LOANS AND ADVANCES OF TNSC BANK

Transcription

1 CHAPTER V LOANS AND ADVANCES OF TNSC BANK

2 5.1 INTRODUCTION 5.2 LOANS AND ADVANCES 5.3 LENDING RATES 5.4 GOVERNMENT OF INDIA INTEREST SUBVENTION 5.5 GOVERNMENT OF TAMIL NADU INTEREST SUBSIDY 5.6 NUMBER OF FARMERS WHO BORROWED SHORT-TERM LOANS 5.7 TOTAL LOANS 5.8 CLASSIFICATION OF TOTAL LOANS 5.9 CLASSIFICATION OF TOTAL LOANS 5.10 MEDIUM- TERM LOANS 5.11 PROGRESS OF LONG-TERM LOANS 5.12 OTHER LOANS 5.13 TOTAL LOANS OF ALL STATE COOPERATIVE BANKS OF INDIA 5.14 CO-EFFICIENT OF VARIATIONS 5.15 TREND ANALYSIS FOR LOANS 5.16 CORRELATION BETWEEN TOTAL DEPOSITS AND TOTAL LOANS 5.17 COMPARISON OF COMPOUND GROWTH RATES OF TNSC BANK FOR TWO PERIODS 5.18 CONCLUSION

3 CHAPTER V LOANS AND ADVANCES OF TNSC BANK 5.1 INTRODUCTION In this chapter an attempt has been made to analyse the loans and advances provided by the Tamil Nadu State Apex Cooperative Bank Limited. This chapter analyses the loans, type-wise and purpose-wise. Annual compound growth rates of short, medium, long and total loans have been analysed. The stability of loans has been analysed through coefficient of variations. The loans to be provided by the Bank for the future year 2022 has been predicted, by straight line trend, using the method of least squares. The relationship between total deposits and total loans have been analysed, by using the correlation coefficient. The lending performance of the Bank have been analysed and compared with all state cooperative banks in India. 5.2 LOANS AND ADVANCES The TNSC Bank mainly provides short-term loans to farmers for agriculture and allied activities such as cattle rearing, minor irrigation and the like, through the central cooperative banks. It also provides nonagricultural loans such as jewel loans, loans to weavers, and direct loans to individuals in Chennai city and its employees. It also provides financial assistance to state level cooperative societies such as the Tamil Nadu State Handloom Weavers Cooperative Society, Tamil Nadu Cooperative Milk Producers Federation, Tamil Nadu Cooperative Consumers Federation, Tamil Nadu Cooperative Housing Federation and the like. It also provides financial assistance to cooperative sugar and spinning mills, employee's cooperative societies, cooperative urban banks and the like. TNSC Bank borrows from National Bank for Agriculture and Rural Development for its lending to agriculture and allied activities.

4 5.3 LENDING RATES The interest rates for the various loans provided by the TNSC Bank are given in Table 5.1. TABLE 5.1 Interest Rates for Loans as on S.No. Types of Loans NABARD to SCB SCB to DCCB DCCB to PACB PACB to Members 1. Short-Term Crop Loans 4.50% 7.55% 8.45% 10.25% 2. Medium-Terms Loans 9.30% 9.50% 10.25% 12.50% 3. Long-Term Loans 9.10% 9.50% 10.25% 12.50% Source: TABLE 5.1A Interest Rates for Non Agricultural Loans S.No. Types of Loans SCB to DCCB DCCB to PACB PACB to Members 1. Jewel Loan (PACCS) 10.25% 10.5% 14% (Maximum) 2. Jewel Loan (Branches) 10.50% 13% to 14.50% 13% to 14.50% 3. Employee's Societies 11.00% 11.50% 13.50% 4. Sugar Mills Consortium 14.00% - - Source: 98

5 5.4 GOVERNMENT OF INDIA INTEREST SUBVENTION With a view to help the farmers, the Government of India provides interest subvention from the year Primary agricultural cooperative credit societies provide crop loans to farmers at 7 per cent up to Rs.3 lakhs per borrower. The interest rate incentive has been enhanced during the subsequent years. Table 5.2 reveals the Government of India interest subvention to farmers. TABLE 5.2 Interest Subvention of Central Government S.No. Years Interest Subvention (percentage) Source: TNSC Bank Annual Report , p GOVERNMENT OF TAMIL NADU INTEREST SUBSIDY The Government of Tamil Nadu has introduced the scheme of providing 2 per cent interest subsidy to cooperative banks, for their lending of crop loans. The Government of Tamil Nadu have "enhanced the interest incentive benefit from 3 per cent to 7 per cent to those farmers who repay the loans before the due dates" 1. As such, the crop loan will bear no interest, when repaid within the due date since

6 "The Government of India have also announced one per cent interest incentive to the farmers for their promt repayment of crop loans since It has been extended to 2 per cent in the year Further, it has been enhanced to 3 per cent in " NUMBER OF FARMERS WHO BORROWED SHORT-TERM LOANS Table 5.3 reveals the total number of farmers in Tamil Nadu who have borrowed crop loans. TABLE 5.3 Number of Farmers Borrowed Crop Loans in Tamil Nadu Year No. of Farmers ,05, ,06, ,26, ,29, ,95, ,31, ,48, ,91, ,98, ,99, ,15,674 Source: Annual Report of TNSC Bank , p.65. It is inferred from Table 5.3 that, the total number of farmers who borrowed crop loans from cooperatives which stood at 7.05 lakhs in 2002 has increased to 9.15 lakhs in the year The following pages deal with the analysis of various type of loans of the TNSC Bank. 100

7 5.7 TOTAL LOANS The total loans provided by the TNSC Bank during the years from 2002 to 2012 are presented in Table 5.2. TABLE 5.4 Total Loans Issued by the TNSC Bank From 2002 to 2012 (Rs. in Crores) Percentage Year Ended Increase / Total Loans Increase / March Decrease Decrease (-) (-) (-) (-) Source: Compiled from the Annual Reports of TNSC Bank from 2002 to It is inferred from Table 5.4 that the total loans issued by the TNSC Bank which stood at Rs Crores in 2002 have steadily increased to Rs crores in 2012 except during the years 2003 and In the years 2003 and 2009, the total loans have declined when compared to their respective previous years due to the problem of overdues and drought conditions in the state. There is more than three-fold increase in the total loans issued by the TNSC Bank during the year 2012 when compared to The percentage increase in the total loans 101

8 during the period under study varied between minus 0.64 per cent and per cent. 5.8 CLASSIFICATION OF TOTAL LOANS The total loans of the Tamil Nadu State Apex Cooperative Bank Limited have been broadly classified into three types, namely - 1. Short-term loans 2. Medium- term loans and 3. Long term loans Short-term Loans Until 1935, the Bank provided short-term loans to agriculture from its own funds. After the establishment of the Reserve Bank of India in 1935, it provided finance to state cooperative banks for their lending to agriculture. After the establishment of the National Bank for Agriculture and Rural Development (NABARD) in 1982, instead of Reserve Bank of India, NABARD provides funds to the state co-operative banks for their lending to agriculture and nonagricultural purposes. The TNSC Bank provides short-term loans to central cooperative banks in Tamil Nadu for the following purposes: 1. Crop loans for seasonal agricultural operations. 2. Short-term non-agricultural loans to a) Weavers cooperative societies. b) Jewel loans. 3. Cash credit to the following: a) Tamil Nadu Handloom Weavers Cooperative Society Limited (Co-optex). b) Tamil Nadu Cooperative State Agriculture and Rural Development Bank. c) Tamil Nadu Consumers Cooperative Federation Limited. d) Tamil Nadu Cooperative State Agriculture and Rural Development Bank Limited. 102

9 e) Tamil Nadu Industrial Cooperative Bank Limited. f) Tamil Nadu Small Industries Corporation Limited. g) Tamil Nadu Cooperative Marketing Federation Limited. h) Tamil Nadu Cooperative Housing Society Limited Medium-term Loans The provision of medium-term loans by the TNSC Bank on a systematic basis was taken up when the Reserve Bank of India came forward to finance the cooperatives for medium-term purposes during In July 1964, the TNSC Bank introduced the revolving credit system to central cooperative Banks in Tamil Nadu. Under this system, each central cooperative bank was sanctioned medium-term annual credit limits, from which reimbursements will be made for its lending. The TNSC Bank provides medium-term loans for agricultural and nonagricultural purposes for the following activities: 1. Land development purposes. 2. Minor irrigation. 3. Loans for subsidiary occupations. 4. Loans to the farmers for the purchase of shares in cooperative sugar and spinning mills. 5. NABARD approved employment oriented schemes such as sericulture development, calf rearing, sheep breading and the like. 6. IRDP Loans to weaker sections of the rural community 7. Loans under differential interest rate at 4 per cent to the weaker sections of the community. 8. Farm mechanization. 9. Organic farming. 10. Aromatic and medicinal plants. 11. Dry land farming. 12. Waste land development. 13. Self-help groups for farm and non-farm activities. 14. For establishing agricultural clinics and agri business centres. 103

10 15. For plantation and horticulture crops. 16. Employees societies and 17. Medium-term conversion loans. The medium-term loans are repayable in the three or five equal annual instalments. The first instalment will not fall due for repayment before the expiry of 15 months from the date of drawal of the loan 4. NABARD provides mediumterm credit limits to the TNSC Bank on behalf of the central cooperative Banks in Tamil Nadu. The central cooperative banks apply to the TNSC Bank for the sanction of medium-term loans. The loan applications of central banks are considered and sanctioned by the state co-operative bank. The central co-operative banks draw the loans, disburse the amount to the primary societies and then furnish a disbursement statement to the state co-operative bank 5. The Bank also provides medium-term non-agricultural loans under the following schemes: 1. Loans under differential interest rate scheme. 2. Self employment loans. 3. Loans to salaried employees and, 4. Loans for consumer durables and loans to employees Long-term Loans Even though the state cooperative banks were started to provided shortterm and medium-term credit to farmers, they also give long-term loans. Longterm loans are given for the following purposes: 1. Staff housing loan. 2. Cold storage construction and 3. Rural housing. 5.9 CLASSIFICATION OF TOTAL LOANS Table 5.3 reveals the classification of total loans of the TNSC Bank during the period from 2002 to

11 TABLE 5.5 Classification of Total Loans of TNSC Bank from 2002 to 2012 (Rs. in crores) Shortterms Total Loans Mediumterm Loans Loans Loans Long-term Other Year Loans (40.03) (31.45) (32.20) (34.37) (38.57) (28.83) (28.15) (31.14) (33.76) (32.48) (35.47) (7.16) (8.78) (11.53) (26.90) (23.83) (37.62) (36.02) (34.51) (23.77) (18.58) (17.47) (6.60) (11.65) (10.96) (6.96) (3.33) (1.73) (0.94) 9.84 (0.30) (0.26) (0.26) (0.29) (46.21) (48.12) (45.31) (31.77) (34.27) (31.82) (34.89) (34.05) (42.21) (48.68) (46.77) Mean SD CV CAGR 11.77% 22.45% 85.17% 13.12% 13.00% Source : Compiled from the Annual Report of TNSC Bank from to Note: Figures in brackets indicate percentage to total. 105

12 It is inferred from Table 5.5 that the short-term loans issued by the Bank which stood at Rs crores in 2002 have steadily increased to Rs crores, in 2012 resulting in more than three-fold increase. There is a decline in the short term loans issued during the years 2003 and 2007 due to overdues of cooperative banks on account of drought conditions in the state of Tamil Nadu. The share of short-term loans in the total loans of the Bank varied between per cent and per cent. There is a fluctuating trend in the share of short-term loans in the total loans of the Bank. Table 5.5 has also revealed that the share of medium-term loans in the total loans of the Bank which stood at Rs crores in 2002 has increased to Rs crores in 2012 resulting in more than nine-fold increase. The medium term loans have a fluctuating trend during the period under study. The share of medium term loans in the total loans of the Bank varied between 7.16 per cent and per cent. It is inferred from Table 5.5 that, the long-term loans issued by the Bank which stood at Rs.128 crores in 2002 have declined to Rs crores in There is a steady decline in the share of long-term loans in the total loans of the Bank. The share of long-term loans in the total loans of the Bank varied between 0.26 per cent and per cent. Table 5.5 has also revealed that, the other loans of the Bank such as cash credit, depositors loans, consumer loans', staff housing loans and the like which stood at Rs crores in 2002 have increased to Rs crores in 2012, resulting in nearly four-fold increase. The share of other loans in the total loans of the Bank, varied between per cent and per cent. It clearly indicates that, the TNSC Bank's lending to individuals in Chennai city, amounts to nearly 50 per cent of the total loans. This has been due to its 45 branches functioning in Chennai city. This confirms that people in Chennai city patronize the Bank because of its better customer service. 106

13 5.9.1 Classification of Short-term Loans Short-term loans are repayable within a period of one year. The TNSC Bank provides short-term loans to farmers through primary agricultural credit societies. Short-term loans are given to farmers for agricultural and nonagricultural purposes. The TNSC Bank also provides direct short-term loans to its customers in Chennai city. Table 5.6 reveals the classification of short-term loans of the Bank during the period under study. TABLE 5.6 Purpose-wise Classification of Short-term Loans of TNSC Bank Year Ended Agricultural Non-agricultural Loans Loans (67.59) (32.41) (80.03) (19.97) (61.93) (38.07) (85.22) (14.78) (73.54) (26.46) (64.35) (35.65) (88.00) (12.00) (97.55) (2.45) (93.69) (6.31) (94.18) (5.82) (94.70) (5.30) Note : Figures in the brackets indicates percentage to total (Rs. in crores) Total Short-term Loans Source: Compiled From the Annual Reports of TNSC Bank From 2002 to It is inferred from Table 5.6 that, the total agricultural loans issued by the Bank which stood at Rs crores in 2002 has steadily increased to Rs

14 crores in 2012 except during the year In year 2007, the total agricultural loans issued by the Bank have declined to Rs crores as against Rs crores in This decline has been due to famine conditions in the state and consequent overdues in central cooperative banks. There is nearly a five-fold increase in the total short-term agricultural loans issued by the Bank during the period under study. The share of agricultural loans in the total short-term loans of the Bank varied between per cent and per cent. The non-agricultural loans which stood at Rs crores in 2002 have declined to Rs crores. There is a fluctuating trend in the short-term nonagricultural loans issued by the Bank. The share of short-term non-agricultural loans in the total short-term loans of the Bank varied between 2.45 per cent and per cent Classification of Short-term Non-agricultural Loans The short-term non-agricultural loans are weavers loans, jewel loans and loans for allied agricultural activities such as distribution of essential commodities and fertilizer business. Table 5.7 reveals the classification of shortterm non-agricultural loans. 108

15 TABLE 5.7 Classification of Short-term Non-agricultural Loans of TNSC Bank (Rs. in crores) Year Weaver's Allied Jewel Loans Loans Activities Total (46.32) (53.68) (19.92) (80.08) (21.56) (47.74) (30.70) (32.51) (67.49) (26.40) (73.60) (20.24) Note: Figures in the brackets indicates percentage to total Source: Compiled From the Annual Reports of the TNSC Bank from to

16 It is inferred from Table 5.7 that, the short-term weavers loans which stood at Rs crores in 2002 have declined to Rs crores in There is a fluctuating trend in the short-term nonagricultural loans issued by the Bank. The share of weavers loans in the total short-term non-agricultural loans of the Bank varied between per cent and 100 per cent. The short-term jewel loans were issued by the Bank only for three years during the period under study. The short-term jewel loans show a fluctuating trend. The share of jewel loans in the total non-agricultural loans of the Bank varied between per cent and per cent. The short-term loans for allied agricultural activities have been issued only for three years and its share in the total non-agricultural loans varied between per cent and per cent. The short-term weavers loans issued by the Bank during the period under study shows as fluctuating trend. The short-term jewel loans and loans for allied activities have been issued only for three years during the period under study Progress of Short term Loans Table 5.8 reveals the progress of short-term loans issued by the TNSC Bank during the period under study. 110

17 TABLE 5.8 Progress of Short-term Loans of TNSC Bank from 2002 to 2012 (Rs. in crores) Short-term Actual Percentage Year Loans Increase/Decrease Increase/Decrease (-) (-) (-) (-) Source: Compiled From the Annual Reports of TNSC Bank From 2002 to 2012 It is inferred from Table 5.8 that, the short-term loans issued by the Bank show a decline during the years 2003 and 2007, when compared to the respective preceding years. The total short-term loans issued by the Bank show a fluctuating trend. The percentage increase in the short-term loans is positive for nine years and negative for two years MEDIUM- TERM LOANS The TNSC Bank provides medium-term loans for agricultural and nonagricultural purposes through the central cooperative banks. The various purposes for which medium-term loans given are: 1. Land development. 2. Minor irrigation. 111

18 3. Loans for subsidiary occupations. 4. Loans to the farmers for the purchase of shares in cooperative sugar and spinning mills. 5. NABARD approved employment oriented schemes such as sericulture development, calf rearing, sheep breading and the like. 6. IRDP loans to weaker sections of the community. 7. Loans under the differential interest rate schemes to the weaker sections of the community. 8. Fisheries development. 9. Direct Loans to individuals residing at Chennai for self-employment purposes and for the purchase of consumer durables Progress of Medium term Loans Table 5.9 reveals the progress of medium-term loans of the TNSC Bank. TABLE 5.9 Progress of Medium-term Loans of TNSC Bank from 2002 to 2012 Medium-term Actual Year Loans Increase/Decrease (Rs. in Crores) Percentage Increase/Decrease (-)34.88 (-) (-)17.21 (-) (-)64.47 (-) (-) Source: Compiled From the Annual Reports of TNSC Bank from 2002 to

19 Table 5.9 has revealed that the total medium-term loans of the Bank which stood at Rs crores in 2002 have increased to Rs crores in 2012 resulting in more than nine-fold increase. But, the medium-term loans show a fluctuating trend due to the poor recovery performance of central co-operative banks in Tamil Nadu. The medium-term loans show a negative growth during the years 2006, 2008, 2009 and The progress of medium- term loans during the period under study varies between minus 1.5 per cent and 68.2 per cent during the period under study Purpose-wise Classification of Medium-term Loans: Medium-Term loans are given for various purposes such as self help groups, for the conversion of short-term loans into medium-term loans, and loans to the staff for the purchase of consumer durables. Table 5.10 reveals the classification of medium-term loans of the Bank during the period under study. 113

20 Years TABLE 5.10 Purpose wise Classification of Medium-term Loans of TNSC Bank Mediumterm conversion Loan to Self help groups (99.71) (37.30) (98.86) (62.67) (20.15) (20.10) (9.12) (11.76) (10.87) (11.55) (23.64) (26.77) (Rs. In crores) Liquidity Staff Waiver Agricultural support Personal Total Loan Stabilization loan Loan (0.29) (0.14) (56.85) (61.59) (90.88) (88.24) (89.13) (88.45) (76.36) (73.23) (23.00) (18.31) (0.03) Note : Figures in the brackets indicates percentage to total Source : Complied from the Annual reports of TNSC Bank from 2002 to

21 Table 5.10 has revealed that, the TNSC Bank has provided medium-term conversion loans to central cooperatives banks only during the year 2004 and it amounted to Rs crores. It is also inferred from Table 5.12 that, the Bank has provided loans to self help groups for all the eleven years under study. This has been due to the fact that, the Government of Tamil Nadu has encouraged loans to women for self employment purposes. The medium-term loans to self help groups which stood at Rs crores in 2002 have steadily increased to Rs crores in 2012 resulting in more than two-fold increase. Loans to self help groups show a fluctuating trend during the period under study. The Bank provides funds to the central cooperative banks with a view to relieve them from the liquidity problem. The Bank has provided liquidity support to central cooperative banks only for two years namely, 2005 and The Government helps the farmers when they are not able to repay the loans due to famines, drought and the like. With a view to enable the central cooperative banks to help the primary cooperative credit societies to write off overdues due to natural calamities, TNSC Bank has provided waiver loans from 2007 to The waiver loans show a fluctuating trend from Rs crores to Rs crores. The waiver loans provided by the Bank varies because they are provided only to those district central cooperative banks which are affected by calamities. The central cooperative banks that have availed themselves of the waiver loans vary, depending upon the district affected by calamities. The TNSC Bank has provided medium-term loans to central cooperative banks with a view to convert the short-term loans into medium-term loans. The medium-term agricultural stabilization loan has been provided only for two years. The TNSC Bank provides medium-term personal loans to its employees for the purchase of consumer durables such as television sets, air conditioners and the like. Staff personal loans have been provided only for three years from 115

22 2002 to 2004 The staff personal loan is less than half per cent of total mediumterm loans of the Bank PROGRESS OF LONG-TERM LOANS Table 5.11 reveals the progress of long-term loans of the TNSC Bank during the period under study. Year TABLE 5.11 Progress of Long term Loans of TNSC Bank Long-term Loans Actual Increase / Decrease (Rs. in Crores) Percentage Increase / Decrease (-)69.65 (-) (-)95.01 (-) (-)45.45 (-) (-)24.64 (-) (-)21.53 (-) Source : Compiled from the Annual Reports of TNSC Bank From 2002 to 2012 It is inferred from Table 5.11 that the long-term loans show a fluctuating trend during the period under study. It shows a negative trend for five years from 2005 to The growth of long- term loans varies between minus per cent and per cent during the period under study. 116

23 Purpose-wise Classification of Long-term Loans The Bank mainly provides short-term loans to farmers for agriculture and allied activities through central cooperatives banks. But, it also provides loans for non-farm activities financed by the National Bank for Agricultural and Rural development, Small Industries Development Bank of India, National Cooperative Development Corporation and the like. NABARD provides 100 per cent refinance to CCB'S for rural industries project, farm mechanization, lending to self-help groups, scheduled castes and scheduled tribes and the like. Long-term loans are also given for godown construction, godown renovation and for the purchase of farm machineries. The TNSC Bank also provides long-term loans to cooperative spinning mills for modernization of obsolete machineries. The Bank also provides refinance facilities to central cooperative banks for their lending to physically challenged persons for self employment. Table 5.12 reveals the classification of long-term loans of the TNSC Bank during the period under study. 117

24 TABLE 5.12 Purpose wise Classification of Long term Loans of TNSC Bank (Rs. in Crores) Year Massive Rural Employment NABARD Non-farm- Schemes (90.93) SSI-SIDBI Loans 6.99 (5.46) SRTO- SIDBI Loans 1.65 (1.29) NCDC Loans 2.97 (2.32) (96.16) (2.36) (0.48) (0.91) (68.96) (0.89) (0.02) (0.46) (66.22) (0.67) (0.01) (0.38) (63.90) (0.76) (0.40) (54.77) (0.79) (0.14) (46.81) (0.29) (0.25) (12.30) (0.80) (4.00) (0.67) (0.46) (0.09) (0.37) Note: Figures in the brackets indicate percentage to total NHFDC Loans NABARD Rural Housing Loans NABARD Self Help Group Loans Total (0.09) 0.44 (0.17) 0.84 (0.42) 1.29 (1.27) 1.85 (3.30) 2.53 (8.06) 3.87 (39.33) 8.71 (72.58) (88.26) (93.21) Source: Compiled from the Annual Reports of TNSC Bank from 2002 to (29.30) (32.30) (33.67) (41.00) (44.58) 4.69 (47.66) 2.73 (22.75) 1.96 (11.28) 1.36 (6.33)

25 It is inferred from Table 5.12 that, the Bank has provided long-term loans under massive rural employment programmes such as rural road projects only during the year The Bank has provided long-term loans for non-farm activities such as construction of godowns, cold storage construction and the like for nine years during the period under study. The Bank has not provided any loan for non-farm activities during the years 2005 and Long-term loans for non-farm activities funded by NABARD, which stood at Rs crores in 2002 has steadily declined to Rs.0.02 crores in There is a fluctuating trend in the long-term loans for non-farm activities financed by NABARD. Table 5.12 has revealed that the long-term loans financed by Small Industries Development Bank of India for the setting up of small scale industries have been provided only for seven years from 2002 to The scheme has been discontinued since 2009 onwards. The share of long-term loans to small scale industrial units in the total long-term loans of the Bank varied between 0.29 per cent and 5.46 per cent. Table 5.12 has also revealed that the Bank has provided long-term loans for small road transport operators ( pick up vans) with a view to provide self employment. These loans have been provided only for five years during the period under study and it is less than two per cent of total long-term loans. The National Cooperative Development Corporation provides financial assistance to promote post-harvest activities in agriculture and allied activities such as marketing, storage, dairy farming, handicrafts, rural crafts, irrigation, rural sanitation and the like. The TNSC Bank has provided long-term loans under this scheme for all the eleven years under study. The share of NCDC loans in the long-term loans, shows a declining trend and it varied between 0.14 per cent and 2.32 per cent. 119

26 The National Handicapped Finance Development Corporation (NHFDC) provides long-term loans to differently abled persons to start small businesses. Loans provided by the Bank under this scheme which was started with Rs.0.20 crores in 2003 has steadily increased to Rs crores in There is more than 100 per cent increase in the long-term loans provided to physically challenged persons in the year 2012 when compared to This confirms the importance given to self-employment of handicapped persons. NABARD wants to promote housing facilities in rural areas. It provides long-term loans for rural housing schemes through state cooperative banks. The TNSC Bank has provided long-term loans for rural housing projects funded by NABARD which stood at Rs crores in 2005 has gradually declined to Rs.1.36 crores in Long-term loans for rural housing has been provided only for eight years from 2005 onwards. The loans under this scheme show a declining trend during the period under study. This has been due to the fact that there are other agencies such as commercial banks and other financial agencies provide finance for rural housing schemes. NABARD also provides long-term loans to self help groups for setting up of small business units. The TNSC Bank has provided long-term loans to selfhelp groups only during the year 2004 and it amounted to Rs crores. No loan has been provided under this scheme for the remaining ten years under study. The long term loans for massive employment programme has been provided only for one year in Long-term loans for non-farm activities funded by NABARD shows a declining trend during the period under study. Long-term loans for small scale industrial units funded by the Small Industries Development Bank of India, has provided loans only for seven years and it is less than six per cent of the total long-term loans of the Bank. The long-term loans for small road transport operators have been provided only for four years and it is less than two crores of rupees. Long term loans to cooperative societies funded 120

27 by the NCDC is less than rupees three crores during the period under study. Long-term loans for handicapped persons show a steady increase and it reached more than 90 per cent of the total long-term loans. Long-term loans for rural housing, funded by the NABARD show a declining trend and it has been provided only from 2005 onwards. Long-term loans for self-help groups funded by the NABARD has been provided only during the year 2004 and it is less than 30 per cent of the total long-term loans of the Bank OTHER LOANS Classification of Other Loans Table 5.5 has classified the total loans of the Bank as short-term, mediumterm, long-term and other loans. The other loans of the Bank include cash credit to central cooperative banks, loans to employees of the Bank and the like. The Bank provides overdraft facilities to central cooperative banks, loans to the employees cooperative credit societies, jewel loans to primary agricultural credit societies and CCB's. It provides, working capital to cooperative sugar mills and the Tamil Nadu Cooperative Housing Federation. Table 5.13 reveals the classification of other loans of the Bank. 121

28 TABLE 5.13 Purpose-wise Classification of Other Loans of TNSC Bank (Rs. in Crores) Year Cash Credit Other Advances Staff Loan Total (86.34) (11.46) (2.20) (91.52) (6.26) (2.22) (89.62) (8.52) (1.85) (90.77) (6.52) (2.71) (90.41) (6.51) (3.08) (75.85) (21.70) (2.92) (83.44) (14.19) (2.37) (78.02) (19.53) (2.45) (77.36) (21.37) (1.27) (82.85) (16.30) (0.85) (79.80) (19.28) (0.92) (Figures in the brackets indicates percentage to total) Source: Compiled From the Annual Reports of TNSC Bank from 2002 to It is inferred from Table 5.13 that, the cash credit facilities provided by the TNSC Bank which stood at Rs crores in 2002 has increased to Rs crores in There is more than three-fold increase in the cash credit provided in 2012 when compared to Cash credit provided by the Bank shows a fluctuating trend from 2002 to There is steady increase in cash credit from 2010 onwards. 122

29 Table 5.13 has also revealed that, the TNSC Bank has provided other loans and advances such as direct jewel loans, loans to salaried persons, depositors loans and the like, which stood at Rs crores in 2002 have increased to Rs crores in There is more than six-fold increase in the other loans provided by the TNSC Bank. The other loans and advances show a fluctuating trend during the period under study. The share of other loans in the total other loans of the Bank is less than 22 per cent. The Bank provides jewel loans to its employees. The staff loans which stood at Rs crores in 2002 has increased to crores in 2012, resulting in nearly two-fold increase. The share of staff loan is less than three per cent TOTAL LOANS OF ALL STATE COOPERATIVE BANKS OF INDIA In order to analyse the performance of the TNSC Bank, loans provided by all the state cooperative banks in India have been examined. Table 5.14 reveals the total loans of all state cooperative banks in India. 123

30 TABLE 5.14 Total Loans of All State Cooperative Banks in India (Rs. in Crores) S.No Year Ending Total Loans Increase/ Percentage March of All SCBS Decrease Increase / Decrease (-)188 (-) (-)1735 (-) (-)1448 (-) Source: Basic Data on State Cooperative. Banks in India From 2002 to 2012 The total loans provided by all the state cooperative banks in India which stood at Rs in 2002 have increased to Rs crores in resulting in more than two-fold increase. The total loans provided by all the state cooperative banks in India show a fluctuating trend Average Loan Per State Cooperative Bank in India In order to compare the lending performance of all state cooperative banks in India, the average loan per state cooperative bank has been computed. Table 5.15 reveals the average loan per state cooperative bank in India. 124

31 S.No. 1 TABLE 5.15 Average Loans Per State Cooperative Bank in India Year Ended March 2 Total Loans 3 Total No of SCB's 4 (Rs.in Crores) Average Loan per SCB (3) (4) = It is inferred from Table 5.15 that, the average loan per state cooperative Bank in India which stood at Rs.1136 crores in 2002, has steadily increased to Rs.2630 crores in 2012 resulting in more than two-fold increase Comparison of TNSC Bank Loans with All India Average Table 5.16 reveals the comparative performance of TNSC Bank loans with all India average. 125

32 TABLE 5.16 Comparison of TNSC Bank Loans with All India Average Loans of SCB's (Rs. in Crores) S.No Year Ending Total Loans of Average Loans per Increase / March TNSC Bank SCBs in India Decrease It is inferred from Table 5.16 that, the total loans provided by the TNSC Bank during the period under study are more than the average loans of all state cooperative banks in India. The loans provided by the Bank are more than the all India average for all the 11 years under study. This confirms that the lending performance of the TNSC Bank is commendable when compared to the average loans per state cooperative banks in India CO-EFFICIENT OF VARIATIONS In order to study the stability of short, medium, long term and total loans of the Bank during the period under study, co-efficient of variations method has been used. The co-efficient of variations for short term, medium-term long-term are presented in Tables 5.17 to

33 Co-efficient of Variations for Short-term Loans The Co-efficient of variations for short-term loans has been presented in Table TABLE 5.17 Co-efficient of Variations for Short-term Loans from 2002 to 2012 X Arithmetic Mean (Rs. in Crores) Standard Deviation (Rs in Crores) C.V in Per cent / X x The co-efficient of variations for short-term loans amounted to per cent Co-efficient of Variations for Medium Term Loans The co-efficient of variations for medium term loans has been computed and presented in Table TABLE 5.18 Co-efficient of Variations for Medium-term Loans from 2002 to 2012 X Arithmetic Mean (Rs. in Crores) Standard Deviation (Rs in Crores) C.V in Per cent / X x 100 per cent The co-efficient of variations for medium-term loans amounted to

34 Co-efficient of Variations for Long Term Loans The co-efficient of variations for long-term loans has been computed and presented in Table TABLE 5.19 Co-efficient of Variations for Long-term Loans from 2002 to 2012 X Arithmetic Mean (Rs. in Crores) Standard Deviation (Rs in Crores) C.V in Per cent / X x cent. The co-efficient of variations for long-term loans amounted to per Co-efficient of Variations for Other Loans The co-efficient of variations for other loans has been computed and presented in Table TABLE 5.20 Co-efficient of Variations for Other Loans from 2002 to 2012 X Arithmetic Mean (Rs. in Crores) Standard Deviation (Rs in Crores) C.V in Per cent / X x The co-efficient of variations for other loans amounted to per cent Co-efficient of Variations for Total Loans The co-efficient of variations for total loans has been computed and presented in Table

35 TABLE 5.21 Co-efficient of Variations for Total Loans from 2002 to 2012 X Arithmetic Mean (Rs. in Crores) Standard Deviation (Rs in Crores) C.V in Per cent / X x cent. The co-efficient of variations for the total loans amounted to per Comparison of Co-efficient of Variations for Short, Medium, Long Term and Other Loans. TABLE 5.22 Comparison of co-efficient of variations for Loans S.No. Type of Loan C.V in Per cent 1. Short-term Loans Medium-term Loans Long-term Loans Other Loans Source: Compiled from Tables 5.17 to 5.21 Among the various types of loans, short-term loans have the least variations TREND ANALYSIS FOR LOANS The loans of the TNSC Bank are analysed by trend values and predicted for the future years

36 The trend values of Short-term loans, medium-term loans, long-term loans, other loans and total loans have been estimated by using linear trend equation as stated below: Y t = a + bx where X = one year interval Y = Loans in crores of Rupees n = Number of years Y t = Computed trend figure for period x 'a' is the computed trend figure for the period when x = 0 in this case, the year 'b' is the slope of the trend line or the amount of change in y t loans per year change in x. The above trend equation has been estimated by the method of least squares. The values of 'a' and 'b' are given below a = b = ΣY where n = 11 years N ΣXY Σx 2 From the above equation, the projected trend figure for any year, can be obtained by substituting the appropriate values of x in to the trend equation. For example, for the year 2022, the value of x is 15. The data for eleven years have been utilized from Table 5.5 for calculating the trend values of loans. With the help of the above linear trend equation, the working of trend values for short-term loans, medium-term loans, long-term loans, other loans and total loans have been computed and it is presented in Tables 5.23 to

37 Trend Values for Short-term Loans The working of trend values for short-term loans is shown in Table TABLE 5.23 Computation of Straight Line Trend of Short-term Loans by the Method of Least-squares Year X Short-term Loans Y 131 (Rs. in Crores) XY X 2 Trend Value Y t (-) (-) (-) (-) (-) Y t = a + bx ΣY a = N 11 ΣXY b = ΣX 110 for Y t 2022 x = 5 Total Y t 2022 = x 15

38 = = The trend value for the short-term loans in the year 2022 would be Rs crores, which the Bank is expected to provide Trend values for Medium-term Loans The working of trend values for medium-term loans is shown in Table TABLE 5.24 Computation of Straight Line Trend for Medium-term Loans by the Method of Least-squares. Year X Mediumterm Loans Y (Rs. in Crores) XY X 2 Trend Value Y t (-) (-) (-) (-) (-) Total

39 Y t = a + bx ΣY 9306 a = N ΣXY b = 2 X for Y t 2022 x = 15 Y t 2022 = x 15 = The trend value for the medium-term loans in the year 2022 would be Rs crores, which the Bank is expected to provide Trend Values for Long-term Loans The working of trend values for long-term loans is shown in Table 5.25 TABLE 5.25 Computation of Straight Line Trend for Long-term Loans by the Method of Least-squares (Rs. in Crores) Year X Long-term XY X 2 Trend Loans Y Value Y t (-) (-) (-) (-) (-) (-) Total 1065 (-)

40 Y t = a + bx ΣY 1065 a = N 11 ΣXY (-)2565 b = ( ) X 110 for Y t 2022 x = 15 Y t 2022 = (-) x 15 = = (-) The trend value for the long-term loans in the year 2022 would be (-) crores Trend values for Other Loans The working of trend values for other loan is shown in Table 5.26 TABLE 5.26 Computation of Straight Line Trend for Other Loans by the Method of Least-squares (Rs. in Crores) Other Loans Year X XY X 2 Trend Y Value Y t (-) (-) (-) (-) (-) Total

41 Y t = a + bx Σy a = N ΣXY (-)25777 b = 2 X 110 ( ) for Y t 2022 x = 15 Y t 2022 = x 15 = crores The trend value for the other loans in the year 2022 would be Rs crores, which the Bank is expected to provide Trend values for Total Loans The working of trend values for total loans is shown in Table

42 TABLE 5.27 Computation of Straight Line Trend for Total Loans by the Method of Least-squares (Rs. in Crores) Total Loans Year X XY X 2 Trend Y Value Y t (-) (-) (-) (-) (-) Y t = a + bx ΣY a = N 11 ΣXY b = X 110 for Y t 2022 x = 15 Total Y t 2022 = x 15 = crores The trend value for the total loans in the year 2022 would be Rs crores, which the Bank is expected to provide. 136

43 Comparison of Trend Values of Loans The various types of loans have been analysed by comparing their trend values Table 5.28 reveals the trend values of all types of loans of the Bank. TABLE 5.28 Comparison of Trend Values for Various Types of Loans (Rs. in Crores) S.No. Loans Average Annual Growth 1. Short term Loans Medium-term Loans Long-term Loans (-) Source: Compiled from Table 5.23, 5.24 and 5.25 Among the three types of loans, short-term loans have the highest annual growth, followed by medium-term loans. The long-term loans have negative growth since it is the least important loan in the Bank CORRELATION BETWEEN TOTAL DEPOSITS AND TOTAL LOANS In order to measure the degree of relationship between total deposits and total loans of the TNSC Bank, correlation coefficient has been computed. Table 5.28 reveals the correlation between the total deposits and total loans of the Bank during the period under study. 137

44 TABLE 5.29 Relationship of Total Deposits and Total Loans of TNSC Bank (Rs. in Crores) Year Ended March Total Deposits Total Loans Note: Figures have been rounded off to crores. Hypothesis Ho: There is no significant relationship between total deposits and total loans of the TNSC Bank TABLE 5.30 Correlation Between Total Deposits and Total Loans of TNSC Bank Correlations Total Deposit Total Loans Total Deposit Pearson Correlation 1.944** Sig. (2-tailed).000 N Total Loans Pearson Correlation.944** 1 Sig. (2-tailed).000 N **.Correlation is significant at the 0.01 level (2-tailed). 138

45 Table 5.30 reveals the correlation coefficient between total deposits and total loans of the Bank for the period from to It is observed from Table 5.30 that the P-value is less than Therefore the null hypothesis is rejected at one per cent level of significance. Hence, it is concluded that, there is significant relationship between total deposits and total loans, of the Bank. It confirms that the increase in deposits will result in increase in loans of the Bank COMPARISON OF COMPOUND GROWTH RATES OF TNSC BANK FOR TWO PERIODS Comparison of Compound Annual Growth Rates of loans between the periods from 1975 to 1985 and 2002 to TABLE 5.31 Comparison of Compound Annual Growth Rates for Loans S.No. Types of Loans From 1975 to 1985 From 2002 to Short-term Loans Medium term Loans (-) Long-term Loans * Source: V.Rengasami, "Performance Evaluation of Tamil Nadu State Cooperative Bank Limited" Unpublished Ph.D. Thesis, Madurai Kamaraj University 1987, p.147. Table 5.31 has revealed that the compound annual growth rate of Shortterm loans of TNSC Bank from 1975 to 1985 was per cent where as, it is per cent during the study period. The compound growth rates for shortterm loans during the study period is less when compared to 1975 to But, the compound growth rates of medium and long-term loans for the period from 2002 to 2012 is higher when compared to the period from 1975 to The TNSC Bank is mainly meant for providing short-term loans to farmers and it is lagging behind when compared to the period from 1975 to This has been due to the changing attitude of the farmers not to repay the loans because of the promises given by the political parties to write off the loans if they are voted to power in the state. This confirms poor performance in lending activities. 139