance, Theils entropy coefficient and Gini ratio and Lorenz curve were used for measuring inequality in disbursement of short term and medium term credit flow by DCCBs in Maharashtra. The results showed that there is inequality in short term and medium term credit flow during study period. The variation in the gross cropped area, area under commercial crops, average rainfall, deposits and recovery of loans was responsible for the inequality in disbursement of per hectare short term and medium term credit in Maharashtra. The gross cropped area, area under commercial crops and deposits play important role in determining ST credit flow in Maharashtra. Whereas, the average rainfall had positive association and recovery percentage had negative association with ST credit flow in the state. The R 2 suggest that the above five factors have jointly explained 99 per cent of the variation in the disbursement of short term credit flow in Maharashtra. The DCCBs in Maharashtra face the problems concerning to administration, management, finance, disbursement and recovery of loans. To overcome the problems of DCCBs by improving administration and management of DCCBs, increase share capital and deposits to overcome problems related to availability of fund with DCCBs, improving loan disbursement through proper selection of borrower, Kisan Credit Cards and timely supervision of lone projects. Increases in recovery and reduction in overdues by adopting recovery in linking format, timely legal action against those persons who miss utilized borrowed loan and willful defaulters, implementing intensive recovery programme and placing and target given to block level recovery officer. These suggestions would be more useful to DCCBs in Maharashtra for better and efficient working in near future. CHAPTER V SUMMARY AND CONCLUSIONS Introduction: Credit is the lifeblood of modern agriculture and one of the accelerators for any development programme. This is particularly true for rural development, which has its goal to achieve higher agricultural productivity as well as the improvement of standard of living of rural people. The role of agricultural credit and credit institutions in the developing countries like India is very important due to the pressing needs for increasing agricultural production and productivity to meet the needs of increasing population. The principle of cooperation is as old as human society. It is truly the basis of domestic and social life. With the passing of co-operative credit society act 1904, the great efforts have been done by the officials to eliminate the peculiar problems of farmers and common public. Since the last few

219 242 years the speed of co-operative credit institution has drastically changed due to the competition from commercial banks, undue intrusion of political parties and failure of many co-operative banks. A co-operative bank is a financial entity which belongs to its members, the owners and the customers of their bank. Agriculture sector plays a strategic role in the process of economic development.. As the World Bank describes, Credit is often a key element in the modernization of agriculture. In India, agriculture loans are mostly provided by co-operative banks, commercial banks, regional rural banks, etc. Co-operative has local participation democratic management and responsive to local needs of village. The co-operative credit system can mobilize funds from urban area through DCCBs and lend them in rural areas. The intermediate level unit that is DCCBs has been playing a crucial role in promoting agriculture and allied activities by purveying credit to the needy through primary agricultural credit societies. They provide a strong linkage between rural based credit societies, which do not have a close contact with money market and the urban biased apex co-operative bank, which does have a healthy connection with money market. Progress made by the DCCBs from to The number of DCCBs in India declined from 509 in to 371 in the year and it was mainly due to the reorganization of DCCBs on the basis of the recommendation (one DCCB for one district) of the All India Rural Credit Review Committee (1986). The number of banks in Maharashtra decreased from 35 in to 26 in due to policy of one DCCB for one district, by All India Rural Credit Review Committee (1966). Further, the number of DCCBs had increased to 31 in 2015 due to the formation of new districts in the state. The DCCBs are most important in the entire co-operative credit structure. The success of co-operative credit structure depends to a very large extent on the working of the DCCBs. These banks not only safeguard the interest of the PACS but also various other types of credit and non- credit societies in the District. Hence there is a need for the existence of a strong and good working District Central Co-operative Bank at the district level. The need was felt to have the scientific study of the issues such as inequality in disbursement of the present loans, factors responsible for such inequality, regionwise and periodwise performance of DCCBs. Problems in disbursement and recovery of loans in respect of the DCCBs in a co-operatively impressive state like Maharashtra. In view of this the present investigation viz., the study of Performance of District Central Co-operative Banks in Maharashtra State was undertaken. It was decided to study the performance of DCCBs in

220 243 respect of different economic indicators, disparity in credit flow, factors influencing disparity in credit flow and problems faced by DCCBs in banking operations with the help of following specific objectives. Objectives: The specific objectives of the study are as under. 6. To assess the performance of DCCBs in Maharashtra. 7. To study the purpose wise lending activities by DCCBs in Maharashtra. 8. To examine the share of DCCBs in total credit disbursement for agriculture. 9. To identify the determinants in flow of agricultural credit through DCCBs in Maharashtra. 10. To examine the problems faced by DCCBs in disbursement and recovery of agricultural loans and to suggest remedial measures. Methodology: The study is based on secondary data obtained from 30 DCCBs in Maharashtra for the period of past 15 years i.e. from to As regards the inequality in distribution of credit (short and medium), the data obtained from 29 DCCBs (excluding Mumbai DCCB) were utilized. The time series data on performance indicators such as number of branches, membership, share capital, reserve fund, owned fund, deposits, borrowings, working capital, investment, loan advancement, loan outstanding, loan recovery, overdues, cost of management, profits for the period from to i.e. 15 years were secured from the published data of NAFSCOB reports and annual reports of DCCBs in Maharashtra. Also data for the last 15 years on purposewise lending activities and share of financial institutions in total credit disbursement for agriculture for the regional as well as state level were secured from districtwise potential linked credit plans from NABARD office Pune. Also, such data for the last 15 years on gross cropped area, area under commercial crops, area under horticultural crops and average rainfall for the four regions as well as for the state of Maharashtra as a whole were secured from the published reports of Government of Maharashtra. The investigation related to the problems faced by DCCBs in their performance was conducted with the help of opinions, suggestions obtained from the Chief of Agricultural Loans Section, General Manager and Member of Management Committees of 22 DCC Banks in Maharashtra.

221 244 The regionwise and periodwise performance of DCCBs was studied with the help of rates of compound growth in the different performance indicators as mentioned above. The annual rates of compound growth were estimated for the period to The regionwise and periodwise averages and their compositions and proportions in the performance indicators were estimated for the base year ( ) and the terminal year ( ) with the help of ratios, averages and percentages. Further, the ranking of DCCBs and regions in the state was done by estimating their Performance Index (PI) based upon loan outstanding, loan demand and loan overdues. The credit gap based upon the scales exercised for crop loans by the DCCBs and the credit requirement for different crops in different regions for the year was also studied. To accomplish the objective relating to the inequality, the region wise Coefficient of Variance (CV) and Theils Entropy Coefficient I (Yi) were calculated for the 15 years during to A linear equation was fitted to examine the trend of regionwise variation. The regression coefficients were tested for their significance. Another measures of inequality i.e. Gini ratio and Lorenz curve have also been used. In order to study the factors influencing per hectare short-term credit flow by DCCBs, a multiple linear regression analysis for each of the regions was attempted. The problems faced by DCCBs in Maharashtra were studied with the help of Garrett s Ranking technique. 6.1 Summary of Findings: Performance of DCCBs in Maharashtra: The present study seeks to analyze region wise performance of DCCBs based on various indicators in Maharashtra during different time periods. The empirical evidence relative to DCCBs performance has been derived from the percentage growth over the base year and estimated compound growth rates in different regions for the period to The performance indicators selected for the analysis were, number of branches, membership, share capital, reserve funds, owned funds, deposits, borrowing, working capital, investment, loan issued, loan outstanding, loan recovery, loan overdues, working results and cost of management. Furthermore, the region wise average compositions and ratios of these indicators were estimated for the base year i.e and terminal year, The regionwise and period wise performance of DCCBs during to was studied for different indicators. The details of the analysis are presented as under Physical indicators:

222 Number of branches: The total number of branches of the DCCBs had decreased from 3722 in to 3718 in i.e. by per cent. The annual rate of compound growth in number of branches of DCCBs in the state as a whole was per cent per annum, which was non-significant during the entire period under study. The regionwise growth showed that the branches of DCCBs in Konkan region had significantly increased at the rate of 2.32 per cent per annum and in Marathwada it was significantly declined ( per cent). The Western Maharashtra ( per cent) and Vidarbha (-0.24 per cent) had nonsignificant growth during period under study. The Western Maharashtra region occupied a dominant place in the state by covering more than 50 per cent of the branches during both the base year and the terminal year of the study. 2. Membership: The number of members had increased from in to in i.e. by per cent over the base year. The maximum increase in the total membership was noticed in Konkan region (60.38 per cent) followed by Western Maharashtra (15.64 per cent), Marathwada (9.16 per cent) and Vidarbha region decreased by (-1.02 per cent). This indicates the satisfactory performance of DCCBs in respect of expansion and coverage with large amount of lending, highest interest margins and more profits. Trends in total membership of DCCBs in Maharashtra State as a whole witnessed a significant positive trend with an annual rate of compound growth being 1.33 per cent during the entire period. The Western Maharashtra region occupies a conspicuous position in the state with more than 50 per cent of the total membership during both years. Moreover, there was a steady increase in the total membership of DCCBs in Maharashtra during the period. The average total membership per DCCB at the State level was during , which increased to in As regards to the regionwise analysis, the Western Maharashtra region occupied a top position with maximum membership per DCCB in the State during both the years. The DCCBs in Marathwada regions had relatively lower average membership during both the years of the study. Furthermore, the proportion of PACS membership in total membership of DCCBs at the State level increased from per cent in to per cent in There was an increasing trend in PACS membership per DCCB in all the regions over the years. It was clearly indicates that the proportional share of PACS membership in total membership had increased during the study period. As regards the proportion of individual membership in total membership of DCCBs, it could be observed that the proportional share of individual membership showed a decline from per cent in to per cent in

223 246 at the State level. The similar declining trend was noticed in all the regions except Konkan region during the study period. 3. Employment: The total number of employee working in DCCBs in Maharashtra decreased from 27,743 in to 22,887 in , the number employee showed decline by (17.50 %) over the base year. The regionwise analysis shows that the declined growth was seen in all regions of Maharashtra except Konkan region. The highest per cent number of employee declined in Marathwada (27.18 %) followed by Western Maharashtra (19.20 %) and Vidarbha (16.70 %), while increased in number of employee by (4.77%) in Konkan region. The rate of growth in total employment of DCCBs in Maharashtra and regions of Maharashtra was negative except Konkan region. The highest growth in total employee was observed in Konkan region (0.13 per cent) followed by Vidarbha region (-1.18 per cent), Western Maharashtra region (-1.64 per cent) and least in Marathwada (-2.63 per cent) Financial indicators: 1. Share capital: The total share capital of the DCCBs in Maharashtra has steadily increased from ` crores in to ` crores in Regionwise trend showed the highest growth in total share capital in Vidarbha ( per cent) followed by Western Maharashtra ( per cent), Konkan ( per cent) and Marathwada region ( per cent) over the base year. The DCCBs in Western Maharashtra region had maintained top position with respect to total share capital throughout the period of study. Out of total share capital of DCCBs in the State as a whole, Western Maharashtra region alone shared about 53 per cent during both the years. Total share capital of DCCBs at state level, registered significant compound growth rate of 9.66 per cent per annum during the entire period. Regionwise results clearly indicated that there was satisfactory growth of share capital in all the regions registering a significant growth rate of 7 to 12 per cent per annum. The positive trend in total share capital during the entire period showed the financial soundness of DCCBs, in the State. The increased in share capital of DCCBs in Maharashtra and regional level over the years was mainly due to the increased in number of PACS membership. The average total share capital of DCCBs in the Maharashtra State was ` crores in , which has increased to ` crores in The Western Maharashtra had maximum total share capital per DCCB. It was the lowest in the Konkan region during the period under study. The proportional share of PACS in the average total share capital of DCCBs at the state level

224 247 showed decreases from per cent in to per cent in The similar trend in the share of PACS was noticed in all the regions of the state except Konkan during the study period. It therefore clearly indicates that the PACS had a lion s share in the total share capital of DCCBs in the State. The percentage of individuals in the total share capital showed marginal increase in Western Maharashtra, Konkan and also at the State level, while it remained stagnant in Marathwada and Vidarbha regions. This was due to the declining trend in individual membership and the larger credit transactions by PACS. The contribution by the Governments in total share capital of the DCCBs at the state and regional level had increased during study period except Konkan region; it had maximum share capital from PACS per cent. 2. Reserve fund: Reserve funds of DCCBs in the State had increased from ` crores in to ` crores in As regards to the regionwise trend, the total reserve funds of DCCBs in Western Maharashtra registered a higher growth ( per cent) followed Vidarbha ( per cent), Konkan region ( per cent) and Marathwada ( per cent) over the base year. In the size of total reserve funds of DCCBs in the State, Western Maharashtra region had a lion s share, which was per cent in , which subsequently increased to per cent in For the State as a whole, the total reserve funds showed a significant increase by per cent per annum during the entire period. Amongst the regions, the Western Maharashtra region had registered maximum compound growth rate of per cent followed by Marathwada (10.54 per cent), Konkan (10.05 per cent) and Vidarbha (9.20 per cent). The average total reserve funds in the DCCBs at the state level were ` crores in , which increased to ` crores in The share of other reserves showed slightly declined from 83 per cent to 82 per cent whereas, the share of statutory fund in the total reserve fund showed an increased from per to per cent and the share of agricultural stabilization fund in the total reserve fund declined from 6.44 per to 5.48 per cent during study period. Out of the total reserve funds, other reserve fund occupied a conspicuous place in the DCCBs of Maharashtra. The DCCBs in Konkan region had the highest average total reserve funds followed by Western Maharashtra, Marathwada and the Vidarbha region during study period.

225 Owned funds: The total owned funds of the DCCBs at the state level had increased from ` crores in to ` crores in showing an increase of more than 36 times over the base year. As regards the regionwise analysis, the growth in owned funds in Vidarbha region (40.22 times) recorded an increase over the base year followed by Western Maharashtra (37.50 times), Konkan (35.43 times) and Marathwada region (30.96 times). The share of owned funds of DCCBs in Western Maharashtra was per cent of the total funds of DCCBs in the year , which later on increased to per cent of the total owned funds of the DCCBs in Western Maharashtra secure a top position as compared to other regions in the state. The total owned funds of DCCBs in Maharashtra registered a compound growth rate of per cent per annum during the entire period of the study. The growth in reserve funds was relatively satisfactory in all the regions and at the State level during the entire period. The branch expansion policy also contributed for improvement in the owned funds of the DCCBs. The average total owned funds per DCCB at the State level were ` crores during , which increased to ` crores in The Western Maharashtra region had maximum owned funds per DCCB during both the years under study because of more total share capital and reserve funds (See Table No.4 & 6). It indicated that the DCCBs in Western Maharashtra region had sound position in respect of owned funds. It could be noted that the proportion of total reserve funds in the total owned funds showed a significant increase from per cent in to per cent in , while that of share capital depicted a decline from per cent to 24.13per cent during the above period at the state level due to per cent decline in individual membership. It was thus clear that the reserve funds formed an important constituent of total owned funds in the DCCBs of the state. 4. Deposits: The total amount of deposits of DCCBs in the Maharashtra had increased from ` crores in to ` crores in the year , recording an impressive growth of more than 21 times over the base year. Regionwise analysis showed that the DCCBs in Vidarbha region had recorded the highest growth (29 times) followed by, Western Maharashtra (25 times), Marathwada (19 times) and Konkan (12 times) over the base year. The magnitudes of annual compound growth rates in deposits of DCCBs for all the regions and for the state as a whole ranged between 7-10 per cent during the entire study period,

226 249 which indicated the satisfactory performance in respect of deposits in all the regions and state as a whole. It indicated the self-reliance of DCCBs during the period under study. The average total deposits per DCCB and their composition according to regions at two points of time in Maharashtra. An examination of average total deposit per DCCB indicated that average total deposit per DCCB for the State as a whole stood at ` crores in , which has increased, to ` crores in As regards the regionwise analysis, the maximum deposits per DCCB were noticed in Konkan region (` crores) followed by Western Maharashtra (` crores), Vidarbha (` crores) and Marathwada (` crores) during the base year. In terminal year of the study, Western Maharashtra region secured a top position, where the average deposits per DCCB were ` crores and the Marathwada region recorded the lowest total deposits at ` crores per DCCB. The co-operative societies and individuals were the major sources of deposits in DCCBs. These sources combine contributed more or less 90 per cent of total deposits of DCCBs in all the regions and for the State as a whole during study period. The deposit from local bodies and other sources contributed more than 7 per cent to the total deposits. 5. Borrowings: The total borrowings of the DCCBs for the State level had increased from ` crores in to ` crores in Regionwise analysis indicated that the increasing growth in total borrowings was observed in all the regions under study. The maximum growth in total borrowings was recorded in Vidarbha region (499 per cent) followed by Western Maharashtra (247 per cent), Konkan region (66.91 per cent) and lastly by Marathwada (27.85 per cent). Out of the total borrowings of DCCBs at the State level, the DCCBs in Western Maharashtra had the share more than per cent during the base year of the study. However, this increased to per cent during the terminal year of the study. Similar trend was observed in Konkan and Vidarbha regions whereas; declining trend was noticed in Marathwada region. Total borrowings of DCCBs had increased by 6.61 per cent per annum at the State level for the entire period under study. The maximum growth in total borrowings was recorded in Vidarbha region (19.69 per cent) and lowest in Western Maharashtra region (7.34 per cent) during the whole period. The growth in borrowings was negative and nonsignificant in the Marathwada region might be due to decline in total membership, less share

227 250 capital, less deposit, some of the branches in that region stop their working due to weak performance as a result the SCBs not given fund to DCCBs in Marathwada region due to that the non-significant growth in borrowing was seen. The average total borrowing of the DCCBs at the overall level was ` crores in , which had increased to ` crores in The similar increasing trend was noticed in all the regions of the State. Such an increasing trend was possible only when the bank effectively checks the problem of overdues and improves its recovery performance. The State Cooperative Bank was the major source of borrowing for DCCBs in all the regions and State as a whole during the period under study. The proportional share of borrowings from the SCB to the total borrowings was per cent in , which has increased to per cent in The similar increasing trend was noticed in Western Maharashtra and Konkan region while decreasing trend was noticed in Marathwada and Vidarbha region respectively. 6. Working capital: The total working capital of DCCBs in Maharashtra has increased from ` crores in to ` crores in All the regions exhibited a similar growth, meaning thereby that sufficient amount of funds were available with DCCBs for undertaking various credit and service activities during the period under study. Importantly the working capital of DCCBs in Western Maharashtra alone shares more than 45 per cent of the total working capital of DCCBs in Maharashtra. This means that the DCCBs in Western Maharashtra had quite a substantial working capital for their credit activities as compared to other regions in the State. The rate of compound growth in total working capital was 9.39 per cent per annum during the entire period at the State level. It was noted that the compound growth rates in the total working capital of DCCBs, for the state as a whole and among the four regions of the state were ranged from 7 to 11 per cent during the entire period of the study. Total working capital per DCCB at the State level was ` crores in to ` crores in , which has increased to, owing to the increase in the owned funds and deposits. The DCCBs in Konkan region secured a top position during but later on the DCCBs in Western Maharashtra region secured top position in The total working capital per DCCB was the highest in the Western Maharashtra region (` crores) followed by the Konkan region (` crores). It indicted a sound financial position of DCCBs in both the regions as compared to the DCCBs of Marathwada and Vidarbha regions.

228 251 The proportional share of owned funds, deposits and borrowings in the working capital helps to determine the self-reliance and dependence of DCCBs. It was observed that 9.68 per cent of the working capital of DCCBs in Maharashtra State was made up of owned funds in the year This percentage share has increased to per cent in the year Contribution of owned funds to working capital was highest in the Marathwada region during study period. The percentage of owned funds to working capital of DCCBs showed an increasing trend in over the year in all the regions and state as a whole. The percentage share of deposits to working capital of DCCBs is another indicator to assess the inherent financial strength of the DCCBs. It indicates the level of dependence of DCCBs on apex institution for working capital. On an average, per cent of working capital of DCCBs in Maharashtra state was made up of deposits in the year and it further declined to per cent in the year The proportionate share of deposits in the working funds had decreased by 2.80 per cent during the study period. The percentage of deposits to working capital was very high and maximum in DCCBs of Konkan region (91.22 per cent) followed by Vidarbha region (82,98 per cent), Western Maharashtra (80.66 per cent) and Marathwada region (59.26 per cent) in the year In the year , the percentage of deposits to working capital was maximum in Konkan region (84.90 per cent) followed by Vidarbha region (78.49 per cent), Western Maharashtra region (71.58 per cent) and Marathwada region (65.56 per cent). The percentage share of borrowings in total working capital was 9.30 per cent in the DCCBs of Maharashtra in which subsequently declined to 7.93 per cent in the terminal year of the study in all regions except Vidarbha and the state as a whole indicating a good pace of resource mobilization and declined in cost burden of DCCBs. The percentage of borrowings to working capital in Vidarbha region showed an increase from 5.05 per cent in to 7.19 per cent in indicated increased dependency of DCCBs. While percentage of borrowings to working capital substantially decreased in Western Maharashtra region from per cent to 9.88 per cent, in Konkan region, it declined from 1.42 per cent to 1.00 per cent, in Marathwada region, it declined from per cent to per cent. This was mainly because of significant growth in deposits of the DCCBs in these regions. It indicated that the movement of DCCBs towards the self-reliance in the state. 7. Investment: The DCCBs in Maharashtra had recorded satisfactory growth in total investment over a period of 15 years. It has increased from ` crores in to ` crores in The growth in total investment had registered around 4 times

229 252 increase over the base year The total investment by the DCCBs showed an increasing growth in all the regions during the period under review. The highest growth in total investment was observed in Vidarbha region ( per cent), followed by Marathwada region ( per cent), Western Maharashtra region ( per cent) and Konkan region ( per cent) during the terminal year Out of total investment (` crores) by the DCCBs in the state, the DCCBs in Western Maharashtra occupied a top position by contributing per cent and per cent in during study period. The proportion in total investment of DCCBs in Konkan region was per cent in , which was decreased to per cent in the terminal year of the study. The increase in investments was noticed in Marathwada and Vidarbha region during the period under study. The annual rate of growth in the total investment by the DCCBs in the State was per cent, which indicated satisfactory performance by the DCCBs during the entire period under study. Regionwise analysis indicated that Marathwada region registered a maximum annual growth of per cent followed by Western Maharashtra region (12.04 per cent), Vidarbha region (11.29 per cent) and Konkan region with 6.26 per cent for the entire Period. In view of the significant rise in the owned funds and deposits, this led to surplus amount of funds to invest. The average total investment per DCCBs in the Maharashtra state had increased from ` crores in to ` crores in the terminal year of the study period. In the year , the highest total investment per DCCB was observed in Konkan region (` crores) followed by Western Maharashtra (` crores), Vidarbha (` crores) and the least in Marathwada region (` crores). In the terminal year, the highest total investment per DCCB was observed in Western Maharashtra (` crores), followed by Konkan region (` crores), Vidarbha (` crores) and the least in Marathwada region (` crores). Fixed deposits occupied a lion s share per cent in total investment during the year which increased to per cent in the terminal year The percentage share of investment in Govt. securities and other securities was 5.59 per cent and 1.51 per cent in the base year, which was decrease in Govt. securities to 1.04 per cent and increased in other securities to 2.71 per cent respectively in At the same, time the percentage of investments in others had substantially decreased from per cent to per cent

230 253 indicating the reduction of funds in other sources of investment, which was a good sign. Similar trend was noticed in all the regions of the State except Vidarbha region. 8. Loan advanced: The total loan advances comprised of short term, medium term and other loans. The total loan advanced by the DCCBs in Maharashtra state had increased from ` crores in to ` crores in The growth in total loan issued witnessed a positive trend in all the regions of the State. The maximum increase in the total loans advanced was noticed in DCCBs of Western Maharashtra ( per cent) followed by Konkan (185.41), Vidarbha (167.83) and least in Marathwada region (88.14). From this result, it is clearly indicated that the growth in total loan issued in absolute term as well as in terms of percentages was the highest in Western Maharashtra. It was mainly due to the increasing commercialization of agriculture, availability of irrigation facility, growth in short term and medium term enterprises were more than other regions in the state, which necessarily call for more investments in input use and plant protection and therefore increase in demand for loans. Out of total loans advanced by the DCCBs in the Maharashtra state, the DCCBs in Western Maharashtra region alone share per cent in , which later on increased to per cent in It clearly indicated that the DCCBs in Western Maharashtra gave better attention towards the loans and advances. In the remaining regions, the proportionate share of total loans advances to the overall State level ranged from per cent (Marathwada), per cent (Vidarbha) and per cent (Konkan) in and from per cent (Konkan), per cent (Vidarbha) and 8.95 per cent (Marathwada) in the terminal year of the study. The total amount of loan issued per DCCB to its members in Maharashtra state had increased from ` crores in to ` crores in In the year , the total loan issued per DCCB was relatively more in Western Maharashtra (` crores) followed by Konkan region (` crores), Marathwada (` crores) and Vidarbha (` crores). In the terminal year of the study, the DCCBs from Western Maharashtra region had maintained its top position by issuing total loans of ` crores per DCCB followed by Konkan region (` crores), Vidarbha (` crores) and Marathwada (` crores). This had also indicated that the DCCBs in Western Maharashtra had offered maximum credit facilities to their members during the period under study. Over 80 per cent of total loans and advances

231 254 issued were in the form of short term loans and remaining being medium term and other loans and advances indicating focused emphasis on short term loans by the DCCBs in Maharashtra. In region wise study, it was revealed that, the share of short term loans was the highest in Marathwada per cent followed by Western Maharashtra per cent, Konkan per cent and Vidarbha per cent in base year. Similarly in the terminal year of the study, the share of short-term loan was the highest in Marathwada per cent followed by Western Maharashtra per cent, Konkan per cent and Vidarbha per cent respectively. The percentage shares of medium term loan and other loan were 7.15 and per cent in , which had marginally increased in medium term loan to and decreased in other loan 9.88 per cent in respectively. At the regional level the Konkan region issued less per cent amount to agriculture 11 per cent out of the total advances than the other regions in the state, it might be due to less farming activities than the other regions in the state. Whereas, percentage of other loans and advances showed increase may be due to increased medium term and long term activities such as dairying, poultry, plantation and horticulture, other processing industries, land development, etc. in the Konkan region. In Marathwada and Vidarbha region loan disbursed for medium term non-agriculture showed increase than agricultural loan because of farming and allied activities mainly depends on monsoon in that region due to less rainfall the less production that effects on recovery of loan whereas in case of non-agricultural loans the guarantee of recovery was more than agricultural loans due to that increases nonagricultural advances was more in that regions than the other regions in state. The proportion of total agricultural loans (both ST and MT) in the total loans was above 20 per cent in the base year, which increased to about 40 per cent during the terminal year. Whereas, the loan disbursed for non-agricultural purposes declined from 65 per cent to 49 per cent it is good sign in view of agricultural advances in the Maharashtra. 9. Credit deposit ratio: Higher C: D ratio simply means that the advances are larger than the deposits. It does not necessarily imply that the magnitude of advances is large. The volume of advances may be small but the ratio could be higher because the deposits are very small. Higher the C: D ratio better is the performance of bank in purveying the credit requirements of their members. A favorable C: D ratio does determine the profitability of the banks. Hence a bank should aim at higher C: D ratio. The results revealed that the C: D ratio had witnessed a declining trend in all the regions except Konkan region and state as a whole during the period under study. The C: D ratio of DCCBs in Maharashtra had declined from

232 in to 0.66 in Similarly the C: D ratio showed a decline in all the regions except Konkan region during the period under study. 10. Loan outstanding: The total loan outstanding in DCCBs of Maharashtra State had increased from ` crores to ` crores during study period. This shows that the growth in total loan outstanding was more than 3 times over the base year of the study. The total loan outstanding of DCCBs in Maharashtra State as a whole registered a compound growth rate of 7.90 per cent per annum for the entire period under study. The DCCBs in Vidarbha registered the highest growth per annum of per cent with reference to total loan outstanding followed by Konkan per cent, Marathwada 6.43 per cent and Western Maharashtra 6.45 per cent. It could be revealed from the above results that there was a significant increase in total loan outstanding. It is quite understandable that there was a poor performance of DCCBs in the state in respect of loan recovery. Average total loan outstanding per DCCB in Maharashtra state had increased from ` crores in to ` crores in During the base year ( ), the DCCBs in Western Maharashtra region had relatively larger outstanding per DCCB than the other regions while loan outstanding per DCCB was low in the Vidarbha region (` crores) respectively. At terminal year ( ), average total outstanding loan was larger in DCCBs of Western Maharashtra region (` crores) followed by Konkan (` crores), Marathwada (` crores), and Vidarbha (` crores). About per cent of total loan outstanding were in the form of short- term loan in , which had increased to per cent in the terminal year The per cent share of medium- term loan outstanding in total outstanding had increased from per cent to per cent during the entire study period. Besides, the per cent share of other loans and advances had declined from per cent to per cent during the same period. Regionwise analysis showed that the per cent share of short term loan outstanding in total loan outstanding had ranged between per cent in Marathwada to per cent in Konkan in , while it was between per cent in Marathwada region to per cent in Konkan region. This means that the short-term loans had the lions share 64 per cent in the total loan outstanding followed by medium term 22 per cent and other loans and advances 14 per cent during the year in Maharashtra.

233 Loan Recovery: The results showed that the total loan recovered by DCCBs in Maharashtra state had increased from ` crores in the base year to ` crores in the terminal year recording a growth of 3 times increase over the base year i.e The regionwise analysis it is clearly noted that the highest growth in the total recovery of loan was achieved by Konkan region (401.61) followed by Vidarbha (179.58), Western Maharashtra (165.13) and Marathwada (74.95) over the base year of the study. The DCCBs in Western Maharashtra recovered about 60 per cent of total loan recovered by DCCBs in the state during both the years under study. Remaining recovery of 40 per cent was contributed by all the three regions of the state. The increase in total loan collection in absolute term was the highest in Western Maharashtra and the least in Konkan region. But, in terms of percentage change in recovery during the study period, it was the highest in Konkan region and the least in Marathwada region indicated DCCBs in Konkan region taken more attention on recovery of the loans than the other regions in the state. The amount of total loans and advances recovered by the DCCBs in Maharashtra registered a compound growth rate of 9.92 per cent per annum during the entire period. Regionwise results revealed that the growth in total recovery of loan was highest in Konkan region per cent followed by Vidarbha region per cent, Western Maharashtra per cent, Marathwada 6.67 per cent during the entire period under study. Average total loan collection per DCCB in Maharashtra state had increased from ` crores in to ` crores in In the base year of the study, the average recovery of total loans per DCCB was ` crores, ` cores ` crores and ` crores in Western Maharashtra, Marathwada, Konkan and Vidarbha regions, respectively. In the terminal year of the study, the average recovery of total loans per DCCB was ` crores; ` cores ` crores and ` crores in Western Maharashtra, Konkan, Marathwada and Vidarbha regions, respectively. About per cent of total loans recovered were in the form of short-term loans in , which had declined to per cent in the in DCCBs of Maharashtra. The per cent share of medium term loan and other loans was 8.75 per cent and 5.21 per cent in the base year of the study. This was increased to per cent and 5.79 per cent in the terminal year of the study. Among the regions, per cent share of short term loan recovery to total loan recovery ranged from per cent in Konkan to per cent in Western Maharashtra in base year of the study. At

234 257 the terminal year it was ranged between per cent in Konkan to per cent in Marathwada. This means that the proportion of recovery of short-term loans in total loans was prominent. The recovery in medium term loan and other loans and advances was highest in Konkan region than the other regions in the state. 13. Loan Overdues: The poor performance of DCCBs was due to increase in total overdues of the DCCBs in Maharashtra State from ` crores in the base year to ` crores in the terminal year The growth witnessed a positive trend in all the regions and state as a whole. At the overall level, the growth in overdues was about 4 times in over the base year of the study. The rising overdues had seriously weakened the DCCBs in Maharashtra. The highest growth in overdues was observed in Vidarbha region followed by Western Maharashtra, Marathwada and the least in DCCBs of Konkan region. In the base year out of the total overdues (` crores) of DCCBs in the State, the DCCBs in Western Maharashtra had relatively large overdues (39.33 per cent) followed by Marathwada (29.16 per cent), Vidarbha (25.52 per cent) and Konkan region (6.00 per cent). In the year the proportion of overdues was more (47.42 per cent) in Western Maharashtra followed by Vidarbha (30.32 per cent), Marathwada (18.19 per cent) and Konkan region (4.07 per cent). The overdues of DCCBs in the state of Maharashtra registered a compound growth rate of 9.50 per cent per annum during the entire period of study. The magnitudes of growth rates in the total overdues showed that the overdues of DCCBs in all the regions and state as a whole had significantly increased over the years. The highest growth in total overdues was noticed in Vidarbha region (12.04 per cent) followed by Western Maharashtra (11.05 per cent), Marathwada (5.00 per cent) and Konkan (4.85 per cent) for the entire period of the study. The average overdues per DCCB in Maharashtra State had increased from ` crores in the base year to ` crores in the terminal year of the study. In the year , loans overdue per DCCBs were higher in Western Maharashtra ` crores and the least in the Konkan region ` crores. In the year , overdues per DCCB ranged between ` crores in Konkan region to ` crores in Western Maharashtra region.

235 258 The share of short-term loan overdues in total overdues was per cent in the DCCBs of Maharashtra in the base year, which had increased to per cent during the terminal year of the study. Similarly, the share of medium-term loan overdues in total overdues had declined from per cent to per cent. However, the share of other loans and advances had declined from 6.05 per cent in to 2.25 per cent in Overdues as percentage of outstanding loans: The percentage of overdues to outstanding loans showed an increase from per cent in to per cent in the terminal year of the study for the state as a whole. The percentage of overdues to outstanding loan was increased from per cent in to in in Western Maharashtra. However, the percentage of overdues to loan outstanding showed a marginal decrease from per cent to per cent in Konkan region. Importantly, the highest percentage of overdues to loan outstanding was noticed in Vidarbha region (38.56 per cent) in , which had further increased to per cent in the terminal year. In Marathwada also, the proportion of overdues to outstanding loan showed an increase from per cent in to per cent in This means that, by and large, the proportion of overdues to outstanding loans in DCCBs had increased in all the regions except Konkan region in the State. 14. Total cost of management: The total cost of management registered an upward trend. The total cost of management in DCCBs of Maharashtra had increased from ` crores in the base year to ` crores in the terminal year of the study period. The rate of growth in total cost of management of DCCBs in Maharashtra was 7.68 per cent per annum and it was significant during the entire period of study. This means that the expenditure on cost of management had significantly increased over the years. The highest growth in total cost of management was observed in Konkan region (11.21 per cent) followed by Vidarbha region (10.00 per cent), Marathwada (7.18 per cent) and Western Maharashtra region (6.13 per cent). The growth in cost of management was highest in Konkan region mainly because of significantly increase in number of branches and number of employees. The average total cost of management per DCCB in Maharashtra region was ` crores in the base year, which had increased to ` crores in the terminal year. In the year , the highest cost of management per DCCB was observed in Western Maharashtra region (` crores) followed by Konkan (` crores), Marathwada (` crores) and the least in Vidarbha

236 259 region (` crores). In the year , the highest cost of management per DCCB was observed in Western Maharashtra region (` crores) followed by Konkan (` crores), Vidarbha region (` crores) and the least in Marathwada (` crores). From the total cost of management, the percentage share of expenditure on salaries at state level accounted for per cent in the base year, which had marginally declined to per cent in the year because of reduction in number of branches ultimately reduction in number of employee in all the regions except Konkan region and state level. The percentage share of other expenditure had increased from to per cent during the same entire period of the study. Among the regions, the percentage share of salaries in total cost of management ranged between per cent (Western Maharashtra) to per cent in Marathwada region in while it ranged between per cent in Western Maharashtra region to per cent in Marathwada region in the year The Western Maharashtra had highest share in cost of management per employee in entire period of study than other regions. Per employee highest growth in total cost was observed in Konkan followed by Vidarbha, Western Maharashtra and Marathwada over the base year. The annual compound growth rate of total cost of management was per cent per annum at state level and at regional level it was highest in Konkan region (11.41) followed by Vidarbha (11.30), Marathwada (10.04) and Western Maharashtra (8.22). The cost of management per employee has been increased during the study period due to decrease in number of employees (See Table 4.31). The management of DCCBs has to concentrate on cost of management. The proportion of cost of management to working capital showed decline in all the regions except Konkan region and also at the state level. The proportion of total cost of management to total working capital at the State level was 2.59 per cent in , which declined to 2.57 per cent with a negative growth of 0.02 per cent over the base year. The highest negative growth was recorded in Western Maharashtra ( per cent) followed by Vidarbha region ( per cent) and Marathwada (-4.33 per cent) while in Konkan region it was increased by (100 per cent). The proportion of total cost of management to total working capital was highest in Western Maharashtra region during the period under study while it was the least in Konkan region. The total profits of the DCCBs in the state had increased from ` crores in to ` crores in the terminal year, which indicated an increasing trend in the

237 260 profits of DCCBs during the period under study. The highest growth in total profits was noticed in Konkan region (5.90 %) followed by Marathwada region (2.92 %), Vidarbha (2.82 %) and Western Maharashtra (0.37%) over the base year. As regards the number of DCCBs in profit, it could be seen that the 19 DCCBs were running in profit and 11 DCCBs in loss in and it was increased to 25 DCCBs running in profit and 5 DCCBs in loss in The DCCBs in the Western Maharashtra secured a top position in the state by way of contributing more per cent share in the selected performance indicators, which showed a well-developed cooperative banking system in the region Performance Index (PI): Ranking of DCCBs for the purpose of performance index has been made as follows. Recently established DCCBs have been eliminated and all the 30 DCCBs have been selected for detailed study. It has been decided to estimate the performance index for the year to In fact, based on DCCBwise average performance index, Satara (2.61), Mumbai (1.74), Pune (0.53), Thane (0.43), Ahmednagar (0.38) Solapur (0.26), Latur (0.20) and Ahmednagar (0.10) DCCBs were the strong units among the 30 DCCBs covered by the study. The DCCBs having very low average performance index were Raigad (0.09), Dhule (0.06), Sindhudurg (0.05), Jalgaon (0.06), Nasik (0.05) and Akola (0.05), while all other DCCBs having negligible or zero performance index and Sangli DCCB having negative performance index (- 0.10), which call for suitable economic measures, so that these DCCBs would improve their performance in future. The performance of DCCBs mainly reduced due to less capital for advance than the demand, high overdues and less membership of the DCCBs in the state level. The DCCBs having high performance index is mainly due to fewer overdue than those DCCBs having less performance index. The ranking of DCCBs and regions based on performance index revealed that DCCBs in Konkan region of the state had performed better as compared to other regions in Maharashtra. The significantly higher average index of performance achieved by the DCCBs in Konkan (0.47) and Western Maharashtra (0.44) indicated a developed system of DCCBs in these regions. The DCCBs in the Marathwada and Vidarbha regions had a poor record in their performance as indicated by average index 0.04 and 0.01 respectively throughout the period. The better performance (as understood from the higher PI) of DCCBs in the Konkan Region had performed better. Comparing the DCCBs of Konkan region of the state to those in Marathwada and Vidarbha region, it was found that broadly the lending operations of the

238 261 former continued for the purposes like crop production, marketing of crops, land development, farm mechanization, poultry, plantation and horticulture, etc. The influence of the rate of recovery and high overdues on overall performance of DCCBs, however continued to be significant and it may be said that higher the rate of recovery and lower the overdues better the overall performance of DCCBs Purposewise lending activities by DCCBs in Maharashtra: 1. Crop loan: Total crop loan disbursed by the DCCBs at the state level significantly increased from ` crores to ` crores with 3.61 per cent annual compound growth during study period. The activities considered while disbursing loans by the DCCBs for crop production, maintenances and marketing of crop produce. At regional level crop loan disbursed showed significant increase in all the regions of the state. The Vidarbha region had highest annual growth followed by Konkan, Western Maharashtra and Marathwada regions. 2. Minor irrigation: The total loan disbursed for minor irrigation by the DCCBs at the state level non-significantly increased from ` crores to ` crores with 3.06 per cent annual compound growth during study period. At regional level loan disbursed for minor irrigation showed significant increase in Western Maharashtra and non-significant in Konkan and Vidarbha region and negative and non- significant growth in Marathwada region in the state. 3. Land development: The total loan disbursed for land development by the DCCBs at the state level significantly increased from `6.213 crores to ` crores with per cent annual compound growth during study period. At regional level loan disbursed for land development showed significant increase in Western Maharashtra and Konkan region whereas the non-significant growth in Marathwada and Vidarbha regions. 4. Dairy development: The total loan disbursed for dairy development by the DCCBs at the state level significantly increased from ` crores to ` crores with per cent annual compound growth during study period. At regional level loan disbursed for dairy development showed significant increase in Western Maharashtra and Konkan region whereas the non-significant growth in Vidarbha region and negative and non-significant growth in Marathwada.

239 Farm mechanization: The total loan disbursed for farm mechanization by the DCCBs at the state level significantly increased from ` crores to ` crores with per cent annual compound growth during study period. At regional level loan disbursed for farm mechanization showed significant increase in all the regions except Vidarbha region during study period 6. Plantation and horticulture: The total loan disbursed for plantation and horticulture by the DCCBs at the state level significantly increased from ` crores to ` crores with per cent annual compound growth during study period. At regional level loan disbursed for plantation and horticulture increased significantly in Western Maharashtra and Konkan region whereas, non-significant growth was observed in Marathwada and Vidarbha region during study period. 7. Poultry: Total loan disbursed for poultry by the DCCBs at the state level significantly increased from ` 1.68 crores to ` 6.06 crores with per cent annual compound growth during study period. At regional level loan disbursed for poultry showed significant increase in Konkan region whereas, non-significant growth was observed in Western Maharashtra, Marathwada and Vidarbha region during study period. 8. Sheep and goats: The total loan disbursed for sheep and goat by the DCCBs at the state level significantly increased from ` 3.34 crores to ` crores with 8.72 per cent annual compound growth during study period. At regional level loan disbursed for sheep and goats showed significant increase in western Maharashtra and Konkan region whereas, significant declining in Marathwada and non-significantly declined in Vidarbha region during study period. 9. Fisheries: The total loan disbursed for fisheries by DCCBs in Maharashtra non-significantly increased from ` 6.00 crores in base year to ` 7.13 crores in terminal year with per cent annual growth. The negative and non- significant growth was observed in all the regions in the state except Western Maharashtra were positive but non-significant trend was observed during the period under study. 10. Forestry and waste land development: Total loan disbursed for forestry and waste land development by DCCBs in Maharashtra negative and non-significantly declined from `

240 crores in base year to ` 2.09 crores in terminal year with 2.80 per cent annual growth. The negative and non- significant growth was observed in all the regions in the state except Konkan region in which positive and significant trend was observed during period under study. 11. Storage godowns and market yard: The total loan disbursed for storage godowns and market yard by DCCBs in Maharashtra non-significantly declined from `9.95 crores in base year to ` 8.15 crores in terminal year with 1.99 per cent annual growth. The negative and non-significant trend was observed in all the regions in the state. Western Maharashtra region recorded positive and non-significant trend during period under study. 12. Biogas plant: The total loan disbursed for biogas plant by DCCBs in Maharashtra significantly increased from ` crores in base year to ` crores in terminal year with per cent annual growth. At the regional level the Western Maharashtra showed significant trend while in the case of Vidarbha it was non-significant during study period. 13. Sericulture unit: Loan disbursed for sericulture units by DCCBs in Maharashtra nonsignificantly increased from ` 0.17 crores in base year to ` crores in terminal year with per cent annual growth. At the regional level the Western Maharashtra only disbursed loan to sericulture in the state. 14. Other purposes: The loan for other purposes is one of the types of medium term loan it includes loan given by DCCBs for purchase of bullocks / other drought animals, bullock carts and establishment of Agri-clinic and Agribusiness centers. The total loan disbursed for other purposes by DCCBs in Maharashtra non-significantly increased from `` crores in base year to ` crores in terminal year with per cent annual growth. Table 4.48 also shows that the total loan disbursed for other purposes by DCCBs at regional level, the Western Maharashtra contribution was highest in both the years of the study. The loan disbursed by DCCBs in Maharashtra showed increase for different activities under short term and medium term loan. Out of the total loan disbursed for agriculture purposes at the state level loan disbursed by Western Maharashtra were more than other regions of the state. It indicated that the developed agricultural system in Western Maharashtra region than the other regions of the state.

241 Share of DCCBs in total credit disbursed for agriculture. 1. Crop loan disbursed: The total crop loan disbursed by financial institutions in Maharashtra significantly increased from ` crores to ` crores during study period with per cent annual compound growth. The significant increases in crop loan in case of DCCBs was ` crores to ` crores with 3.61 per cent annual growth, in case of CBs it was from ` crores to ` crores with per cent annual growth and in case of RRBs from ` crores to ` crores with per cent annual growth during study period. The crop loan disbursed by the financial institutions in Maharashtra showed highest share in total crop loan disbursement by DCCBs (52.09%), CBs (26.09%) and RRBs (21.91%) at state level in base year of the study. The similar trend was observed in all the regions except Marathwada where in the more share was observed by RRBs followed by DCCBs and CBs in base year. In the terminal year the highest share was observed by CBs (55.43%) followed by DCCBs (35.19%) and RRBs (9.38%) in total crop loan disbursement at state and regional level. 2. Term loan: This refers to medium-term investment credit made available by the financial institutions for the period of 3 to 5 years. It includes loan disbursed for the purpose of minor irrigation, land development, dairy development, farm mechanization, plantation and horticulture, poultry production, sheep and goats production, fisheries, forest and waste land development, storage godowns and market yard, biogas plant, sericulture unit and other purposes (bullocks / other drought animals, bullock carts, Agri-clinic and Agribusiness centers). The total term loan disbursed by financial institutions in Maharashtra significantly increased from `` crores in base year to ` crores in terminal year with per cent annual growth. The total term loan disbursed by DCCBs significantly increased from ` crores to ` crores with per cent annual growth, CBs significantly increased from ` crores to `` crores with per cent annual compound growth and RRBs significantly increased from ` crores to `` crores with per cent annual growth during study period. Table 4.50 showed that the total term loan disbursed by financial institutions at regional level, the Western Maharashtra contributed highest share per cent to total term loan disbursed at state level followed by Marathwada per cent, Vidarbha per cent and least contribution was observed in

242 265 Konkan region 8.01 per cent in the year The term loan disbursed by the financial institutions in Maharashtra showed highest share in total term loan disbursement by CBs (58.78%), DCCBs (37.04%) and RRBs (4.18%) at state level in base year of the study. The similar trend was observed in all regions except Marathwada the more share was observed by RRBs followed by CBs and DCCBs in base year. The similar trend was observed in terminal year. 3. Total agricultural loan: The total agricultural loan disbursed by financial institutions in Maharashtra significantly increased from `` crores in base year to ` crores with per cent annual growth. The total agricultural loan disbursed by DCCBs increased from ` crores to ` crores with per cent per annual growth, CBs increased from ` crores to `` crores with per cent annual growth and the RRBs increased from ` crores to `` crores with per cent annual growth during study period. From the Table 4.51 observed that the total loan disbursed for agriculture by the financial institutions in Maharashtra showed highest share in total agricultural loan disbursement by DCCBs (49.37%) CBs (31.92%) and RRBs (18.70%) at state level in base year of the study. Whereas, in terminal year highest share was observed in CBs (61.18%), DCCBs (31.06%) and RRBs (7.76%) at state level. Table 4.51 also depicted that the total agricultural loan disbursed by financial institutions at regional level, the Western Maharashtra contributed highest share per cent followed by Marathwada per cent, Vidarbha per cent and least contribution was observed in Konkan region 2.99 per cent in the year Similar trend was observed in terminal year of the study. The share of DCCBs in total loan disbursed for agriculture was decreased from per cent to per cent, share of RRBs was decreased from 8.80 per cent to 5.88 per cent and share of CBs increased from per cent to per cent respectively during study period. The loan disbursed by CBs was increased over the period and loan disbursed by DCCBs and RRBs decreased over the period in Maharashtra and all regions during study period. The total loan disbursed for agriculture increased in absolute term but share of DDCBs declined and the share of CBs increased over the year. This is because of less recovery of short term loan and medium term (term loan), mounting overdues, less rainfall the less amount of credit with DCCBs for recycle as a result declined share was observed. Whereas the share of CBs showed increase mainly because of government policy of compulsory lending 18 per cent out of their 40 per cent priority sector to agricultural and

243 266 allies activities and doubling agriculture loan policy introduced by Government from resulted increases in loan disbursement for agriculture purposes in state and regional level. Apart from that the DCCBs in Western Maharashtra disbursed highest agricultural loan than the other region because majority of area under sugarcane cultivation and more number of cooperative sugarcane factories and other cooperative organizations such as dairy, poultry in the region that s way more number of peoples already connected with cooperative credit organization. People still believe in cooperative organization because of their efficiently working in rural areas of Western Maharashtra than the other regions in the state Inequality Measures 1. Scale of finance: The information of credit requirement and credit availability, the credit gap was estimated separately for the major crops and fruit crops are presented in Table It is noted that there is a credit gap in the flow of short-term credit supplied by the DCCBs. For most of the crops, the credit gap was noticed in the Western Maharashtra, Marathwada and Vidarbha region, while in the case of Konkan region, excess finance was advanced to some important crops indicating the adequacy of funds to advance. In Western Maharashtra, the credit gap in the finance by DCCBs was observed for all crops grown in region, whereas excess finance was advanced to pomegranate (+7.84) per cent than the credit requirement in Western Maharashtra. There was a wide credit gap in the flow of credit provided by the DCCBs to almost all crops grown in the Konkan region, whereas excess finance was advanced to improved paddy (+ 6.25) per cent, summer paddy ( ) per cent, udid and green gram (+ 1.56) per cent, rainfed groundnut (+ 0.83) per cent, mango ( ) per cent and coconut ( ) per cent than the credit requirement in Konkan Region. In Marathwada Region, the credit gap in the finance by DCCBs was observed for almost all crops grown in region, whereas excess finance was advanced to sugarcane adsali (+ 0.75) per cent, preseasonal (+ 1.59) per cent and ratoon (+ 1.90) per cent, Banana (+ 1.32) per cent, irrigated wheat (+ 1.65) per cent, Soybean (+ 4.29) per cent, Ginger & Turmeric (+ 0.95) and Chilli (+ 2.30) per cent than the credit requirement in Marathwada Region. There was a wide credit gap in the flow of credit provided by the DCCBs to almost all crops grown in the Vidarbha region it means there was inadequate funds available with DCCBs in Vidarbha Region.

244 a. Coefficient of variance for short term credit flow: The regression coefficients for short term credit flow, the trend equations were positive and non-significant in Western Maharashtra, Konkan and at the state level, this indicated variation in the short-term credit flow over the study period. The regression coefficient for Marathwada region was observed to be negative and non-significant indicating no significant decline in variation in short-term credit flow during the study period. Importantly, there was significant increase in variation in short-term credit disbursement in Vidarbha region during the period under study. At the state level, Coefficient of Variance for short-term credit flow across the years indicated that there was a moderate inequality in the disbursement of short-term credit flow by the DCCBs. 2. b. Coefficient of Variance for medium term credit flow: The regression coefficients for medium term credit flow, the trend equations were positive and non-significant in all regions and at the state level, which indicated non-significantly increase in variation in the medium term credit flow over the study period. At the state level, Coefficient of Variance for medium term credit flow across the years indicated that there was a moderate inequality in the disbursement of medium term credit flow by the DCCBs 3. a. Theils Entropy index for short term credit flow: The average variation across the years was highest in Vidarbha region (0.88) and Western Maharashtra (0.88) followed by Marathwada (0.77) and lowest in Konkan (0.53). The regression coefficients for short term credit flow, the trend equations were negative and significant in all regions and at the state level, which indicate significant decline in inequality in short term credit flow over the study period. At the state level, Thiel s entropy coefficient for short term credit flow across the years indicated that there was a moderate inequality in the disbursement of short term credit flow by the DCCBs. 3. b. Theils Entropy Index for medium term credit flow: The average variation across the years was highest in Vidarbha region (0.88) and Western Maharashtra (0.88) followed by Marathwada (0.79) and lowest in Konkan (0.54) respectively. The regression coefficients for medium term credit flow, the trend equations were negative and non-significant in Western Maharashtra and at the state level, which indicated non-significant decline in inequality in the medium term credit flow over the period. The regression coefficients for medium term credit flow, the trend equations were negative and significant in Konkan and Vidarbha region which indicated significant decline in inequality in the medium term credit flow over the study period. The regression coefficient in Marathwada region for medium term credit flow showed positive and significant trend which indicated significant increase in inequality in the

245 268 disbursement of medium term credit flow. At the state level, Theils entropy coefficient for medium term credit flow across the years indicated that there was a moderate inequality in the disbursement of medium term credit flow by the DCCBs. 4. a. Gini concentration ratio and Lorenz curve analysis for short-term credit flow The Gini ratio was 0.49, 0.52 and 0.52 for the base year, mid-year and terminal year, respectively for short term credit flow, indicating moderate intra-regional inequality in short term credit flow by DCCBs in Maharashtra. The results of Gini ratio and Lorenz curve for short term credit flow showed an increase in intra-regional inequality in the mid-year and constant in terminal year of the study. Lorenz curve was constructed for short-term agricultural credit for all the regions and state as a whole separately. This presents a picture of the cumulative percentage of DCCBs for the individual regions or Maharashtra state on the X axis and cumulative percentage of agricultural credit given by DCCBs per hectare of gross cropped area on the Y axis for the base year, mid-year and terminal year. It could be seen that these curves ware away from the line of equal distribution (45 0 degree line) indicated unequal distribution of short-term agricultural credit among the regions and among the districts in the regions during study period in Maharashtra state. 4. b. Gini concentration ratio and Lorenz curve analysis for medium term credit flow The Gini ratio was 0.61, 0.72 and 0.72 for the base year, mid-year and terminal year, respectively for medium term credit flow, indicating moderate intra-regional inequality in medium term credit flow by DCCBs in Maharashtra. The results of Gini ratio and Lorenz curve for medium term credit flow showed an increase in intra-regional inequality in the mid-year and constant in terminal year of the study. Lorenz curve was constructed for medium term agricultural credit for all the regions and state as a whole separately. This presents a picture of the cumulative percentage of DCCBs for the individual regions or Maharashtra state on the X axis and cumulative percentage of agricultural credit given by DCCBs per hectare of gross cropped area on the Y axis for the base year, mid-year and terminal year. It could be seen that these curves ware away from the line of equal distribution (45 0 degree line) indicated unequal distribution of short-term agricultural credit among the regions and among the districts in the regions during study period in Maharashtra state. For measuring inequality the various inequality measures like Coefficient of variance, Theils entropy coefficient and Gini ratios were used for per hectare short term

246 269 and medium term credit flow. From the results it was observed that there was inequality in short term and medium credit flow in all regions and state as a whole during study period Determinants in flow of short-term agricultural credit: In order to study the determinants of per hectare short-term credit flow by DCCBs, a multiple linear regression analysis was attempted for all the regions and state as a whole separately covering the period from to At the state level, the gross cropped area, area under commercial crops and deposits play important role in determining ST credit flow in Maharashtra. Whereas, the average rainfall had positive association and recovery percentage had negative association with ST credit flow in the state. The R 2 suggest that the above said five determinants have jointly explained 99 per cent of the variation in the disbursement of short term credit flow in Maharashtra. The deposits play an important role in determining the disbursement of short term credit in Western Maharashtra. The proportion of commercial crops to GCA has positive association with ST credit flow in the region whereas, gross cropped area, average rainfall and ST loan recovery showed the negative association with the disbursement of short term loans in Western Maharashtra. It was indicated that these five determinants jointly explained 97 per cent of the variation in the disbursement of short term credit in Western Maharashtra. The proportion of area under commercial crops to GCA plays important role in determining ST agriculture credit in the region. The average rainfall and deposit has positive association with ST credit flow whereas, gross cropped area and ST recovery has negative association with ST credit flow in Konkan region. The R 2 was 0.97, which has indicated that the five determinants jointly explain 97 per cent of the variation in disbursement of short term credit in Konkan region. In Marathwada region all the determinants had positively associated with ST agricultural credit flow in the region whereas, the deposits had negative by associated with ST agricultural credit flow in the region. It was seen that these determinants together explained 83 per cent of the total variation in the disbursement of short term credit in Marathwada region. As regards Vidarbha region, the proportionate area under commercial and deposits had played important role in determining ST credit flow in the region. Whereas, gross cropped area, average rainfall and recovery per cent had negative association with ST credit flow in the region. The R 2 suggest that 97 per cent of the total variation in the disbursement of short term credit in Vidarbha region due to above five determinants. The gross cropped area, area under commercial crops and deposits play important role in

247 270 determining ST credit flow in Maharashtra. Whereas, the average rainfall had positive association and recovery percentage had negative association with ST credit flow in the state. The R 2 suggest that the above five determinants have jointly explained 99 per cent of the variation in the disbursement of short term credit flow in Maharashtra Problems faced by DCCBs: Problems faced by DCCBs concerning to administration, management, availability of funds and disbursement of loan and recovery of loan and suggest remedial measure for efficient working of DCCBs in Maharashtra through Garrett s Ranking Technique. By referring Garrett s table the per cent position estimated were converted into scores (Garrett and Woodworth, 1967). The various problems faced by the DCCBs in study Maharashtra. The major problems experienced were no any contribution by state government (87.00), government policies (87.00), less value of farm produce (87.00) thus three problems having first rank followed by need to improve administration and management (86.55), less productivity (86.55), mentality of the farmers (85.64) and so on.the last problem experienced by DCCBs in Maharashtra was delay in availability of fund (63.00) which having 13 th rank. Suggestions to overcome the problems of DCCBs by improving administration and management of DCCBs, increase share capital and deposits to overcome problems related to availability of funds, improving loan disbursement through proper selection of borrower and timely supervision of lone projects. Increases in recovery and reduction in overdues by adopting recovery in linking format, timely legal action against those persons who miss utilized borrowed loan and willful defaulters, implementing intensive recovery programme and placing and target given to block level recovery officer. Thus suggestions would be more useful to DCCBs in Maharashtra for better and efficient working in near future Conclusions: 1. The performance of DCCBs in respect of branch expansion and employment was non-satisfactory at the state level during study period. 2. The total membership of DCCBs in Maharashtra state increased during study period. 3. A significant increase in the total share capital, reserve fund, owned funds, deposits, investment and working capital during the study period indicated the financial soundness of DCCBs in Maharashtra state.

248 Although there was significant trends of borrowings of DCCBs in Maharashtra over the entire period indicated that the increased dependency of DCCBs for financial requirement in the state. 5. The total advances by DCCBs were increased in Maharashtra. The proportion of total agricultural loans (ST and MT) in the total loans and advances was above 20 per cent in the base year, which increased to about 40 per cent during the terminal year. Whereas, the loan disbursed for non-agricultural purposes declined from 65 per cent to 49 per cent it was good sign in the view of increased agricultural advances in the Maharashtra. 6. The increase in total loan outstanding it clearly indicated that the poor performance of DCCBs in recovery of loans in the state. 7. The overdues also increased during study period due to increased share of shortterm loan overdues in total overdues was per cent in the DCCBs of Maharashtra in the base year, which had increased to per cent during the terminal year of the study. 8. The increase in cost of management during study period mainly attributed to significant increase in salaries and other expenditure of each DCCB in state. 9. The higher magnitude of average performance index achieved by the DCCBs in Konkan and Western Maharashtra regions had developed system of DCCBs in the state. The DCCBs in the Marathwada and Vidarbha regions had a poor record in their performance indicated by low average performance index. 10. The DCCBs in Maharashtra provided short term loans and medium term loans. Out of the total agricultural loans more than 80 per cent loan were disbursed for short term purposes in the state during study period. 11. The total loan disbursed by financial institutions for agriculture increased in absolute term but the share of DCCB s and RRB s declined whereas, share of CB s increased in the state level during study period. 12. The coefficient of variance, Theils entropy coefficient, Gini ratio and Lorenz curve were used for measuring inequality in disbursement of short term and medium term credit flow by DCCBs in Maharashtra state. The results showed that there was inequality in per hectare short term and medium term credit flow in all the regions and state as a whole during study period. 13. The gross cropped area, area under commercial crops and deposits play important role in determining ST credit flow in Maharashtra state. Whereas, the average

249 272 rainfall had positive association and recovery percentage had negative association with ST credit flow in the state. 14. The DCCBs in Maharashtra state face the problems concerning to administration, management, finance, disbursement and recovery of loans Policy implications: 1. The DCCBs in Maharashtra need to pay more attention for branch expansion, increasing membership and requirement of staff for efficient and profitable working of DCCBs in the state in near future. 2. The DCCBs are required to be operated more transparently to minimize the level of percentage of NPAs as compared with international standards and disbursement may be strictly based up on repaying capacity of borrowers, technical efficiency and economical soundness of the societies. 3. There is a need to enhance fund investment in Government securities and fixed deposits for transparency in financial management. 4. The more attention is required to be given to increase the coverage of loans through Kisan Credit Cards (KCC) which would result in easy and timely credit disbursement to the borrowers when we are moving towards cashless economy. 5. The efforts are needed to increase recovery performance by implementing intensive recovery programme and timely supervision of utilization of credit. 6. The problem of overdues is more and requires greater attention for formulating future policy. The co-operative administration and concerned authorities shall pay more attention towards the recovery of agricultural loans so as to increase fund availability for credit disbursement. 7. The more attention is required to be given to minimize the credit gap by supplying required scale of finance for important crops to avoid improper utilization for crop production. These policy measures are suggested to improve the overall performance of the DCCBs in the State of Maharashtra and if these are taken in right spirit and implemented whole-heartedly will certainly go a long way in recognizing a role of DCCBs in overall development of the districts especially on agricultural front.

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258 281 DEPARTMENT OF AGRICULTURAL ECONOMICS COLLEGE OF AGRICULTURE, DAPOLI Dr. Balasaheb Sawant Konkan Krishi Vidyapeeth, Dapoli Student Name : Raut. S. D.Regd. No:204 Degree : Ph.D.(Ag.) Discipline: Agricultural Economics Course Instructor: Dr. S. S. Wadkar Year of admission: Course Number:AG.ECON-699 Research Title: Performance of District Central Co-operative Banks in Maharashtra State SYNOPSIS ABSTRACT Introduction: India is agricultural based country. Agriculture sector has been the back bone of the Indian economy. Two thirds of the population is dependent on the agricultural sector through direct as well as indirect. Share of Agriculture & allied sector has declined at per cent in Share of Services sector has improved to 57.03per cent. Share of Industry sector has also increased to per cent. Co-operation - Latin word cooperate working together. Four stages of cooperative development in India: (a) Initiation stage ( ), (b) Modification stage ( ), (c) Expansion stage ( ) and (d) Restructuring stage ( ). Agriculture loans are mostly provided by co-operative banks, commercial banks, regional rural banks etc.currently 372 district central co-operative banks (DCCBs) working in India.Maharashtra has witnessed successful development as compared to other states in co-operative sector during the last five decades In Maharashtra. State Co-operative Bank (1911) (Apex Bank) acts as banker s bank to 31 DCCBs, providing the funds to all DCCBs. Objectives: 1. To assess the performance of DCCBs in Maharashtra. 2. To study the purpose wise lending activities by DCCBs in Maharashtra. 3. To examine the share of DCCBs in total credit disbursement for agriculture. 4. To identify the determinants in flow of agricultural credit through DCCBs in Maharashtra. 5.To examine the problems faced by DCCBs in disbursement and recovery of agricultural loans and to suggest remedial measures. Methodology: Basic approach of study: It was one of the major aspects of the present study is to assess the region wise and period wise performance of DCCBs in Maharashtra with reference to

259 282 select the key indicators like number of branches, membership, share capital, working capital, reserve funds, borrowings, deposits, loan advanced, loan outstanding, recovery, over dues and cost of management. Data requirement and source of data: The investigation was based on macro level data. Sampling technique: All the 31 district central co-operative banks in Maharashtra were selected for the study. Methods of analysis: The methods of analysis will consists of tabular analysis, growth function, inequality measures like coefficient of variation, Theils entropy index, Lorenz curve, Gini ratio and regression analysis. Problems faced by DCCBs: Finally, it is propose to examine the problems faced by DCCBs in disbursing and recovery of agricultural loans and suggest remedial measure for efficient working of DCCBs in Maharashtra by using Garrett s Ranking Technique. Conclusions: 1. The performance of DCCBs in respect of branch expansion and employment was nonsatisfactory at the state level during study period. 2. The total membership of DCCBs in Maharashtra state increased during study period. 3. A significant increase in the total share capital, reserve fund, owned funds, deposits, investment and working capital during the study period indicated the financial soundness of DCCBs in Maharashtra state. 4. Although there was significant trends of borrowings of DCCBs in Maharashtra over the entire period indicated that the increased dependency of DCCBs for financial requirement in the state. 5. The total advances by DCCBs were increased in Maharashtra. The proportion of total agricultural loans (ST and MT) in the total loans and advances was above 20 per cent in the base year, which increased to about 40 per cent during the terminal year. Whereas, the loan disbursed for non-agricultural purposes declined from 65 per cent to 49 per cent it was good sign in the view of increased agricultural advances in the Maharashtra. 6. The increase in total loan outstanding it was quite clear indicated that the poor performance of DCCBs in recovery of loans in the state. 7. The overdues also increased during study period due to increased share of short-term loan overdues in total overdues was per cent in the DCCBs of Maharashtra in the base year, which had increased to per cent during the terminal year of the study. 8. The increase in cost of management during study period mainly attributed due to significant increase in salaries and other expenditure of each DCCB in state. 9. The higher magnitude of average performance index achieved by the DCCBs in Konkan and Western Maharashtra regions had developed system of DCCBs in the state. The DCCBs in the Marathwada and Vidarbha regions had a poor record in their performance indicated by low average performance index. 10. The DCCBs in Maharashtra provided short term loans and medium term loans. Out of the total agricultural loans more than 80 per cent loan were disbursed for short term purposes in the state during study period. 11. The total loan disbursed by financial institutions for agriculture increased in absolute term but the share of DCCB s and RRB s declined whereas, share of CB s increased in the state level during study period. 12. The coefficient of variance, Theils entropy coefficient, Gini ratio and Lorenz curve were used for measuring inequality in disbursement of short term and medium term credit flow by DCCBs in Maharashtra state. The results showed that there was an inequality in per hectare short term and medium term credit flow in all the regions and state as whole during study period.

260 The gross cropped area, area under commercial crops and deposits play important role in determining ST credit flow in Maharashtra state. Whereas, the average rainfall had positive association and recovery percentage had negative association with ST credit flow in the state. 14. The DCCBs in Maharashtra state face the problems concerning to administration, management, finance, disbursement and recovery of loans. References: Bhosale, S.S. (2011). Performance of District Central Co-operative Banks in Konkan Region of Maharashtra. Unpublished Thesis submitted to Maharana Pratap University of Agriculture and Technology Udaipur, Rajasthan. Deorukhkar, A.C. and S.G. Borude (1983). Progress of Ratnagiri DCC Bank (Maharashtra) with special emphasis on crop loan. Indian Co-operative Review, 21 (2): Deorukhakar, A. C. and M. B. Nikam (2007). Crop loan system in Raigad District. Unpublished thesis submitted to Dr. B. S. K. K. V., Dapoli. Harshitha, G. S., S. B. Mahajanshetti, H. S., Vijaykumar, H Basavraj and B. Basavraj (2008).Management appraisal of district central co-operative bank - A case study of DCC Bank, Shimoga, Karnataka.Karnataka Journal of Agricultural Sciences, 21 (3): Jadhav,K.L, (2004). Performance Analysis of DCCB in Maharashtra.Ph.D(Agri.) Thesis (Unpublished) submitted to Mahatma Phule Krishi Vidyapeeth, Rahuri. Ahmednagar, Maharashtra. Jairath, M.S Regional disparities in co-operative credit services in Himachal Pradesh. India Co-operative Review, vol. 27 (3): Patil, E. R., G. G. Thakare and S. G. Borude (1990).A farm level study on credit requirement, availability and its gap in Thane district. Indian Co-operative Review, 27 (4): 352. Saudagar, A. H., D. K. Das and D. J. Kate (2015).Analysis of crop loan supply in Maharashtra. International Journal of Scientific Research, 4 (10):

261 284 SYNOPSIS OF RESEARCH WORK PERFORMANCE OF DISTRICT CENTRAL CO-OPERATIVE BANKS IN MAHARASHTRA STATE Submitted by: RAUT SURAJKUMAR DNYANESHWAR Ph.D. (Ag.) Regd. No. 204 Submitted to: DEPARTMENT OF AGRICULTURAL ECONOMICS,

262 285 COLLEGE OF AGRICULTURE, DR. BALASAHEB SAWANT KONKAN KRISHIVIDYAPEETH, DAPOLI, DIST: RATNAGIRI Introduction: The word co-operation is derived from the Latin word cooperate and its elementary sense it simple means working together. The principle of co-operation is as old as human society. It is truly the basis of domestic and social life. With the passing of cooperative credit society act 1904, the great efforts have been done by the officials to eliminate the peculiar problems of farmers and common public. Since the last few years the speed of co-operative credit institution has drastically changed due to the competition from commercial banks, undue intrusion of political parties and failure of many co-operative banks. A co-operative bank is a financial entity which belongs to its members, the owners and the customers of their bank. Agriculture sector plays a strategic role in the process of economic development.. As the World Bank describes, Credit is often a key element in the modernization of agriculture. In India, agriculture loans are mostly provided by co-operative banks, commercial banks, regional rural banks etc. Co-operative has local participation democratic management and responsive to local needs of village. The co-operative credit system can mobilize funds from urban area through DCCBs and lend them in rural areas. The intermediate level unit that is DCCBs has been playing a crucial role in promoting agriculture and allied activities by purveying credit to the needy through primary agricultural credit societies. They provide a strong linkage between rural based credit societies, which do not have a close contact with money market and the urban biased apex co-operative bank, which does have a healthy connection with money market. Progress made by the DCCBs from to The number of DCCBs in India declined from 509 in to 371 in the year and it was mainly due to the reorganization of DCCBs on the basis of the recommendation (one DCCB for one district) of the All India Rural Credit Review Committee (1986). The number of banks in Maharashtra decreased from 35 in to 26 in due to policy of one DCCB for one district, by All India Rural Credit Review Committee (1966). Further, the number of DCCBs had increased to 31 in 2015 due to the formation of new districts in the state.

263 286 The DCCBs are most important in the entire co-operative credit structure. The success of co-operative credit structure depends to a very large extent on the working of the DCCBs. These banks not only safeguard the interest of the PACS but also various other types of credit and non- credit societies in the District. Hence there is a need for the existence of a strong and good working District Central Co-operative Bank at the district level. The need was felt to have the scientific study of the issues such as inequality in disbursement of the present loans, factors responsible for such inequality, region wise and period wise performance of DCCBs. Problems in disbursement and recovery of loans in respect of the DCCBs in a co-operatively impressive state like Maharashtra. In view of this the present investigation viz., the study of Performance of District Central Co-operative Banks in Maharashtra State was undertaken. It was decided to study the performance of DCCBs in respect of different economic indicators, disparity in credit flow, factors influencing disparity in credit flow and problems faced by DCCBs in banking operations with the help of following specific objectives. Objectives: The specific objectives of the study are as under. 11. To assess the performance of DCCBs in Maharashtra. 12. To study the purpose wise lending activities by DCCBs in Maharashtra. 13. To examine the share of DCCBs in total credit disbursement for agriculture. 14. To identify the determinants in flow of agricultural credit through DCCBs in Maharashtra. 15. To examine the problems faced by DCCBs in disbursement and recovery of agricultural loans and to suggest remedial measures. Hypotheses of the Study: 1. The DCCBs in the study areas having fluctuating growth in terms of physical and financial indicators. 2. The performance of district central cooperative banks in all the regions of Maharashtra state is uneven during the study period. 3. The agricultural performance having strongly influence in the flow of short term credit in different regions of the state. 4. The DDCBs in the study areas face the problems related to management, administration, disbursement and recovery of loans.

264 287 Methodology: Brief description of the study area: The study area refers to the entire state of Maharashtra covering an area of 3.08 lakh sq. km., occupying nearly 10 per cent of the total geographical area of the country. It was decided to cover all the 30 DCCBs in the State for study. Data requirements and sources of data: Since the investigation is based on macro level data, an attempt has been made to estimate region wise and period wise growth rates of performance of different indicators in DCC banks of Maharashtra over a period of last 15 years from to The time series data used for analysis of the various aspects of the study are as follows. The district wise report on Potential linked credit plans collected from NABARD office Pune, Maharashtra. The time series data on various selected indicators was obtained from the published data of NAFSCOB (Basic Data on Performance of District Central Cooperative Banks) and annual reports of DCCBs. The district wise data on scale of finance fixed by district central cooperative banks in Maharashtra for the period The district wise gross cropped area was secured from the published reports of Handbook of Basic Statistics of Maharashtra state. The area under commercial crops and average rainfall were secured from the published reports of Department of agriculture, Government of Maharashtra. The areas under horticultural crops were secured from The Directorate of Horticulture, statistical Division, Shivajinagar Pune, Maharashtra. The information related to the problems faced by DCCBs was obtained with the help of opinions, suggestions obtained from the Chief of Agricultural Loan Sections, General Manager and Member of Management Committees of 30 DCC banks in Maharashtra. Out of the total 30 DCCBs eight DCCBs did not respond in sending the information on mailed questionnaire. Thus in all 22 Chiefs of Agricultural Loan Sections was contacted either by mailed questionnaire or by personal contact method to get the requisite information. Sampling technique: All the 36 district central co-operative banks in Maharashtra were selected for the study. Out of 36 DCCBs, 30 DCCBs have more than 15 years old and 6 DCCBs (newly created) having less than 15 years old. Hence 30 DCCBs were selected for the study. As regards the study of inequality in distribution of credit (short and medium), the data obtained from 29 (excluding Mumbai District Central Co-operative Bank) DCCBs were utilized. For other aspects of study particularly the work performance, all the 30 DCCBs formed the sample of study.

265 288 Method of analysis: To accomplish the objectives under study, different analytical tools were employed to analyze the data. The methods of analysis employed were tabular analysis, growth function, inequality measures like coefficient of variation, Theils entropy coefficient, Gini ratio, Lorenz curve and regression analysis. Tabular analysis: Simple tabular analysis was employed to evaluate the performance of District Central Co-operative Banks amongst different regions and over the period of time in Maharashtra. The following composition proportions and ratios of various co-operative performance indicators were calculated for each region and the state as a whole for period from to Physical Indicators: Number of branches, Number of members Number of employees. Financial Indicators: Share capital, Reserve funds, Owned funds, Total borrowings, Total deposits, Total working capital, Total investments, Total loan and advances, Total loan recovery, Total over dues, Total cost of management, Credit deposit ratio, Percentage of over dues to loan outstanding, Ratio of cost of management to working capital. Estimation of rates of compound growth in performance indictors: The trends in the progress of the performance indicators was estimated by using percent change over the base period The region wise and period wise compound growth rates for different indicators (as listed earlier) of DCCBs have been estimated using the following type of exponential model. Y = ab t e Where, Y = Dependent variable (indicator), a = Intercept, b = Trend value, t = Time period in years, e = Error term Ranking of districts and regions based on the performance index: The ranking of districts and regions was based on Performance Index (PI) of DCCBs, which was obtained as under. PI = Lo Ld Lod X MB MBs Where, Lo - Loan outstanding, Ld - Loan demand, Lod - Overdues, MB - Number of borrowing members, MBs - Membership at state level.

266 289 Credit Deposit Ratio: The credit deposit ratio was worked out by taking ratio of total credit advanced to total deposits. Scale of finance and credit gap in regions of Maharashtra: The schedules of the scale of finance of the DCCBs for the year in the four regions of the Maharashtra were utilized for analysis of regional scale of finance offered by the DCCBs. This was compared with the regional scale of finance recommended by the Department of Agriculture to work out the region wise credit gap. Measures of inequality in credit flow by DCCBs:The regional inequality in disbursement of short term and medium term loans by DCCBs were assessed with the help of following measures of inequality. Coefficient of variation: To accomplish the objective relating to the inequality, the region wise coefficient of variation (CV) was calculated for each of the 15 years ( to ) by using the following formula. CV = SD Mean X 100 Where, CV = Coefficient of variation, SD = Standard deviation Mean = X/N, X = per hectare credit flow, N = Number of districts Theils entropy: Theil (1967) evolved the measure of inequality to assess the income inequality which was given by, H (Y i ) = N Y i i=1 X log ( 1 Y i ) Where, H (Y i ) = Theils entropy Y i = Proportion of i th district in the total credit flow from DCCBs in the State H (Y i ) has been modified and is given by

267 290 I (Y i ) = log N - H (Y i ) Where, I (Yi) = Theils entropy coefficient which ranges from 0 to log N N = Number of districts Taking I (Yi) as dependent variable, linear trend equation was fitted to examine the region wise inequality over the period of 15 years ( to ). I (Y i ) = a + bt + u The regression coefficient was tested for its statistical significance. A significant positive regression coefficient indicates an increase in the variability in credit flow while a significantly negative regression coefficient indicates a tendency of reduction in variability over the last 15 years period ( to ). Gini ratio: The Gini ratio (L) is estimated as follows. (Grewal, 1987) N L = 1 - i=1 (P i - P i-1 ) X (Q i - Q i-1 ) Where, P i = Cumulative percentage of number of DCCBs up to and including i th class. Q i = Cumulative percentage of credit flow per hectare of gross cropped area by DCCBs up to and including i th class N = Number of DCCBs. Higher the value of Gini ratio (L), more is the inequality in distribution of credit and vice versa (0 < L < 1). Lorenz curve technique: A measure of income inequality developed by Kuznets (1963) by constructing Lorenz curve has also been used here. It is the graphical representation of cumulative proportion of number of DCCBs in Maharashtra on horizontal X-axis and

268 291 cumulative proportion of agricultural credit flow per hectare of gross cropped area by DCCBs on the vertical Y-axis. The line of equal distribution is the straight line at 45 0 angle joining (0, 0) and (100,100) points. The degree to which a line Lorenz Curve deviates from the line of equal distribution is a measure of the inequality of disbursement of loan. Further, the curve moves away from the equality line, the greater is the inequality. (Grewal, 1987) Both Gini Ratios and Lorenz Curves were obtained for base year, mid-year and terminal year of the study. Identifying the determinants influencing regional inequality in credit flow: In order to study the determinants influencing per hectare short term credit flow by DCCBs, a multiple linear regression analysis involving per hectare short term agricultural credit in rupees (Y) as dependent variable, gross cropped area in lakh hectares (X 1 ), proportion of area under commercial crops to GCA (X 2 ), average rainfall in (mm) (X 3 ), total deposits in crores of rupees (X 4 ) and short term agricultural loan recovery in per cent (X 5 ) as the independent variables was attempted. The form of the equation used for analysis is given below Y = a +b 1 X 1 +b 2 X 2+b 3 X 3+ b 4 X 4+ b 5 X 5+ u Where, Y = Per hectare short term agricultural credit (`.) A = Constant b 1 to b 5 = Regression coefficients X 1 = Gross cropped area (thousand hectares) X 2 = Proportion of area under commercial crops to gross cropped area (per cent) X 3 = Annual rainfall (mm) X 4 = Total deposits (` in crores) X 5 = Short term agricultural loan recovery (per cent) U = Error term. Problems faced by DCCBs: To examine importance of the problems faced by DCCBs in disbursing and recovery of agricultural loans and suggest remedial measure for efficient working of DCCBs in Maharashtra through Garrett s Ranking Technique was used. By

269 292 referring Garrett s table the per cent position estimated were converted into scores (Garrett and Woodworth, 1967) Per cent position = 100 X R ij 0.5 N j Where, R ij = Rank given to i th problems by j th districts N j = Number of problems ranked by j th districts Thus for each problem the score of various districts were added and then mean score was estimated. The means thus obtained for each of the problems were arranged in descending order. The problems with highest mean value will be considered as the most important one and the others followed in order. Results and discussion: Performance of DCCBs in Maharashtra: The present study seeks to analysed region wise performance of DCCBs based on various indicators in Maharashtra during different time periods. The empirical evidence relative to DCCBs performance has been derived from the percentage growth over the base year and estimated compound growth rates in different regions for the period to The performance indicators selected for the analysis were, number of branches, membership, share capital, reserve funds, owned funds, deposits, borrowing, working capital, investment, loan issued, loan outstanding, loan recovery, loan overdues, working results and cost of management. Furthermore, the region wise average compositions and ratios of these indicators were estimated for the base year i.e and terminal year, The region wise and period wise performance of DCCBs during to was studied for different indicators. The details of the analysis are presented as under. Number of branches: The total number of branches of the DCCBs had decreased from 3722 in to 3718 in i.e. by per cent. The annual rate of compound growth in number of branches of DCCBs in the state as a whole was per cent per annum, which was non-significant during the entire period under study. The region wise growth showed that the branches of DCCBs in Konkan region had significantly increased at the rate of 2.32 per cent per annum and in Marathwada it was significantly declined ( per cent). The

270 293 Western Maharashtra ( per cent) and Vidarbha (-0.24 per cent) had non-significant growth during period under study. The Western Maharashtra region occupied a dominant place in the state by covering more than 50 per cent of the branches during both the base year and the terminal year of the study. Membership: The number of members had increased from in to in i.e. by per cent over the base year. The maximum increase in the total membership was noticed in Konkan region (60.38 per cent) followed by Western Maharashtra (15.64 per cent), Marathwada (9.16 per cent) and Vidarbha region decreased by (-1.02 per cent). This indicates the satisfactory performance of DCCBs in respect of expansion and coverage with large amount of lending, highest interest margins and more profits. Trends in total membership of DCCBs in Maharashtra State as a whole witnessed a significant positive trend with an annual rate of compound growth being 1.33 per cent during the entire period. The Western Maharashtra region occupies a conspicuous position in the state with more than 50 per cent of the total membership during both years. Moreover, there was a steady increase in the total membership of DCCBs in Maharashtra during the period. The average total membership per DCCB at the State level was during , which increased to in As regards to the region wise analysis, the Western Maharashtra region occupied a top position with maximum membership per DCCB in the State during both the periods. The DCCBs in Marathwada regions had relatively lower average membership during both the years of the study. Furthermore, the proportion of PACS membership in total membership of DCCBs at the State level increased from per cent in to per cent in There was an increasing trend in PACS membership per DCCB in all the regions over the years. It was clearly indicates that the proportional share of PACS membership in total membership had increased during the study period. As regards the proportion of individual membership in total membership of DCCBs, it could be observed that the proportional share of individual membership showed a decline from per cent in to per cent in at the State level. The similar declining trend was noticed in all the regions except Konkan region during the study period. Trends in Employment: The total number of employee working in DCCBs in Maharashtra decreased from 27,743 in to 22,887 in , the number employee showed declined by (17.50 %) over the base year. The region wise analysis shows that the declined growth was seen in all regions of Maharashtra except Konkan region. The highest per cent

271 294 number of employee declined in Marathwada (27.18 %) followed by Western Maharashtra (19.20 %) and Vidarbha (16.70 %), while increased in number of employee by (4.77%) in Konkan region. The rate of growth in total employment of DCCBs in Maharashtra and regions of Maharashtra was negative except Konkan region. The highest growth in total employee was observed in Konkan region (0.13 per cent) followed by Vidarbha region (-1.18 per cent), Western Maharashtra region (-1.64 per cent) and least in Marathwada (-2.63 per cent). Share capital: The total share capital of the DCCBs in Maharashtra has steadily increased from ` crores in to ` crores in Region wise trend showed the highest growth in total share capital in Vidarbha ( per cent) followed by Western Maharashtra ( per cent), Konkan ( per cent) and Marathwada region ( per cent) over the base year. The DCCBs in Western Maharashtra region had maintained top position with respect to total share capital throughout the period of study. Out of total share capital of DCCBs in the State as a whole, Western Maharashtra region alone shared about 53 per cent during both the year. Total share capital of DCCBs at state the level, registered significant compound growth rate of 9.66 per cent per annum during the entire period. Region wise results clearly indicated that there was satisfactory growth of share capital in all the regions registering a significant growth rate of 7 to 12 per cent per annum. The positive trend in total share capital during the entire period showed the financial soundness of DCCBs, in the State. The increased in share capital of DCCBs in Maharashtra and regional level over the years was mainly due to the increased in number of PACS membership. The average total share capital of DCCBs in the Maharashtra State was ` crores in , which has increased to ` crores in The Western Maharashtra had maximum total share capital per DCCB. It was the lowest in the Konkan region during the period under study. The proportional share of PACS in the average total share capital of DCCBs at the state level showed decreases from per cent in to per cent in The similar trend in the share of PACS was noticed in all the regions of the state except Konkan during the study period. It therefore clearly indicates that the PACS had a lion s share in the total share capital of DCCBs in the State. The percentage of individuals in the total share capital showed marginal increase in Western Maharashtra, Konkan and also at the State level, while it remained stagnant in Marathwada and Vidarbha regions. This was due to the declining trend in individual membership and the larger credit transactions by PACS. The contribution

272 295 by the Governments in total share capital of the DCCBs at the state and regional level had increased during study period except Konkan region; it had maximum share capital from PACS per cent. Reserve fund: Reserve funds of DCCBs in the State had increased from ` crores in to ` crores in As regards to the region wise trend, the total reserve funds of DCCBs in Western Maharashtra registered a higher growth ( per cent) followed Vidarbha ( per cent), Konkan region ( per cent) and Marathwada ( per cent) and over the base year. In the size of total reserve funds of DCCBs in the State, Western Maharashtra region had a lion s share, which was per cent in , which subsequently increased to per cent in For the State as a whole, the total reserve funds showed a significantly increased by per cent per annum during the entire period. Amongst the regions, the Western Maharashtra region had registered maximum compound growth rate of per cent followed by Marathwada (10.54 per cent), Konkan (10.05 per cent) and Vidarbha (9.20 per cent). The average total reserve funds in the DCCBs at the state level were ` crores in , which increased to ` crores in The share of other reserves showed slightly declined from 83 per cent and 82 per cent whereas, the share of statutory fund in the total reserve fund showed an increased from per to per cent and the share of agricultural stabilization fund in the total reserve fund showed declined from 6.44 per to 5.48 per cent during study period. Out of the total reserve funds, other reserve fund occupied a conspicuous place in the DCCBs of Maharashtra. The DCCBs in Konkan region had the highest average total reserve funds followed by Western Maharashtra, Marathwada and the Vidarbha region during study period. Owned funds: The total owned funds of the DCCBs at the state level had increased from ` crores in to ` crores in showing an increase of more than 36 times over the base year. As regards the region wise analysis, the growth in owned funds in Vidarbha region (40.22 times) recorded an increased over the base year followed by Western Maharashtra (37.50 times), Konkan (35.43 times) and Marathwada region (30.96 times). The share of owned funds of DCCBs in Western Maharashtra was per cent of the total funds of DCCBs in the year , which later on increased to per cent of

273 296 the total owned funds of the DCCBs in Western Maharashtra secure a top position as compare to other regions in the state. The total owned funds of DCCBs in Maharashtra registered a compound growth rate of per cent per annum during the entire period of the study. The growth in reserve funds was relatively satisfactory in all the regions and at the State level during the entire period. The branch expansion policy also contributed for improvement in the owned funds of the DCCBs. The average total owned funds per DCCB at the State level were ` crores during , which increased to ` crores in The Western Maharashtra region had maximum owned funds per DCCB during both the years under study because of more total share capital and reserve funds (See Table No.4 & 6). It indicated that the DCCBs in Western Maharashtra region had sound position in respect of owned funds. It could be noted that the proportion of total reserve funds in the total owned funds showed a significant increase from per cent in to per cent in , while that of share capital depicted a decline from per cent to 24.13per cent during the above period at the state level due to per cent declined in individual membership. It was thus clear that the reserve funds formed an important constituent of total owned funds in the DCCBs of the state. Deposits: The total amount of deposits of DCCBs in the Maharashtra had increased from ` crores in to ` crores in the year , recording an impressive growth of more than 21 times over the base year. Region wise analysis showed that the DCCBs in Vidarbha region had recorded the highest growth (29 times) followed by, Western Maharashtra (25 times), Marathwada (19 times) and Konkan (12 times) over the base year. The magnitudes of annual compound growth rates in deposits of DCCBs for all the regions and for the state as a whole ranged between 7-10 per cent during the entire study period, which indicated the satisfactory performance in respect of deposits in all the regions and state as a whole. It indicated the self-reliance of DCCBs during the period under study. The average total deposits per DCCB and their composition according to regions at two points of time in Maharashtra. An examination of average total deposit per DCCB indicated that average total deposit per DCCB for the State as a whole stood at ` crores in , which has increased, to ` crores in As regards the region wise analysis, the maximum deposits per DCCB were noticed in Konkan region (` crores) followed by

274 297 Western Maharashtra (` crores), Vidarbha (` crores) and Marathwada (` crores) during the base year. In terminal year of the study, Western Maharashtra region secured a top position, where the average deposits per DCCB were ` crores and the Marathwada region recorded the lowest total deposits at ` crores per DCCB. The co-operative societies and individuals were the major sources of deposits in DCCBs. These sources combine contributed more or less 90 per cent of total deposits of DCCBs in all the regions and for the State as a whole during study period. The deposit from local bodies and other sources contributed more than 7 per cent to the total deposits. Borrowings: The total borrowings of the DCCBs for the State level had increased from ` crores in to ` crores in Region wise analysis indicated that the increasing growth in total borrowings was observed in all the regions under study. The maximum growth in total borrowings was recorded in Vidarbha region (499 per cent) followed by Western Maharashtra (247 per cent), Konkan region (66.91 per cent) and lastly by Marathwada (27.85 per cent). Out of the total borrowings of DCCBs at the State level, the DCCBs in Western Maharashtra had the share more than per cent during the base year of the study. However, this increased to per cent during the terminal year of the study. Similar trend was observed in Konkan and Vidarbha regions whereas; declining trend was noticed in Marathwada region. Total borrowings of DCCBs had increased by 6.61 per cent per annum at the State level for the entire period under study. The maximum growth in total borrowings was recorded in Vidarbha region (19.69 per cent) and lowest in Western Maharashtra region (7.34 per cent) during the whole period. The growth in borrowings was negative and nonsignificant in the Marathwada region might be due to decline in total membership, less share capital, less deposit, some of the branches in that region stop their working due to weak performance as a result the SCBs not given fund to DCCBs in Marathwada region due to that the non-significant growth in borrowing was seen. The average total borrowing of the DCCBs at the overall level was ` crores in , which had increased to ` crores in The similar increasing trend was noticed in all the regions of the State. Such an increasing trend was possible only when the bank effectively checks the problem of overdues and improves its recovery performance. The State Cooperative Bank was the major source of borrowing for DCCBs in all the regions and State as a whole during the period

275 298 under study. The proportional share of borrowings from the SCB to the total borrowings was per cent in , which has increased to per cent in The similar increasing trend was noticed in Western Maharashtra and Konkan region while decreasing trend was noticed in Marathwada and Vidarbha region respectively. Working capital: The total working capital of DCCBs in Maharashtra has increased from ` crores in to ` crores in All the regions exhibited a similar growth, meaning thereby that sufficient amount of funds were available with DCCBs for undertaking various credit and service activities during the period under study. Importantly the working capital of DCCBs in Western Maharashtra alone shares more than 45 per cent of the total working capital of DCCBs in Maharashtra. This means that the DCCBs in Western Maharashtra had quite a substantial working capital for their credit activities as compare to other regions in the State. The rate of compound growth in total working capital was 9.39 per cent per annum during the entire period at the State level. It was noted that the compound growth rates in the total working capital of DCCBs, for the state as a whole and among the four regions of the state were ranges from 7-11 per cent during the entire period of the study. Total working capital per DCCB at the State level was ` crores in to ` crores in , which has increased to, owing to the increase in the owned funds and deposits. The DCCBs in Konkan region secured a top position during but later on the DCCBs in Western Maharashtra region secured top position in The total working capital per DCCB was the highest in the Western Maharashtra region (` crores) followed by the Konkan region (` crores). It indicted a sound financial position of DCCBs in both the regions as compared to the DCCBs of Marathwada and Vidarbha regions. The proportional share of owned funds, deposits and borrowings in the working capital helps to determine the self-reliance and dependence of DCCBs. It was observed that 9.68 per cent of the working capital of DCCBs in Maharashtra State was made up of owned funds in the year This percentage share has increased to per cent in the year Contribution of owned funds to working capital was highest in the Marathwada region during study period. The percentage of owned funds to working capital of DCCBs showed an increasing trend in over the year in all the regions and state as a whole.

276 299 The percentage share of deposits to working capital of DCCBs is another indicator to assess the inherent financial strength of the DCCBs. It indicates the level of dependence of DCCBs on apex institution for working capital. On an average, per cent of working capital of DCCBs in Maharashtra state was made up of deposits in the year and it further declined to per cent in the year The proportionate share of deposits in the working funds had decreased by 2.80 per cent during the study period. The percentage of deposits to working capital was very high and maximum in DCCBs of Konkan region (91.22 per cent) followed by Vidarbha region (82,98 per cent), Western Maharashtra (80.66 per cent) and Marathwada region (59.26 per cent) in the year In the year , the percentage of deposits to working capital was maximum in Konkan region (84.90 per cent) followed by Vidarbha region (78.49 per cent), Western Maharashtra region (71.58 per cent) and Marathwada region (65.56 per cent). The percentage share of borrowings in total working capital was 9.30 per cent in the DCCBs of Maharashtra in which subsequently declined to 7.93 per cent in the terminal year of the study in all regions except Vidarbha and the state as whole indicating a good pace of resource mobilization and declined in cost burden of DCCBs. The percentage of borrowings to working capital in Vidarbha region showed an increase from 5.05 per cent in to 7.19 per cent in indicated increased dependency of DCCBs. While percentage of borrowings to working capital substantially decreased in Western Maharashtra region from per cent to 9.88 per cent, in Konkan region, it decline from 1.42 per cent to 1.00 per cent, in Marathwada region, it decline from per cent to per cent. This was mainly because of significant growth in deposits of the DCCBs in these regions. It indicated that the movement of DCCBs towards the self-reliance in the state. Investment: The DCCBs in Maharashtra had recorded satisfactory growth in total investment over a period of 15 years. It has increased from ` crores in to ` crores in The growth in total investment had registered around 4 times increase over the base year The total investment by the DCCBs showed an increasing growth in all the regions during the period under review. The highest growth in total investment was observed in Vidarbha region ( per cent), followed by Marathwada region ( per cent), Western Maharashtra region ( per cent) and Konkan region ( per cent) during the terminal year Out of total investment (` crores) by the DCCBs in the state, the DCCBs in Western Maharashtra occupied a top position by contributing per cent and per

277 300 cent in during study period. The proportion in total investment of DCCBs in Konkan region was per cent in , which was decreased to per cent in the terminal year of the study. The increase in investments was noticed in Marathwada and Vidarbha region during the period under study. The annual rate of growth in the total investment by the DCCBs in the State was per cent, which indicated satisfactory performance by the DCCBs during the entire period under study. Region wise analysis indicated that Marathwada region registered a maximum annual growth of per cent followed by Western Maharashtra region (12.04 per cent), Vidarbha region (11.29 per cent) and Konkan region with 6.26 per cent for the entire Period. In view of the significant rise in the owned funds and deposits, this led to surplus amount of funds to invest. The average total investment per DCCBs in the Maharashtra state had increased from ` crores in to ` crores in the terminal year of the study period. In the year , the highest total investment per DCCB was observed in Konkan region (` crores) followed by Western Maharashtra (` crores), Vidarbha (` crores) and the least in Marathwada region (` crores). In the terminal year, the highest total investment per DCCB was observed in Western Maharashtra (` crores), followed by Konkan region (` crores), Vidarbha (` crores) and the least in Marathwada region (` crores). Fixed deposits occupied a lion s share per cent in total investment during the year which increased to per cent in the terminal year The percentage share of investment in Govt. securities and other securities was 5.59 per cent and 1.51 per cent in the base year, which was decrease in Govt. securities to 1.04 per cent and increased in other securities to 2.71 per cent respectively in At the same, time the percentage of investments in others had substantially decreased from per cent to per cent indicating the reduction of funds in other sources of investment, which was a good sign. Similar trend was noticed in all the regions of the State except Vidarbha region. Loan advanced: The total loan advances comprised of short term, medium term and other loans. The total loan advanced by the DCCBs in Maharashtra state had increased from ` crores in to ` crores in The growth in total loan issued witnessed a positive trend in all the regions of the State. The maximum increase in the total loans advanced was noticed in DCCBs of Western Maharashtra ( per cent) followed by

278 301 Konkan (185.41), Vidarbha (167.83) and least in Marathwada region (88.14). From this result, it is clearly indicated that the growth in total loan issued in absolute term as well as in terms of percentages was the highest in Western Maharashtra. It was mainly due to the increasing commercialization of agriculture, availability of irrigation facility, growth in short term and medium term enterprises were more than other regions in the state, which necessarily call for more investments in input use and plant protection and therefore increase in demand for loans. Out of total loans advanced by the DCCBs in the Maharashtra state, the DCCBs in Western Maharashtra region alone share per cent in , which later on increased to per cent in It clearly indicated that the DCCBs in Western Maharashtra gave better attention towards the loans and advances. In the remaining regions, the proportionate share of total loans advances to the overall State level ranged from per cent (Marathwada), per cent (Vidarbha) and per cent (Konkan) in and from per cent (Konkan), per cent (Vidarbha) and 8.95 per cent (Marathwada) in the terminal year of the study. The total amount of loan issued per DCCB to its members in Maharashtra state had increased from ` crores in to ` crores in In the year , the total loan issued per DCCB was relatively more in Western Maharashtra (` crores) followed by Konkan region (` crores), Marathwada (` crores) and Vidarbha (` crores). In the terminal year of the study, the DCCBs from Western Maharashtra region had maintained its top position by issuing total loans of ` crores per DCCB followed by Konkan region (` crores), Vidarbha (` crores) and Marathwada (` crores). This had also indicated that the DCCBs in Western Maharashtra had offered maximum credit facilities to their members during the period under study. Over 80 per cent of total loans and advances issued were in the form of short term loans and remaining being medium term and other loans and advances indicating focused emphasis on short term loans by the DCCBs in Maharashtra. In region wise study, it was revealed that, the share of short term loans was the highest in Marathwada per cent followed by Western Maharashtra per cent, Konkan per cent and Vidarbha per cent, in base year. Similarly in the terminal year of the study, the share of short-term loan was the highest in Marathwada per cent followed by Western Maharashtra per cent, Konkan per cent and Vidarbha per cent respectively. The percentage shares of medium term loan and other loan

279 302 were 7.15 and per cent in , which had marginally increased in medium term loan to and decreased in other loan 9.88 per cent in respectively. At the regional level the Konkan region issued less per cent amount to agriculture 11 per cent out of the total advances than the other regions in the state, it might be due to less farming activities than the other regions in the state. Whereas, percentage of other loans and advances showed increased may be due to increased medium term and long term activities such as dairying, poultry, plantation and horticulture, other processing industries, land development etc. in the Konkan region. In Marathwada and Vidarbha region loan disbursed for medium term non-agriculture shows increased than agricultural loan because of farming and allied activities mainly depends on monsoon in that region due to less rainfall the less production that effects on recovery of loan where as in case of non-agricultural loans the guarantee of recovery is more than agricultural loans due to that increases non-agricultural advances is more in that regions than the other regions in state. The proportion of total agricultural loans (both ST and MT) in the total loans was above 20 per cent in the base year, which increased to about 40 per cent during the terminal year. Whereas, the loan disbursed for non-agricultural purposes declined from 65 per cent to 49 per cent it is good sign in the view of agricultural advances in the Maharashtra. Credit deposit ratio: Higher C: D ratio simply means that the advances are larger than the deposits. It does not necessarily imply that the magnitude of advances is large. The volume of advances may be small but the ratio could be higher because the deposits are very small. Higher the C: D ratio better is the performance of bank in purveying the credit requirements of their members. A favorable C: D ratio does determine the profitability of the banks. Hence a bank should aim at higher C: D ratio. The results revealed that the C: D ratio had witnessed a declining trend in all the regions except Konkan region and state as a whole during the period under study. The C: D ratio of DCCBs in Maharashtra had declined from 0.73 in to 0.66 in Similarly the C: D ratio showed a decline in all the regions except Konkan region during the period under study. Loan outstanding: The total loan outstanding in DCCBs of Maharashtra State had increased from ` crores to ` crores during study period. This shows that the growth in total loan outstanding was more than 3 times over the base year of the study. The total loan outstanding of DCCBs in Maharashtra State as a whole registered a compound growth rate of 7.90 per cent per annum for the entire period under study. The DCCBs in Vidarbha registered the highest growth per annum of per cent with reference to total loan

280 303 outstanding followed by Konkan per cent, Marathwada 6.43 per cent and Western Maharashtra 6.45 per cent. It could be revealed from the above results that there was a significant increase in total loan outstanding. It is quite understandable that there was a poor performance of DCCBs in the state in respect of loan recovery. Average total loan outstanding per DCCB in Maharashtra state had increased from ` crores in to ` crores in During the base year ( ), the DCCBs in Western Maharashtra region had relatively larger outstanding per DCCB than the other regions while loan outstanding per DCCB was low in the Vidarbha region (` crores) respectively. At terminal year ( ), average total outstanding loan was larger in DCCBs of Western Maharashtra region (` crores) followed by Konkan (` crores), Marathwada (` crores), and Vidarbha (` crores). About per cent of total loan outstanding were in the form of short- term loan in , which had increased to per cent in the terminal year The per cent share of medium- term loan outstanding in total outstanding had increased from per cent to per cent during the whole study period. Besides, the per cent share of other loans and advances had declined from per cent to per cent during the same period. Region wise analysis showed that the per cent share of short term loan outstanding in total loan outstanding had ranged between per cent in Marathwada to per cent in Konkan in , while it was between per cent in Marathwada region to per cent in Konkan region. This means that the short-term loans had the lions share 64 per cent in the total loan outstanding followed by medium term 22 per cent and other loans and advances 14 per cent during the year in Maharashtra. Loan Recovery: The results showed that the total loan recovered by DCCBs in Maharashtra state had increased from ` crores in the base year to ` crores in the terminal year recording a growth of 3 times increase over the base year i.e The region wise analysis it is clearly noted that the highest growth in the total recovery of loan was achieved by Konkan region (401.61) followed by Vidarbha (179.58), Western Maharashtra (165.13) and Marathwada (74.95) over the base year of the study. The DCCBs in Western Maharashtra recovered about 60 per cent of total loan recovered by DCCBs in the state during both the years under study. Remaining recovery of 40 per cent was contributed by all the three regions of the state. The increase in total loan collection in

281 304 absolute term was the highest in Western Maharashtra and the least in Konkan region. But, in terms of percentage change in recovery during the study period, it was the highest in Konkan region and the least in Marathwada region indicated DCCBs in Konkan region taken more attention on recover of the loans than the other regions in the state. The amount of total loans and advances recovered by the DCCBs in Maharashtra registered a compound growth rate of 9.92 per cent per annum during the entire period. Region wise results revealed that the growth in total recovery of loan was highest in Konkan region per cent followed by Vidarbha region per cent, Western Maharashtra per cent, Marathwada 6.67 per cent during the entire period under study. Average total loan collection per DCCB in Maharashtra state had increased from ` crores in to ` crores in In the base year of the study, the average recovery of total loans per DCCB was ` crores, ` cores ` crores and ` crores in Western Maharashtra, Marathwada, Konkan and Vidarbha regions, respectively. In the terminal year of the study, the average recovery of total loans per DCCB was ` crores; ` cores ` crores and ` crores in Western Maharashtra, Konkan, Marathwada and Vidarbha regions, respectively. About per cent of total loans recovered were in the form of short-term loans in , which had declined to per cent in the in DCCBs of Maharashtra. The percent share of medium term loan and other loans was 8.75 per cent and 5.21 per cent in the base year of the study. This was increased to per cent and 5.79 per cent in the terminal year of the study. Among the regions, per cent share of short term loan recovery to total loan recovery ranged from per cent in Konkan to per cent in Western Maharashtra in base year of the study. At the terminal year it was ranges between per cent in Konkan to per cent in Marathwada. This means that the proportion of recovery of short-term loans in total loans was prominent. The recovery in medium term loan and other loans and advances was highest in Konkan region than the other regions in the state. Loan Overdues: The poor performance of DCCBs was due to increase in total overdues of the DCCBs in Maharashtra State from ` crores in the base year to ` crores in the terminal year The growth witnessed a positive trend in all the regions and state as a whole. At the overall level, the growth in overdues was about 4 times in over the base year of the study. The rising overdues had seriously

282 305 weakened the DCCBs in Maharashtra. The highest growth in overdues was observed in Vidarbha region followed by Western Maharashtra, Marathwada and the least in DCCBs of Konkan region. In the base year out of the total overdues (` crores) of DCCBs in the State, the DCCBs in Western Maharashtra had relatively large overdues (39.33 per cent) followed by Marathwada (29.16 per cent), Vidarbha (25.52 per cent) and Konkan region (6.00 per cent). In the year the proportion of overdues was more (47.42 per cent) in Western Maharashtra followed by Vidarbha (30.32 per cent), Marathwada (18.19 per cent) and Konkan region (4.07 per cent). The overdues of DCCBs in the state of Maharashtra registered a compound growth rate of 9.50 per cent per annum during the entire period of study. The magnitudes of growth rates in the total overdues showed that the overdues of DCCBs in all the regions and state as a whole had significantly increased over the years. The highest growth in total overdues was noticed in Vidarbha region (12.04 per cent) followed by Western Maharashtra (11.05 per cent), Marathwada (5.00 per cent) and Konkan (4.85 per cent) for the entire period of the study. The average overdues per DCCB in Maharashtra State had increased from ` crores in the base year to ` crores in the terminal year of the study. In the year , loans overdue per DCCBs were higher in Western Maharashtra ` crores and the least in the Konkan region ` crores. In the year , overdues per DCCB ranged between ` crores in Konkan region to ` crores in Western Maharashtra region. The share of short-term loan overdues in total overdues was per cent in the DCCBs of Maharashtra in the base year, which had increased to per cent during the terminal year of the study. Similarly, the share of medium-term loan overdues in total overdues had declined from per cent to per cent. However, the share of other loans and advances had declined from 6.05 per cent in to 2.25 per cent in Overdues as percentage of outstanding loans: The percentage of overdues to outstanding loans showed an increased from per cent in to per cent in the terminal year of the study for the state as a whole. The percentage of overdues to outstanding loan was increased from per cent in to in in Western Maharashtra. However, the percentage of overdues to loan outstanding showed a marginal decreased from per cent to per cent in Konkan region. Importantly, the highest percentage

283 306 of overdues to loan outstanding was noticed in Vidarbha region (38.56 per cent) in , which had further increased to per cent in the terminal year. In Marathwada also, the proportion of overdues to outstanding loan showed an increase from per cent in to per cent in This means that, by and large, the proportion of overdues to outstanding loans in DCCBs had increased in all the regions except Konkan region in the State. Total cost of management: The total cost of management registered an upward trend. The total cost of management in DCCBs of Maharashtra had increased from ` crores in the base year to ` crores in the terminal year of the study period. The rate of growth in total cost of management of DCCBs in Maharashtra was 7.68 per cent per annum and it was significant during the entire period of study. This means that the expenditure on cost of management had significantly increased over the years. The highest growth in total cost of management was observed in Konkan region (11.21 per cent) followed by Vidarbha region (10.00 per cent), Marathwada (7.18 per cent) and Western Maharashtra region (6.13 per cent). The growth in cost of management was highest in Konkan region mainly because of significantly increased in number of branches and number of employees. The average total cost of management per DCCB in Maharashtra region was ` crores in the base year, which had increased to ` crores in the terminal year. In the year , the highest cost of management per DCCB was observed in Western Maharashtra region (` crores) followed by Konkan (` crores), Marathwada (` crores) and the least in Vidarbha region (` crores). In the year , the highest cost of management per DCCB was observed in Western Maharashtra region (` crores) followed by Konkan (` crores), Vidarbha region (` crores) and the least in Marathwada (` crores). From the total cost of management, the percentage share of expenditure on salaries at state level accounted for per cent in the base year, which had marginally declined to per cent in the year because of reduction in number of branches altimetry reduction in number of employee in all the regions except Konkan region and state level. The percentage share of other expenditure had increased from to per cent during the same entire period of the study. Among the regions, the percentage share of salaries in total cost of management ranged between per cent (Western

284 307 Maharashtra) to per cent in Marathwada region in while it ranged between per cent in Western Maharashtra region to per cent in Marathwada region in the year nThe western Maharashtra was highest share in per employee in entire period of study than other regions. Per employee highest growth in total cost was observed in Konkan followed by Vidarbha Western Maharashtra and Marathwada over the base year. The annual compound growth rate of total cost of management was percent per annum at state level and at regional level it was highest in Konkan region (11.41) followed by Vidarbha (11.30), Marathwada (10.04) and Western Maharashtra (8.22). The cost of management per employee has been increasing during the study period due to decrease in number of employees (See Table No.4.31). The management of DCCBs has to concentrate on cost of management. The proportion of cost of management to working capital showed declining trend in all the regions except Konkan region and also at the State level. The proportion of total cost of management to total working capital at the State level was 2.59 per cent in , which declined to 2.57 per cent with a negative growth of 0.02 per cent over the base year. The highest declining growth was recorded in Western Maharashtra ( per cent) followed by Vidarbha region ( per cent) and Marathwada (-4.33 per cent) while in Konkan region it was increased by (100 per cent). The proportion of total cost of management to total working capital was highest in Western Maharashtra region during the period under study while it was the least in Konkan region. The total profits of the DCCBs in the state had increased from ` crores in to ` crores in the terminal year, which indicates an increasing trend in the profits of DCCBs during the period under study. The highest growth in total profits was noticed in Konkan region (5.90 %) followed by Marathwada region (2.92 %), Vidarbha (2.82 %) and Western Maharashtra (0.37%) and over the base year. As regards the number of DCCBs in profit, it could be seen that the 19 DCCBs were running in profit and 11 DCCBs in loss in and it was increased to 25 DCCBs running in profit and 5 DCCBs in loss in The DCCBs in the Western Maharashtra secured a top position in the state by way of contributing more per cent share in the selected performance indicators, which showed a well-developed cooperative banking system in the region.this interpretation is in line with hypothesis entitles the DCCBs in the study areas having fluctuating growth in terms of physical and financial indicators hence the hypothesis is accepted.

285 308 The results of various performance indicators are in the line of observations made by Sholapure (1995), Srinath (1995), Barik and Dugalavannan (2001), Jadhav (2004), Harshitha et al.(2008), Pujari (2008), Jadhav (2009), Hooda and Chahal (2010), Kanchu (2012), Bhosale (2011), Sale (2014) and Shelke et al. (2014) Performance Index (PI): Ranking of DCCBs for the purpose of performance index has been made as follows. Recently established DCCBs have been eliminated and all the 30 DCCBs have been selected for detailed study. It has been decided to estimate the performance index for the year to In fact, based on DCCB wise average performance index, Satara (2.61), Mumbai (1.74), Pune (0.53), Thane (0.43), Ahmednagar (0.38) Solapur (0.26), Latur (0.20) and Ahmednagar (0.10) DCCBs were the strong units among the 30 DCCBs covered by the study. The DCCBs having very low average performance index were Raigad (0.09), Dhule (0.06), Sindhudurg (0.05), Jalgaon (0.06), Nasik (0.05) and Akola (0.05), while all other DCCBs having negligible or zero performance index and Sangli DCCB having negative performance index (-10), which call for suitable economic measures, so that these DCCBs would improve their performance in future. The performance of DCCBs mainly reduced due to less capital for advance than the demand, high overdues and less membership of the DCCBs in the state level. The DCCBs having high performance index is mainly due to fewer overdue than those DCCBs having less performance index. The ranking of DCCBs and regions based on performance index revealed that DCCBs in Konkan region of the state had performed better as compared to other regions in Maharashtra. The significantly higher average index of performance achieved by the DCCBs in Konkan (0.47) and Western Maharashtra (0.44) indicated a developed system of DCCBs in these regions. The DCCBs in the Marathwada and Vidarbha regions had a poor record in their performance as indicated by average index 0.04 and 0.01 respectively throughout the period. The better performance (as understood from the higher PI) of DCCBs in the Konkan Region had performed better. Comparing the DCCBs of Konkan region of the state to those in Marathwada and Vidarbha region, it was found that broadly the lending operations of the former continued for the purposes like crop production, marketing of crops, land development, farm mechanization, poultry, plantation and horticulture etc. The influence of the rate of recovery and high overdues on overall performance of DCCBs, however continued to be significant and it may be said that higher the rate of recovery and lower the overdues better the overall performance of DCCBs. With this interpretation hypothesis

286 309 entitled the performance of district central cooperative banks in all the regions of Maharashtra state is uneven during the study period hence the hypothesis is accepted. Purpose wise lending activities by DCCBs in Maharashtra are as follows: Crop loan: Total crop loan disbursed by the DCCBs at the state level significantly increased from ` crores to ` crores with 3.61 per cent annual compound growth during study period. The activities considered while disbursing loans by the DCCBs for crop production, maintenances and marketing of crop produce. At regional level crop loan disbursed showed significantly increased in all the regions of the state. The Vidarbha region had highest annual growth followed by Konkan, Western Maharashtra and Marathwada regions respectively. Minor irrigation: The total loan disbursed for minor irrigation by the DCCBs at the state level non-significantly increased from ` crores to ` crores with 3.06 per cent annual compound growth during study period. At regional level loan disbursed for minor irrigation showed significantly increased in Western Maharashtra and non-significant in Konkan and Vidarbha region and negative and non- significant growth in Marathwada regions in the state. Land development: The total loan disbursed for land development by the DCCBs at the state level significantly increased from `6.213 crores to ` crores with per cent annual compound growth during study period. At regional level loan disbursed for land development showed significantly increased in Western Maharashtra and Konkan region whereas the non-significant growth in Marathwada and Vidarbha region. Dairy development: The total loan disbursed for dairy development by the DCCBs at the state level significantly increased from ` crores to ` crores with per cent annual compound growth during study period. At regional level loan disbursed for dairy development showed significantly increased in Western Maharashtra and Konkan region whereas the non-significant growth in Vidarbha region and negative and non-significant growth in Marathwada. Farm mechanization: The total loan disbursed for farm mechanization by the DCCBs at the state level significantly increased from ` crores to ` crores with per cent

287 310 annual compound growth during study period. At regional level loan disbursed for farm mechanization showed significantly increased in all the regions except Vidarbha region during study period Plantation and horticulture: The total loan disbursed for plantation and horticulture by the DCCBs at the state level significantly increased from ` crores to ` crores with per cent annual compound growth during study period. At regional level loan disbursed for plantation and horticulture increased significantly in Western Maharashtra and Konkan region whereas, non-significant growth was observed in Marathwada and Vidarbha region during study period. Poultry: Total loan disbursed for poultry by the DCCBs at the state level significantly increased from ` 1.68 crores to ` 6.06 crores with per cent annual compound growth during study period. At regional level loan disbursed for poultry showed significantly increased Konkan region whereas, non-significant growth was observed in Western Maharashtra, Marathwada and Vidarbha region during study period Sheep and goat: The total loan disbursed for sheep and goat by the DCCBs at the state level significantly increased from ` 3.34 crores to ` crores with 8.72 per cent annual compound growth during study period. At regional level loan disbursed for sheep and goat showed significantly increased in western Maharashtra and Konkan region whereas, significant declining in Marathwada and non-significantly declining in Vidarbha region during study period Fisheries: The total loan disbursed for fisheries by DCCBs in Maharashtra negative but nonsignificantly increased from ` 6.00 crores in base year to ` 7.13 crores in terminal year with per cent annual growth. The negative and non- significant growth in all regions in the state except western Maharashtra observed positive but non-significant trends during period. Forestry and west land development: Total loan disbursed for forestry and west land development by DCCBs in Maharashtra negative and non-significantly declined from ` 5.89 crores in base year to ` 2.09 crores in terminal year with 2.80 per cent annual declined

288 311 growth. The negative and non- significant growth in all regions in the state except Konkan region observed positive and significant trends during period under study. Storage godowns and market yard: The total loan disbursed for storage godowns and market yard by DCCBs in Maharashtra non-significantly declined from `9.95 crores in base year to ` 8.15 crores in terminal year with 1.99 per cent annual growth. The negative and non-significant trends in all regions in the state Western Maharashtra region observed positive and non-significant trends during period under study. Biogas plant: The total loan disbursed for biogas plant by DCCBs in Maharashtra significantly increased from ` crores in base year to ` crores in terminal year with per cent annual growth. At the regional level the western Maharashtra showed significant trend while in case of Vidarbha it was non-significant during study period. Sericulture unit: Loan disbursed for sericulture units by DCCBs in Maharashtra nonsignificantly increased from ` 0.17 crores in base year to ` crores in terminal year with per cent annual growth. At the regional level the Western Maharashtra only disbursed loan to sericulture in the state. Other purposes: The loan for other purposes is one of the types of medium term loan it includes loan given by DCCBs for purchase of bullocks / other drought animals, bullock carts and establishment of Agri-clinic and Agribusiness centers. The total loan disbursed for other purposes by DCCBs in Maharashtra non-significantly increased from `` crores in base year to ` crores in terminal year with per cent annual growth. Table 4.14 also shows that the total loan disbursed for other purposes by DCCBs at regional level, the Western Maharashtra contribution was highest in both the year of the study. From above results it was concluded that the loan disbursed by DCCBs in Maharashtra showed increased for different activities under short term and medium term loan. Out of the total loan disbursed for agriculture purposes at the state level loan disbursed by western Maharashtra were more than other regions of the state. It indicated that the developed agricultural system in Western Maharashtra region than the other regions of the state. These results are in the line of observations made by Pujari (2008), Vijayalakshmi (2009), Chandragouda (2011), Uma Devi (2013), Saroj Sharma (2014).

289 312 Share of DCCBs in total credit disbursed for agriculture. Crop loan disbursed: The total crop loan disbursed by financial institutions in Maharashtra significantly increased from ` crores to ` crores during study period with per cent annual compound growth. The significant increases in crop loan in case of DCCBs it was ` crores to ` crores with 3.61 per cent annual growth, in case of CBs it was from ` crores to ` crores with per cent annual growth and in case of RRBs from ` crores to ` crores with per cent annual growth during study period. The crop loan disburse by the financial institutions in Maharashtra showed highest share in total crop loan disbursement by DCCBs (52.09%), CBs (26.09%) and RRBs (21.91%) at state level in base year of the study. The similar trend was observed in all regions except Marathwada the more share was observed by RRBs followed by DCCBs and CBs in base year. In the terminal year the highest share was observed by CBs (55.43%) followed by DCCBs (35.19%) and RRBs (9.38%) in total crop loan disbursement at state and regional level. Total term loan disbursement: This refers to medium-term investment credit made available by the financial institutions for the period of 3 to 5 years. It includes loan disbursed for the purpose of minor irrigation, land development, dairy development, farm mechanization, plantation and horticulture, poultry production, sheep and goat production, fisheries, forest and west land development, storage godowns and market yard, biogas plant, sericulture unit and other purposes (bullocks / other drought animals, bullock carts, Agri-clinic and Agribusiness centers). The total term loan disbursed by financial institutions in Maharashtra significantly increased from `` crores in base year to ` crores in terminal year with per cent annual growth. The total term loan disbursed by DCCBs significantly increased from ` crores to ` crores with per cent annual growth, CBs significantly increased from ` crores to `` crores with per cent annual compound growth and RRBs significantly increased from ` crores to `` crores with per cent annual growth during study period. Table 4.50 showed that the total term loan disbursed by financial institutions at regional level, the Western Maharashtra contributed highest share per cent to total term loan disbursed at state level followed by Marathwada per cent, Vidarbha per cent and least

290 313 contribution was observed in Konkan region 8.01 per cent in the year The term loan disburse by the financial institutions in Maharashtra showed highest share in total term loan disbursement by CBs (58.78%), DCCBs (37.04%) and RRBs (4.18%) at state level in base year of the study. The similar trend was observed in all regions except Marathwada the more share was observed by RRBs followed by CBs and DCCBs in base year. The similar trend was observed in terminal year. Total agricultural loan disbursement: The total agricultural loan disbursed by financial institutions in Maharashtra significantly increased from `` crores in base year to ` crores with per cent annual growth. The total agricultural loan disbursed by DCCBs increased from ` crores to ` crores with per cent per annual growth, CBs increased from ` crores to `` crores with per cent annual growth and the RRBs increased from ` crores to `` crores with per cent annual growth during study period. From the Table 4.51 observed that the total loan disbursed for agriculture by the financial institutions in Maharashtra showed highest share in total agricultural loan disbursement by DCCBs (49.37%) CBs (31.92%) and RRBs (18.70%) at state level in base year of the study. Whereas, in terminal year highest share was observed in CBs (61.18%), DCCBs (31.06%) and RRBs (7.76%) at state level. Table 4.51 also depicted that the total agricultural loan disbursed by financial institutions at regional level, the Western Maharashtra contributed highest share per cent followed by Marathwada per cent, Vidarbha per cent and least contribution was observed in Konkan region 2.99 per cent in the year Similar trend was observed in terminal year of the study. The share of DCCBs in total loan disbursed for agriculture was decreased from per cent to percent, share of RRBs was decreased from 8.80 per cent to 5.88 per cent and share of CBs increased from per cent to per cent respectively during study period. The loan disbursed by CBs was increased over the period and loan disbursed by DCCBs and RRBs decreased over the period in Maharashtra and all regions as whole during study period. The total loan disbursed for agriculture increases in absolute term but share of DDCBs declined and the share of CBs increased over the year. This is because of less recovery of short term loan and medium term (term loan), mounting overdues, less rainfall the less amount of credit with DCCBs for recycle as a result declined share was observed. Whereas the share of CBs showed increased mainly because of government policy of

291 314 compulsory lending 18 per cent out of their 40 per cent priority sector to agricultural and allies activities and doubling agriculture loan policy introduced by Government from resulted increases in loan disbursement for agriculture purposes in state and regional level. Apart from that the DCCBs in Western Maharashtra disbursed highest agricultural loan than the other region because majority of area under sugarcane cultivation and more number of cooperative sugarcane factories and other cooperative organizations such as dairy, poultry in the region that s way more number of peoples already connected with cooperative credit organization. Thus reasons people still believe in cooperative organization because of their efficiently working in rural areas of Western Maharashtra than the other regions in the state. These results are in the line of observations made by Pujari (2008), Chandragouda (2011), Uma Devi (2013) and Matkar and Jadhao (2015) Inequality Measures Scale of finance: The information of credit requirement and credit availability, the credit gap was estimated separately for the major crops and fruit crops are presented in table It is noted that there is a credit gap in the flow of short-term credit supplied by the DCCBs. For most of the crops, the credit gap was noticed in the Western Maharashtra Marathwada and Vidarbha region, while in the case of Konkan region, excess finance was advanced to same important crops indicating the adequacy of funds to advance. In Western Maharashtra, the credit gap in the finance by DCCBs was observed for all crops grown in region, whereas excess finance was advanced to pomegranate (+7.84) per cent than the credit requirement in Western Maharashtra. There was a wide credit gap in the flow of credit provided by the DCCBs to almost all crops grown in the Konkan region, whereas excess finance was advanced to improved paddy (+ 6.25) per cent, summer paddy ( ) percent, udid and green gram (+ 1.56) per cent, rainfed groundnut (+ 0.83) per cent, mango ( ) per cent and coconut ( ) per cent than the credit requirement in Konkan Region. In Marathwada Region, the credit gap in the finance by DCCBs was observed for almost all crops grown in region, whereas excess finance was advanced to sugarcane adsali (+ 0.75) per cent, preseasonal (+ 1.59) per cent and ratoon (+ 1.90) per cent, Banana (1.32) per cent, irrigated wheat (+ 1.65) per cent, Soybean (+ 4.29) per cent, Zinger & Turmeric (+ 0.95) and Chili ( ) per cent than the credit requirement in Marathwada Region. There was a wide credit gap in the flow of credit provided by the DCCBs to almost all crops grown in the Vidarbha region it means there is inadequate fund available with DCCBs in Vidarbha Region.

292 315 Determinants of regional disparity: There were wide variations in the four regions of the state, in credit flow, geographical and agricultural conditions. The growth in short term credits was not uniform. The Western Maharashtra region have greatest advantages, followed by Marathwada, Vidarbha and Konkan regions in the state as for as disbursement of credit is concerned. The Western Maharashtra has unique position in development of credit system in view of increased irrigation facilities and commercialization of agriculture as compared to other regions in the state. Coefficient of variance for short term credit flow: The regression coefficients for short term credit flow, the trend equations were positive and non-significant in Western Maharashtra, Konkan and at the state level, this indicated variation in the short-term credit flow over the study period. The regression coefficient for Marathwada region was observed to be negative and non-significant indicating no significantly decline in variation in short-term credit flow during the study period. Importantly, there was significantly increase in variation in shortterm credit disbursement in Vidarbha region during the period under study. At the state level, Coefficient of Variance for short-term credit flow across the years indicated that there was a moderate inequality in the disbursement of short-term credit flow by the DCCBs. Coefficient of Variance for medium term credit flow: The regression coefficients for medium term credit flow, the trend equations were positive and non-significant in all regions and at the state level, which indicated non-significantly increases in variation in the medium term credit flow over the study period. At the state level, Coefficient of Variance for medium term credit flow across the years indicated that there was a moderate inequality in the disbursement of medium term credit flow by the DCCBs Theils Entropy index for short term credit flow: The average variation across the years was highest in Vidarbha region (0.88) and Western Maharashtra (0.88) followed by Marathwada (0.77) and lowest in Konkan (0.53) respectively. The regression coefficients for short term credit flow, the trend equations were negative and significant in all regions and at the state level, which indicate significantly declining in inequality in short term credit flow over the study period. At the state level, Theil s entropy coefficient for short term credit flow across the years indicated that there was a moderate inequality in the disbursement of short term credit flow by the DCCBs. Theils Entropy Index for medium term credit flow: The average variation across the years was highest in Vidarbha region (0.88) and Western Maharashtra (0.88) followed by

293 316 Marathwada (0.79) and lowest in Konkan (0.54) respectively. The regression coefficients for medium term credit flow, the trend equations were negative and non-significant in Western Maharashtra and at the state level, which indicate non-significantly declining in inequality in the medium term credit flow over the period. The regression coefficients for medium term credit flow, the trend equations were negative and significant in Konkan and Vidarbha region which indicate significant declining in inequality in the medium term credit flow over the study period. The regression coefficient in Marathwada region for medium term credit flow was showed positive and significant trend which indicate significantly increases in inequality in the disbursement of medium term credit flow. At the state level, Theil s entropy coefficient for medium term credit flow across the years indicated that there was a moderate inequality in the disbursement of medium term credit flow by the DCCBs. Gini concentration ratio and Lorenz curve analysis for short-term credit flow The Gini ratio was 0.49, 0.52 and 0.52 for the base year, mid-year and terminal year, respectively for short term credit flow, indicating moderate intra-regional inequality in short term credit flow by DCCBs in Maharashtra. The results of Gini ratio and Lorenz curve for short term credit flow showed an increase in intra-regional inequality in the mid-year and constant in terminal year of the study. Lorenz curve was constructed for short-term agricultural credit for all the regions and state as a whole separately. This presents a picture of the cumulative percentage of DCCBs for the individual regions or Maharashtra state on the X axis and cumulative percentage of agricultural credit given by DCCBs per hectare of gross cropped area on the Y axis for the base year, mid-year and terminal year. It could be seen that these curves being was away from the line of equal distribution (45 0 degree line) indicated unequal distribution of short-term agricultural credit among the regions and among the districts in the regions during study period in Maharashtra state. Gini concentration ratio and Lorenz curve analysis for medium term credit flow The Gini ratio was 0.61, 0.72 and 0.72 for the base year, mid-year and terminal year, respectively for medium term credit flow, indicating moderate intra-regional inequality in medium term credit flow by DCCBs in Maharashtra. The results of Gini ratio and Lorenz curve for medium term credit flow showed an increase in intra-regional inequality in the mid-year and constant in terminal year of the study. Lorenz curve was constructed for medium term agricultural credit for all the regions and state as a whole separately. This presents a picture of the cumulative percentage of DCCBs for the individual regions or

294 317 Maharashtra state on the X axis and cumulative percentage of agricultural credit given by DCCBs per hectare of gross cropped area on the Y axis for the base year, mid-year and terminal year. It could be seen that these curves being was away from the line of equal distribution (45 0 degree line) indicated unequal distribution of short-term agricultural credit among the regions and among the districts in the regions during study period in Maharashtra state. For measuring inequality the various inequality measures like Coefficient of variance, Theils entropy coefficient and Gini ratios were used for per hectare short term and medium term credit flow. From the results it was observed that there is inequality in short term and medium credit flow in all regions and state as a whole during study period. Determinants in flow of short-term agricultural credit: In order to study the determinants of per hectare short-term credit flow by DCCBs, a multiple linear regression analysis was attempted for all the regions and state as a whole separately covering the period from to At the state level, the gross cropped area, area under commercial crops and deposits play important role in determining ST credit flow in Maharashtra. Whereas, the average rainfall had positive association and recovery percentage had negative association with ST credit flow in the state. The R 2 suggest that the above said five determinants have jointly explained 99 per cent of the variation in the disbursement of short term credit flow in Maharashtra. In Western Maharashtra the deposits play an important role in determining the disbursement of short term credit in Western Maharashtra. The proportion of commercial crops to GCA has positive association with ST credit flow in the region whereas, gross cropped area, average rainfall and ST loan recovery shows the negative association with the disbursement of short term loans in Western Maharashtra. It must be indicated that these five determinants jointly explained 97 per cent of the variation in the disbursement of short term credit in Western Maharashtra. The proportion of area under commercial crops to GCA plays important role in determining ST agriculture credit in the region. The average rainfall and deposit has positive association with ST credit flow whereas, gross cropped area and ST recovery has negative association with ST credit flow in Konkan region. The R2 was 0.97, which has indicated that the five determinants jointly explain 97 per cent of the variation in disbursement of short term credit in Konkan region. In Marathwada region the all determinants had positively associated with ST agricultural credit flow in the region whereas, the deposits had negative associated with ST agricultural credit flow in the region. It was seen that these determinants together explain

295 per cent of the total variation in the disbursement of short term credit in Marathwada region. As regards Vidarbha region, the proportionate area under commercial and deposits had play important role in determining ST credit flow in the region. Whereas, gross cropped area, average rainfall and recovery per cent had negative association with ST credit flow in the region. The R 2 suggest that 97 per cent of the total variation in the disbursement of short term credit in Vidarbha region due to above five determinants. The gross cropped area, area under commercial crops and deposits play important role in determining ST credit flow in Maharashtra. Whereas, the average rainfall had positive association and recovery percentage had negative association with ST credit flow in the state. The R 2 suggest that the above five determinants have jointly explained 99 per cent of the variation in the disbursement of short term credit flow in Maharashtra. Thus the hypothesis in this regards entitled the agricultural performance having strongly influence in the flow of short term credit in different regions of the state hence the hypothesis is rejected. These results are in the line of observations made by Zeratsion (2001), Jadhav (2004), Bhosale (2011), Rakshit and Chakrabarti (2012) and Sale (2014). Problems faced by DCCBs: Problems faced by DCCBs concerning to administration, management, availability of funds and disbursement of loan and recovery of loan and suggest remedial measure for efficient working of DCCBs in Maharashtra through Garrett s Ranking Technique. By referring Garrett s table the per cent position estimated were converted into scores (Garrett and Woodworth, 1967). The various problems face by the DCCBs in study Maharashtra. The major problems experienced by DCCBs Maharashtra are no any contribution by state government (87.00), government policies (87.00), less value of farm produce (87.00) thus three problems having first rank followed by need to improve administration and management (86.55), less productivity (86.55), mentality of the farmers (85.64) and so on.the last problem experienced by DCCBs in Maharashtra was delay in availability of fund (63.00) which having 13 th rank. This interpretation is in line with hypothesis entitled the DDCBs in the study areas face the problems related to management, administration, disbursement and recovery of loans hence the hypothesis is accepted. Suggestions to overcome the problems of DCCBs by improving administration and management of DCCBs, increase share capital and deposits to overcome problems related to availability of funds, improving loan disbursement through proper selection of borrower and timely supervision of lone projects. Increases in recovery and reduction in overdues by

296 319 adopting recovery in linking format, timely legal action against those persons who miss utilized borrowed loan and willful defaulters, implementing intensive recovery programme and placing and target given to block level recovery officer. Thus suggestions would be more useful to DCCBs in Maharashtra for better and efficient working in near future. Conclusions: 15. The performance of DCCBs in respect of branch expansion and employment was non-satisfactory at the state level during study period. 16. The total membership of DCCBs in Maharashtra state increased during study period. 17. A significant increase in the total share capital, reserve fund, owned funds, deposits, investment and working capital during the study period indicated the financial soundness of DCCBs in Maharashtra state. 18. Although there was significant trends of borrowings of DCCBs in Maharashtra over the entire period indicated that the increased dependency of DCCBs for financial requirement in the state. 19. The total advances by DCCBs were increased in Maharashtra. The proportion of total agricultural loans (ST and MT) in the total loans and advances was above 20 per cent in the base year, which increased to about 40 per cent during the terminal year. Whereas, the loan disbursed for non-agricultural purposes declined from 65 per cent to 49 per cent it was good sign in the view of increased agricultural advances in the Maharashtra. 20. The increase in total loan outstanding it was quite clear indicated that the poor performance of DCCBs in recovery of loans in the state. 21. The overdues also increased during study period due to increased share of shortterm loan overdues in total overdues was per cent in the DCCBs of Maharashtra in the base year, which had increased to per cent during the terminal year of the study. 22. The increase in cost of management during study period mainly attributed due to significant increase in salaries and other expenditure of each DCCB in state. 23. The higher magnitude of average performance index achieved by the DCCBs in Konkan and Western Maharashtra regions had developed system of DCCBs in the state. The DCCBs in the Marathwada and Vidarbha regions had a poor record in their performance indicated by low average performance index.

297 The DCCBs in Maharashtra provided short term loans and medium term loans. Out of the total agricultural loans more than 80 per cent loan were disbursed for short term purposes in the state during study period. 25. The total loan disbursed by financial institutions for agriculture increased in absolute term but the share of DCCB s and RRB s declined whereas, share of CB s increased in the state level during study period. 26. The coefficient of variance, Theils entropy coefficient, Gini ratio and Lorenz curve were used for measuring inequality in disbursement of short term and medium term credit flow by DCCBs in Maharashtra state. The results showed that there was an inequality in per hectare short term and medium term credit flow in all the regions and state as whole during study period. 27. The gross cropped area, area under commercial crops and deposits play important role in determining ST credit flow in Maharashtra state. Whereas, the average rainfall had positive association and recovery percentage had negative association with ST credit flow in the state. 28. The DCCBs in Maharashtra state face the problems concerning to administration, management, finance, disbursement and recovery of loans. Policy implications: 8. The DCCBs in Maharashtra need to pay more attention for branch expansion, increasing membership and requirement of staff for efficient and profitable working of DCCBs in the state in near future. 9. The DCCBs are required to be operated more transparently to minimize the level of percentage of NPAs as compared with international standards and disbursement may be strictly based up on repaying capacity of borrowers, technical efficiency and economical soundness of the societies. 10. There is a need to enhance fund investment in Government securities and fixed deposits for transparency in financial management.

298 The more attention is required to be given to increase the coverage of loans through Kisan Credit Cards (KCC) which would result in easy and timely credit disbursement to the borrowers when we are moving towards cashless economy. 12. The efforts are needed to increase recovery performance by implementing intensive recovery programme and timely supervision of utilization of credit. 13. The problem of overdues is more and requires greater attention for formulating future policy. The co-operative administration and concerned authorities shall pay more attention towards the recovery of agricultural loans so as to increase fund availability for credit disbursement. 14. The more attention is required to be given to minimize the credit gap by supplying required scale of finance for important crops to avoid improper utilization for crop production. These policy measures are suggested to improve the overall performance of the DCCBs in the State of Maharashtra and if these are taken in right spirit and implemented whole-heartedly will certainly go a long way in recognizing a role of DCCBs in overall development of the districts especially on agricultural front. Date: student signature Place:

299 322 Appendix-I a. Regionwise and periodwise trends in membership and share capital of DCCB s in Maharashtra (Per cent) Region and period Membership Share capital PACS Individuals Total PACS Govt. Individuals Total Konkan 3.64* 1.35* 3.34* 9.77* NA NS 9.61* Western Maharashtra 1.38* -0.63* 1.07* 9.85* 21.34* NS 10.11* Marathwada 0.61* 0.14* 0.60* 7.21* 27.94* NA 7.78* Vidarbha 0.32* -0.75* 0.23 NS 11.74* 4.90 NS 24.05* 12.08* Maharashtra 1.62* -0.36* 1.33* 9.67* 24.11* 0.77 NS 9.96* *-Significant at 5 % level, NS - Non Significant and NA-Not available b. Regionwise and periodwise trends in reserve funds of DCCB s in Maharashtra Reserve funds (Per cent) Region and period Statutory reserve fund Agril. stabilization reserve funds Other reserve funds Total reserve funds Konkan 11.20* 6.21* 10.10* 10.05* Western Maharashtra 1032* 9.37* 10.81* 10.61* Marathwada 18.69* 14.78* 10.01* 10.54* Vidarbha 17.66* 13.10* 8.33* 9.20*

300 323 Maharashtra 12.36* 9.51* 10.01* 10.22* *-Significant at 5 % level and NS - Non Significant c. Regionwise and periodwise trends in owned funds of DCCB s in Maharashtra (Per cent) Region and period Owned funds Share capital Reserve funds Deposits Total owned funds Konkan 9.61* 10.05* 7.06* 10.00* Western Maharashtra 10.11* 10.61* 9.83* 10.44* Marathwada 7.98* 10.54* 8.16* 9.82* Vidarbha 12.08* 9.20* 16.69* 9.83* Maharashtra 9.96* 10.22* 9.09* *-Significant at 5 % level and NS - Non Significant d. Regionwise and periodwise trends in deposits of DCCB s in Maharashtra (Per cent) Region and period Source wise deposits PACS Individual Local bodies Others Total Deposits Konkan 4.50* 7.80* 23.03* NS 7.06* Western Maharashtra 5.49* 13.16* 10.03* 15.48* 9.83* Marathwada 3.21* 8.26* 16.97* 11.43* 8.16* Vidarbha 5.88* 10.41* 14.30* 18.57* 10.69* Maharashtra 5.08* 10.78* 14.14* 14.51* 9.09* *-Significant at 5 % level and NS - Non Significant

301 324 e. Regionwise and periodwise trends in borrowings of DCCB s in Maharashtra Borrowings (Per cent) Region and period Total loans from SCB Loans from Govt. Loans Commercial Banks Cash credits and overdrafts Total borrowings Konkan 11.28* NS NS NS 10.61* Western Maharashtra 7.32* * NS 1.30 NS 7.34* Marathwada NS NA NA NS NS Vidarbha 19.37* NS NA * 19.69* Maharashtra 6.23* * NS 6.22* 6.14* *-Significant at 5 % level and NS - Non Significant f. Regionwise and periodwise trends in working capital of DCCB s in Maharashtra Working capital (Per cent) Region and period Share capital Reserve funds Deposits Borrowings Total working capital Konkan 9.61* 10.05* 7.06* 10.60* 9.08* Western Maharashtra 10.11* 10.61* 9.83* 7.34* 9.54* Marathwada 7.78* 10.54* 8.16* NS 7.45* Vidarbha 12.08* 9.20* 10.69* 19.69* 10.96* Maharashtra 9.96* 10.22* 9.09* 6.41* 9.39* *-Significant at 5 % level and NS - Non Significant

302 325 g. Regionwise and periodwise trends in investments of DCCB s in Maharashtra Investments (Per cent) Region and period Investment in Govt. securities Other securities Fixed Deposits Investment in others Total investments Konkan 17.04* 4.08 NS 3.20* 6.65 NS 6.26* Western Maharashtra 24.34* 11.00* 8.37* 31.06* 12.04* Marathwada 43.93* * 13.55* NS 12.29* Vidarbha 4.05 NS * 11.47* 25.53* 11.29* Maharashtra 17.19* 8.79 NS 8.28* 13.90* 10.17* *-Significant at 5 % level and NS - Non Significant h. Regionwise and periodwise trends in loan issued of DCCB s in Maharashtra (Per cent) Region and period Agril. Short Term Non Agril. Total S.T. Agril. Medium Term Non Agril. Total M.T. Total Other loans & loans & advances advances Konkan 17.51* 6.75* 8.04* 12.65* 9.89* 10.16* NS 11.21* Western Maharashtra 15.64* 4.79* 8.46* 4.03 NS 12.88* 7.26* 5.54 NS 7.97* Marathwada 10.68* 4.71* 7.73* * 23.04* 4.77 NS NS 7.08* Vidarbha 18.06* 5.85* 12.74* 8.01 NS 13.99* 12.51* 6.09 NS 10.90*

303 326 Maharashtra 15.27* 5.32* 8.88* 3.97 NS 6.14 NS 4.64* 7.89* 8.63* *-Significant at 5 % level and NS - Non Significant i. Regionwise and periodwise trends in loan outstanding of DCCB s in Maharashtra (Per cent) Region and period Agril. Short Term Non Agril. Total S.T. Agril. Medium Term Non Agril. Total M.T. Total Other loans & loans advances &advances Konkan 12.58* 5.94* 7.02* 12.70* 8.12* 8.60* 19.96* 11.68* Western Maharashtra 11.76* 4.04* 7.59* 4.34* 9.30* 5.90* 3.90* 6.45* Marathwada 8.26* 5.21* 7.17* -8.91* 12.43* 2.41 NS 8.96* 6.43* Vidarbha 14.52* 10.11* 13.16* 7.38* 13.08* 10.17* 10.73* 11.93* Maharashtra 11.27* 5.08* 8.23* 3.93 NS 10.23* 6.80* 8.90* 7.90* *-Significant at 5 % level and NS - Non Significant j. Region wise and period wise trends in recovery of DCCB s in Maharashtra ( Per cent) Region and period Agril. Short Term Non Agril. Total S.T. Agril. Medium Term Non Agril. Total M.T. Other loans &advances Total loans & advances Konkan 20.49* 8.32* 9.83* 21.06* 15.00* 16.08* 13.43* 11.22* Western Maharashtra 15.49* 3.55 NS 10.03* 8.34* 9.08* 8.54* 23.39* 10.31*

304 327 Marathwada 12.39* NS 6.88* NS 17.39* 5.02 NS NS 6.47* Vidarbha 16.81* 5.81 NS 12.55* 13.72* 5.70* 8.94* 3.90* 11.02* Maharashtra 15.07* 3.84 NS 9.74* 8.85* 10.09* 9.48* 11.96* 9.92* *-Significant at 5 % level and NS - Non Significant k. Regionwise and periodwise trends in loan overdues of DCCB s in Maharashtra (Per cent) Region and period Agril. Short Term Medium Term Other Non Agril. Total S.T. Agril. Non Agril. Total M.T. loans &advances Total Loans & advances Konkan 14.71* 3.96 NS 8.92* 13.45* NS 2.08NS NS 4.85* Western Maharashtra 13.27* 3.63* 12.22* 8.76* 5.12* 7.12* 1.98 NS 10.05* Marathwada 5.04* NS 4.75* 1.06 NS 8.99* 5.66* 5.90 NS 5.00* Vidarbha 12.86* 13.75* 12.86* 10.07* 10.68* 10.27* 6.45* 12.04* Maharashtra 10.83* 4.37 NS 10.22* 8.09* 6.29* 7.32* 3.91 NS 9.50* *-Significant at 5 % level and NS - Non Significant l. Regionwise and periodwise trends in cost of management of DCCB s in Maharashtra Cost of management (Per cent) Region and period Salaries Other expenditure Total cost of management Konkan 10.64* 12.32* 11.21* Western 8.56* 1.74 NS 6.13*

305 328 Maharashtra Marathwada 7.47* 6.26* 7.18* Vidarbha 9.06* 12.70* 10.00* Maharashtra 8.22* 5.33* 7.68* *-Significant at 5 % level and NS - Non Significant

306 329 Appendix-II a. Regionwise cumulative proportion of number of DCCBs and cumulative proportion of per hectare short term credit flow in base-year, mid-year and terminal year Regions Konkan Western Maharashtr a Marathwad a Vidarbha No. of D C C Bs Cumu lative % of No. of DCC Bs Name of Districts Base year Name of Districts Mid - year Name of Districts Termin al year Raigad 5.41 Raigad 3.66 Ratnagiri Sindhudur Thane Raigad g Ratnagiri Sindhudur Sindhudur g g Thane Ratnagiri Thane Jalgaon 1.64 Jalgaon 1.26 A. Nagar Dhule 5.84 Pune 3.38 Satara A. Nagar A. Nagar 7.99 Kolhapur Satara Dhule Jalgaon Sangli Sangli Pune Pune Satara Nashik Kolhapur Solapur Dhule Solapur Kolhapur Solapur Nashik Nashik Sangli Beed 0.00 Jalna 4.44 Jalna Aurangaba Jalna 4.31 d Nanded Osmanaba Parbhani d Parbhani Osmanaba Latur Parbhani d Osmanaba d Nanded Latur Aurangaba d Beed Beed Aurangaba 0 Nanded Latur d Gadchiroli 1.03 Gadchiroli 1.47 Wardha Bhandara 6.07 Bhandara 7.23 Gadchiroli Wardha Wardha Buldana Amravati Chandrapu Nagpur 17.35

307 330 r Chandrapu r Buldana Bhandara Nagpur Amravati Amravati Chandrapu Buldana Nagpur r Yavatmal Yavatmal Yavatmal Akola Akola Akola b. State level cumulative proportion of number of DCCBs and cumulative proportion of per hectare short term credit flow in base-year, mid-year and terminal year No. of DCCBs Cumulative % of No of DCCBs Name of District Base year Name of District Midyear Name of District Terminal year Beed 0.00 Raigad 0.06 Buldana Raigad 0.07 Gadchiroli 0.31 Nagpur Gadchiroli 0.22 Thane 0.76 Ratnagiri Sindhudurg 0.56 Sindhudurg 1.30 Gadchiroli Wardha 0.97 Wardha 1.93 Raigad Ratnagiri 1.43 Jalna 2.61 Wardha Thane 1.93 Ratnagiri 3.30 Sindhudurg Bhandara 2.64 Bhandara 4.26 Jalna Amravati 3.78 Chandrapur 5.65 Nanded Jalna 4.94 Buldana 7.14 Thane Chandrapur 6.60 Amravati 8.69 Osmanabad Nagpur 8.58 Aurangabad Dhule Dhule Osmanabad Bhandara Buldana Parbhani Aurangabad Yavatmal Dhule Parbhani Akola Nanded Yavatmal Parbhani Beed Beed Ahmednagar Nagpur Chandrapur Latur Yavatmal Latur Satara Akola Amravati Sangli Latur Solapur Osmanabad Sangli Akola Aurangabad Satara Sangli Nanded Jalgaon Satara Pune Solapur Kolhapur Kolhapur Kolhapur Ahmednagar Jalgaon Pune Pune Solapur Nasik Jalgaon Nasik Ahmednagar Nasik

308 331 c. Regionwise cumulative proportion of number of DCCBs and per hectare medium term credit flow in base year, mid-year and terminal year. Regions Konkan Western Maharashtr a Marathwada Vidarbha No of DCC Bs Cumu lative % of No of DCC Bs Name of Districts Base year Name of Districts Mid - year Name of Districts Termi nal year Raigad 0.66 Raigad 1.42 Raigad Ratnagiri Thane 3.73 Sindhudurg Sindhudur Sindhudur g g Ratnagiri Thane 0 Ratnagiri 0 Thane A. Nagar 0.00 Pune 0.74 Sangli Dhule 1.48 A. Nagar 2.68 Satara Satara 5.43 Dhule 6.87 Kolhapur Jalgaon Nashik Jalgaon Kolhapur Jalgaon Dhule Nasik Kolhapur Nashik Solapur Solapur A. Nagar Sangli Sangli Solapur Pune 0 Satara 0 Pune Osmanaba 0.00 Parbhani d 0.00 Nanded Nanded 2.41 Parbhani 0.00 Parbhani Osmanaba 6.11 Beed Jalna 3.37 d Jalna Nanded 6.87 Latur Aurangaba Aurangaba d Latur d Aurangaba Latur d Jalna Osmanaba d 0 Beed 0 Beed Akola 0.30 Bhandara 0.00 Nagpur Chandrapu 2.05 Nagpur Akola 1.39 r Buldana 9.53 Nagpur 3.60 Akola Wardha Amravati 6.39 Amravati Gadchiroli Wardha Buldana Chandrapu Yavatmal r Bhandara 9.67

309 Amravati Gadchiroli Yavatmal Bhandara Yavatmal Gadchiroli Chandrapu r 0 Buldana 0 Wardha 0 d. State level cumulative proportion of number of DCCBs and cumulative proportion of per hectare medium term credit flow in base-year, mid-year and terminal year No. of DCCBs Cumulative % of No of DCCBs Name of District Base year Name of District Midyear Name of District Terminal year Ahmednagar 0.00 Amravati 0.00 Beed Jalna 0.00 Jalna 0.00 Buldana Raigad 0.02 Nanded 0.00 Jalna Gadchiroli 0.31 Raigad 0.04 Nagpur Parbhani 0.62 Ratnagiri 0.10 Nanded Sindhudurg 0.97 Aurangabad 0.26 Osmanabad Aurangabad 1.46 Osmanabad 0.43 Parbhani Ratnagiri 1.98 Parbhani 0.62 Gadchiroli Beed 2.74 Nagpur 0.85 Aurangabad Dhule 3.72 Gadchiroli 1.14 Bhandara Wardha 4.78 Bhandara 1.58 Wardha Nagpur 6.02 Dhule 2.18 Latur Bhandara 7.29 Sindhudurg 2.85 Ratnagiri Akola 8.64 Buldana 3.60 Solapur Thane Beed 4.53 Sindhudurg Yavatmal Wardha 5.87 Dhule Latur Jalgaon 7.44 Raigad Buldana Thane 9.24 Jalgaon Satara Akola Thane Amravati Yavatmal Kolhapur Nanded Kolhapur Chandrapur Jalgaon Latur Sangli Osmanabad Chandrapur Yavatmal Chandrapur Solapur Pune Kolhapur Ahmednagar Ahmednagar Nasik Satara Satara Solapur Sangli Amravati Sangli Nasik Akola Pune Pune Nasik

310 333 Appendix III Questionnaire For Bank Officials Title Performance of District Central Co-Operative Banks In Maharashtra State Name of Investigator: Mr. S. D. Raut. Name of Research Guide-:Dr. S. S. Wadkar Name of DCC Bank:.. Bank Officer: Name Designation A) Problems concerning to availability of funds:

311 334 1) What is the present situation of availability of funds for finance with the bank? 1) Adequate 2) Inadequate How much -. % 2) How is the system to meet the requirements of funds for Agricultural finance? ) How the time adjustment is made for making the finance available to the DCCBs by the state apex co-operative Bank / NABARD? 1) Timely 2) After the need (immediate) 3) Delayed. 4) How is the total availability of funds for Agricultural finance by the DCCBs? Sr. No. Source of finance Rate of interest (%) Amount Borrowed for finance 1 Owned funds 2 SCB 3 NABARD 4 Lead Bank 4 State Govt.

312 335 5) Percentage distribution of funds according to purposes 6) How much is the contribution of State Government in building up the funds for Agricultural finance? 7) Any other relevant information regarding availability of funds to DCCBs. B) Problems concerning to disbursement of agricultural loans: 1) How is the system of disbursement of agricultural loans to the PACS?.... 2) What is the rate of interest charged on the agricultural loans provided to the PACS? 1) On ST Loan:. 2) On MT Loan:

313 336 3) What is your opinion on the present system of scale of finance adopted for the disbursement of crop loans by the DCCBs? 4) What are your specific suggestions regarding the norms to be adopted for the disbursement of crop loans to the PACS ) What is the extent of coverage of disbursement of agricultural loans through Kisan Credit Card System or Rupee Credit card system? 6) What are your suggestions to strengthen Kisan Credit Card System or Rupee Credit card system?.. C) Problems concerning to recovery of loans: 1) What is the present situation of recovery of agricultural loans for last three years? a) For Normal year 1) Poor 2) Medium 3) Good b) For Good year 1) Poor 2) Medium 3) Good c) For Bad year

314 337 1) Poor 2) Medium 3) Good 2) What are the main problems in recovery of agricultural loans? 3) If the PACS plays any role in the recovery of agricultural loans and to what extent? Yes / No. - If yes then at what extent a) Crop loan..% b) Term loan % 4) What are your specific suggestions for the improvement of recovery of agricultural loans by DCCBs? 5) What are the main reasons or causes for increasing overdues? D) Suggestions for improvement: 1) What is your opinion, to provide adequate budgetary support by the State Government to DCCBs?

315 338 2) Do you want that NABARD may review its present financial policy?. 3) What is your opinion regarding administrative and Financial control of DCCBs? 4) What type of co-operation do you need from the revenue department of State Government for recovery of agricultural loans? 5) What are your suggestions for the recovery of loans from cooperative institution such as co-operative processing, machinery, societies, Agricultural industries, SHGs etc. 6) Are there NPAs for bank? 7) What are the measures to be adopted for managing NPAs?

316 339 7) What problems do you face in recovery of loans at the time of natural calamities such as flood, drought, etc.? 8) What are the recommended suggestions for recovery of loans at the time of natural calamities?

317 340 ABBREVIATIONS CBs : Commercial Banks CDR : Credit Deposit Ratio CM : Composite Marks Co-op : Co-operative CRR : Cash Reserve Ratio CV : Coefficient of Variance DCCBs : District Central Co-operative Banks Govt. : Government GOI : Government of India HYV : High Yielding Varieties KCC : Kisan Credit Card LDBs : Land Development Banks LT : Long-term MT : Medium-term NABARD : National Bank for Agriculture and Rural Development NAFSCOB : National Federation of State Co-operative Banks NPAs : Non-Performing Assets PACS : Primary Agricultural Co-operative Society PCARDBs : Primary Co-operative Agricultural and Rural Development Banks

318 341 PLDBs : Primary Land Development Banks PI : Performance Index RBI : Reserve Bank of India RRBs : Regional Rural Banks SACB : State Apex Co-operative Bank SCARDBs : State Co-operative Agricultural and Rural Development Banks SCB : State Co-operative Bank SLR : Statutory Liquidity Ratio ST : Short-term VAMNICOM : Vaikunthalal Mehta National Institute of Co-operative Management

319 342

320 Number of branches 343 Fig. 2. Regionwise trends in number of branches of DCCBs in Maharashtra Regions

321 344 Fig. 3. Regionwise share in number of branches of DCCBs in Maharashtra Western Maharashtra Marathwada Konkan Vidarbha Western Maharashtra Marathwada Konkan Vidarbha

322 Membership in number 345 Fig.4. Regionwise trends in membership of DCCBs in Maharashtra

323 346 Fig. 5. Composition of membership in DCCBs in Maharashtra PACS Individules PACS Individules

324 Employee in numbers 347 Fig.6. Trends in number of employee of DCCBs in Maharashtra Konkan Western Maharashtra Marathwada Vidarbha Maharashtra

325 Share capital ` in crores 348 Fig.7. Regionwise trends in share capital of DCCBs in Maharashtra

326 349 Fig. 8. Composition of share capital in DCCBs in Maharashtra PACS Government Individuals PACS Government Individuals

327 Reserve funds ` in crores 350 Fig. 9. Regionwise trends in reserve funds of DCCBs in Maharashtra

328 351 Fig.10. Composition of reserve funds in DCCBs in Maharashtra Statutory reserve fund Agricultural Stabilization fund Others Statutory reserve fund Agricultural Stabilization fund Others

329 Owned funds ` in crores 352 Fig. 11. Regionwise trends in owned funds of DCCBs in Maharashtra

330 353 Fig.12.Composition of owned funds in DCCBs in Maharashtra Total share capital Total reserve sunds Total share capital Total reserve sunds

331 Deposits ` in crores 354 Fig.13. Regionwise trends in deposits of DCCBs in Maharashtra Konkan Western Maharashtra Marathwada Vidarbha Maharashtra

332 355 Fig.14.Composition of deposits in DCCBs in Maharashtra Co-operative Society Individuals Local Bodies Others Co-operative Society Individuals Local Bodies Others

333 Borrowing ` in crores 356 Fig.15. Region wise trends in borrowing of DCCBs in Maharashtra Konkan Western Maharashtra Marathwada Vidarbha Maharashtra

334 357 Fig.16. Composition of borrowing in DCCBs in Maharashtra Loans from SCB Loans from Government Loans from Commercial banks Cash credits and overdrafts Loans from SCB Loans from Government Loans from Commercial banks Cash credits and overdrafts

335 Working capital ` in crores 358 Fig.17. Regionwise trends in working capital of DCCBs in Maharashtra Konkan Western Maharashtra Marathwada Vidarbha Maharashtra

336 359 Fig.18. Composition of working capital in DCCBs in Maharashtra Total owned funds Total Deposits Total borrowing Total owned funds Total Deposits Total borrowing

337 Investment ` in crores 360 Fig. 19. Regionwise trends in investment of DCCBs in Maharashtra Konkan Western Maharashtra Marathwada Vidarbha Maharashtra

338 361 Fig.20. Composition of working capital in DCCBs in Maharashtra Government securities Fixed deposits Other securities Others Government securities Fixed deposits Other securities Others

339 Loans and advances in ` crores 362 Fig.21. Regionwise trends in loan and advance of DCCBs in Maharashtra Konkan Western Maharashtra Marathwada Vidarbha Maharashtra

340 363 Fig.22. Composition of loan and advances in DCCBs in Maharashtra Short term Medium term Other loans and advances Short term Medium term Other loans and advances

341 Loan outstanding ` in crores 364 Fig.23. Regionwise trends in loan outstanding of DCCBs in Maharashtra Konkan Western Maharashtra Marathwada Vidarbha Maharashtra

342 365 Fig.24. Composition of loan outstanding in DCCBs in Maharashtra Short term Medium term Other loans and advances Short term Medium term Other loans and advances

343 Loan recovery ` in crores 366 Fig.25. Regionwise trends in loan recovery of DCCBs in Maharashtra Konkan Western Maharashtra Marathwada Vidarbha Maharashtra

344 367 Fig.26. Composition of recovery in DCCBs in Maharashtra Short term Medium term Other loans and advances Short term Medium term Other loans and advances

345 Loan overdues ` in crores 368 Fig.27. Regionwise trends in loan overdues of DCCBs in Maharashtra Konkan Western Maharashtra Marathwada Vidarbha Maharashtra

346 369 Fig.28. Composition of loan overdues in DCCBs in Maharashtra Short term Medium term Other loans and advances Short term Medium term Other loans and advances

347 Cost of management ` in crores 370 Fig.29. Regionwise trends in cost of management of DCCBs in Maharashtra Konkan Western Maharashtra Marathwada Vidarbha Maharashtra

348 371 Fig.30. Composition of cost of management in DCCBs in Maharashtra Expenditure on salaries Other expenditure Expenditure on salaries Other expenditure

349 372 Fig.31. Percent share of various medium term activities Minor irrigation Land Development Farm Maechanization Plantation and Horticulture Dairy development Poultry Sheep & Goat production Fisheries Forestry & west land development storage godown & market yard 1.86 Biogas Sericulture Others

350 373 Fig.31.Cont Minor irrigation Land Development Farm Maechanization Plantation and Horticulture Dairy development 9.91 Poultry Sheep & Goat production Fisheries 4.63 Forestry & west land development 0.30 storage godown & market yard Biogas Sericulture 0.16 Others

351 374 Fig.32. Share of financial institutions in crop loan disbursement in Maharashtra % 52% 26% DCCBs CBs RRBs 9% % 56% DCCBs CBs RRBs

352 375 Fig.33. Share of financial institutions in term loan disbursement in Maharashtra DCCBs CBs RRBs DCCBs CBs RRBs

353 Share of financial institutions in total credit disbursement for agriculture in Maharashtra state Fig.34. Per cent share of finencial instiutions Years Loan disbursed by DCCBs Loan disbursed by CBs Loan disbursed by RRBs

354 Inequality in short term and medium term credit flow by DCCBs in Maharashtra state Fig.35. Coefficient of Varience of short term and medium term credit flow CV ST credit flow Years CV MT credit flow

355 Inequality in short term and medium term credit flow by DCCBs in Maharashtra state Fig. 36. Theils entropy coefficient of short term and medium term credit flow Years Theils entrophy coefficient ST credit flow Theils entrophy coefficient MT credit flow

356 Gini coefficient ratio of inequality in short term and medium term credit flow by DCCBs in Maharashtra state Fig.37. Gini ratios of short term and medium term credit flow Gini Ratio ST Years Gini Ratio MT

357 Cumulative proportion of medium term loan flow per ha of GCA Cumulative proportion of medium term loan flow per ha of GCA Cumulative proportion of medium term loan flow per ha of GCA Cumulative proportion of medium term loan flow per ha of GCA Fig.39.a. Lorenz curve for medium term credit flow in different regions of Maharashtra Western Maharashtra Base year Mid year Terminal year Base year Mid year Terminal year Konkan Cumulative proportion of number of DCCBs Cumulative proportion of number of DCCBs Base year Mid year Terminal year Marathwada Vidarbha Base year Mid year Terminal year Cumulative proportion of number of DCCBs Cumulative proportion of number of DCCBs

358 Cumulative proportion of short term loan flow per ha of GCA Cumulative proportion of short term loan flow per ha of GCA Cumulative proportion of short term loan flow per ha of GCA Cumulative proportion of short term loan flow per ha of GCA Fig.38.a. Lorenz curve for short term credit flow in different regions of Maharashtra Western Maharashtra Base year Mid year Terminal year Base year Mid year Terminal year Konkan Cumulative proportion of number of DCCBs Cumulative proportion of number of DCCBs Base year Mid year Terminal year Marathwada Base year Mid year Terminal year Vidarbha Cumulative proportion of number of DCCBs Cumulative proportion of number of DCCBs

359 Cumulative proportion of short term loan flow per ha of GCA Fig. 38.b. Lorenz curve for short term credit flow in Maharashtra Terminal year Mid year Base year Maharashtra Fig.39.b. Lorenz curve for medium term credit flow in Maharashtr a Cumulative proportion of number of DCCBs

360 Cumulative proportion of medium term loan flow per ha of GCA 120 Maharashtra Terminal year Mid year Base year Cumulative proportion of number of DCCBs

361 Fig.1. Map of study area