CHAPTER III DEVELOPMENT OF BANKING IN GOA Go has achieved a very high level of socio economic development in terms of social and economic indicators. It has high per capita income, low poverty, high standard of living, low birth rate, low death rate, low infant mortality rate and development of banks and other socio economic infrastructure needed for the rapid development of its economy. Goa is considered as one of the most prosperous states of the country. After a very long Portuguese rule Goa along with Daman and Diu becarre a part of Indian union on 19th December 1961. Till liberation, Goa was lacking of banking facilities, which were monopolized by Banco National Ultramarino (National Overseas Bank) and restricted to four branches, Panaji, Margao, Vasco and Mapusa. The business commur ty only for foreign exchange transactions used them. A very few cash credit accounts were sanctioned for traders. This bank undertook only conservative banking. There were no banking establishments or professional lending institutions in the state apart from A Caixa Economica de Goa, which allowed borrowings on a small scale for the needy and not for business. However, the landlords and religious and charitable bodies lent m:ney in times need against some security. Banking has undergone a sea change in Goa in the post rberation period. Due to burst in the development programmes in the state many banks opened their branches in the state. 57
SBI opened its first branch in Panjim on 2nd January 1962 and other commercial banks followed it slowly in the later years. In spite of being a late entrant to the banking system, Goa has a made a tremendous progress in the banking sector. Goa has an excellent network of banks, which has spread to every nook, and comer of the State. As on 31-12-2005 there were 456 banking oflees in Goa, of which 319 were commercial banks and 127 were co-operative banks. As per the RBI s classification criteria, Goa does not have metropolitan and urban offices of banks. It has only semi urban and rural offices. The State Bank of India, which is the lead bank of the state, is ahead of others and is leading with 53 branches. The Corporation Bank with 35 branches and Bank of India with 27 branches follow it. Among the co-operative banks the Goa State Co-operative bank is leading with 54 branches. The population covered by per bank is 3070, which is much better than the national average of 16000. There are no Regional Rural Banks in Goa. Among all the states and union territories, bank to population ratio in Goa is the best in the country. 3.1 BANK OFFICES IN GOA During the last two decades the number of banking offices in the state of Goa has increased by over 77%. The increase in the number of banking increase from 1980-81 to 2004-05 is shown in the following table. 58
NO OF BANK OFFICES IN GOA- Table 3.1 YEAR No of Banking offices 1980-81 258 1985-86 297 1990-91 306 1995-96 375 1999-00 442 2000-01 444 2001-02 446 2002-03 447 2003-04 445 2004-05 445 2005-06 456 Source: Lead Bank Office, (SBI), Panaji. NO OF BANK OFFICES Figure 3.1 NO OF BANK OFFICES NO OF BANK OFFICES 1 ho co ^ cn o o o o o o o o o o o 1990-91 1995-96 < 1999-00 35 2000-01 6 ia d> O 8 8 8 O o T 1 1 C\J 2001-02 1 1 C\J 2002-03 1 C\J s C\J 2003-04 2004-05 c6 t C\J c 2005-06 us
Over the years the number of banking offices in Goa has increased. Their were 258 bank offices during 1980-01 and their number up to December 2005 was 456. 3.2 DEPOSITS The banking offices in Goa have over three million deposit accounts. In terms of per capita deposits Goa leads from the front being only nest to Delhi and Chandigarh. The following table shows deposits in scheduled commercial banks according to type of deposits as on 31 stdecember 2005. Table 3.2 DEPOSITS Type of deposit No of accounts Amount in (Rs in crores) Current 105438 609.83 Savings 1979586 2644.26 Term 1280185 10701.08 Total 3365209 13955.17 Source: Department of planning statistics and evaluation, Panaji. It is evident from the table that about 38% of the accounts were term deposits comprising 77% of total deposits which is much higher than the national average of 61.9% (March 2004), 59% of the accounts were saving banks deposits comprising 19% of total deposits which is lower than the national average of 26.1% (March2004). The figures prove the fact that the people of Goa have preference to invest their savings in term deposits rather then in saving deposits. They prefer to earn more return on their investment in the form 60
of higher interest income on term deposits over saving deposits. As on 31st March 2005, the deposits in banks have increased by 7% over the previous year and by December 3P 2005 there has been a further increase in the bank deposits by 10%. The per capita bank deposit of Rs 103549 is more than the per capita income of the state. The three talukas of Salcete, Tiswadi and Bardez accounted for more than three fourth of the total deposits. A significant and noteworthy feature of deposits in the state is the contribution from the Non Resident Emigrants, which accounts for about 33% of the deposits. 3.3 OWNERSHIP CLASSIFICATION OF ACCOUNTS Ownership classification of accounts reveals that in Goa 96.2% of the accounts were owned by the individuals. Females owned 32.16% of the accounts, which is much higher than the national average at 24.3%. Goa has a very high rate of savings as shown in the Deposits in the banks, which as on 31-3-2005, the deposits in the banks have increased by 7% over the previous year and by 31st December 2005 there has been a further increase by 10%. During the period 1980-81 to 2004-05, the deposits have risen at an annual compound growth rate of 16.4%. The per capita bank deposit of Rs 103549 is more than the per capita income of the state. The taluka wise mobilization of deposits reveals that nearly 76% of the deposits are from the three Talukas of Salcete, Tiswadi and Bardez. An important attribute of deposits in Goa is the momentous contribution from Non Resident Emigrants, which accounts for 33% of the deposits and per capita deposits from 1980-81 to 2005-06 (up to December) in Goa, is, gi /en in the following table. 61
3.4 TRENDS IN BANK DEPOSITS The following table and figure enlightens us about the growth of deposits and per capita deposits in the state from the year 1980-81 to 2005-06, which is highly impressive. Trend in banks deposits- Table3.3 SI No Year Deposits (Rs. In crores) Per capita deposits (in rupees) 1 1980-81 380.92 3779 2 1985-86 800.92 7030 3 1990-91 1636.88 13993 4 1995-96 3714.31 29318 5 1999-00 7331.01 54288 6 2000-01 8522.75 63413 7 2001-02 9530.98 70915 8 2002-03 10662.40 79333 9 2003-04 11843.33 87856 10 2004-05 12631.07 89508 11 2005-06 13955.00 103549 Source. Directorate of planning, statistics and evaluation, Panaji. TREND IN BANKS DEPOSITS. Figure 3.2 TREND IN BANK DEPOSITS DEPOSITS AND PER CAPITA DEPOSITS. ro cj>oo o ro o o o o o o o o o o o o o o o o o o o 1980-81 1985-86 1990-91 1995-96 1999-2000 2000-01 YEAR 2001-02 2002-03 2003-04 2004-05 2005-06 Deposits ( Rs. In crores) Percapita deposits (in 62
It is very interesting to note that the deposits and per capita deposits in the state (Table.3.4) with the banks have shown a continuously increasing trend. In the year 1980-81 the deposits and per capita deposits were amounting Rs 380.92 crores and Rs 3779 respectively. During the year 2005-06 deposits and per capita deposits were amounting to Rs. 13955.00 crores and Rs 103549 respectively. 3.5 TRENDS IN BANK CREDIT The following table shows the trends in bank credit in Goa from 1980-81 to 2005-06. Table 3.4 TREND IN BANK CREDIT Year Credits in Crores of Rs. Per capita Credit in Rs. 1980-81 171.18 1698 1985-86 289.11 2537 1990-91 640.94 5479 1995-96 1248.11 9852 1999-00 2258.24 16723 2000-01 2785.17 20723 2001-02 3151.75 23451 2002-03 3263.70 24284 2003-04 3357.65 24914 2004-05 3952.82 29332 2005-06 4625.60 31914 Source: Department of planning statistics and evaluation, Panaji. 63
Figure 3.3 TRENDS IN BANK CREDIT TRENDS IN BANK CREDIT TRENDS IN BANK CREDIT Jo c? o ' o v # cr1 o'* o K ey 4? 4? *> c > rfi rfi rfi e$> C&6C&* YEAR i Credits in crores of Rs. i Per capita It is evident from the above table that the amount of credit provided by the banks in the state shows an increasing trend over the years. In the year 1980-81 the credit was Rs. 171.18 crores and it has increased to Rs. 4625.60 crores in the year 2005-06. It can also be observed from the table that the provision of per capita credit also shows an increasing trend. It was Rs 1698 in the year 1980-81 and has increased to Rs.31914 during the year 2005-06. 3.6 CREDIT DEPOSIT RATIO The credit deposit ratio in Goa was 29.0 during 2004-05. Though the growth in credit has been reasonably good, the relatively higher growth in deposits has led to a low CD ratio. The per capita credit during 2004-05 was Rs.25959, and taluka wise figures indicates that 64
nearly 41% of the credit is from Tiswadi taluka followed by Salcete with 19%, Bardez 11% and Mormugao with 15%. The following table shows per capita credit and CD ratio from 1980-81 to 2005-2006 (up to December 2005) is g ven in Table no 4.4. CREDIT DEPOSIT RATIO Table 3.5 YEAR CD RATIO 1980-81 44.9 1985-86 36.1 1990-91 39.2 1995-96 33.6 1999-00 30.8 2000-01 32.7 2001-02 33.1 2002-03 30.6 2003-04 28.4 2004-05 31.0 2005-06 33.0 Source. Directorate of planning, statistics and evaluation, Panaji. 65
Figure 3.4 CD RATIO CD RATIO CD RATIO ^ >N C? 0N & C? /////# W # # & > *v> n < $ qy <$ qy <$ <$ YEAR -CD RATIO The credit deposit ratio in the state is showing a continuous decline, which is a matter of serious concern. The CD ratio has declined from 44.9% in 1980-81 to 31% in 2005-06, which is very much lower than the national average of 66%. Even though the growth in credit has been reasonably good, the relatively higher growth in deposits has led to low credit deposit ratio. Even though females dominate micro credit in the state the flow of credit to the women is found to be low. L- 75CI7 * 66
CONCLUSION Goa is a late entrant to the banking system. In spite of this fact it has made a significant progress in the field of banking. The 456 banking offices of Goa have spread throughout the entire state serving an average population of 3070 which is one of the best in the country. The state has a very high per capita banking deposits and term deposits being the major component of deposits. Apart from high per capita banking deposits another important feature is the high percentage of female ownership of savings accounts, which is a proof of women empowerment in the state. Even though the growth in credit is good the CD ratio is low. This is probably because of the higher rate of growth in deposits compared to the growth of credit. The credit profile of the state shows that the banks have contributed significantly to the development of industries, agriculture, and services. Among these three sectors the amount of loans availed for the agriculture was very less due to declining importance of agriculture in the state as a source of livelihood. The role of the banking system in the process of economic development is to mobilize savings of the people and make them available for productive investment in the form of credit. The banks in the state though are successful in the mobilization of savings they have yet to experience the credit boom. 67
Appendix Table 3.1 GOA AT GLANCE- 1. Area 3072 Sq Kms. 2 Number of Districts 2 3 Number of Blocks 11 4 Number of Villages 429 5 Population as per 2001 1343998 census Rural -675129 Urban Semi urban - 668869 6 Per capita income as on 31-03-03 Constant prices 1993-94 Current prices. All India- 10,653,00 17,736,00 Goa 27,139,00 46,356,00 7 Number of bank offices. 451 branches Commercial banks 324 branches State Co- Operative banks 127 branches Central Co - Operative Nil banks Regional Rural Banks Nil Financial Institutions 5 Lead Bank North Goa and South Goa State Bank of India. State Level Bankers State Bank of India. Committee Convener Bank Source: Lead Bank Office, (SBI) Panaji.