Implementation Status & Results India Strengthening India's Rural Credit Cooperatives (P102768)

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1 Public Disclosure Authorized Public Disclosure Authorized The World Bank Implementation Status & Results India Strengthening India's Rural Credit Cooperatives (P102768) Operation Name: Strengthening India's Rural Credit Cooperatives (P102768) Project Stage: Implementation Seq.No: 10 Status: ARCHIVED Archive : 16-Oct-2012 Country: India Approval FY: 2007 Product Line: IBRD/IDA Region: SOUTH ASIA Lending Instrument: Specific Investment Loan Implementing Agency(ies): National Bank for Agriculture and Rural Development Key s Board Approval 26-Jun-2007 Original Closing 30-Jun-2012 Planned Mid Term Review 11-Jan-2010 Last Archived ISR 24-Mar-2012 Effectiveness 31-Dec-2007 Revised Closing Actual Mid Term Review 22-Jan-2010 Project Development Objectives Project Development Objective (from Project Appraisal Document) The project helps to provide members of the rural cooperative credit system (CCS), including marginal and small farmers (the poorest groups in rural India), with significantly enhanced access to formal finance (credit, savings, etc.), by ensuring that the potentially viable CCBs in the participating states (PS) are transformed into efficient and commercially sustainable institutions. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) losure Authorized Public Disclosure Authorized Component Name Component Cost Capacity building technical assistance Information technology CCS Financial Restructuring Support Implementation 5.00 Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Satisfactory Moderately Satisfactory Overall Risk Rating Implementation Status Overview An update on project achievements and remaining challenges comes against the back-drop of the recently approved 12 month project extension from June 30, 2012 to June 30, The assessment of the Project Development Objectives (PDOs) is Moderately Satisfactory, and the rating for Implementation Progress(IP) has been downgraded to Moderately Satisfactory from Satisfactory. The rating for IP has been lowered because project implementation has slowed pending government review of proposals for the allocation Page 1 of 7

2 of additional budget resources which are expected to be completed by October 31st. In this respect, challenges around the implementation of both the IT and Financial Restructuring Support (FRS) components remain. At the same time, it is important to note that in Bank-funded states, it appears that good progress is being made in terms of overall credit growth, outreach to small and marginal farmers, recovery rates for State Cooperative Banks (SCBs), and the conduct of elections for cooperative boards. Progress is mixed on recovery rates for District Credit Cooperative Banks(DCCBs) and Primary Agricultural Credit Societies (PACS), and DCCB profitability. Overall, profitability performance at SCBs is mixed and weaker than the other indicators, but this will improve significantly after the inflows of capitalization comes from the central government. There has also been significant progress across all states in terms of results indicators and project benchmark activities. (Benchmark activities are a series of wide-ranging legal and institutional reforms which form the basis of all support by the Government). The main implementation challenges in each of the 5 Bank-funded states revolve around the IT component and completion of all remaining benchmark activities that are linked to recapitalization under the Financial Restructuring Support (FRS) component. One state (Gujarat) has completed all benchmark activities, and two others (UP and West Bengal) have only one remaining activity before they will have completed the full set of legal and governance reforms set out by the Government, and which is a condition of recapitalization. Locations Country First Administrative Division Location Planned Actual India Uttar Pradesh State of Uttar Pradesh India Rajasthan State of Rajasthan India State of Orissa State of Orissa India Not Entered Republic of India India Haryana State of Haryana India State of Gujarat State of Gujarat India Uttarakhand State of Uttarakhand Results Project Development Objective Indicators Page 2 of 7

3 Indicator Name Core Unit of Measure Baseline Current End Target Upward trend in Recovery rates in the 5-10% per year for PACS participating CCBs in the PS; Text Value Haryana:SCB 99.76%, DCCBs 75.30%, PACS 71.30% Orissa: SCB 89%, DCCBs 60%, PACS 74% UP: SCB 88.67%, DCCBs 53.05%, PACS 69.14% Gujarat:SCB 97.33%, DCCBs 70.03%, PACS 67% 31-Mar-2005 Orissa SCB: 88% to 96% Orissa DCCBs: 65% to 70% Orissa PACS: 86% to 73% Haryana SCB: 99% to 99% Haryana DCCBs: 76% to 70% Haryana PACS: 68% to 65% Gujurat SCB: 86% to 99% Gujurat DCCBs: 78% to 57% Gujarat PACS: 58% to 43% West Bengal SCB: 85% to 87% West Bengal DCCBs: 78% to 81% West Bengal PACS: 76% to N.A. UP SCB: 72% to 96% UP DCCBs: 52% to 57% UP PACS: 42% to 61% Baseline (03/31/2005): Haryana: SCB 99.82%, DCCBs 76.56%, PACS 67.77% Orissa: SCB 88%, DCCBs 65%, PACS 56% UP: SCB 72.05%, DCCBs 52.02%, PACS NA Gujarat: SCB 86.81%, DCCBs 75.14%, PACS NA Participating CCBs publish election schedules and hold elections on regular basis over the project period. Profitability improves in at least 2/3 of the participating CCBs in the PS by the end of the project period. (relative to baseline). Target (06/30/2013): 5-10% per year for PACS. Text Value Mostly no election 100% across all states 100 % of CCBs 31-Mar-2005 Baseline (03/31/2005): Mostly no election. Text Value Haryana: ROAs for DCCBs -0.21% SCB 0.69% Orissa: ROA for DCCBs 0.083% SCB 0.33% UP: ROA for DCCBs -1.54% SCB 0.70% Target (06/30/2013): 100 % of CCBs. ROA for SCB Orissa: 0.14 ROA for SCB Haryana: 0.31 ROA for SCB Gujurat: 0.24 ROA for SCB West Bengal: N.A. ROA for SCB UP: 0.46 DCCBs 0.5% SCB 0.8% Page 3 of 7

4 Gujarat: ROA for DCCBs % SCB 0.140% 31-Mar-2005 ROA> threshold DCCB Orissa: 40% ROA > threshold DCCB Haryana: 5% ROA > threshold DCCB Gujurat 59% ROA > threshold DCCB West Bengal: 41% ROA > threshold DCCB UP: 29% Baseline (03/31/2005): Haryana: ROAs for DCCBs 1.0%, for SCB 1.3% Orissa: ROA for DCCBs 2.4%, SCB 0.9% UP: ROA for DCCBs -1.5%, SCB 0.65% Gujarat: ROA for DCCBs 0.7%, SCB 0.77% Rapid upward trend in the number of small and marginal farmers who receive credit from CCBs (50 percent increase by the end of the project, relative to baseline) A rapid and upward trend (increase of 70% over project life) in ground-level financing (credit) extended to farmers through CCBs inthe participating states. Target (06/30/2013): DCCBs 0.5% SCB 0.8% Percentage Value Mar-2005 Percentage Value Mar-2005 Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target Eligible CCBs in participating states receive recapitalization support, so that 100% of eligible CCBs covered by implementation completion. Text Value 0% On track All eligible CCBs receive restructuring support as per the pre-determined criteria 31-Mar-2005 Page 4 of 7

5 Eligible CCBs in participating states receive training and capacity building to strengthen managerial and operational capabilities,so that 100% of eligible CCBs covered by implementation completion. The new IT platform is installed in the participating states Implementation capacity of NABARD, and state and district level implementing agencies is strengthened Volume of Bank Support: Lines of Credit - Microfinance Volume of Bank Support: Institutional Development - Microfinance Text Value 0% On track All CCBs in participating states migrate to the new Common Accounting System (CAS) within three years of signing the MoU 31-Mar-2007 Text Value 0% lagging behind 100% 31-Mar-2007 Text Value 0% On track 100% 31-Mar-2007 Amount(USD) Value Expenditure on recapatalization Amount(USD) Value Expenditure on TA, IT and Implementation Support component Outstanding Microfinance Loan Portfolio Amount(USD) Value Data gathered from retrofit No target available exercise Percentage of project-supported institutions that are reporting on this indicator Percentage Sub Type Supplemental Value No of active loan accounts -Microfinance Number Value Data gathered from retrofit exercise Capital adequacy of CCBs Text Value -2% for DCCBs and 2.1% for SCB Orissa SCB: 8.12% Haryana SCB: 11.68% Gujarat SCB: 10.26% West Bengal SCB: N. A. UP SCB: 14.32% No target available Regulator defined target Page 5 of 7

6 Data on Financial Performance (as of 04-Jul-2012) Financial Agreement(s) Key s 2/3 of DCCBs are meeting Capital adequacy requirements: On target in Orissa, Haryana and Gujarat. Not on target in West Bengal and UP. 31-Mar-2005 Project Ln/Cr/Tf Status Approval Signing Effectiveness Original Closing Revised Closing P IBRD Effective 26-Jun Nov Dec Jun-2012 P IDA Effective 26-Jun Nov Dec Jun-2012 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P IBRD Effective USD P IDA Effective USD Disbursement Graph Page 6 of 7

7 Key Decisions Regarding Implementation The team s view remains that full project implementation can be attained. However, a strong push to finalize any remaining benchmark activities at the state level and a renewed dialogue between the participating states and the Government will be important. The provision of resources for the FRS and the IT components to be initiated in states where the procurement process has been stalled, is key for the credibility of the program, and its sustainability. Restructuring History Level two Approved on 20-May-2011, Level two Approved on 20-Jun-2012 Related Projects There are no related projects. Page 7 of 7